Finding Text
Criteria or Specific Requirement (Obtaining Certificate of Non-Debarment or Checking Sam.gov for Debarment): Debarment is an action by a federal agency to prohibit a recipient from receiving federal funds through procurement transactions and applicable non-procurement transactions. (Examples given for applicable non-procurement transactions are: grants, cooperative agreements, scholarships, fellowships, contracts of assistance, loans, loan guarantees, subsidies, insurances, payments for specified uses, and donation agreements.)
Non-Federal entities cannot contract with nor make subawards under procurement transactions and applicable non-procurement transactions to parties that are suspended or debarred or whose principals are suspended or debarred.
2 CFR § 180.300 provides that a non-federal entity must use one of the following procedures when contracting with vendor or when paying a vendor over $25,000 during the audit year:
(a) Check SAM Exclusions; or
(b) Collect a certification from that person; or
(c) Add a clause or condition to the covered transaction with that person.
Condition: We inquired about the District’s procedures under 2 CFR § 180.300 regarding suspension and debarment. We were informed that self-certifications are contained in the District’s contracts. We selected a sample of three vendors in the population of six vendors which received over $25,000 during the audit period. The District provided a contract provision self-certifying on suspension and debarment on one procurement, which was the general contractor’s contract. However, the District stated they could not locate a suspension and debarment self-certification for the other two vendors. We inquired if perhaps the District had checked the Sam.gov website, but the District had not.
Cause: It appears that the primary cause of this condition is that the District has limited experience with Single Audit requirements in general. Indeed, the District has not been required to have a Single Audit since the fiscal year ending June 30, 2013.
Effect: The federal government can disqualify any transaction and reject the claim for federal funds when the underlying transaction is with a suspended or debarred individual or entity.
Questioned costs: No costs are questioned.
Perspective: The population of vendors with expenditures over $25,000 was six. The electric company was excluded as an obvious sole source. The general contractor had already been tested during walk throughs. A sample of two in addition to the general contractor test was selected; both vendors produced exceptions.
We note that the two exceptions represented 5.2% of the dollar value of sample tested with the general contractor representing 94.8% of the dollar value. Extrapolating the 5.2% to the population, of vendors subject to debarment requirements, the expected dollar error for debarment checks is $103,162.
It is noted that the auditor checked SAM.gov on all three vendors tested, and neither vendor was suspended or debarred.
Repeat Finding: No
Recommendation: We would recommend that the District adopt policies and procedures under 2 CFR § 180.300 requiring that the non-federal entity must use one of the following procedures when contracting with vendor or when paying a vendor over $25,000 during the audit year:
(a) Check SAM Exclusions; or
(b) Collect a certification from that person; or
(c) Add a clause or condition to the covered transaction with that person.
Further, we recommend that a monitoring procedure be implemented to review for compliance with these procedures.
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.