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Finding #SA2024-004 Compliance with Procurement Requirements Assistance Listing Number: 21.027 Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Treasury Pass Through Entity: California State Water Resources Control Board Federal Award Identification Number: A-00216-01 Criteria: Section I, Procurement and Suspension and Debarment, of the May 2024 OMB Compliance Supplement includes the following: In July 2022, Treasury released Final Rule FAQ 13.15, which explains that only a subset of the requirements in Subparts D and E of the Uniform Guidance apply to recipients’ use of award funds under the revenue loss eligible use category. The requirements of 2 CFR sections 200.318 through 200.327 are not included in the list of requirements applicable to such funds. The FAQ 13.15 referenced indicates “In general, these requirements provide that recipients should not deviate from their established practices and policies regarding the incurrence of costs, and that they should expend and account for the funds in accordance with laws and procedures for expending and accounting for the recipient’s own funds.” Condition: We selected seven services and supplies transactions under the revenue loss category to test for allowability under the program and compliance with the City’s procurement policies and noted two vehicle purchases in the amounts of $60,762 and $54,383 were accompanied by sole source purchase documentation, in lieu of formal bidding, but the sole source forms were not signed as approved by the Department Director. Cause: We understand City staff could not locate the authorized forms for the two vehicle purchases. Effect: The City is not in compliance with the procurement requirements of the CSLFRF program. Recommendation: The City must develop procedures to ensure that the procurement files contain documentation to demonstrate compliance with the bidding/quote, contract and sole source requirements, as well as City Council approval requirements, to ensure compliance not only with its own policies, but with the procurement requirements of the CSLFRF grant. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.