Finding Text
Criteria or Specific Requirement: Per 2 CFR §200.318 - §200.326, non-federal entities must follow procurement procedures that ensure full and open competition and maintain proper documentation of procurement transactions. Additionally, under 2 CFR §200.213, entities must verify that vendors and subrecipients are not suspended or debarred before entering into contracts funded by federal awards.
Condition: AIRA did not retain sufficient/updated documentation to support compliance with Uniform Guidance procurement standards. Specifically:
• Procurement files lacked evidence of cost/price analysis and vendor selection criteria for purchases exceeding the micro-purchase threshold of $10,000.
• The entity did not retain verification records confirming that selected vendors were not suspended or debarred in SAM.gov before contract execution.
Cause: The deficiency appear to result from inadequate internal controls over procurement documentation and a lack of formalized procedures ensuring compliance with federal procurement and debarment requirements.
Effect or Potential Effect: Failure to maintain proper procurement documentation and verify vendor eligibility increases the risk of noncompliance with federal requirements. This may lead to questioned costs and potential disallowance of federal expenditures.
Questioned Costs: Not applicable as there were no questioned costs related to noncompliance.
Recommendation: We recommend AIRA strengthen its internal controls over procurement documentation by considering the following:
1. Implementing a standardized procurement checklist to ensure all required documentation is maintained. A procurement checklist includes key compliance steps such as:
a. Documentation of competitive procurement such as bids, proposals, or price comparisons.
b. Justification for vendor selection, including cost/price analysis.
c. Approval signatures from designated officials.
d. Verification of vendor eligibility through SAM.gov before contract execution.
2. Establishing a formal review process to verify and document vendor eligibility through SAM.gov before awarding federally funded contracts. The entity should implement a procurement control process where a designated staff member completes the following steps:
a. Searches SAM.gov for each vendor before contract execution.
b. Prints and retains a copy of the vendor’s eligibility verification.
c. Signs and dates a verification form certifying the check was performed.
d. Includes this form in the procurement file.
3. Conducting regular training for staff involved in procurement to reinforce federal compliance requirements. The training should cover:
a. Procurement methods (small purchase, micro-purchase, simplified acquisitions, competitive proposals, sealed bids, sole source) competitive proposals, sealed bids)
b. Documentation requirements under 2 CFR Part 200.
c. Vendor debarment checks and maintaining verification records.
d. Retention requirements for procurement documents.
Repeat finding from prior year: No
Views of Responsible Officials: Management agrees with the finding. See attached corrective action plan.