Finding Text
Finding: Failure to adequately document adherence to procurement compliance requirements Criteria: Per the Office of Management and Budget Compliance Supplement (2 CFR Part 200, Appendix XI), procurement is a relevant compliance requirement for recipients of federal funding under the Unaccompanied Children Program. The recipient must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Further, they must follow proper procurement procedures. • Procurement records. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. • Formal procurement methods. Formal procurement methods are required when the value of the procurement transaction under a Federal award exceeds the simplified acquisition threshold of the recipient or subrecipient. Formal procurement methods are competitive and require public notice. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT) ($250,000), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include micro-purchases (generally, the acquisition of supplies or services whose aggregate amount does not exceed $10,000) and small purchases (the acquisition of property or services where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.Condition and Context: During our audit, we identified significant expenditures categorized as Cleaning Expense and Repairs and Maintenance charged to the Unaccompanied Minor Programs paid to one vendor (“the Contractor”). Review of the Cayuga Centers website shows that a member of the Board of Directors during the period under audit was also the owner of the Contractor. We inquired with management if the Organization went out to bid on the renovations charged to repairs and maintenance in the current year. Management noted that at the start of the UC Transitional Contract, the President at that time met with several vendors regarding work to be done on the building. As the Contractor was already doing other work for the building, the President made the decision to continue using the Contractor. The President has since separated from the Organization and management was unable to provide any official documentation regarding bid/price comparisons made. The Organization provided emails dated throughout 2014 which included fragmented information regarding management contacting contractors at that time. The information provided was not sufficient to support the assertion that management followed proper procedures with respect to obtaining bids for significant procurement activities in fiscal year ended June 30, 2024. In addition to the renovations, the total amounts paid for repairs, security, and maintenance exceeded the micro-purchase threshold and therefore should have documentation regarding the procurement decisions. Amounts charged to the grant are listed below. Cause: The Organization was unable to provide proof of proper procurement procedures being followed for expenditures paid to the Contractor due to the former President separating from the Organization and not maintaining relevant documentation. Result: Amounts paid to the Contactor for renovations are included in the Summary of Unallowable Costs. See finding 2024-011. Amounts paid to the contractor for repairs, security, and maintenance are included in the Summary of Questioned Costs for failure to adequately document the use of proper procurement procedures. In several instances, these expenses also resulted in the Organization going over the total approved budget by cost category. See the Summary of Questioned Costs for detail. Recommendation: We recommend the Organization establish procedures to review significant recurring expenditures to ensure they are following the procurement procedures as required under the Code of Federal Regulations and Compliance Supplement.