Finding Text
Information on the Federal Programs:
United States Department of Education, both programs are passed through Massachusetts Department of Elementary and Secondary Education
CFDA Nos. 84.027 & 84.173; Special Education Cluster; Grant Period Ending Fiscal Year End 2024
CFDA Nos. 84.425 & 84.425D; ESSER Program; Grant Period Ending Fiscal Year End 2024
Condition:
In the course of allowable costs and procurement testing (B-010), it was discovered that the client failed to check vendors for suspension/debarment prior to contracting; note I-002 email from client. Client does have appropriate policies/procedures in place for managing Federal awards, including this particular criteria; see Policies & Procedures, MPS Grant Manual – Policies Over Federal Awards, however they were not being followed.
Criteria:
Non-Federal entities are required to follow procurement standards per 2 CFR sections 200.303 and 200.318-326, Uniform Guidance, as well as their own documented procurement standards, which must reflect applicable state and local laws and regulations – whichever is stricter. Per 2 CFR 200.303(a), a non-Federal entity must: 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). UG §200.318 General procurement standards.
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. 2 CFR Part 180 identifies two types of covered transactions: a transaction at the primary tier versus a transaction at the lower tier. A covered transaction at the primary tier is any transaction between a Federal agency and a person. A person can be an individual or business, federal agency or non-federal agency. A covered transaction at the lower tier is where a participant, such as a non-federal entity, in a covered transaction does business with another person.
A “covered transaction” can be further defined as a non-procurement transaction or procurement transaction. A subaward, regardless of amount, qualifies as a non-procurement transaction, unless exempt by 2 CFR Part 180.215. A procurement transaction for goods or services that equals or exceeds $25,000 qualifies as a covered transaction, unless other criteria is met within 2 CFR Part 180.220. For example, a procurement transaction could be a covered transaction, regardless of amount, if the transaction requires approval by a Federal agency.
Cause:
Excerpt from client Policies & Procedures, MPS Grant Manual – Policies Over Federal Awards: Debarment and Suspension (p. 28)
The District awards contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. The District may not subcontract with or award sub grants to any person or company who is debarred or suspended. For all contracts over $25,000 the District verifies that the vendor with whom the District intends to do business with is not excluded or disqualified. 2 C.F.R. Part 200, Appendix II (1) and 2 C.F.R. §§ 180.220 and 180.300.
In this case, therefore, the proper control was in place but not followed.
Effect or Possible Effect of the Condition:
Non-compliance with 2 CFR 200 Section 180.995.
Questioned Costs: Not applicable.
Isolated Instance or Systemic Problem:
This appears to be an isolated problem as the controls over this compliance requirement are in place but were not being followed.
Repeat of a Finding in the Immediately Prior Audit (with Prior Year Audit Finding Number (where applicable)): No
Recommendation to Prevent Future Occurrence:
It is recommended that the Town follow scrupulously its own MPS Grant Manual – Policies Over Federal Awards: Debarment and Suspension, which is fully compliant with 2 CFR 200 Uniform Guidance.