Finding 1202967 (2025-004)

2025-004 Improve Procurement Process for Child Nutrition Cluster Federal Agency: U.S. Department of Education Cluster/Program: Child Nutrition Cluster AL Number(s): 10.553/10.555/10.559/10.582 Award Year: 2025 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Uniform Guidance (2 CFR § 200.318–200.320) requires recipients of federal funds to follow their own documented procurement procedures, which must conform to applicable federal and state laws and promote full and open competition. For small purchases, Uniform Guidance and School policy require obtaining price or rate quotations from an adequate number of qualified sources, which per School policies is at least three. Additionally, proper contract documentation must be maintained for vendor relationships. Condition and Context Of the three vendors tested for procurement transactions under the Child Nutrition Cluster program, sufficient support could not be provided for one small purchase selection. School policy requires at least three quotes for small purchases; however, only two quotes were consistently obtained from vendors throughout the year. Each month, only two vendors provided quotes and the lowest-priced vendor was selected to supply produce. Further, no contracts were in place with the vendor supplying the produce. Effect or Potential Effect Noncompliance with policies and procedures regarding required number of quotes and maintaining formal contracts with vendors increases the risk of noncompliance with federal procurement requirements, lack of competition, and unallowable costs. Questioned Costs Due to the condition noted above, we were unable to determine if costs of $241,737 charged to the grant were allowable. Cause The School Department did not implement adequate controls to ensure compliance with its procurement policy for obtaining sufficient quotes and did not formalize vendor relationships with contracts as required. Recommendation The School Department should strengthen its procurement controls by ensuring that the required number of quotes are obtained and documented for all small purchases, in compliance with School policy and Uniform Guidance. The School should also implement procedures to ensure that contracts are in place with all vendors providing goods and services to the program. Views of Responsible Official and Planned Corrective Action Management’s views and Corrective Action Plan are included at the end of this report after the summary Schedule of Prior Year Findings.