Finding Text
Criteria or Specific Requirement (Written Procurement Policies and Procedures): Uniform Guidance requires nonfederal entities to have written policies and procedures regarding procurement under federal awards. Regarding this requirements, 2 CFR § 200.318(a), states:
“The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327.”
Condition: We requested the District’s procurement policies and procedures. The District provided “POLICY 3170.” This policy includes general provisions in only a few areas: (1) purchases under or equal to $1000; (2) purchases from $1000 to $20,000; (3) purchases over $20,000; (4) provision for local preference; and (5) provision for vehicle purchases.
POLICY 3170 does not appear to deal with procurement for federal grants or Uniform Guidance 2 CFR §§ 200.317 through 200.327.
The District provided evidence of its intent to adopt new procurement policies and procedures. This is certainly a positive occurrence, but revision to the policies should have, instead, occurred prior to the beginning of the audit year 2022-2023.
Cause: It appears that the primary cause of this condition is that the District does not have experience with procurement procedures under Uniform Guidance. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: Procurement policies and procedures are the base of internal control for procurement. Without adoption of procurement policies and procedures, non-compliance with procurement requirements is significantly more likely.
Questioned costs: No costs are questioned.
Perspective: The situation is somewhat offset by the fact that the District hired outside construction managers on both projects who were both experienced in federal grants and sewer projects.
Further, despite the lack of appropriate Uniform Guidance procurement policies and procedures, the District did comply with most provisions of 2 CFR §§ 200.317 through 200.327.
Repeat Finding: This is not a repeat finding.
Recommendation: We would recommend that the District move forward with drafting procurement, debarment, and further conflict of interest policies and procedures for federal awards. We recommend that the District review 2 CFR §§ 200.317 through 200.327 and make sure that each requirement is dealt with in the District’s new policies and procedures.
It is noted that for purchases up to the Micro-purchase amount of $10,000, that competitive price or even rate quotes are not necessary as long as the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. 2 CFR § 200.320(a)(1).
Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.