Finding 1159825 (2022-009)

Finding No.: 2022-009 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.224 Health Center Program Federal Award No.: 1 H8DCS36516-01-00, 4 H8DCS36516‐01‐01, 6 H80CS02467-35-03, 1 H8FCS41190-01-00, 6 H80CS02467-36-08, 3 H80CS02467‐36‐01, 5 H80CS02467‐37‐00 Area: Procurement, Suspension and Debarment Questioned Costs: $187,764 Criteria: In accordance with 2 CFR 200.320(a)(1)(i) and (ii), to the maximum extent practicable, non-Federal entities should distribute micro-purchases equitably among qualified suppliers. Additionally, micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history, or other relevant information and maintains documents to support its conclusion in the procurement files accordingly. Condition: The Republic’s procurement policy, 40 Palau National Code Annotated (PNCA) §625(c)(2), states that small purchases under two thousand five hundred dollars ($2,500) may be made after receiving one (1) written price quotation. However, the Republic’s procurement policy on small purchases does not meet the federal procurement requirement on micro-purchases as stated in the above criteria. As a result, for 260 (or 39%) of the 660 procurement transactions tested, no documentation was maintained to substantiate that the small purchases were distributed equitably among qualified suppliers as follows:For 260 (or 39%) of the 660 procurement transactions, no documentation is maintained to substantiate equitably distributing $187,764 of micro-purchase procurements among qualified suppliers as follows: No. No. of transactions GL Account Name Amount 1 109 General Supplies $101,254 2 18 Boat Rentals 30,700 3 58 Vehicle Cycle Repair 18,102 4 34 Medical Drugs 13,055 5 4 Conference 6,502 6 5 Medical Supplies 6,257 7 7 Building Rentals 3,650 8 1 Computer Software 1,999 9 4 All Other Rentals 1,985 10 9 Dues & Fees 1,500 Cause: The Republic did not effectively monitor compliance with applicable procurement requirements. Condition, continued: No. No. of transactions GL Account Name Amount 11 4 Machinery & Equip Repair 1,030 12 1 Training 700 13 1 Building/Space Rentals 575 14 4 Advertising 255 15 1 Vehicle Cycle Etc Rentl 200 Total: 260 $187,764 Cause: The Republic did not include documentation in the procurement file to evidence that the program made effort to distribute small purchases equitably among qualified vendors. In addition, the Republic’s procurement policy does not address micro-purchases distribution to meet the federal requirements. Effect: The Republic is in noncompliance with applicable procurement requirements. The reportable questioned cost is $187,764. Recommendation: We recommend that the Republic update its procurement policies and procedures to include specific guidance on equitably distributing micro-purchase procurements among qualified suppliers. Additionally, management should ensure that documentation supporting the basis for supplier selection is consistently maintained in the procurement files. Views of Responsible Officials: The Republic’s Corrective Action Plan does not indicate disagreement and provides planned corrective action.