FAC Explorer

Finding 486144 (2023-003)

Significant Deficiency
Requirement
I
Questioned Costs
-
Year
2023
Accepted
2024-09-09
Audit: 318791
Organization: City of Minneapolis (MN)
Auditor: Minnesota Office of the State Auditor

AI Summary

  • Core Issue: The City failed to comply with federal procurement regulations, specifically regarding cost analysis and vendor verification for suspension and debarment.
  • Impacted Requirements: Non-compliance with Title 2 U.S. Code of Federal Regulations § 200.303 and § 180.300, which mandate effective internal controls and verification processes for contracts over $25,000.
  • Recommended Follow-Up: The City should update its policies and ensure contract managers are trained on compliance requirements and documentation practices.

Finding Text

2023-003 Procurement, Suspension, and Debarrment Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLT0790, 2021; E-20-MW-27-0003, 2020 Pass-Through Agency: Minnesota Department of Health Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the City must maintain records sufficient to detail the history of procurement, and the City must perform a cost or price analysis provided in Title 2 U.S. Code of Federal Regulations § 200.323. In addition, federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. The suspension and debarment requirements apply to covered transaction amounts over $25,000. Entities must use their documented procurement process compliance. The City’s procurement policy requires a suspension and debarment clause be included in the contract and also requires the contract manager to verify the vendor is not suspended, debarred, or otherwise excluded at SAM.gov. Condition: Five of the nine contracts tested exceeded the simplified acquisition threshold which requires a cost or price analysis. The City could not provide documentation that this analysis was performed for four contracts tested. Additionally, a sample of 20 covered transactions was tested for suspension and debarment. In two instances, the City included required suspension and debarment contract clauses but did not maintain documentation of the verification that the vendor was not suspended or debarred at SAM.gov. Questioned Costs: None. Context: Nine of 89 contracts were tested for compliance with applicable federal regulations. Additionally, there were 191 covered transactions subject to suspension and debarment. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City is not in compliance with federal regulations. Cause: Project/contract managers did not perform or maintain documentation of cost or price analyses. The project/contract managers did not know verification of suspension and debarment using the federal listing was required and, in one instance, relied on the state listing. Recommendation: We recommend the City review its written policies and procedures and communicate with contract managers their responsibility for complying with the federal regulations and maintaining documentation to support that compliance. View of Responsible Official: Concur

Corrective Action Plan

Finding Number: 2023-003 Finding Title: Procurement, Suspension, and Debarment Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Contact Person Responsible for Corrective Action: Ra Chhoth, Deputy Chief Finance Officer, Finance and Property Services OR Matt Bower, Manager Resource Coordination, Finance and Property Services Corrective Action Planned: Controllers Division staff will work with Procurement Division on further development of enhanced communication and training tools on federal procurement for city contract manager staff. Suspension and debarment subject has been shared with Grants Users Group and will be made a standing annual topic to be covered moving forward. Anticipated Completion Date: 12/31/2024

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

  • 486139 2023-001
    Significant Deficiency
  • 486140 2023-001
    Significant Deficiency
  • 486141 2023-002
    Significant Deficiency
  • 486142 2023-002
    Significant Deficiency
  • 486143 2023-002
    Significant Deficiency
  • 486145 2023-003
    Significant Deficiency
  • 486146 2023-003
    Significant Deficiency
  • 1062581 2023-001
    Significant Deficiency
  • 1062582 2023-001
    Significant Deficiency
  • 1062583 2023-002
    Significant Deficiency
  • 1062584 2023-002
    Significant Deficiency
  • 1062585 2023-002
    Significant Deficiency
  • 1062586 2023-003
    Significant Deficiency
  • 1062587 2023-003
    Significant Deficiency
  • 1062588 2023-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.218 Community Development Block Grants/entitlement Grants $14.82M
20.205 Highway Planning and Construction $12.24M
14.239 Home Investment Partnerships Program $2.40M
14.241 Housing Opportunities for Persons with Aids $2.02M
66.468 Drinking Water State Revolving Funds $1.99M
14.900 Lead Hazard Reduction Grant Program $1.77M
20.205 Covid-19 - Highway Planning and Construction $1.29M
93.870 Maternal, Infant and Early Childhood Home Visiting Grant $1.16M
93.994 Maternal and Child Health Services Block Grant to the States $854,367
97.083 Staffing for Adequate Fire and Emergency Response (safer) $808,861
16.838 Comprehensive Opioid, Stimulant, and Other Substances Use Program $657,398
14.231 Emergency Solutions Grant Program $646,893
93.738 Pphf: Racial and Ethnic Approaches to Community Health Program Financed Solely by Public Prevention and Health Funds $612,394
21.023 Covid-19 - Emergency Rental Assistance Program $493,662
14.218 Covid-19 - Community Development Block Grants/entitlement Grants $439,106
97.067 Homeland Security Grant Program $435,105
16.833 National Sexual Assault Kit Initiative $434,845
93.354 Covid-19 - Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response $417,102
17.277 Wioa National Dislocated Worker Grants/wia National Emergency Grants $383,191
93.738 Covid-19 - Pphf: Racial and Ethnic Approaches to Community Health Program Financed Solely by Public Prevention and Health Funds $351,258
93.069 Public Health Emergency Preparedness $328,682
14.913 Healthy Homes Production Program $325,060
93.435 The Innovative Cardiovascular Health Program $313,179
93.137 Covid-19 - Community Programs to Improve Minority Health Grant Program $299,132
17.259 Wioa Youth Activities $283,637
93.967 Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health $254,496
93.297 Teenage Pregnancy Prevention Program $251,447
93.136 Injury Prevention and Control Research and State and Community Based Programs $188,680
93.304 Racial and Ethnic Approaches to Community Health $158,862
17.258 Wioa Adult Program $156,088
45.024 Promotion of the Arts_grants to Organizations and Individuals $150,000
93.092 Affordable Care Act (aca) Personal Responsibility Education Program $96,279
66.034 Surveys, Studies, Research, Investigations, Demonstrations, and Special Purpose Activities Relating to the Clean Air Act $93,490
93.391 Covid-19 - Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $61,250
93.323 Covid-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $60,939
93.558 Temporary Assistance for Needy Families $59,640
14.231 Covid-19 - Emergency Solutions Grant Program $45,106
17.278 Wioa Dislocated Worker Formula Grants $41,625
97.044 Covid-19 - Assistance to Firefighters Grant $39,159
93.788 Opioid Str $37,257
66.312 Environmental Justice Government to Government (ejg2g) Program $36,666
93.421 Covid-19 - Strengthening Public Health Systems and Services Through National Partnerships to Improve and Protect the Nation’s Health $36,608
93.421 Strengthening Public Health Systems and Services Through National Partnerships to Improve and Protect the Nation’s Health $35,550
15.904 Historic Preservation Fund Grants-in-Aid $30,000
16.738 Edward Byrne Memorial Justice Assistance Grant Program $25,843
14.241 Covid-19 - Housing Opportunities for Persons with Aids $21,068
20.608 Minimum Penalties for Repeat Offenders for Driving While Intoxicated $15,894
20.941 Strengthening Mobility and Revolutionizing Transportation (smart) Grants Program $9,000
16.710 Public Safety Partnership and Community Policing Grants $7,208
21.027 Covid-19 - Coronavirus State and Local Fiscal Recovery Funds $6,044