Finding 372244 (2023-001)

Finding 2023-001: Procurement: Suspension and Debarment Federal Program Research and Development Cluster (R&D) (AL No.: Various) Federal Agency National Institute of Standards and Technology Federal Award Number Award numbers: 70NANB21H085, 70NANB21H086, 70NANB17H002 Federal Award Year July 1, 2022 through June 30, 2023 Criteria or 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 others criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through 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 the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov | Home (click on Search Record, then click on Advanced Search-Exclusions) (Note: The OMB guidance at 2 CFR Part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (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). Per 2 CFR Section 200.303, the non-Federal 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. Condition Found, including Perspective In our testing over suspension and debarment, we identified two covered transactions, both with the same vendor, in a sample of 40 procurement transactions for which the University was unable to provide supporting documentation that they verified the vendor was not suspended or debarred prior to entering into the procurement transaction with the vendor. It was determined that the related vendor was not suspended or debarred. Possible Cause and Effect The University’s internal control over compliance with federal procurement suspension and debarment was not operating consistently through fiscal year 2023, including obtaining and maintaining appropriate documentation. Failure to implement sufficient internal controls to verify the University does not enter into covered transactions with parties that are suspended or debarred in accordance with federal regulations increases the risk of noncompliance. Questioned Costs No questioned costs were identified. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year Yes Recommendation We recommend the University enhance its internal control over compliance with the federal regulations related to suspension and debarment to ensure covered transactions are not entered into with parties that have been suspended or debarred. Views of Responsible Officials The University agrees with the finding. The University has taken additional measures to ensure a clause with suspension and debarment language is included within the contracts of all new covered transactions entered into on or after July 1, 2023. The finding relates to a legacy contract and has prompted a review of open purchase orders to address suspension and debarment requirements. Additionally, the University will begin utilizing a third-party verification software to screen existing and potential vendors against the System for Award Management (SAM.gov) Exclusions list daily, with an expected implementation by June 30, 2024.