Finding No. 2023-009 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Award Number: H027A210106, H027A220106, H027A230106, H027X210106 Area: Procurement and Suspension and Debarment Questioned Costs: $102,862 Criteria: In accordance with 2 CFR Section 200.317, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds. PSS Procurement Rules and Regulations states the following: 1. § 60-40-210 Small Purchases • Purchases not exceeding $500 may be made without securing bids or price quotations if the Chief of Procurement and Supply considers the price reasonable. Such determination shall be made in writing and shall indicate: 1) the reason why price quotations were not sought; 2) the utility of the purchase; and 3) an explanation of why the price is reasonable under the circumstances. • Bidding is not required but is encouraged for procurement under $10,000. Price quotations from at least three vendors must be obtained and the selection based on competitive price and quality for procurement valued at under $10,000. Any price quotations obtained must be written, documented, and submitted to the Chief for approval. However, if it is an emergency and three price quotations are not practicable, the purchase shall function as an emergency procurement and follow § 60-40-220. 2. § 60-40-230 Competitive Selection Procedures for Professional Services: • Procurement Method – The services of accountants shall be procured as provided in this section except when authorized as a small purchase, emergency procurement, sole-source procurement or non-employment services contracts such as special education related services. • Policy – It is the policy to publicly announce all requirements for professional services and negotiate contracts on the basis of demonstrated competence and qualifications at a fair and reasonable price. The Chief Procurement Officer shall maintain files of current statements of qualifications of professional firms. Persons engaged in providing professional services may submit statements of qualifications and expressions of interests providing such types of services. Persons may amend these statements at any time by filing a new statement. • Public Announcement and Form of Request for Proposals – Adequate notice of the need for such services shall be given by the official with expenditure authority through a request for proposals. The request for proposals shall describe the services required, list the type of information and data required of each offeror and state the relative importance of particular qualifications. • Award – Award shall be made to the offeror determined in writing by the official with expenditure authority to be the best qualified based on the evaluation factors set forth in the request for proposals, and negotiation of compensation determined to be fair and reasonable. If compensation cannot be agreed upon with the best qualified offeror then negotiations will be formally terminated with the selected offeror. If proposals were submitted by one or more other offerors determined to be qualified, negotiations may be conducted with such other offeror or offerors, in the order of their respective qualification ranking, and the contract may be awarded to the offeror then ranked as best qualified if the amount of compensation is determined to be fair and reasonable. 3. § 60-40-560 Authority to Debar or Suspend • After reasonable notice to the person involved and reasonable opportunity for the person to be heard under the Administrative Procedure Act [1 CMC §§ 9101, et seq.], the Commissioner of Education after consultation with the Public School System legal counsel, shall have authority to debar a person for cause from consideration for award of contracts; and • The debarment shall not be for a period of more than three years. The Commissioner of Education, after consultation with Public School System legal counsel, shall have authority to suspend a person from consideration for award of contracts if there is probable cause for debarment. The suspension shall not be for a period exceeding three months. 4. In accordance with 2 CFR §180.220 and §180.300, entities that enter into a covered transaction with another person at the next lower tier for a contract amount that is expected to equal or exceed $25,000, entities must verify that the person with whom they intend to do business is not excluded or disqualified by: a. Checking SAM.gov Exclusions; or b. Collecting a certification from that person; or c. Adding a clause or condition to the covered transaction with that person. Condition: Of twelve expenditures tested, aggregating $114,356 of a total population of $1,156,858 in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 17%), transactions were procured under the $10,000 small purchases threshold; however, only one quotation was obtained. 2. For two (or 17%), contracts were procured through a competitive sealed proposal for professional services; however, the evaluation for and proposal submitted by the offeror was not provided for contract 00180716-OC. For contract 00190611-OC, the request for proposals outlining scope of work and proposal submitted by the offeror was not provided. 3. PSS does not verify whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300, prior to entering into a covered transaction for an amount equal to or exceeds $25,000 with award funds. No questioned costs are presented as the amount is questioned at Condition 2. Cause: 1. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs. 2. Lack of monitoring control procedures to ensure verification as to whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300 are performed, prior to entering into a covered transaction. Effect or potential effect: PSS is in noncompliance with applicable procurement and suspension and debarment compliance requirements and questioned costs of $102,862 result for Conditions 1 and 2. Identification as Repeat Finding: Finding No. 2022-013 Recommendation: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. 2. Establish and implement effective monitoring controls to ensure that all procurement regulations are complied with, including over the verification of excluded or disqualified persons or vendors pursuant to 2 CFR §180.220 and §180.300, prior to the PSS entering into a covered transaction. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.