Repeat finding 2023-001, 2022-001, and 2021-002 FAN 93.676 Unaccompanied Alien Children Program Child Nutrition Cluster
Procurement and Suspension & Debarment
Type of Finding: Non-Compliance
U.S. Department of Health & Human Services
U.S Department of Agriculture
Criteria
Non-federal entities other than states, including those operating federal programs as subrecipients of
states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They
must use their own documented procurement procedures, which reflect applicable state and local laws
and regulations, provided that the procurements conform to applicable federal statutes and the
procurement requirements identified in 2 CFR Part 200. A non-federal entity must:
1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of
contractors’ performance, maintaining written standards of conduct for employees involved in
contracting, awarding contracts only to responsible contractors, and maintaining records to
document history of procurements.
2. Conduct all procurement transactions in a manner providing full and open competition, in
accordance with 2 CFR section 200.319.
3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable
criteria under 2 CFR sections 200.320(a) (1) and (2).
4. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of
the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2
CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR
section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one
source) but only when one or more of four circumstances are met, in accordance with 2 CFR section
200.320(c)).
5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified
acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a
percentage of cost and percentage of construction cost methods of contracting must not be used
(2 CFR section 200.323(b)).
6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR
section 200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions
for Non-Federal Entity Contracts Under Federal Awards.” The requirements that apply to procurement under grants and cooperative agreements are contained
in 2 CFR sections 200.317 through 200.326, program legislation, federal awarding agency regulations, and
the terms and conditions of the award.
Non-federal entities are prohibited from contracting with or making subawards under covered
transactions to parties that are suspended or debarred. “Covered transactions” include contracts for
goods and services awarded under a non-procurement transaction (e.g., grant or cooperative
agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in
2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity
(i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions,
unless they are exempt as provided in 2 CFR section 180.215.
The requirements for non-procurement suspension and debarment are contained in OMB guidance in
2 CFR Part 180, which implements Executive Orders 12549 and 12689, “Debarment and Suspension;”
federal awarding agency regulations in Title 2 of the CFR adopting/implementing the OMB guidance in
2 CFR Part 180; program legislation; and the terms and conditions of the award.
Condition
The Organization had no findings for contracts procured during the last three fiscal years that were detail
tested. However, the Organization’s management recognizes that there are still active contracts under
the federal programs for fiscal year ending August 31, 2024 that were procured over three fiscal years
ago in which adherence to procurement policies, specifically documentation history of procurement,
has not been maintained. In regards to progress made in reducing the number of vendors that are out
of compliance, specifically vendors with over $50,000 of annual expenditures that were categorized as
“legacy” vendors procured under the previous procurement policies, the Organization went from having
100 vendors totaling approximately $159 million in expenditures as of August 31, 2023, to 46 vendors
totaling approximately $119 million as of August 31, 2024. This shows a decrease of 54% in the number of
legacy vendors with a decrease of 25% in the dollar-value of the legacy vendors year over year. Further,
the Organization continues to make progress in reducing legacy vendor non-compliance by reducing
that number to 33 vendors totaling approximately $113 million as of January 2, 2025.
As this has been a recurring finding in which management is actively getting all active contracts under
the current procurement policies, only those current contracts that were procured in the last three fiscal
years were detail tested. Of the approximately 70 active vendor contracts that were procured in the last
three fiscal years that were wholly or partially funded with Unaccompanied Alien Children Program
revenue dollars or with Child Nutrition Cluster Program revenue dollars, ten were tested with no errors
noted.
Cause
The Organization is aware they are operating under contracts that were procured in previous years that
may not have all the records maintained. Contracts procured within the last three years show compliance
with federal requirements based on detailed testing. Reprocuring all of the legacy contracts at once
would potentially cause disruptions in operations due to the products/services related those vendors
playing an important role in the Organization’s day-to-day operations. As such, the Organization still has
active contracts procured under the old policies that they are working on reprocuring as these contracts’
renewal dates arise, if not earlier.
Effect or Potential Effect
The Organization could potentially be under contract with vendors that are not the best value, not
adequately qualified, potentially suspended or debarred, or otherwise not suitable for contract under
federal procurement guidelines. No questioned costs were identified, as services/goods under these contracts that were previously tested
were deemed to be allowable under the program, and no exceptions noted for allowable costs/activities
for samples that included payment to those vendors in previous years or current year.
Recommendation
The Organization should continue to review all its “legacy” contracts that were procured under the
previous procurement policies to determine if there is proper documentation maintained for compliance
with applicable procurement guidelines. This includes systematically re-procuring any current contracts
not in compliance as soon as feasible.
Views of Responsible Officials and Planned Corrective Actions
See corrective action plan.