Finding Text
Federal Program Information: Assistance Listing Number (ALN): 14.251 Federal Program Name: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Federal Agency: U.S. Department of Housing and Urban Development Passed-through Entity: Not applicable Federal Award Number: B-23-CP-CA-0189 Federal Award Year: 12/29/2022 - 8/31/2031 Compliance Requirement: Suspension and Debarment Criteria or Specific Requirements: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended, debarred, or otherwise excluded. Covered transactions include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000, or as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a passthrough entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. To verify vendor eligibility, the non-federal entity must confirm that covered transactions with an entity at a lower tier are not suspended or debarred or otherwise excluded. This verification may be accomplished by: 1. Checking SAM.gov Exclusions; or 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person. Condition: During the audit, the management was unable to provide documentation demonstrating that vendor eligibility was verified prior to contract execution for two of three sampled vendors. Questioned Costs: None. Cause: LYRIC’s verification procedures were consistently performed as part of its procurement workflow; however, the procedures did not address the specific federal requirements for vendor vetting, resulting in the absence of required supporting documentation for the sampled vendors identified during the audit. Effect: The absence of required documentation constitutes noncompliance with federal requirements and increases the risk that contracts could be awarded to ineligible vendors. Recommendation: We recommend that management strengthen its internal controls and procedures to ensure that vendor eligibility is verified prior to award of contracts or procurement transactions, and that required documentation is maintained evidencing the verification procedures performed. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this finding. LYRIC will implement the following corrective actions: (1) develop and adopt a written procurement policy that requires SAM.gov exclusion verification for all covered transactions at or above $25,000, as well as all subrecipient transactions regardless of amount; (2) create a standardized SAM.gov verification checklist requiring staff to print or save a screenshot of the SAM.gov search result and retain it in each vendor's contract file as documentation of verification; (3) designate the Contracts Manager as responsible for confirming that debarment documentation is completed and filed before any contract is executed; and (4) train all staff involved in procurement on suspension and debarment requirements under 2 CFR Part 180. However, please note that the appropriate Bids were held prior to the selection of the vendors and the vendors provided all the required validations before being contacted. Responsible Official and Position: Ana Rubio, Director of Finance, and Laura Chavez, Contracts Manager Expected Implementation Date: July 1, 2026