Finding Text
Criteria: Under 2 CFR 200.318 through 200.320, non-Federal entities must maintain effective oversight and internal controls over the procurement process, use appropriate methods of procurement, provide for full and open competition, perform cost or price analysis when required, and maintain sufficient documentation to support procurement decisions and contract pricing. Condition/Context: The District charged certain expenditures to federal funds; however, because management was not aware, at the time the purchases were made, that the expenditures would be federally funded, the District did not apply the Uniform Guidance procurement standards under 2 CFR 200 to those purchases. As a result, procurement activities were not performed in accordance with applicable federal requirements, and the related procurement files did not consistently contain documentation supporting the procurement method used, full and open competition or justification for limiting competition, required cost or price analysis, and complete procurement history. Therefore, the control activities designed to ensure compliance with federal procurement requirements did not operate effectively. Effect: Major federal programs tested required procurement policies and specific competitive bidding procedures to comply with the use of awarded federal funds to the District. However, the District did use multiple vendors for each project, spreading the cost amongst competing companies, and used vendors that are widely engaged by all irrigation and drainage districts in the State or Arizona. Cause: Management was not aware, at the time the purchases were made, that the related expenditures would be charged to federal funds; therefore, management did not identify the need to apply the Uniform Guidance procurement standards under 2 CFR 200. Consequently, internal controls did not operate effectively to ensure procurements charged to federal awards complied with applicable federal procurement requirements and were supported by complete documentation, including the procurement method used, competition requirements, cost or price analysis, and procurement history. Recommendation: We recommend that management formally adopt amendments to their existing procurement policies to conform with U.S. Code of Federal Regulations, Title 2, Part 200, Uniform Administrative Guidance CFR Section 318(a). Additionally, we recommend management perform competitive procurement on all purchases made with federal funds. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding, see corrective action plan.