Finding Text
SECTION 3 ? FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding 2022-002 Debarred and Suspended Vendors Condition: The Organization?s did not develop and perform procedures to ensuring staff verified the suspension and debarment status of two contractors paid $25,000 or more, all or in part with federal funds. Cause: Suspension and Debarment Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Organization enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended, debarred or otherwise excluded. The Organization may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The Organization must perform this verification before entering into the contract or, in this specific case, prior to charging the costs to a federal award, and it must keep documentation demonstrating compliance with this federal requirement. The Organization did not have adequate controls and did not verify that the two contractors were not suspended or debarred before charging the costs to the program. Criteria: Title 2 CFR Part 180, OMB, Guidelines to Agencies on Governmentwide Debarment and Suspension (No procurement), establishes non-procurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689. Pacific Mountain Workforce Development Council, Contracts 102-TCC-BS-PY21, 102-TC-PEC-PY21, 102-TCC-CY-BS-PY21: 13. The Contractor certified that it is in compliance with and must note be, and shall not contract with individuals or organizations which are debarred, suspended, or otherwise excluded from or ineligible from participation in the Feder Assistance Programs under Executive Order 12549, and ?Debarment and Suspension?, codified at 29 VFR part 98. Contractor must provide a signed statement, attached to this Agreement, that it is complying with the requirements of this section. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Effect: The Organization did not obtain a written certification, insert a clause into the contract, or check SAM.gov to verify the contractor was not suspended or debarred. Without this verification, the City increases its risk of providing federal funds to contractors that are excluded from participating in federal programs. Any payments the City made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. We verified the contractor was not suspended or debarred. Therefore, we are not questioning the related costs. Recommendation: Develop internal control policies to ensure contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging their costs to the program and documenting the verification. This can be added to service contracts with a written certification. Management?s response: Management agrees with this recommendation and have taken steps to develop and implement proper internal controls. Person Responsible: Finance Officer and Program Managers