Finding Text
Type of Finding: Material Weakness in Internal Control over Compliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2022 through May 30, 2023, September 30, 2017 through September 29, 2022, September 30, 2022 through September 29, 2027.
Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record 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". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". 2 CFR 180.300 states that before entering into a covered transaction with another person at the next lower tier, an entity must verify that the person with whom they intend to do business with 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”.
Condition: The Alliance does not have a written procurement, suspension and debarment policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. For procurement, CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 5 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. For suspension and debarment, CLA tested all payments to vendors exceeding $25,000 as established by Uniform Guidance. Of the 3 tested, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Questioned costs: Undeterminable.
Context: Procurement: A sample of 5 was made from a population of 16 procurement transactions charged to the major program that exceeded $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $48,099. Of the 5 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Suspension and Debarment: A sample of 3 (entire population) was made from a population of 3 vendors who received payments exceeding $25,000. Of the 3 sampled vendors, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Cause: Management believes procurement, suspension and debarment standards apply only to the awarding agency, and not to the Alliance.
Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected.
Repeat Finding: No.
Recommendation: We recommended that the Alliance design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommended the Alliance to formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. The Alliance followed this recommendation, pairing prior (non-federally implicated) procurement processes and expenditures.
Views of responsible officials: Management has provided a response to the finding in their Corrective Action Plan.