Finding Text
Assistance Number: 16.753 Congressionally Recommended Awards (CRA) Year: 2024 Name of Federal Agency: U.S. Department of Justice Name of Pass-Thru Agency: Direct award Type of Compliance Finding: I – Procurement and Suspension and Debarment Condition: During our testing, we noted that the City did not perform or document required suspension and debarment checks for certain vendors and contractors paid with federal funds. The City did not obtain or retain evidence, such as a certification from the vendor or a verification from the System for Award Management (SAM), to ensure that vendors were not suspended, debarred, or otherwise excluded from federal programs. Criteria: The Uniform Guidance (2 CFR §200.213) requires non-federal entities to ensure that federal funds are not awarded to or expended with parties that are suspended, debarred, or otherwise excluded. This requirement can be satisfied by obtaining a vendor certification or by checking the SAM.gov system prior to entering into a covered transaction. Questioned Costs: N/A Context: The City did not document the suspension and debarment check on one of the five transactions tested. The sample size was determined based upon guidelines provided by the AICPA which is not a statistically valid sample. Cause: The City did not have adequate procedures in place to ensure that suspension and debarment checks were consistently performed and documented. Effect: Without performing suspension and debarment checks, the City risks expending federal funds on ineligible vendors, which could result in questioned costs and potential repayment of federal funds. Recommendation: We recommend that the City implement procedures to ensure suspension and debarment checks are performed for all covered transactions and that evidence of such checks is retained in the procurement files. Views of Responsible Officials (Unaudited): The City is in agreement with the finding and appreciates the auditor’s recommendations for improvements. While federal contract compliance language is included in agreements that are being paid with federal funds, this case occurred because the original contract (2020) predated knowledge that federal funds would later be applied (2022). The oversight highlights the need for additional training and coordination to ensure procurement and legal staff are notified whenever federal funding is applied to an existing contract or amendment.