Finding Text
Criteria or specific requirement: The Code of Federal Regulations, 2 CFR 200.320, requires that nonfederal entities must have and use documented procurement procedures. Such procurement procedures must reflect the standards identified in 2 CFR 200.320. These standards require various elements, such as cover conflict of interests, avoiding acquisition of unnecessary or duplicative items, maintaining records sufficient to detail the history of procurement, and conducting procurement in a manner providing full and open competition and adhering to the required methods of procurement for the acquisition of property and services. The required methods of procurement:
• Micro purchases: These purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly.
• Small purchases: For purchases of which the dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. 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.
• Procurement by sealed bids: A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price.
• Procurement by competitive proposals: A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids.
• Noncompetitive procurement: This procurement method is when a proposal form only one source is used. This form of procurement can only be used when an item is only available from a single source, for a public emergency, the awarding agency expressly authorizes the proposal, or, after solicitation of a number of sources, competition is determined inadequate.
Condition: The Company's written procurement policy did not address the federally required elements of written procurement policies listed above.
Context: Based on our review of the Company's procurement policy, we noted that the policy did not include documented procurement procedures for the required elements above.
Cause: Management was unaware of the requirements that such elements should be included in their written procurement policy.
Effect: The Company is not in compliance with procurement policy requirements as outlined by 2 CFR 200.320.
Recommendation: We recommend the Company update its written procurement policy so that it incorporates all required procurement elements as outlined by 2 CFR 200.320.
Views of responsible officials: There is no disagreement with the audit finding.