FINDING 2024-001
Subject: Highway Planning and Construction - Procurement
Federal Agency: Department of Transportation
Federal Program: Highway Planning and Construction
Assistance Listings Number: 20.205
Federal Award Numbers and Years (or Other Identifying Numbers): DES. Nos. 1600968, 1702753,
1802927, 1802929,
1902066, 2301613
Pass-Through Entity: Indiana Department of Transportation
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Other Matters
Condition and Context
Recipients may use award funds to procure engineering and design-related services from
consultants necessary to implement one or more eligible purposes outlined for the Highway Planning and
Construction award funds. Subrecipients may adopt written policies and procedures prescribed by the
awarding state DOT or prepare their own written policies and procedures approved by the Indiana
Department of Transportation.
The County did not have documented procurement procedures or policies used to procure
engineering and design services.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
23 CFR 175 states in part:
". . . (b) Subrecipient responsibilities. Subrecipients shall develop and sustain
organizational capacity and provide the resources necessary for the procurement, management,
and administration of engineering and design related consultant services, reimbursed in
whole or in part with FAHP funding as specified in 23 U.S.C. 106(g)(4)(A). Responsibilities
shall include the following:
(1) Adopting written policies and procedures prescribed by the awarding STA or other
recipient for the procurement, management, and administration of engineering and
design related consultant services in accordance with applicable Federal and State
laws and regulations; or when not prescribed, shall include:
(i) Preparing and maintaining its own written policies and procedures in accordance
with paragraph (c) of this section; or
(ii) Submitting documentation associated with each procurement and subsequent
contract to the awarding STA or other grantee for review to assess compliance with
applicable Federal and State laws, regulations, and the requirements of this part;
(2) Procuring, managing, and administering engineering and design related consultant
services in accordance with applicable Federal and State laws, regulations, and
approved policies and procedures, as specified in 23 CFR 1.9(a).
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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
(c) Written policies and procedures. The contracting agency shall prepare and maintain
written policies and procedures for the procurement, management, and administration of
engineering and design related consultant services. The FHWA shall approve the written
policies and procedures, including all revisions to such policies and procedures, of the STA or
recipient to assess compliance with applicable requirements. The STA or other recipient shall
approve the written policies and procedures, including all revisions to such policies and procedures,
of a subrecipient to assess compliance with applicable requirements. These policies
and procedures shall address, as appropriate for each method of procurement a contracting
agency proposes to use, the following items to ensure compliance with Federal and State laws,
regulations, and the requirements of this part:
(1) Preparing a scope of work and evaluation factors for the ranking/selection of a
consultant;
(2) Soliciting interests, qualifications, or proposals from prospective consultants;
(3) Preventing, identifying, and mitigating conflicts of interest for employees of both the
contracting agency and consultants and promptly disclosing in writing any potential
conflict to the STA and FHWA, as specified in 2 CFR 200.112 and 23 CFR 1.33, and
the requirements of this part.
(4) Verifying suspension and debarment actions and eligibility of consultants, as specified
in 2 CFR part 1200 and 2 CFR part 180;
(5) Evaluating interests, qualifications, or proposals and the ranking/selection of a
consultant;
(6) Determining, based upon State procedures and the size and complexity of a project,
the need for additional discussions following RFP submission and evaluation;
(7) Preparing an independent agency estimate for use in negotiation with the selected
consultant;
(8) Selecting appropriate contract type, payment method, and terms and incorporating
required contract provisions, assurances, and certifications in accordance with
§ 172.9;
(9) Negotiating a contract with the selected consultant including instructions for proper
disposal of concealed cost proposals of unsuccessful bidders;
(10) Establishing elements of contract costs, accepting indirect cost rate(s) for application
to contracts, and assuring consultant compliance with the Federal cost principles in
accordance with § 172.11;
(11) Ensuring consultant costs billed are allowable in accordance with the Federal cost
principles and consistent with the contract terms as well as the acceptability and
progress of the consultant's work;
(12) Monitoring the consultant's work and compliance with the terms, conditions, and
specifications of the contract;
(13) Preparing a consultant's performance evaluation when services are completed and
using such performance data in future evaluation and ranking of consultant to provide
similar services;
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(Continued)
(14) Closing-out a contract;
(15) Retaining supporting programmatic and contract records, as specified in
2 CFR 200.333 and the requirements of this part;
(16) Determining the extent to which the consultant, which is responsible for the professional
quality, technical accuracy, and coordination of services, may be reasonably
liable for costs resulting from errors and omissions in the work furnished under its
contract;
(17) Assessing administrative, contractual, or legal remedies in instances where consultants
violate or breach contract terms and conditions, and providing for such
sanctions and penalties as may be appropriate; and
(18) Resolving disputes in the procurement, management, and administration of engineering
and design related consultant services.
(d) A contracting agency may formally adopt, by statute or within approved written policies and
procedures as specified in paragraph (c) of this section, any direct Federal Government or
other contracting regulation, standard, or procedure provided its application does not conflict
with the provisions of 23 U.S.C. 112, the requirements of this part, and other laws and regulations
applicable to the FAHP.
(e) Notwithstanding paragraph (d) of this section, a contracting agency shall have a reasonable
period of time, not to exceed 12 months from the effective date of this rule unless an
extension is granted for unique or extenuating circumstances, to issue or update current written
policies and procedures for review and approval in accordance with paragraph (c) of this
section and consistent with the requirements of this part."
2 CFR 200.303 states in part:
"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). . . ."
Cause
The County's management was not aware of the compliance requirement relating to the written
procurement policy.
Effect
The failure to establish a written policy for Federal Procurement placed the County in noncompliance
with the grant agreement and the Procurement and Suspension and Debarment compliance
requirement. Noncompliance with the grant agreement and the compliance requirement could result in the
repayment of federal funds.
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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the County's management establish written policies and procedures for the
procurement of engineering and design services.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that part of this report.