Finding 390156 (2023-001)

Finding Reference Number: SA2023-001 Suspension and Debarment Documentation for Contracts and Subcontracts Assistance Listing Number: 21.027 Assistance Listing Title: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Federal Award Identification Number: SLFRP2686 68-0281986 Name of Pass-Through Entity: California State Water Resources Control Board Criteria: The award terms and conditions of the Coronavirus State and Local Fiscal Recovery Funds agreement with the Department of the Treasury requires that the City comply with OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), 2 C.F.R. Part 180, including the requirement to include a term or condition in all lower tier covered transactions (contracts and subcontracts described in 2 C.F.R. Part 180, subpart B) that the award is subject to 2 C.F.R. Part 180 and Treasury’s implementing regulation at 31 C.F.R. Part 19. In addition, the OMB Compliance Supplement for the Program requires that prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300. Condition: We selected ten contracts and two subrecipient agreements for testing and noted that City did not include a term or condition related to compliance with debarment and suspension compliance provisions and we understand that the City did not verify the contractors and subrecipient were not suspended, debarred, or otherwise excluded prior to entering into the agreements. We did note that City staff did have documentation of checking the status of seven of the vendors in April or September 2023. For the remaining three vendors, City staff could not locate the earlier documentation, so they provided documentation that the vendors were not included on the exclusions list on SAM.gov as of March 2024. Cause: We understand that staff was not aware of the requirement to include the debarment and suspension provisions in the contracts and the requirement to verify the status of contractors or subrecipients prior to entering into agreements with the entities. City staff became aware of the requirements in March 2023 and established a policy effective April 1, 2023. Effect: The City is not in compliance with the award terms and conditions and the OMB Compliance Supplement requirements of the Coronavirus State and Local Fiscal Recovery Funds program. Identification as a repeat finding: Yes, since 2022 Recommendation: The City should ensure compliance with debarment and suspension provisions of the grant award terms and conditions and the OMB Compliance Supplement of the Coronavirus State and Local Fiscal Recovery Funds program prior to entering into contracts and retain documentation in the grant project files to provide evidence of compliance. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.