Finding 16618 (2022-002)

Federal Programs Information: Funding Agency: Department of Health and Human Services Title: Head Start Assistance Listing Number: 93.600 Award Period: September 1, 2021 ? August 31, 2022, September 1, 2022 ? August 31, 2023 Funding Agency: Department of Health and Human Services Title: Indian Self-Determination Assistance Listing Number: 93.441 Award Period: January 1, 2022 ? December 31, 2024 Criteria: The Office?s policies and procedures contains various requirements, including policies requiring certain levels of administrative and legal review, obtaining one or more written bids at various dollar thresholds, and requiring different levels of approval based on dollar values. Uniform Guidance regulations section CFR 200.318(a) and CFR 200.320(a) state, the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurement conform to applicable Federal law and the standards identified. Condition: For Head Start, in our selected sample of 41 expenditures, we noted an expenditure of $208,932 that required either a sole source form or three written bids, and a legal review per the Office?s policy. These forms were not obtained. There was sole source justification; however, it was written by the vendor. The Tribal Council approved the purchase, but the resolution didn?t mention the vendor and/or the need to sole source the purchase. For Indian Self-Determination, in our selected sample of 40 expenditures, we noted an expenditure of $7,772 that did not have the required three written bids, an expenditure for $15,331 that did not have the required governor?s signature, and an expenditure that was approved for $365 but was later revised to $640 without any additional approvals. Questioned Costs: None. Context: 4 of 81 transactions tested across these two programs were missing documentation required by the Office?s procurement policy. Cause: The Office?s policies and procedures were not always being enforced or being followed. Additionally, the Office?s procurement policy requires sole source documentation for certain expenditures and contracts where the bidding process is bypassed, but the Office has not developed such a form. Effect: The Office was not in compliance with procurement standards and made payments during the year that were in violation of their policy. Auditors? Recommendation: We recommend the Office adhere to the procurement policy that it has developed, and we recommend a sole source form be generated that conforms to the requirements of the procurement policy. Management?s Response: For Head Start ? The Office?s procurement policy allows for sole source procurement if Tribal Council specifically authorizes its use. For the Head Start expenditure of $208,932, Tribal Council Resolution 08-2021-36 specifically approved this expenditure. The Office?s procurement policy does reference a sole source form. However, a sole source form was never created when the procurement policy was approved by Tribal Council. Therefore, a memo justifying the sole source procurement was accepted as sufficient documentation and justification of the sole source procurement. Because this was a sole source procurement, three written bids were not required. Also, legal review is not required for this expenditure because it is a purchase of goods. Legal review is only required for purchase of services above a certain threshold. The Office is in the process of updating its procurement policy and will create a sole source justification form in connection with the update. For Indian Self-Determination ? The Office acknowledges the lack of three written bids for a $7,772 expenditure. Only one written quote was obtained for this purchase. The Office also acknowledges the lack of Governor?s signature on a $15,331 purchase requisition. A new Administrative Assistant issued this purchase requisition and was not properly trained on obtaining Governor?s signature for all purchase requisitions greater than $5,000. It should be noted that Governor signed the check related to this expenditure so was able to see the purchase at that time. The Office also acknowledges a revision was not made to a $365 purchase requisition when an additional purchase was added to the approved purchase requisition.