Finding Text
Program: Magnet Schools Assistance (Assistance Listing No. 84.165)
Compliance Requirement – Procurement, Suspension and Debarment
Finding Type: Material Noncompliance / Material Weakness in Internal Controls over Compliance
Criteria: 2 CFR Part 180.300 requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity and its principals, as defined in 2 CFR section 180.995 and agency adopting regulations, are not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at https://www.sam.gov/ (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity. In addition, under 2 CFR 200.318, the non-Federal entity must have and use documented procurement procedures for the acquisition of property or services required under a Federal award
or subaward.
Condition: The Magnet Schools Assistance Program (MSAP) office did not verify that contracted vendors are not suspended or debarred or otherwise excluded from participating in program transactions prior to their participation. In addition, the MSAP Director entered into a contract for services without having the authority to do so, thus circumventing the procurement procedures of the District.
Cause: The MSAP office was unaware of the federal requirements related to verifying that contracted vendors are not suspended or debarred or otherwise excluded from participating in program transactions. In addition, it
appears that the MSAP Director felt her position provided her the authority to enter into contracts under her
program, regardless of standard District procurement procedures.
Effect: The failure to verify suspension and debarment can result in entering into prohibited transactions, leading to non-compliance and the loss of program funding. In addition, not following procurement procedures can result in prohibited transactions and the repayment of federal funds used.
Auditor’s Recommendations: The MSAP office should familiarize themselves with federal compliance requirements including suspension and debarment. In addition, the MSAP office should ensure all transactions
that do not qualify as “small-purchases” be procured by the District Procurement Department.
Views of Responsible Official: The MSAP program will undergo specific training related to federal compliance
including procurement, suspension and debarment. The District will implement additional monitoring procedures to ensure transactions that do not qualify as “small-purchases” be procured by the District Procurement Department.