Description: Significant deficiency in internal control over compliance related to suspension and debarment. Cause: Though the Organization has established internal controls for suspension and debarment, the Organization made an incorrect determination that the suspension and debarment requirements outlined in 2 CFR 200 Part 180 only applied to subawards. Effect: The Organization did not fully comply with the suspension and debarment requirements regarding covered transactions. Corrective Action: • The Organization’s management previously had an incorrect understanding of the Suspension & Debarment requirements of 2 CFR Part 180. Management was aware that Suspension & Debarment verification is required for subawards, but did not realize that this requirement also extends to vendors when procuring goods or services in excess of $25,000. Washington Maritime Blue’s management is committed to ongoing professional development in order to maintain the highest standards for financial reporting and regulatory compliance, and we became aware of this error mid-way through the year under audit. At that point, we took the following corrective action: o Contract templates were updated to include Suspension & Debarment terms. This updated template was used for all new purchase contracts. • Unfortunately, several federally-funded purchase contracts in excess of $25,000 had already been entered into before this update was made to our processes. We acknowledge that regulations related to Suspension & Debarment were not observed with respect to these earlier purchases, but are confident that the error will not be completed moving forward. Contact Person: Daniel Pulse, CFO Anticipated completion date: November 2025, Corrective action has been completed.