Finding Text
#2025-004: Grant Program: Department of Health and Human Services – Assistance Listing #93.696 – Certified Community Behavioral Health Clinic Expansion – Documented Procurement Procedures Condition: As a result of our audit procedures over the Procurement and Suspension and Debarment compliance requirement, we noted that the Center did not have documented procurement policies and procedures in place during the fiscal year under audit. Additionally, during testing of contracts funded by federal awards, we noted that the procurement contract did not clearly include required provisions related to debarment and suspension. We also noted that the Center had not established a documented conflict of interest policy applicable to procurement activities involving federal awards. Criteria: Uniform Guidance requires recipients and subrecipients to maintain and use documented procurement procedures for procurement transactions under federal awards. Procurement transactions are required to be conducted in a manner providing full and open competition and must include written standards of conduct covering conflicts of interest governing employees, officers, board members, and agents engaged in the selection, award, and administration of contracts. Procedures should be in place to ensure contractors are not suspended, debarred, or otherwise excluded from participation in federal programs. Context: The Center did not have a procurement policy in place during the fiscal year under audit. Additionally, the contract funded by federal awards did not clearly include the required debarment and suspension-related provisions. The Center also had not adopted written conflict of interest standards addressing procurement decisions and contractor relationships for federally funded activities. Cause: The Center had not established and implemented formal procurement procedures, including written standards of conduct and conflict of interest requirements, applicable to federal awards during the fiscal year under audit. Effect: The absence of procurement procedures, contractor eligibility verification, and documented conflict of interest standards increases the risk that procurement activities may not comply with federal requirements and that federal funds could be awarded to contractors that are suspended, debarred, or otherwise ineligible, or have relationships that could create actual or perceived conflicts of interest. No known or likely questioned costs were identified as a result of the control deficiencies noted above. Recommendation: We recommend that management continue to implement and strengthen its formal procurement policies and procedures to ensure compliance with federal procurement requirements. Procedures should require that federally funded procurement activities are documented and retained, including the method of procurement, basis for contractor selection, evidence of competition when applicable, and compliance with applicable federal contract provisions. In addition, management should implement procedures to verify contractor eligibility prior to entering into federally funded contracts by checking SAM.gov, obtaining appropriate contractor certifications, or including required suspension and debarment clauses in contracts, and document conflict of interest disclosures and related determinations. Management Response: See Corrective Action Plan.