Finding Text
2025-003 Improve Controls Over Special Education Procurement Federal Agency: U.S. Department of Education Program: Special Education Grants to States AL Number: 84.027/84.173 Award Year: 2025 Type of Finding Compliance – Procurement Internal Control over Compliance – Procurement – Significant Deficiency Criteria or Specific Requirement Under 2 CFR 200.318 and 200.320, non-federal entities are required to maintain adequate documentation supporting procurement decisions, including the method of procurement used; and justify and document the use of noncompetitive (sole source) procurement, including the reasons why competition was not feasible. Specifically, 2 CFR 200.320(c) permits noncompetitive procurement only under limited circumstances and requires proper justification and documentation. Condition and Context During testing of procurement transactions charged to the Special Education Grants to States program, we identified one instance in which the School Department utilized a sole source procurement method; however, no documentation was maintained to support or justify the determination that the vendor qualified as a sole source provider, in accordance with 2 CFR 200.320(c). Cause The School Department does not have sufficient internal controls in place to ensure that sole source determinations are appropriately evaluated and documented against Uniform Guidance criteria. Effect or Potential Effect The lack of documentation supporting sole source procurement increases the risk that procurement may not comply with federal requirements, competitive procurement processes may be inappropriately bypassed; and federal funds may not be used in a manner that ensures full and open competition. Questioned Costs No evidence of improper payment or unallowable costs was identified; therefore, no questioned costs are reported. Recommendation We recommend that the School Department develop and implement formal procedures requiring written justification for all sole source procurements. Ensure documentation clearly addresses the criteria under 2 CFR 200.320(c). Implement a review process to verify that procurement files include all required documentation prior to payment, and provide training to relevant personnel on federal procurement requirements under Uniform Guidance. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report.