Finding Text
Coronavirus State and Local Fiscal Recovery Funds Criteria: Under 2 CFR 200.320(a), recipients and subrecipients may use informal procurement methods for small purchases when the value of the procurement does not exceed the Simplified Acquisition Threshold. However, small purchase procedures require the solicitation of price or rate quotations from an adequate number of qualified sources and documentation supporting the procurement decision. In addition, 2 CFR 200.318(a) requires recipients and subrecipients to maintain and use documented procurement procedures that conform to federal procurement standards and applicable state and local laws and regulations. Condition: During our review of procurement transactions charged to federal awards, we noted that the Town did not follow required small purchase (informal procurement) procedures for certain purchases. Specifically, for selected procurement transactions with values above the micro purchase threshold but below the Simplified Acquisition Threshold, the Town did not solicit price or rate quotations from an adequate number of qualified sources and did not retain documentation to support price reasonableness, as required by federal procurement standards. Universe/Population: Four contracts totaling $7,347,577 were subjected to compliance testing. For two of the four contracts totaling $90,955 that were below the Simplified Acquisition threshold were subjected to compliance testing. The Town did not solicit price or rate quotations from an adequate number of qualified sources for one contract and did not retain documentation to support price reasonableness, as required by federal procurement standards, for the other contract. Cause: The Entity did not have written procurement procedures or internal controls as required by 2 CFR 200.318(a). As a result, inconsistent application of small purchase requirements, including the failure to obtain and document required price or rate quotations and support for price reasonableness, occurred. Questioned Costs: No questioned costs were identified. Effect: Failure to follow small purchase procedures increases the risk that procurements are not conducted in a manner that ensures full and open competition and cost reasonableness. This noncompliance exposes the Town to potential questioned costs, cost disallowance, and increased federal or pass through oversight. Recommendation:. We recommend that the Town: 1. Update its written procurement policies and procedures to clearly define small purchase requirements, including quotation thresholds and documentation standards. 2. Require procurement staff to solicit and retain documentation of price or rate quotations from an adequate number of qualified sources for all small purchases. 3. Provide training to relevant personnel on federal procurement requirements under 2 CFR Part 200, including informal procurement methods. 4. Implement supervisory review of procurement files to ensure compliance prior to payment. View of Responsible Official: Management concurs with the finding.