Finding Text
Finding 2023-002: Procurement Federal Agency: United States Department of Agriculture Federal Program: Foreign Market Development Cooperator Program (FMD) Assistance Listing Number: 10.600 Pass-through Entity, if Applicable: None Award Identification Number and Year: F23GXCHSHO, F23GXCHDES, F23GXWWDES, F23GXSTNDS, F22GXEVALU Criteria or Specific Requirement: In accordance with the Organization's policy and 2 CFR 200.320 "Procurement Methods", price or rate quotations must be obtained from an adequate number of qualified sources for purchases over the applicable threshold. The Organization's guidelines include requirements to conduct an appropriate form of competition every three years on all multi-year contracts that are governed by the contracting guidelines. Also per the policy, contracts for market representation are not required to be re-competed after the initial reward. Instead, the performance of market representation must be evaluated and documented by the Organization annually to ensure that the terms of the contract are being met in a satisfactory manner. Condition: We noted opportunities to strengthen procurement documentation. In one instance, the selection analysis was not dated or formally approved and did not clearly identify the contract to which it related. In another instance, while documentation indicated that a request for proposal (RFP) was issued, no additional evaluation documentation or award conclusion was retained. Additionally, we noted an instance in which a market representative, for which re-competition is not required after the initial award, engaged under the USDA Market Access Program (MAP) was utilized to provide logistics support services, with costs charged to the Foreign Market Development (FMD) program.Based on discussions with management, logistics coordination is included within the scope of the China market representative’s original MAP contract. As such, these services were considered ancillary to the representative’s role and exempt from separate procurement requirements. However, contemporaneous documentation did not clearly demonstrate the formal rationale supporting the use of a noncompetitive procurement method under the FMD program. Strengthening documentation in this area would improve transparency and support compliance with applicable Federal requirements. Cause: Controls over procurement documentation and periodic compliance review were not sufficiently formalized to ensure consistent alignment with Uniform Guidance requirements. Effect: There is a risk that the Organization will not perform proper evaluation of each element of cost to determine reasonableness. Questioned Costs: None noted. Context: Our audit procedures consisted of statistical sampling as well as substantive testwork over various samples of expenditures, and were deemed to be representative of the population for the fiscal year under audit. Identification as a Repeat Finding, if Applicable: This is not a repeat finding. Recommendation: We recommend the Organization strengthen its procurement documentation and compliance procedures to ensure alignment with 2 CFR Part 200, as well as other applicable program guidelines. Specifically, the Organization should: Ensure all selection analyses are dated, formally approved, and clearly reference the applicable contract. Retain complete procurement files, including RFP documentation, evaluation criteria, scoring or comparative analyses, and documented award determinations. Implement a standardized procurement checklist to promote consistent documentation of the procurement rationale, selection process, and price reasonableness. For services provided by market representatives that are outside the original scope or are separately identifiable, perform appropriate competitive procurement procedures or clearly document the justification for a noncompetitive approach. Strengthening these procedures would enhance transparency, improve audit defensibility, and reduce the risk of questioned costs.