Finding 1240644 (2025-005)

2025-005 Finding – Federal Award Type: Material Weakness in Internal Control over Compliance and Noncompliance – Procurement Criteria / Requirement: In accordance with 2 CFR 200.318(a), non-Federal entities must use and maintain documented procurement procedures consistent with applicable Federal standards. 2 CFR 200.318(i) requires recipients to maintain records sufficient to detail the history of each procurement, including the rationale for the method of procurement, contractor selection, and the basis for the contract price. In addition, 2 CFR 200.318(h) requires recipients to award contracts only to responsible contractors possessing the ability to successfully perform under the terms and conditions of the proposed procurement. As part of this responsibility, recipients should verify that contractors are not suspended or debarred from participating in Federal programs prior to awarding a contract. Condition / Context: The Organization did not have a documented procurement policy that addressed the procurement requirements of the Uniform Guidance. During audit testing, one procurement for ecological restoration services was selected for review. We noted that the Organization solicited proposals from multiple qualified vendors and utilized an evaluation methodology to determine the contract award. However, documentation supporting the procurement process was not retained by the Organization. Supporting documentation was obtained through email records maintained by a former employee rather than from the Organization's procurement files. Additionally, the Organization did not maintain documentation demonstrating that the selected contractor had been verified as not suspended or debarred prior to contract award. Cause: The Organization had not established documented procurement procedures or implemented controls to ensure procurement transactions were adequately documented and retained. In addition, procedures were not in place to document verification that contractors were eligible to receive Federal awards. Effect: The lack of documented procurement procedures and supporting procurement records increases the risk that procurement activities may not comply with Uniform Guidance requirements and limits the Organization's ability to demonstrate that contracts were awarded through a fair, competitive, and compliant procurement process. Additionally, failure to document suspension and debarment verification increases the risk of contracting with an ineligible vendor. Questioned Costs: None. Recommendation: We recommend the Organization develop and implement a written procurement policy that complies with the Uniform Guidance procurement standards. The policy should require documentation of each procurement transaction, including the procurement method used, solicitation process, evaluation and selection criteria, contract award decision, basis for contract pricing, and retention of all supporting documentation. In addition, management should implement procedures to verify and document that contractors are not suspended or debarred prior to contract award and retain this documentation within the procurement file. Management’s Response: Management concurs with the finding and will implement effective internal controls over Procurement.