Finding 2162 (2022-002)

Significant Deficiency

Requirement

Questioned Costs

Year

2022

Accepted

2023-11-20

Audit: 3729

Organization: Biostl (MO)

Auditor: Rubinbrown LLP

AI Summary

Core Issue: The Organization failed to follow federal procurement rules, exceeding the $10,000 threshold without proper procedures and did not verify contractor eligibility regarding suspension or debarment.
Impacted Requirements: Non-compliance with the Uniform Guidance on procurement and contractor eligibility could lead to hiring unqualified or ineligible contractors.
Recommended Follow-Up: Management should enhance internal controls for procurement processes and ensure all contracts include suspension and debarment language, along with timely report submissions.

Finding Text

Finding 2022-002 Significant Deficiency: Procurement and Suspension and Debarment – Compliance and Control Finding ALN 11.020 – Economic Development Administration Federal Agency: U.S. Department of Commerce Pass-Through Entity: N/A - Direct Award Criteria Or Specific Requirement: The Uniform Guidance requires the Organization to adhere to federal procurement requirements when expending federal funds under the project. The Organization also must adhere to federal requirements to ensure that its contractors have not been suspended or debarred from receiving federal funds. Condition: The Organization procured services with one vendor in an amount in excess of the $10,000 micropurchase threshold where the procurement process was not followed. Additionally, the Organization did not ensure that its contractors have not been suspended or debarred from receiving federal funds by either including appropriate language to this effect within the contract or determining that the contractors were not included within the suspension and debarment listing within the EPLS database. Cause: The Organization’s internal control in place (review of reports by a supervisory employee) failed to ensure that procurement and suspension and debarment procedures were followed. Effect: The Organization could contract with a contractor who is either not the most qualified and/or lowest cost provider, or who is suspended or debarred. Context: Of three contracts selected for procurement testing, one contract had not gone through the procurement process. Additionally, none of the three contracts had been subjected to procedures to ensure the contractor was not suspended or debarred. Questioned Costs: None. Identification As A Repeat Finding: Not applicable. Recommendation: We recommend that management evaluate their existing internal control for the review of reports, and consider enhancing it to ensure that all reports are submitted by applicable deadlines. Views Of Responsible Officials: Along with strengthening of reporting, the hiring of the dedicated Grants Coordinator position additionally improved controls related to procurement. Updated internal forms to document purchasing and classify procurement requirements were established and integrated with project management tools; new procurement templates were established; and improved repositories for cataloguing procurement materials and invoices were established. Additionally, moving forward, the suspension and disbarment language will now be included specifically in all contracts and has been added into the contract template.

Corrective Action Plan

Finding No. 2022-002 Significant Deficiency Personnel Responsible For Corrective Action: Mike Higgins, Vice President of Development, Christina Green, Vice President of Finance and Human Resources, Procurement and Compliance Officer, to be hired, Grant Manager, to be hired Anticipated Completion Date: Completed Corrective Action Plan: Along with strengthening of reporting, the hiring of the dedicated Grants Coordinator position additionally improved controls related to procurement. Updated internal forms to document purchasing and classify procurement requirements were established and integrated with project management tools; new procurement templates were established; and improved repositories for cataloguing procurement materials and invoices were established. Additionally, in 2023, as noted above, BioSTL created a new position to ensure internal programmatic and financial control for grants – initiating the hiring of a new Grants Manager role that has already been posted to our website and recruiting has begun. This role will have more dedicated time and responsibility for internal controls and be responsible for oversight and effectiveness of all internal controls – above and beyond existing and previous supervisory review from the VP, Development and SVP, Programs. In 2024, a Procurement and Compliance Officer role is being added to further ensure internal controls for all contracts are adhered to and to provide further structure around the processes. The required language provided by the EDA is included in all BioSTL contracts as specifically noted by the EDA. There is not a call out specifically to suspension and disbarment, however, the language provided by the EDA entails these aspects. Moving forward, the suspension and disbarment language will now be included specifically in all contracts and has been added into the contract template.

Other Findings in this Audit

2161 2022-001

Significant Deficiency
2163 2022-002

Significant Deficiency
578603 2022-001

Significant Deficiency
578604 2022-002

Significant Deficiency
578605 2022-002

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
11.307	Economic Adjustment Assistance	$609,222
11.020	Economic Development Administration - Center for Defensive Medicine	$417,982
11.024	Build to Scale	$79,215
11.020	Economic Development Administration	$70,625