Finding Text
ALN 14.251 and ALN 21.027 Finding #2024‐003 Subrecipient Monitoring Repeat Finding: No Condition: The Organization did not perform adequate monitoring of its subrecipient to ensure compliance with federal procurement and suspension/debarment requirements. Specifically: · The subrecipient did not have procurement policies that conform to the Uniform Guidance requirements at 2 CFR 200.317–200.327. · The subrecipient did not perform suspension or debarment verifications for vendors, as required by 2 CFR 200.214. · The Organization, as pass‐through entity, did not identify or address these deficiencies through its monitoring procedures. Criteria: In accordance with 2 CFR 200.332(d), pass‐through entities are required to monitor the activities of subrecipients as necessary to ensure that subawards are used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward. Additionally, 2 CFR 200.317–200.327 establish procurement standards applicable to non‐federal entities, including the requirement to have written procurement procedures that conform to applicable federal law and standards. Under 2 CFR 200.214, non‐federal entities are prohibited from contracting with or making subawards to parties that are suspended or debarred. Cause: The Organization’s monitoring procedures did not include a review of subrecipient procurement policies and practices, nor did they require confirmation that the subrecipient was performing suspension/debarment checks. Effect: There is an increased risk that federal funds could be expended on unallowable costs, including purchases from suspended or debarred vendors. Lack of proper procurement policies also creates a risk that procurements may not be conducted in a manner providing full and open competition, as required by federal regulations. Questioned Costs: None at this time. Perspective Information: The condition noted applied to the subrecipient responsible for administering $1,525,133 of the Organization’s federal expenditures under ALN 14.251 and $900,000 of the Organization’s pass‐through funds expenditures under ALN 21.027. This represents 100% of the Organization’s subrecipient expenditures for the program. Accordingly, the lack of subrecipient procurement and debarment compliance is considered systemic to the subrecipient relationship and not an isolated instance. Recommendation: We recommend that the Organization strengthen its subrecipient monitoring procedures to include verification that subrecipients have procurement policies in compliance with Uniform Guidance and are performing suspension and debarment checks prior to entering into vendor agreements. The Organization should provide training and technical assistance to subrecipients to help them implement compliant procurement and debarment procedures. Reporting Views of Responsible Officials: The Organization agrees with the finding. The Organization has partnered with a firm to administer the development of the project and was unaware of its responsibilities to monitor the subrecipient relating to procurement and debarment. The Organization is in process of implementing procedures to ensure the subrecipient complies with the requirements of the Uniform Guidance.