Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D22AF00327, D23AF00019, D21AF10232, D22AF00017, D22AF00326, D23AF00061, D19AF00046, D21AF10018, D20AP00054, D21AF10013 Area: Procurement and Suspension and Debarment Questioned Costs: $6,767,555 Criteria: Article VI, Section 1(j)(5) of the Fiscal Procedures Agreement requires that records shall be maintained with sufficient detail to document the history of procurement, including but not limited to the rationale for and method of procurement, the selection of contract type, contractor selection or rejection, and the basis for the contract price. Additionally, in accordance with Article VI, Section 1(h) of the FPA says the Government of the Federated States of Micronesia shall not award funds received pursuant to the Compact, as amended, to any party which is debarred, suspended or otherwise excluded from and ineligible for participation in United States assistance programs. Condition: Of 8 procurement transactions, aggregating $3,350,341 of a total population of $3,691,776 in procurement performed in fiscal year 2023, the following were noted: 1. For four (or 50%), procurement related documentation such as quotations, bid submissions, invitation-to-bid publications were not provided. 2. FSM National Government does not perform suspension and debarment monitoring for covered transactions with a total population of $6,757,381, which includes both the current and prior period procurements, that is in accordance with Article VI, Section 1(h) of the FPA. Cause: 1. FSM National Government did not provide procurement related evidence such as quotations, bid evaluations, or rationale for vendor selection. 2. FSM National Government does not have a policy and procedure in place for verification of persons or contractors prior to entering into a covered transaction that is in accordance with Article VI, Section 1(h) of the FPA. Effect: FSMNG is in noncompliance with applicable procurement and suspension and debarment requirements and questioned costs of $6,767,555 results. Identification as a Repeat Finding: 2022-010 Recommendation: 1. FSM National Government should improve its file maintenance system to help ensure documents over compliance requirements can be easily retrieved. 2. FSM National Government should establish a policy and implement formal procedures to document written evidence that, prior to entering into a covered transaction, an assessment has been performed that is in accordance with Article VI, Section 1(h) of the FPA. Views of Responsible Officials: Management disagrees with the finding. Refer to FSM NG’s Views of Responsible Officials for their detailed response. Auditor Response: As referenced in the criteria, Fiscal Procedures Agreement was used as a guideline for compliance testing. Noncompliance was due to lack of procurement related documentation such as, but not limited to, quotes and bidding evaluations, made available to auditors during the time of audit. Additionally, FSM National Government does not perform suspension and debarment verification for covered transactions as required by the FPA.