Finding 1140854 (2024-004)

Criteria The Organization is required to perform and document suspension and debarment searches for potential vendors prior to procuring services. If bids are not obtained in accordance with the Organization’s procurement procedures due to using the noncompetitive procurement method, documentation must be prepared and retained including justification for sole-source procurement. Condition Evidence was not in place to ensure that the Organization is abiding by the suspension and debarment searches for potential vendors or sole-source procurement in accordance with 2 CFR Part 200. Context During the year ended May 31, 2024, the Organization engaged a single contractor for this program. Upon testing this contractor, we found that the Organization lacked documentation to demonstrate that the suspension and debarment verification procedures and sole-source procurement procedures, as outlined in the Organization’s procurement policy, were conducted to securing the services. Consequently, we could not conclude that these procedures were performed in a timely manner. The Organization incurred expenditures totaling $264,628 with this contractor during the year ended May 31, 2024. The remaining program expenditures of $8,791,324 were payroll-related and not subject to procurement requirements. Cause The Organization was not aware of the necessity to maintain the documentation of its suspension and debarment search and sole-source justification procedures. Effect Without abidance of the documentation requirements of 2 CFR Part 200, there is an increased risk that procurement activities may not be conducted in compliance with federal requirements, potentially leading to unallowable costs or questioned costs. Questioned Costs None due to auditor agreeing with verbal justification of the sole-source procurement. Repeat Finding Documentation to support that the Organization’s suspension and debarment verification procedures were performed prior to procuring services is a repeat finding. Recommendation We recommend that management ensure all procurement policy requirements are performed and documented prior to entering into procurement transactions. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.