Finding Text
Finding 2025-102 Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553; 10.555 Federal Award Identification Number and Year: 256PA332N1199 - 2025 Pass-Through Agency: Pennsylvania Department of Education Pass-Through Number(s): N/A Award Period: July 1, 2024 through June 30, 2025 Finding Type: Significant Deficiency in Internal Control Over Compliance and Noncompliance – Procurement and Suspension/DebarmentCondition: The District procured milk products for its Child Nutrition Program in excess of the $23,800 bidding threshold without obtaining formal competitive bids, as required. Furthermore, the District did not perform or document verification of the selected vendor’s suspension or debarment status prior to awarding the procurement. Criteria: The District must comply with federal procurement standards under the Uniform Guidance when using funds from the school food service account. Procurement transactions must provide full and open competition, sealed bids or proposals are required for procurements exceeding the applicable threshold, and records sufficient to detail the history of each procurement must be maintained. The Pennsylvania Public School Code required formal competitive bidding for purchases exceeding $23,800 during the period under audit. In addition, the District is prohibited from entering into covered transactions with parties that are suspended, debarred, or otherwise excluded from federal programs, and must verify exclusion status through a SAM.gov search, vendor certification, or contract clause prior to award. The District is also required to maintain effective internal control providing reasonable assurance that the federal award is managed in compliance with applicable requirements. Context: Cumulative milk purchases from the vendor exceeded the formal bidding threshold during the fiscal year. The District was unable to provide procurement history documentation required by Uniform Guidance or SAM.gov search results, a vendor certification, or a contract clause evidencing exclusion verification for 2 out of 7 vendors in our procurement and suspension and debarment sample. No indication was noted that the vendor was in fact excluded or that the price paid was unreasonable. Cause: The District did not adhere to procurement procedures conforming to federal procurement standards under the Uniform Guidance and applicable Pennsylvania bidding thresholds, does not monitor cumulative vendor expenditures against applicable bidding thresholds, and has no procedure requiring suspension and debarment verification to be performed and retained prior to award. Food service and business office personnel have not received targeted training on federal procurement standards. Effect: Noncompliance with USDA, Uniform Guidance and Pennsylvania procurement requirements increases the risk of noncompetitive pricing for federally reimbursed food purchases and of contracting with a suspended or debarred vendor and may result in questioned costs or disallowances under the National School Lunch Program or findings during Pennsylvania Department of Education or USDA administrative reviews. Repeat Finding: No Recommendation: We recommend the District adhere to written federal procurement procedures conforming to Uniform Guidance and applicable Pennsylvania bidding thresholds and review those procedures annually for threshold adjustments. The District should implement a process to track cumulative purchases by vendor and commodity, conduct and document formal competitive bidding for purchases exceeding the threshold, retain procurement history documentation sufficient to federal procurement standards under the Uniform Guidance, and obtain and retain suspension and debarment verification prior to each contract award. Targeted training should be provided to food service and business office personnel on USDA procurement requirements and Pennsylvania bidding thresholds. Views of Responsible Officials: The District will adhere to written procurement procedures for Child Nutrition purchases conforming to the Uniform Guidance and Pennsylvania bidding thresholds, monitor cumulative vendor expenditures against those thresholds, conduct formal competitive bidding for purchases exceeding the threshold, and perform and retain suspension and debarment verification for all applicable vendors prior to award. Training will be provided to food service and business office personnel on federal procurement requirements.