Finding 369743 (2021-007)

Federal Agency: U.S. Department of Agriculture Federal Program Name: Child and Adult Care Food Program Assistance Listing Number: 10.558 Pass-Through Agency: Feeding Our Future Award Period: February 2021 – December 2021 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Adverse Opinion) Criteria or specific requirement: Nonfederal entities other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations. Under these procurement standards, there must be written standards of conduct for employees involved in contracting, procurement transactions must be conducted in a manner providing full and open competition, and certain methods must be followed for soliciting bids or pricing. Additionally, under 2 CFR Part 180, which implements Executive Orders 12549 and 12689, nonfederal entities are prohibited from contracting with parties that are suspended or debarred and must follow certain procedures to verify that an entity is not suspended or debarred when it enters into a contract. Condition: The Organization does not have a procurement policy which complies with procurement requirements noted above. The organization did not have documentation supporting the selection of the vendors used for the program. Procurements did not provide full and open competition. There were not procedures to verify that an entity was not debarred, suspended, or otherwise excluded. Additionally, contracts did not contain required elements, such as pricing, type of meals, delivery, and schedule. The contract utilized for the largest vendor was very brief and did not follow the template contract that the State of Minnesota recommends. Questioned costs: Unknown Context: There were three vendors utilized for food purchases in the following amounts: (1) $2,276,877; (2) $325,801; and (3) $254,843. For all three vendors, no procurement or suspension and debarment procedures were performed. Cause: The Organization was not aware it was required to perform procurement or suspension and debarment procedures. Management indicated the contracting processes used were approved by its sponsor organization. Effect: It is unclear if the Organization received competitive pricing for its federal grant purchases. The auditors verified that vendors were not listed as suspended or debarred. Recommendation: We recommend the Organization familiarize itself with the procurement regulations prior to entering into any future federal grants and review state and federal guidance. Views of responsible officials: This program was initiated during the height of COVID, when guidelines on both state and federal levels were changing rapidly. Management provided auditors with documentation about vendors that had been approved by the sponsor organization. Management attended all trainings provided by the sponsor organization and followed all of the program sponsor guidelines. See the Corrective Action Plan for further details.