Finding Text
Finding 2023-003 Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No: Various Area: Procurement, Suspension, and Debarment Questioned Costs: $223,588 Criteria: The following must be adhered to comply with federal and the State’s procurement regulations: • 2 CFR 200.318 requires documentation sufficient to detail the history of each procurement transaction, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and basis for contract price. • 2 CFR 200.319 requires all procurement transactions under a federal award to be conducted in a manner providing full and open competition. • 2 CFR 200.320 permits small purchases without soliciting competitive quotations if the price is deemed reasonable based on research, experience, or purchase history, provided supporting documentation is maintained. • The State’s procurement regulations require that small purchases exceeding $1,000 be supported by three quotations, with the lowest quotation selected unless a waiver is documented and approved. Waiver justifications must be submitted to the State treasury for inclusion in the procurement file. Condition: For 5 (or 8%) of 60 transactions tested, test population aggregating $1,187,753 out of $19,504,751 in program expenditures, we noted based on our review of procurement files: • For test no. 15, obligation 361854 – Of 3 quotations obtained for a small purchase transaction, the highest quotation was selected, there was no documented justification to support the procurement selection. • For test no. 16, obligation 372216 – The procurement was sourced from one vendor and lacks additional quotations. There was no documented justification to support the sole-source procurement. • For test no. 17, obligation 372215 – The procurement was sourced from one vendor and lacks additional quotations. There was no documented justification to support the sole-source procurement. • For test no. 22, obligation 334914 – The procurement file included 2 quotations and a justification form that did not relate to the transaction as it cites an explanation for purchasing goods from other vendors unrelated to the actual transaction. Of the 2 vendors included, there did not appear to be a notable difference in goods/services offered, however the higher of the 2 was selected. Consequently, we could not determine the ultimate basis for vendor selection. • For test no. 30, obligation 358537 – The procurement as sourced from one vendor and lacks additional quotations. There was no documented justification for the sole-source procurement. Total questioned costs are summarized as follows: Cause: Ineffective documentation filing and retention controls, further impacted by the relocation of the State Treasury office. Effect: The State is not in compliance with federal and State procurement requirements. Known questioned costs of $223,588 are reported, with projected questioned costs exceeding $25,000. Recommendation: The State should strengthen procurement documentation controls and ensure rationales and justifications for vendor selection are retained in procurement files. Identification as a Repeat Finding: N/A View of Responsible Officials: The State’s response and corrective action plan addressing this finding is included in the accompanying corrective action plan.