Finding Text
2022?001?PROCUREMENT AND SUSPENSION AND DEBARMENT Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.048 Federal Award Identification Number and Year: Multiple Award Period: Project period 06/01/2018-05/31/2023; Budget period: Multiple Questioned Costs: Unknown Type of Findings ? Significant Deficiency in Internal Control Over Compliance of Federal Awards (E) ? Instance of Non-compliance Related to Federal Awards (F)Statement of Condition The Institute did not follow federal procurement and suspension and debarment regulations. Context We sampled 60 disbursements including payroll. Out of 17 vendors, 3 vendors were paid over $25,000 over the life of the grant. These vendors were not checked for suspension and debarment prior to the purchase goods and services. Out of 17 vendors, 4 had payments/contracts over the micro-purchase threshold of $10,000. Although some procurement selection processes were explained during the audit, sufficient documentation was not kept in the file explaining why sole source procurement was used or what type of unique qualifications the selected vendors had. One vendor was selected in 2018 and the documentation was not readily available. Criteria or Specific Requirement The Institute is required to verify that entities it plans to do business with are not excluded or disqualified under the federal procurement regulations and non-procurement common rule, or otherwise declared ineligible under statutory or regulatory authority. According to ?75.303 Internal controls of 45 CFR Part 75, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to ?75.327 General procurement standards of 45 CFR Part 75, the non-federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. According to ?180.300 of Subpart C?Responsibilities of Participants Regarding Transactions Doing Business with Other Persons of 2 CFR Part 180, when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. This can be done by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Cause Internal controls do not appear to have been adequately implemented due to lack of awareness of the federal requirement. Effect The Institute may have entered into contracts with ineligible contractors and exposed itself to potential liability and loss of federal funds. Recommendation We recommend the Institute: ? Document controls to ensure compliance with federal procurement regulation and its federal procurement policy. ? Implement policies and procedures to verify the suspension and debarment status of contractors before awarding contracts using federal funds. ? Include the required suspension and debarment clause in its contracts with contractors using federal funds. View of Responsible Officials We accept the finding. Although after the fact, all vendors subject to verification for debarment and suspension were verified on the SAM web platform and none were found. Therefore, no payments were made to any debarred or suspended vendor and there was no exposure to liability. Going forward, we will check all vendors that require this verification and will also include the suspension and debarment clause in all necessary contracts. Finding resolved timeline: The finding was resolved in September 2023. Designated employee?s name and position responsible for meeting this deadline: Bruce Young Candelaria ? President / Ricardo A. Colon Padilla, Vice-President