2024 – 012 - Procurement and Suspension and Debarment Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Public Housing Authorities (PHAs) that expend federal funds under the Public Housing Program are required to comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, including the procurement standards in 2 CFR Part 200, Subpart D, and the governmentwide nonprocurement suspension and debarment requirements in 2 CFR Part 180, as adopted and supplemented by HUD at 2 CFR Part 2424. Procurement Requirements The PHA must do the following: Maintain and follow documented procurement procedures for all procurement transactions that expend federal funds. The Public Housing Program are required to comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, including the procurement standards in 2 CFR Part 200, Subpart D, and the governmentwide nonprocurement suspension and debarment requirements in 2 CFR Part 180, as adopted and supplemented by HUD at 2 CFR Part 2424. Procurement Requirements The PHA must do the following: • Maintain and follow documented procurement procedures for all procurement transactions under federal awards, consistent with applicable State and local laws and the Uniform Guidance procurement standards (2 CFR § 200.318(a)). • Conduct procurements in a manner that provides for full and open competition, using only allowable procurement methods and avoiding practices that unnecessarily restrict competition (2 CFR §§ 200.318(d) and 200.319). 2024 – 012 - Procurement and Suspension and Debarment Procurement Requirements • Maintain written standards of conduct governing conflicts of interest (2 CFR § 200.318(c)). • Maintain oversight of contractors to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders (2 CFR § 200.318(b)). • Maintain records sufficient to detail the history of procurement, including rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price (2 CFR § 200.318(i)). • For procurements exceeding the Simplified Acquisition Threshold, perform a cost or price analysis in connection with every procurement action (2 CFR § 200.324). Suspension and Debarment Requirements HUD has adopted the governmentwide nonprocurement suspension and debarment requirements in 2 CFR Part 180, as supplemented by 2 CFR Part 2424, which apply to PHAs as participants in HUD covered transactions. Accordingly, the PHA must: • Ensure that federal funds are not used to enter into covered transactions with parties that are suspended, debarred, or otherwise excluded from participation in federal programs (2 CFR Parts 180 and 2424). • Establish and follow procedures to verify vendor eligibility, including consideration of the System for Award Management (SAM) exclusions framework, prior to entering into procurement transactions subject to the suspension and debarment requirements (2 CFR §§ 180.300, 180.320 and 2 CFR § 2424.300). Condition: During the testing of the Public Housing Program procurement and suspension and debarment activity, the following compliance and internal control deficiencies were noted: Procurement Of the 8 procurement transactions selected for testing: • 3 instances where the Authority was unable to provide or locate any documentation related to the contract, the payee, or the associated procurement process. • 1 instance where the client used MRO Cooperative Purchasing to select the vendor; however, the client did not download or retain the RFP, Addendum, Contracts, or SAM documentation, and the information is no longer available. Suspension and Debarment Of the 5 covered transactions (procurements ≥ $25,000) selected for testing: • 3 instances where the Authority did not have the supporting suspension and debarment (SAM) verification documentation evidencing that vendor eligibility was verified prior to entering into the covered transaction. • 1 instance where the verification date was not documented in the file Questioned costs: N/A 2024 – 012 - Procurement and Suspension and Debarment Context: Procurement Out of 8 procurement transactions tested, 5 contained errors as noted above. Suspension and Debarment Out of 5 suspension and debarment transactions tested, 3 contained errors as noted above. Cause: The Authority failed to retain and maintain adequate procurement documentation and did not have adequate internal controls in place to ensure that suspension and debarment verification procedures were consistently performed and documented prior to entering into covered transactions, in accordance with HUD rules and regulations and the Authority's procurement policy. Effect: The Authority is not in compliance with federal regulations regarding procurement and suspension and debarment requirements under the Uniform Guidance. The lack of documentation prevents verification that procurements were conducted competitively, that costs were reasonable, and that federal funds were not used to enter into covered transactions with suspended or debarred parties. Repeat Finding: No Recommendation: We recommend that the Authority designate an individual to maintain and retain all procurement documentation (including RFPs, addenda, contracts, cost analyses, and SAM exclusion searches) in a centralized file for each vendor, and to review each covered transaction prior to contract execution to confirm that suspension and debarment verification has been performed and documented in accordance with 2 CFR Part 200, Subpart D and 2 CFR Part 180. Views of responsible officials: There is no disagreement with the audit finding.