Finding Text
Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000513 Area: Procurement, Suspension and Debarment Questioned Costs: $509,463 Criteria: In accordance with 2 CFR 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with the Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, in accordance with 2 CFR section 180.300, entities that enter into covered transactions 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. Lastly, according to 2 CFR 180.220(b)(1), a procurement transaction is considered a cover transaction if the contract amount is expected or to equal or exceed $25,000. Condition: For nine (or 100%) of eight purchase orders or contracts selected for testing, with a total population of $509,463, FSMNG did not perform verification whether the individual or contractor was suspended or debarred prior to entering into a covered transaction. Cause: FSMNG does not have an established policy and procedure for verification of the suspension and debarment status of persons or contractors prior to entering into a covered transaction that is in accordance with 2 CFR 180.300. Effect or potential effect: FSMNG is in noncompliance with the applicable procurement and suspension and debarment requirements, questioned costs of $509,463 result. Identification of a Repeat Finding: 2023-018 Recommendation: FSMNG should establish policies and procedures that monitor the suspension and debarment status of vendors prior to entering into a covered transaction that is designed based on any of the suggested methods in 2 CFR 180.300. Views of Responsible Officials: Management agrees with the finding as it relates to the absence of an established written policy and procedure for verifying the suspension and debarment status of persons or contractors prior to entering into a covered transaction, but disagrees with the questioned costs. Management's position is that this constitutes an internal control deficiency and does not warrant questioned costs. With respect to the questioned costs of $509,463, management notes that the entire population from which the questioned costs derive comprises allowable transactions, and verification against the SAM.gov exclusions list confirmed that no vendor or contractor in the population was suspended, debarred, or otherwise excluded. The purpose of the verification requirement in 2 CFR 180.300 — to ensure that covered transactions are not entered into with excluded or disqualified parties — was therefore met in substance: no federal funds went to any excluded party. The costs did not result from a violation of the terms and conditions of the Federal award in substance, are fully supported by adequate documentation, and are not unreasonable. Under the definition of questioned costs in 2 CFR 200.1, including paragraph (3)(i), there should not be a questioned cost for this type of finding, and management accordingly requests that the finding be reported as an internal control deficiency with questioned costs of $0. As corrective action, the compliance team and all departments have now been guided on and made aware of this requirement, and suspension and debarment verification checks are being performed on an ongoing basis as part of the standard checklist of checks prior to entering into covered transactions. In line with the auditors' recommendation, this practice will be formalized into established policies and procedures for monitoring the suspension and debarment status of vendors, designed on the verification methods provided in 2 CFR 180.300. Summary Schedule — Remarks (2024-016): Repeat 2023-018. Finding agreed as an internal control deficiency — absence of a written S&D verification policy; questioned costs disagreed: the full population comprises allowable transactions and no vendor was on the SAM.gov exclusions list, so the substantive purpose of 2 CFR 180.300 was met — per 2 CFR 200.1, including paragraph (3)(i), questioned costs of $0 are warranted. Compliance team and all departments guided and aware; S&D checks performed on an ongoing basis as part of the standard checklist, to be formalized into policies and procedures per the recommendation.