Finding Text
2023-002 – PROCUREMENT, SUSPENSION, AND DEBARMENT COMPLIANCE Type of Finding: (F) – Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: State Humanities Program and Humanities Councils American Rescue Plan Funding AL #: 45.129 Award #s: ZSO-283159-21 ARP, SO-268668-20 and SO-289867-23 Award Period: November 1, 2022 – October 31, 2023 Questioned Costs: None Statement of Condition
The Council did not consistently follow the suspension and debarment policy and did not keep backup documentation for some of the procurement transactions over $10,000. Context
The Council purchased goods and services exceeding $25,000 and documentation was not available to substantiate that the vendors were screened for suspension and debarment prior to expenditure. Note: All the vendors were screened during the audit and none of them had any exclusions. Also, the Council had documentation for all 6 sub-awardees tested (non-procurement clause of the award.) Criteria
Per 2 CFR 200.320(a)(2)(i) Small purchases -
(i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold ($10,000 in fiscal year 2023) but does not exceed the simplified acquisition threshold ($249,999 in fiscal year 2023). 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.
Additionally, 2 CFR 200.214 requires vendors awarded contracts expected to equal or exceed $25,000 to be checked for suspension and debarment via the System for Award Management Exclusions (SAM.gov). According to §180.300 of Subpart C–Responsibilities of Participants Regarding Transactions Doing Business with Other Persons of 2 CFR Part 180, when the grantee enters into a covered transaction with another person at the next lower tier, they must verify that the person with whom they intend to do business is not excluded or disqualified.
This can be done by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person.
While the Council has policies in place and links in the policies to the appropriate CFRs, it seems that the policies might need to be updated to specify the thresholds for debarment and suspension checks for vendor and the updated threshold for micro-purchasing. Cause
The Council had turnover in employment for staff in charge of obtaining 3 bids and documentation could not be located. The policies might need to be updated with the new micro-purchasing thresholds and clearly specify the thresholds for vendor check-ups in sam.gov. Effect
There is the risk that the Council could contract with a party that is suspended or debarred. The Council is not following consistently the policies. Recommendation
Design and implement internal controls to ensure that contracts expected to equal or exceed $25,000, or meet certain other criteria as specified in 2 CFR 180.220, are checked for suspension and debarment.
Improve the policies and procedures manual by updating the thresholds for micro-purchases and small purchases, and adding explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. View of Responsible Official and Corrective Action Plan:
NMHC management is in agreement with this finding. Management has reviewed the existing federal procurement policies and procedures found in 2 CFR 200 and will enforce the policies and procedures to ensure existing suspension and debarment policies and procedures are followed. NMHC’s Executive Director or Deputy Director will review all potential purchases and contracts for compliance with the policies. The Executive Director or Deputy Director will also provide an additional check by reviewing all vendors paid $25,000 or more against the SAM website. Proof of the SAM website review and approval will be maintained in each vendor file. All future contracts of any size will also include a clause or condition to the covered transaction with the contractor/vendor that must be signed by that person.
The Executive Director will update the existing NMHC policies and procedures manual by adding the new thresholds for micro-purchases and small purchases. The Executive Director will also add explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. Corrective Action Plan Timeline:
Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline:
Personnel responsible for ensuring implementation include the Executive Director and Deputy Director.