Finding Text
2024-040 - Suspension and Debarment Documentation Deficiency Federal Program 23.002 - Appalachian Area Development Award Numbers MS-20695 MS.:20699 Federal Agency Appalachian Regional Commission (ARC) Compliance Requirement Procurement, Suspension, and Debarment - 2 CFR § 180.220 and § 180.300 Type of Finding Internal Control over Compliance - Significant Deficiency Compliance - Noncompliance Questioned Costs None - No questioned costs were identified because all contractors were ultimately verified as eligible and no federal funds were paid to suspended or debarred entities. Criteria Per 2 CFR § 180.220, non-federal entities must verify that contractors receiving more than $25,000 in federal funds are not suspended or debarred at the time of award. Per 2 CFR §180.300, documentation of this verification must be retained as part of the procurement record. Condition The City of Batesville did not retain documentation verifying that contractors were not suspended or debarred prior to contract execution for federally funded projects under ARC MS-20699 and MS-20698. Although the grant administrator stated that SAM.gov was checked before signing, no evidence of this verification was maintained. Screenshots were printed only after the auditor's request, and one Mississippi Development Authority (MDA) verification letter was dated after the contract award. Cause The City relied on verbal confirmation from the grant administrator and did not implement a formal process to retain debarment verification documentation prior to contract execution. Effect While all contractors were ultimately verified as eligible, the lack of contemporaneous documentation means the control was not operating effectively. This increases the risk of noncompliance and weakens the audit trail. Recommendation We recommend the City implement a formal procurement checklist that includes suspension/debarment verification steps and requires retention of SAM.gov screenshots or equivalent documentation prior to contract execution. Staff should be trained on federal procurement documentation standards. Views of Responsible Officials Management concurs with the finding. The City acknowledges that documentation of suspension and debarment verification was not retained prior to contract execution. To strengthen internal controls, the City will implement a standardized procurement checklist that includes SAM.gov verification and require retention of supporting documentation in the procurement file. Staff involved in grant administration and procurement will receive training on federal requirements under 2 CFR §180.220 and §180.300 to ensure future compliance.