Finding Text
31 CFR 19.305 states that Non-Federal entities may not enter into a covered transaction with an excluded person, unless the Department of the Treasury grants an exception under 31 CFR § 19.120.
31 CFR 19.200 identifies “covered transactions” as non-procurement or procurement transactions subject to the prohibitions of 31 CFR Part 19 which is either at the primary tier, between a Federal agency and a person, or at a lower tier, between a participant in a covered transaction and another person. 31 CFR 19.220 indicates that procurement contracts for goods or services awarded by a participant in a non-procurement transaction are covered transactions if the amount of the contract is expected to equal or exceed $25,000 or meets certain other specified criteria outlined in 31 CFR § 19.220. All non-procurement transactions, irrespective of award amount, are considered covered transactions, unless exempt by 31 CFR 19.215.
31 CFR 19.300 provide that when a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not excluded or disqualified. This verification may be accomplished by checking SAM exclusions (https://sam.gov), collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity.
The Village did not have a written policy or proper internal controls in place to help verify that all entities, with whom the Village had entered into covered transactions, had not been suspended or debarred. During testing of nonpayroll disbursements for AL # 21.027 State and Local Fiscal Recovery Fund, there was no evidence the Village checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor for all procurement transactions with a payment to the vendor of more than $25,000. Due to the deficient internal control structure, the required verification was not completed for the covered transaction in the AL # 21.027 State and Local Fiscal Recovery Fund during the fiscal year ended December 31, 2023. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred.
Prior to contracting with vendors that will be paid with federal funds, the Village should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor. In addition, the Village should adopt a written policy regarding the process for verifying that vendors are not suspended or debarred.