Finding Text
31 CFR 19.305(a) states that Non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Department of the Treasury grants an exception under 31 CFR § 19.120. 31 CFR 19.200 identifies "covered transactions" as nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. A contract for goods and services awarded under a nonprocurement transaction (e.g. grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 31 CFR § 19.220. Generally, nonprocurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 31 CFR § 19.215. When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov/); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. The Village did not have the proper internal controls in place to verify that all entities, with whom the Village had entered into covered transactions, had not been suspended or debarred. During testing of the State Local Fiscal Recovery Fund program, we noted two vendors that had a payment of more than $25,000 in which the Village had no evidence of the vendors being checked for SAM exclusions, collected a certification from the vendor, or added a clause or condition identifying that the vendors were not suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for the covered transaction in the State Local Fiscal Recovery Fund program during Fiscal Year 2024. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred. The Village should establish and implement internal controls to help ensure that prior to contracting with vendors that will be paid with federal funds, the Village verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.