Finding Text
Procurement and Suspension and Debarment – Lack of Documented Procurement Policy – Material Weakness in Internal Control Over Compliance U.S. Department of Health and Human Services: Health Center Program and American Rescue Plan Act Funding for Health Centers, ALN 93.224; Ending HIV Epidemic – Primary Care HIV Prevention, ALN 93.527. Criteria The Uniform Guidance requires non-federal entities to have documented procurement policies and procedures that reflect applicable federal, state, and local laws and regulations, as well as standards for the purchase of goods and services using federal funds. These requirements are intended to ensure full and open competition, proper cost management, and the allowability and allocability of costs charged to federal awards. In addition, effective internal controls require that procurement activities are properly documented and supported, including evidence of vendor selection, price or cost analyses, and contract terms, to ensure compliance with federal requirements and to support audit and monitoring activities. Condition and Context The Health Center did not have a formally documented procurement policy in place that complies with the Uniform Guidance requirements. During our audit, we were unable to obtain complete procurement documentation for transactions selected for testing, including evidence of vendor selection, competitive bidding, or price analyses. We also noted that searches for suspension and debarment was not completed or maintained to support the purchase of goods and services charged to federal awards. Cause Management did not establish and implement a documented procurement policy in accordance with the Uniform Guidance. In addition, management did not implement controls to ensure that procurement activities were consistently documented and retained. Effect or Potential Effect Without a documented procurement policy and compliance with federal standards, there is an increased risk of noncompliance with the Uniform Guidance requirements, including noncompetitive procurement practices, the potential for unallowable or unreasonable costs to be charged to federal awards, and a lack of fair and open competition. This condition may result in purchases above prevailing market rates, failure to obtain the best value, or conflicts of interest with vendors or contractors not being identified or addressed. Questioned Costs $74,888. Repeat Finding Yes (2023-011). Recommendation Management should develop and implement a formal, documented procurement policy that as a minimum complies with the Uniform Guidance, including requirements for full and open competition, vendor selection, cost or price analysis, and documentation of procurement decisions. This policy should be communicated to relevant personnel and consistently monitored and enforced. Management should also establish controls to ensure that all procurement transactions are properly documented and supported, including maintaining records of vendor selection processes, contracts, approvals, and basis for awarding purchases. In addition, management should suspension and debarment checks. Views of Responsible Officials and Planned Corrective Action See the attached response and corrective action plan.