Finding Text
Subject: COVID-19 Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2025 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness Criteria: Federal regulations 2 CFR section 200.318 through 200.327 and 2 CFR 180.300 require the City to: 200 CFR.318 (a): The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. 200 CFR.320 (b-c) states in part: Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require the following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (3) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate Finding 2025-001 (Continued) Criteria (Continued) 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.” Condition: An effective system of internal controls was not in place at the City to ensure compliance with requirements related to the Procurement and Suspension and Debarment compliance requirement. Cause: Management had not established and implemented a system of internal controls and written procedures to ensure compliance with the Procurement and Suspension and Debarment compliance requirement, including the use of formal procurement methods when required and documenting suspension and debarment verification for applicable contracts. Effect: The failure to design and implement an effective system of internal controls enabled noncompliance with the Procurement and Suspension and Debarment compliance requirement to occur and go undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could have resulted in questioned costs or the loss of federal funds to the City. Questioned Costs: There were no questioned costs identified. Context: There was one procurement selected for testing for which The City did not follow federal procurement requirements for a professional services contract totaling approximately $442,200, which exceeded the City's small purchase threshold of $10,000. The City contracted with a firm to perform the design services for the Ohio River Greenway Trail Design Project; however, a formal procurement method was not used for the purchase as required by the federal procurement requirements outlined in 2 CFR § 200.320. Additionally, for the same contract, representing the procurement selected for testing, the City did not document that it verified the contractor was not suspended or debarred from participation in federal award programs prior to awarding the contract exceeding $25,000, as required by 2 CFR § 180.300. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the City's management establish and implement written federal procurement policies to supplement its organizational policies and develop a system of internal controls and written procedures to ensure compliance with grant agreement requirements and the Procurement and Suspension and Debarment compliance requirement. We further recommend that management document the use of the appropriate procurement method and perform and retain documentation of suspension and debarment verification for all covered transactions. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.