Finding Text
FINDINGS AND QUESTIONED COSTS RELATED TO FEDERAL AWARDS Finding Number: 2022-001 Repeat Finding: Yes; 2021-001 Program Name/Assistance Listing Title: MBDA Business Center Assistance Listing Number: 11.805 Federal Agency: US Department of Commerce Federal Award Numbers: MB20OBD8050207, MB21OBD8050182 Pass-Through Agency: N/A Questioned Costs: $200,052 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment CRITERIA Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR ?200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR ?180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR ?180.300). CONDITION Adequate internal controls over the organization?s procurement procedures to ensure compliance with federal regulations and guidelines were not in place. In addition, the organization did not verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. CAUSE Staff were not aware of the procurement requirements contained within 2 CFR part 200, and, therefore, no internal controls had been designed or implemented to avoid non-compliance until June 2022 when the organization underwent its first single audit. A procurement policy was created and implemented in October 2022, well after the contracts were in place for the purchases identified in the finding. EFFECT The organization was not in compliance with federal guidelines regarding procurement. CONTEXT During our review of purchases, we noted the following: ? The Organization did not establish written procurement standards until October 2022. The procurements standards did not establish suspension and debarment checks for vendors. ? Small purchase procedures were not followed for seven purchases that exceeded the micropurchase threshold ($10,000) but were less than the simplified acquisition threshold ($250,000). These purchases were contracted before the Organization was aware of the deficiency, which was first identified during the previous single audit in summer 2022. ? The Organization did not verify four vendors were not suspended or debarred. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION The Organization should establish written procurement standards address suspension and debarment requirements. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.