Finding Text
The Madison County Fiscal Court Did Not Comply With Procurement Requirements Federal Program: Assistance Listing # 97.040 Chemical Stockpile Emergency Preparedness Program Award Number and Year: Multiple Years – CSEPP Grant Name of Federal Agency and Pass-Thru Agency: US Department of Homeland Security passed through Kentucky Department of Military Affairs Compliance Requirements: Procurement, Suspension, and Debarment Type of Finding: Material Weakness and Material Noncompliance Amount of Questioned Costs: None Opinion Modification: Qualified COVID Related: No The non-compliances below are also discussed in “Financial Statement Finding 2024-004”. The Madison County Fiscal Court receives funding as a part of the Chemical Stockpile Emergency Preparedness Program (CSEPP). As a part of this program, the fiscal court makes expenditures for various goods and services. The fiscal court did not consistently comply with procurement statutes governing competitive bidding and public advertisement as required by the grant. Thirty expenditures totaling $6,633,777 were tested and thirteen of these totaling $4,703,914 did not comply with procurement requirements. The exceptions were as follows: • One vendor was paid $4,528,784 under the assumption of a sole source exemption; however, the county has not adopted the Model Procurement Code, and therefore the exemption was not applicable. • One purchase, in the amount of $175,130, did not meet the public advertising requirements for sealed bids; the bid notice was posted only online and was not advertised in a newspaper as required by statute. The fiscal court lacked adequate internal controls to ensure purchases subject to bidding requirements were properly reviewed for statutory compliance before approval. County officials did not have sufficient knowledge or understanding of the specific documentation, advertising, and procedural requirements applicable to procurement. As a result of these weaknesses, the fiscal court did not comply with state procurement statutes and is not in compliance with the award requirements under the program. This increases the risk of noncompetitive procurement, favoritism, or improper vendor selection; overpayment for goods and services; and diminished transparency and accountability in the expenditure of public funds. Failure to follow program requirements and comply with bidding laws also undermines public confidence in the fiscal court’s financial management and oversight and could negatively affect future funding opportunities. 2 CFR § 200.318(a) requires non-federal entities to have and use documented procurement procedures, consistent with state and local laws and regulations and the applicable federal procurement standards, for the acquisition of property or services under a federal award. KRS 424.260(1) requires counties to advertise in a newspaper for bids on all purchases exceeding $40,000 for materials, supplies (excluding certain perishables), equipment, and contractual services other than professional services. This requirement applies unless the purchase qualifies for a specific exemption provided in statute, such as emergencies certified in writing. We recommend the fiscal court ensure procurements made with CSEPP funds comply with applicable federal, state, and local procurement requirements. The fiscal court should ensure purchases are competitively procured and properly advertised when required and that any exceptions to competitive procurement are applicable and adequately documented.