Finding Text
Program Information:
U.S. Department of Transportation
AL Number Award Number Award Period Grant Name
20.205 A18AV01093/A17AV00612 1/1/2018-12/31/2022 Highway Planning and Construction Cluster
AL Number Award Number Award Period Grant Name
20.509 A18AV01093/218AV00785 1/1/2018-9/30/2023 Road Maintenance Programs
Criteria:
Per 2 CFR § 200.303 Internal controls, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. A non-federal entity must:
1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements.
2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319.
3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) and (b). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)).
Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR Section 180.220. All non-procurement transactions entered into by a passthrough entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR Section 180.215.
When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at https://www.sam.gov, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR Section 180.300).
Condition/Context:
20.205 – Highway Planning and Construction Cluster
• 1 of 8 Individually Important Items (IIIs) had bidding/solicitation documentation but did not have proper approval.
• 2 of 8 IIIs had documentation of one quote obtained but no further documentation.
• 5 of 8 IIIs and 2 of 2 procurement samples had no bidding/solicitation support provided.
• 8 of 8 IIIs and 2 of 2 suspension and debarment samples did not have documentation of a suspension and debarment search prior to payment.
20.509 – Road Maintenance Programs
• 3 of 3 IIIs and 7 of 7 procurement samples had no bidding/solicitation support provided.
• 3 of 3 IIIs and 2 of 2 suspension and debarment samples did not have proper documentation provided.
[X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness
Cause:
Due to turnover in key personnel, Joint Programs had a breakdown in internal controls during 2022.
Effect:
Without an effective internal control system an entity’s objective: operations, reporting, and compliance cannot be achieved. In addition, Joint Programs could be subject to questioned costs or other sanctions from funding agencies if they determine that Joint Programs did not assure full and open competition for the procurements and/or if vendors retained and paid from federal funds and are later found to be suspended or debarred.
Questioned Costs:
Known – $971,925 AL# 20.205
Known – $563,676 AL# 20.509
Repeat Finding:
Yes – 2021-005.
Recommendation:
We recommend that Joint Programs use the Green Book to design, implement, and operate internal controls to achieve its objectives related to operations, reporting, and compliance. We also recommend that Joint Programs conduct training for staff to review procurement and suspension and debarment policies and procedures and maintain all records in a way that allows them to be located and reviewed at any point in time.
View of Responsible Officials and Planned Corrective Action:
Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.