Finding 33164 (2022-001)

Significant Deficiency
Requirement
I
Questioned Costs
-
Year
2022
Accepted
2023-03-30

AI Summary

  • Core Issue: The Air District failed to verify that a vendor was not suspended or debarred before contracting, and the contract lacked required provisions for the Clean Air Act and Federal Water Pollution Control Act.
  • Impacted Requirements: Compliance with 2 CFR Part 180 and 2 CFR Part 200, which mandate verification of vendor status and inclusion of environmental provisions in contracts over $150,000.
  • Recommended Follow-Up: Strengthen procurement controls to ensure proper documentation of vendor verification and inclusion of necessary contract provisions for federal funding compliance.

Finding Text

Program Identification Finding Reference Number: F-2022-001 Assistance Listing Number: 20.205 Federal Program Titles: Highway Planning and Construction Cluster (Significant Deficiency) Awarding Agency / Pass-Through Entity: U.S. Department of Transportation / California Department of Transportation Award Number: CML-6297 (008) / CML-6297 (009) Compliance Requirement: Procurement and Suspension and Debarment Criteria According to 2 CFR Part 180, 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, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. According to 2 CFR Part 200, Appendix to Part 200, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following: (G) Clean Air Act (42 U.S.C. 7401-7671q.) and the Federal Water Pollution Control Act (33 U.S.C. 1251-1387), as amended ? Contracts and subgrants of amounts in excess of $150,000 must contain a provision that requires the non-Federal award to agree to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act (42 U.S.C. 7401-7671q.) and the Federal Water Pollution Control Act as amended (33 U.S.C. 1251-1387). Violations must be reported to the Federal awarding agency and the Regional Office of the Environmental Protection Agency (EPA). Condition In our review of the procurement files for a vendor with material expenditures related to the program, we noted that the Air District was not able to provide documentation to prove that it verified that the vendor was not suspended or debarred at the time of the contract. However, we noted that this vendor was not suspended or debarred at the time of the audit. Additionally, in our review of the contract with this vendor, we noted that the contract did not contain provisions covering the Clean Air Act and the Federal Water Pollution Control Act as stated in the Criteria. Cause and Effect The District did not initially intend on utilizing this vendor as part of this federal program. As such, the procurement action was conducted without consideration to these federal guidelines. Subsequent to making the determination that the vendor would be used as part of the federal program, the District did not take the necessary action to ensure it is compliant with the stated federal guidelines. Questioned Costs Not applicable. This finding is considered a programmatic non-compliance issue as well as a significant deficiency in the internal control system over the procurement process. Recommendation We recommend the District strengthen its controls over the procurement process to ensure that the verification of suspension and debarment is properly documented, and that required provisions are included in contracts made with federal funds.

Corrective Action Plan

Air District Management concurs with the recommendation under F-2022-001. The Air District is currently reviewing its procurement processes and procedures against best governmental practices and will implement process changes that will require retention of backup documentation for debarment evaluations and include any needed provisions for contracts that are federally funded. The District anticipates implementation of the required process changes during calendar year 2023.

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

  • 609606 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
66.001 Air Pollution Control Program Support $2.33M
20.205 Highway Planning and Construction $1.62M
97.091 Homeland Security Biowatch Program $1.25M
66.034 Surveys, Studies, Research, Investigations, Demonstrations, and Special Purpose Activities Relating to the Clean Air Act $224,965
66.956 Targeted Airshed Grant Program $40,472