Finding No.: 2024-022 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster (IDEA) Federal Award No.: H027A220011-22A, H027A220011-23A, H027A220011-24A Area: Procurement and Suspension and Debarment Questioned Costs: $48,663 Criteria: Section 200.317 of 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards states that, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. RepMar enacted Procurement Code Act, 2023, which took effect on October 1, 2023. RepMar’s new Procurement Code states the following: (a) Section 118 - Unless otherwise provided for in Section 119, all Government contracts shall be awarded by competitive sealed bidding. (b) Section 119(b) - A contract may be awarded for a supply, service, or construction item without competition when, under regulations, the Chief Procurement Officer, the head of a Procurement Entity, or a designee of either officer above the head of a Procurement Entity, or a designee of either officer above the level of the Procurement Officer determines in writing that there is only one source for the required supply, service, or construction item. (c) Section 119(c) - Any procurement not exceeding $50,000, or a lesser amount established by regulation, may be made in accordance with small purchase procedures promulgated in accordance with the Regulation. Ministry of Finance, Banking and Postal Services has declared that if small purchase procedures are used, price or rate quotations shall be obtained from three sources. Section 123 of the new Procurement Code stipulates that debarred, suspended, or sanctioned parties are ineligible to participate in solicitations or contract awards. Section 151 stipulates that regulations shall be issued to implement its provisions. 2 CFR 200.214 states that recipients and subrecipients are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. 2 CFR 180.300 states that when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified by doing the following: (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. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition 1: To date, Regulations have not been issued as required by Section 151 of the Procurement Code. Despite the absence of finalized implementing guidance, procurement officials applied the new Procurement Code thresholds in practice without adequate supporting regulations, documented procedures, or formally approved guidance to facilitate consistent and compliant implementation. Condition 2: For 9 (or 53%) of 17 procurement transactions tested, aggregating $61,863 of $261,862 in total transactions subject to procurement requirements, supporting procurement documentation was not sufficient to substantiate compliance with applicable procurement requirements as follows: Item # Fund# Encumbrance # Expenditure Amount Questioned Cost 1 10305 23/00001413 TRAVELMISS $ 1,818 $ 1,818 2 10305 23/00001507 BRV 21,000 21,000 3 10305 23/00001676PORDER 1,999 1,999 4 10305 23/00002745 TRAVELMISS 3,734 3,734 5 10305 23/00002923 TRAVELMISS 3,871 3,871 6 10305 23/00003339 TRAVELMISS 3,224 3,224 7 10305 23/00004864 BRV 2,868 2,868 8 10305 23/00002184PORDER 7,597 7,597 9 10305 23/00003157 TRAVELMISS 2,552 2,552 $ 48,663 $ 48,663 Condition 3: Documented evidence of compliance with Section 123 of the RMI Procurement Code, 2 CFR 200.214 and 2 CFR 180.300 regarding debarred, suspended, or otherwise excluded parties was not available. Cause: RepMar did not enforce adequate internal control policies and procedures over documentation of the procurement process to satisfy compliance with applicable procurement requirements. Further, RepMar lacks policies and procedures requiring verification of the status of an entity with which RepMar intends to enter into a covered transaction. Effect or Potential Effect: RepMar is in noncompliance with applicable procurement requirements. The reportable questioned cost is $48,663. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: Responsible personnel should require that documentation be adequate to comply with applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the rationale for contractor or vendor selection, and verification of whether an entity or person with whom RepMar intends to do business is not excluded or disqualified. Views of Responsible Officials: Condition 1. The Ministry disagrees with this finding. The revised procurement threshold of $25,000 to $50,000 became effective upon adoption of the Procurement Code of 2023 on October 1, 2023, as provided under Section 119(c) Small Purchases. A Regulation is not necessary to support this change. All other provisions of the Procurement Code remained in force and continue to govern procurement activities. Furthermore, an amended Procurement Code was endorsed by Cabinet in March 2026 and will be introduced to Parliament during the August session. Upon its adoption, the corresponding Regulation will be formally issued. Condition 2. Except for items #1 & #8, the Ministry of Finance agrees with the finding and will ensure that vendor selection and the justification for the selected vendor are clearly documented in all TMVs and BRVs to demonstrate compliance with procurement requirements. Condition 3. Same response as Finding No.: 2024-014 - Condition 3 Auditor’s Response: Condition 1: We acknowledge management’s disagreement; however, Section 151 of the Procurement Code requires adoption of Procurement Regulations, which has not occurred to date. Condition 2: We acknowledge management’s disagreement; however, supporting documentation was not provided by the agreed-upon deadline. Accordingly, based on the evidence available at the time of audit conclusion, the finding remains unchanged.