Finding Text
Federal Agency: U.S. Department of Transportation Federal Program Name: Enhanced Mobility of Seniors and Individuals with Disabilities Assistance Listing Number: 20.513 Federal Award Identification Number and Year: PTD0725-01 (2023); KC001184 (2024); PTD1111 (2025) Pass-Through Agency: Washington State Department of Transportation Pass-Through Number(s): PTD0725-01; KC001184; PTD1111 Award Period: July 1, 2023 through June 30, 2027; June 1, 2024 through May 1, 2029; July 1, 2025 through June 30, 2027 Type of Finding: Material Weakness in Internal Control over Compliance – Procurement, Suspension and Debarment Other Matters – Non-Compliance with Procurement, Suspension and Debarment Criteria or specific requirement: Per OMB UG 200.320(a)(2)(i), "if simplified acquisition procedures are used [for the procurement of small purchases], price or rate quotations must be obtained from an adequate number of qualified sources." Additionally, when a recipient or subrecipient enters into a covered transaction, the recipient or subrecipient must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification must happen prior to entering into the covered transaction. Condition: During testing of procurement transactions, we noted that Sound Generations did not consistently follow its documented procurement procedures. For one procurement, Sound Generations did not obtain the required number of competitive quotes prior to vendor selection. In addition, documentation supporting vendor selection and price reasonableness was not maintained. In addition, we noted that Sound Generations did not retain the documentation showing the result of verification that the selected vendor was not suspended or debarred. Questioned costs: None. Sound Generations failed to maintain documentation supporting compliance with federal procurement requirements for one transaction. Because it was not possible to reconstruct the procurement process or determine whether compliant vendor would have offered different pricing, the audit could not quantify the amount of questioned costs resulting from noncompliance. Sound Generations did not perform and document the required suspension and debarment verification procedures prior to entering the covered transaction. During audit testing for one transaction, we verified that the vendor was not suspended or debarred; however, the auditor was unable to determine the vendor's status as of the contract execution date. Accordingly, while a compliance exception exists, no questioned costs were identified. Context: A procured vendor was selected based on a prior relationship with the vendor; however, documentation was not maintained to reflect the decision for said vendor's selection. It was acknowledged that there are other qualified vendors available that should be considered for documenting vendor pricing and fair and reasonable selection moving forward. For a separate procurement for a covered transaction, the organization was unable to provide documentation demonstrating that it verified the vendor was not debarred or suspended prior to contract execution. Cause: This was overlooked by the Director of Transportation and Controller, who were responsible for reviewing to ensure procurement and suspension and debarment procedures are in place and appropriately followed. Effect: Federal funding may be used for procurements that are not the most advantageous for the Federal program, or covered transactions could be entered into with entities that are federally suspended or debarred. Repeat Finding: No. Recommendation: Management at Sound Generations should review its existing control structure and ensure that there are adequate processes and controls to ensure the correct procurement methods are used and that documentation of quotes, bids, vendor evaluations, and price analysis is appropriately maintained. We also recommend Sound Generations follow its policies and procedures and ensure suspension and debarment checks are performed on a timely basis for all covered transactions. Views of responsible officials and planned corrective actions: Please see the attached Management’s Corrective Action Plan.