Finding 503760 (2023-001)

Federal Agency: Department of Health and Human Services Federal Program Title: COVID-19 Epidemiology and Laboratory for Capacity Testing ALN: 93.323 Pass-Through Agency: State of California Department of Health and Human Services Pass-Through Number(s): N/A Award Number and Period: N/A Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200 Appendix II (H) Debarment and Suspension (Executive Orders 12549 and 12689)—A contract award (see 2 CFR 180.220) must not be made to parties listed on the governmentwide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR part 1989 Comp., p. 235), “Debarment and Suspension.” SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. Condition: During our testing, we noted that management’s review of contracts did not include a review to ensure that the party was not debarred, suspended or otherwise excluded. Questioned costs: None. Context: Audit procedures included a review of the five agreements during the year ended June 30, 2023, which represented the entire population. For all of the items reviewed management did not obtain verification that the party was not debarred, suspended or otherwise excluded, prior to entering into the transactions. However, upon subsequent review, no parties were determined the be debarred, suspended or otherwise excluded. Cause: The County’s procurement process did not include a requirement that required a verification of debarred or suspended status. Effect: Amounts could be paid to parties that are debarred, suspended or otherwise excluded. Repeat Finding: No Recommendation: We recommend that management enhance the procurement controls to ensure that all required parties are reviewed for suspension and debarment prior to entering the transaction. Views of responsible officials: The County agrees with the findings. Corrective action plan: While several departments at the County have been checking this internally, we will work on a more formal procedure that will require the departments to show proof of verification that the vendor or subrecipient is not suspended or debarred prior to release of payment.