Finding Text
Federal Agency: Department of Transportation Federal Program Name: Highway Planning and Construction Cluster (HPCC) Assistance Listing Number: 20.205 Award Period: January 1, 2022 ? December 31, 2022 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a passthrough entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. 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. This verification may be accomplished by (1) checking SAM exclusions, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: During our testing of internal control over suspension and debarment for HPCC, we noted the City did not have effective control over compliance. Questioned costs: None. Context: In our sample of five cases, there were five instances where the City did not have evidence of verification the entity was not suspended or debarred prior to entering into a covered transaction with the entity. The County did provide evidence that the verification occurred subsequent to payment. Cause: The City did not have adequate controls in place to prevent it from entering into covered transactions with entities that may be suspended or debarred. Effect: The City could enter into a transaction with an entity that is suspended or debarred and inappropriately distribute program funds. Repeat Finding: No. Recommendation: We recommend that the City utilize standard forms or templates for its Requests for Qualifications and contracts with vendors to document verification that parties are not suspended or debarred prior to entering into a covered transaction with a vendor or subrecipient. Views of responsible officials: There is no disagreement with the audit finding.