Finding Text
Program: Emergency Solutions Grant Program (ESG)
ALN #: 14.231
Federal Agency: Housing and Urban Development
Federal Award Numbers: E-20-MC-25-005, E-21-MC-25-0005, E-22-MC-25-0005, E-20-MW-25-005, and
E-20-MW-35-005
Award Year: July 1, 2022–June 30, 2023
Suspension and Debarment
Type of finding: Significant deficiency
Prior-year finding: Yes
Statistically valid sample: No
Criteria
The 2 CFR sections 180.215 and 180.220 provide the principles to be applied to ensure that nonfederal entities are not contracting with or making subawards under covered transactions to parties that are suspended or debarred. Also, when a nonfederal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. According to 2 CFR 200.303, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition
When establishing contracts for subrecipients under the Emergency Solutions Grant Program (ESG), the City requires that standard contract language be included to address the applicable suspension and debarment requirements. During fiscal year 2023, the required contract language was not included within the subrecipient contracts executed for the ESG program. Additionally, the City’s policy is to check the System of Award Management (SAM) to verify that its subrecipients were not suspended or debarred. During our audit, we noted one of four subrecipients selected for testing were not checked for suspension and debarment as evidenced via review of the subrecipient contracts or through SAM documentation. During compliance testing for the subrecipients, it was confirmed they were not suspended or debarred.
Cause
The City requires that standard contract language be included in all of its subrecipient contracts and that the City reviews SAM to address suspension and debarment requirements. The City was unaware that the required language was excluded from subrecipient contracts entered into for the ESG program as there was insufficient review of the contracts prior to execution to ensure all required elements were present. Additionally, the City requires that program personnel review SAM.gov to ensure the subrecipient is not suspended or debarred. There was no documentation that this review had occurred prior to entering into a contract with the subrecipient.
Effect
Lack of formal review of subrecipient contracts and review of entities on SAM could result in the City entering into contracts with prohibited entities.
Questioned Costs
None
Recommendation
We recommend the City ensure that required language is included within all subrecipient contracts prior to execution. We also recommend that the City review that subrecipients are not included on the SAM exclusion list and retain documentation of that check and review prior to entering into contracts with subrecipients.
Views of Responsible Officials and Corrective Actions
Based on the finding in the prior year audit, the City updated the subrecipient contract template in spring 2023 prior to execution of contracts for the FY24 ESG program year and will continue to utilize the updated template to ensure required language certifying that the agency, its officers, and employees are not suspended or debarred from doing business with the federal government. Staff will continue to verify that subrecipients are not suspended or debarred by checking against the Sam.gov Exclusion List and registration pages prior to executing contracts, and will document those checks through grant management meeting minutes and Smartsheet tracking.
Implementation Date
Updates to the contract template were completed in spring 2023 and updated contract template was utilized for FY24 program year beginning July 1, 2023 and will be utilized for FY25 ESG program year beginning July 1, 2024. Documentation from the Sam.gov website showing that all ESG subrecipients are in good standing will be included in each subrecipient file for the FY25 program year, with anticipated completion of June 30, 2024.
Responsible Officials
Anthony Woods, Planner and Contract Manager, and Liz Mengers, Planning and Development Manager