Finding Text
Criteria or specific requirement: Federal regulations require that for acquisitions exceeding the simplified acquisition threshold, the nonfederal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b)(1); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source), but only when one or more of five circumstances are met in accordance with 2 CFR 200.320(c). Condition: For one of the four contracts tested, the Organization followed its internal policy allowing for preferred vendor selection, which states frequently used vendors can be vetted in advance of use and can eliminate the need for bids; however, the contract exceeds the simplified acquisition threshold and must follow formal procurement methods. Formal procurement methods are competitive and require public notice. The Organization did not meet the criteria in 2 CFR 200.320(c) for noncompetitive procurement. Context: Of the ten vendors that had expenditures greater than $25,000, we selected four vendors for procurement testing. One of the four vendors had a contract that exceeded the simplified acquisition threshold. The total value of the contract award is $663,190 over three years and the questioned costs during the year ended June 30, 2025 totaled $221,063. Effect: The Organization awarded a contract to a vendor that exceeded the simplified acquisition threshold. This project did not follow the required formal procurement process. Cause: There were ineffective controls in place during the period, along with lack of management oversight. Repeat finding: Yes, this is a repeat finding of 2024-002 from the prior year’s audit. The prior corrective action plan was not fully implemented. As the prior year audit was completed subsequent to June 30, 2025 the Organization did not have time to implement the corrective action. Recommendation: The Organization should ensure that all contracts exceeding the simplified acquisition threshold follow procurement methods outlined in 2 CFR 200.320. Additionally, the Organization should implement controls to verify and maintain documentation of contract approvals to ensure compliance with federal regulations under 2 CFR 200.320. Views of responsible officials: Management agrees with the auditor recommendation