Finding Text
2024-018 Noncompliance with Procurement Requirements Grantor Department of Treasury - Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Grant Period – Year ended June 30, 2024 First reported 2024 Type Material Weakness, Noncompliance Condition During the audit of the procurement processes, it was identified that the Town may not have fully complied with the federal regulations governing procurement. During the year ended December 31, 2024, the Town paid one contractor a sum of $85,476 for water and sewer system repairs as necessary. The Town did not provide a contract for audit or evidence that it obtained price or rate quotations from an adequate number of qualified sources. Criteria Federal regulations generally require procurement transactions to be conducted in a manner that provides full and open competition, unless specific exceptions apply. Contracts are typically necessary to formalize the procurement relationship and ensure compliance with federal statutes, regulations, and the terms and conditions of a federal award. According to 2 CFR section 200.320, the micro-purchase method allows for procurements where the aggregate dollar amount does not exceed $10,000, and these purchases may be awarded without soliciting competitive quotations if the nonfederal entity considers the price to be reasonable. For small purchase procedures, which apply to purchases exceeding the micro-purchase amount but not exceeding the simplified acquisition threshold of $250,000, price or rate quotations must be obtained from an adequate number of qualified sources. Cause Management believed the requirement for small purchases did not apply to routine water and sewer system repairs since the individual invoices did not exceed $10,000 in most cases. Effect Noncompliance may lead to the disallowance of costs, where the federal agency may refuse to reimburse noncompliant costs or require refunds. Questioned Costs $85,476 Recommendation To ensure compliance with federal procurement standards, it is recommended that the Town implement procedures to ensure that price or rate quotations are obtained from an adequate number of qualified sources for all small purchases, thereby promoting full and open competition. Management's Response See management’s corrective action plan.