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Finding 2025-002: Competitive Proposal Process for Dental Van Procurement (Significant Deficiency) Federal Program: FIP [93.526] Federal Agency: U.S. Department of Health and Human Services (HHS) Criteria: Federal regulations under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200), specifically 2 CFR § 200.319(b) and § 200.320(b), require that all procurement transactions be conducted in a manner providing full and open competition. For a competitive proposal process, the organization must publicly advertise the procurement and include a clear and accurate description of the technical requirements and specifications for the goods or services to be procured. Furthermore, 2 CFR § 200.320(b)(2)(i) requires that proposals be evaluated and a selection made based on established evaluation criteria. These criteria must be clearly stated in the solicitation and must be used as the basis for the selection, ensuring that price is a factor but not the only one. Condition: The organization intended to use a competitive proposal process to procure a van. However, it failed to publicly advertise the request for proposals, limiting the pool of potential vendors to only those known to the organization. Additionally, the request for proposals did not include a complete and accurate list of specifications, nor did it include the evaluation and selection criteria that would be used to assess the proposals. While the organization did obtain three proposals and documented its rationale for selecting a vendor that was not the lowest bidder, the overall process did not meet the standards for full and open competition required by federal regulations. Questioned Costs: None Cause: The organization lacked a clear understanding of the specific requirements for a federal competitive proposal process. There were no written procedures or internal controls in place to ensure all required documentation and steps were followed. This oversight, combined with an over-reliance on informal practices, contributed to the noncompliance. Effect: The non-compliant procurement process increases the risk that the organization paid more than was necessary for the vehicle, which is an inefficient use of federal funds. Context: This procurement was for a significant asset for the program. While the organization has made an attempt to solicit proposals, the process was fundamentally flawed from the outset due to the lack of public advertising, incomplete specifications, and missing evaluation criteria. This is the first time the organization has procured a van with these funds, and the error was an oversight rather than an intentional act of noncompliance. Repeat Finding: No. This is the first time this specific finding has been identified. Recommendation: The organization should immediately develop and implement a comprehensive procurement policy and procedures manual that fully aligns with 2 CFR Part 200. This manual should provide a detailed checklist for all procurement methods, including specific requirements for public advertising, developing clear specifications, and documenting the full evaluation process based on a set of pre-established criteria. Mandatory training on federal procurement regulations should be provided to all staff involved in federal awards management and procurement to ensure they understand the importance of compliance. Management Response: The organization acknowledges the finding. To address this, we are committing to develop and implement a comprehensive procurement policy and procedures manual that strictly aligns with requirements within the Uniform Guidance. This manual will include detailed checklists for all procurement methods, covering public advertising, clear specification development, and the use of pre-established, documented evaluation criteria, followed by mandatory training for all staff involved in procurement.