Finding Text
Subject: Special Education Cluster (IDEA) - Procurement
Federal Agency: Department of Education
Federal Programs: Special Education Grants to States
Assistance Listings Numbers: 84.027
Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-ARP; 23611-043-PN01;
24611-043-PN01
Pass-Through Entity: Indiana Department of Education
Compliance Requirement: Procurement and Suspension and Debarment
Audit Findings: Material Weakness, Modified Opinion
Criteria: 2 CFR 200.303 states in part: The non-Federal entity must: (a) Establish and maintain effective
internal control over Federal award that provides reasonable assurance that the non-Federal entity is
managing the Federal awards in compliance with Federal statutes, regulations, and the terms and
conditions of the Federal award. These internal controls should be in compliance with guidance in
'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United
States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO)...."
2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement
procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of
the following methods of procurement used for the acquisition of property or services required under a
Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement for property or services
under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in §
200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are
not required. The non-Federal entity may use informal procurement methods to expedite the
completion of its transactions and minimize the associated administrative burden and cost. The
informal methods used for procurement of property or services at or below the SAT include: . . . (b) Formal Procurement Methods. When the value of the procurement for property or services
under a Federal financial assistance award exceeds the SAT, or a lower threshold established by
a non-Federal entity, formal procurement methods are required. Formal procurement methods
require following documented procedures. Formal procurement methods also require public
advertising unless a non-competitive procurement can be used in accordance with § 200.319 or
paragraph (c) of this section. The following formal methods of procurement are used for
procurement of property or services above the simplified acquisition threshold or a value below the
simplified acquisition threshold the non-Federal entity determines to be appropriate: . . .
(1) Sealed bids. A procurement method in which bids are publicly solicited and a firm
fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose
bid, conforming with all the material terms and conditions of the invitation for bids, is the
lowest in price. The sealed bids method is the preferred method for procuring construction,
if the conditions. . . .
(2) Proposals. A procurement method in which either a fixed price or cost-reimbursement
type contract is awarded. Proposals are generally used when conditions are not
appropriate for the use of sealed bids. . . ."
Condition: The Cooperative did not obtain sealed bids or competitive proposals, nor was a circumstance
met that would have allowed for a noncompetitive procurement for the purchases. The lack of internal
controls and noncompliance were systemic issues throughout the audit period.
Cause: The Cooperative noted they were unaware of the procurement requirements of expenditures
exceeding the Simplified Acquisition Threshold. They stated they have used the same vendors to provide
professional services for several years but only recently started using federal grant award funds for the
services.
Effect or potential effect: Without the proper implementation of an effectively designed system of internal
controls, the Cooperative cannot ensure the vendors paid with federal award funds are procured using the
required methods. Without following the required methods for procurement, the Cooperative could be
overpaying for services.
Questioned Costs: There were no questioned costs identified.
Context: The School Corporation is a member of the Northwest Indiana Special Education Cooperative
(Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and
spent the federal money on behalf of all its members. As the grant agreement was between the Indiana
Department of Education (IDOE) and each member school, the School Corporation was responsible for
ensuring and providing oversight of the Cooperative.
When the value of the procurement for property or services exceeds the simplified acquisition threshold
(SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required.
The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and,
therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to
documented procedures and formal methods such as sealed bids or proposals. During the fiscal year 2023-2024, the Cooperative had three vendors which exceeded the SAT and all three
vendors were tested. The Cooperative did not obtain sealed bids or competitive proposals, nor was a
circumstance met that would have allowed for a noncompetitive procurement for the purchases. The total
dollar amount spent with all three vendors was $1,417,349.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Identification as a repeat finding, if applicable: No.
Recommendation: Management of the Cooperative should develop written policies and procedures which
would require that appropriate procurement methods are used for vendors that exceed the Simplified
Acquisition Threshold. Appropriate documentation should be maintained to ensure the procurement
methods are being followed and compliance with Procurement methods are being followed.
Views of Responsible Officials and planned corrective actions: Management agrees with the finding
and has prepared a corrective action plan.