Finding 2023-002 Procurement and Suspension and Debarment – Significant Deficiency in
Internal Control Over Compliance
Agency/Pass-through
Grantor
Denali Commission, Denali Commission passed through Alaska Energy
Authority, Department of Energy
ALN and Program
Name
90.100 – Denali Commission Program
81.087 – Research and Development Cluster
Award # 7110096, 7210049, 1750-01, 1686-02, 1693-00, 1605-02, 1546-06, 1561-06,
1654-00, 1724-00, 1511-05, 1423-10, 1517-10, 1545-09, 1711-00, 1721-01,
1834-00, DE-IE0000098, DE-IE0000173
Award Year 90.100 – 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023
81.087 – 2019, 2023
Criteria or Specific
Requirement
The regulations in 2 CFR Part 180 prohibits contracts with certain parties that
are debarred, suspended, or otherwise excluded from or ineligible for
participation in Federal programs or activities. Non-federal entities must
verify that parties to covered transactions are not suspended or debarred or
otherwise excluded from participating in the transaction.
Condition Testing of 21 procurements identified 19 exceptions where evidence was not
retained to support the required verification of whether a contractor or
subrecipient was a suspended or debarred party.
Cause The Cooperative’s policies over procurement and issuance of sub-awards were
not designed appropriately to retain evidence of suspension and debarment
review for all contracts or sub-awards funded with federal awards.
Effect or Potential
Effect
By failing to retain documentation over procedures performed, the
Cooperative is unable to substantiate that its procurements were
appropriately reviewed to ensure compliance in accordance with regulations
in 2 CFR Part 180.
Questioned costs None.
Context For the Denali Commission Program, we tested a sample of 20 procurements,
consisting of 18 purchase orders and 2 task orders, totaling to $721,671. The
purchase order population of 36 items totaled to $1,477,400, and the task
order population of 3 items totaled to $319,123. BDO did not identify any
vendors that the Cooperative entered into covered transactions with, wherein
the vendor was disbarred. In addition, BDO identified that the Cooperative
appropriately documented that vendors were checked for suspension and
debarment before entering into task orders for procurements related to
construction projects. However, the Cooperative did not retain sufficient
documentation to substantiate that purchase orders for smaller procurements
were checked for suspended or debarred vendors before their execution. For the Research and Development Cluster, we tested a sample of 1
procurement, consisting of 1 purchase order, totaling to $45,022. The
procurement tested was the entire population of procurements during the
year that were not micropurchases. The Cooperative did not retain sufficient
documentation to substantiate that purchase order was checked for
suspended or debarred vendors before its execution.
Identification as a
Repeat Finding Not a repeat finding.
Views of Responsible
Officials
Management agrees with the findings and is working to revise our policies
and procedures to improve retention of evidence and documentation over
the procedures performed which ensure and substantiate compliance with
regulations.