Finding Text
Finding 2024-003 Procurement, Suspension and Debarment (Significant Deficiency)
Information on the Federal Programs: Assistance Listing #15.657
Criteria or Specific Requirement: § 200.318 (i) General procurement standards, states that the
non-Federal entity must maintain records sufficient to detail the history of procurement. These
records will include, but are not necessarily limited to the following: rationale for the method of
procurement, selection of contract type, contractor selection or rejection, and the basis for the
contract price. Furthermore: §200.320 (f) Methods of procurement to be followed, states that
procurement by noncompetitive proposals is procurement through solicitation of a proposal from only
one source and may be used only when certain requirements have been met. Additionally, §200.213
Reporting a determination that a non-Federal entity is not qualified for a Federal award states that
non-Federal entities are subject to the non-procurement debarment and suspension regulations
implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict
awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise
excluded from or ineligible for participation in Federal assistance programs or activities. The non-
Federal entity must verify that the person with whom you intend to do business is not excluded or
disqualified, by (a) checking SAM Exclusions; (b) collecting a certification from that person; (c)
adding a clause or condition to the covered transaction with that person.Condition: During our audit, we noted contractual relationships under the Federal awards for which
evidence of procurement procedures and documentation of SAM Exclusion checks were unavailable
for our inspection. It is our understanding that some contracts were procured under noncompetitive
(sole source) justification. However, in certain instances we were unable to review documentation
detailing the history and rationale of the procurements.
Cause: The Organization's processes in place during 2024 did not provide for the formalization and
retention of procurement records and vendor screenings consistent with the expectations outlined in
2 CFR 200. Additionally, the Organization does not have a formal policy in place related to
contractor screenings under CFR §200.213.
Effect or Potential Effect: Purchases of goods and services could be made above the prevailing
market rates if the prescribed procurement procedures are not adhered to. Additionally, the
Organization may have inadvertently selected noncompetitive proposals method when the
circumstances did not meet the requirements noted in § 200.320 (f) Methods of procurement to be
followed, and thereby failing to administer full and open competition as required by the regulations.
Finally, the Organization could inadvertently enter into a contractual relationship with an entity that is
suspended, debarred or otherwise included on the US Federal sanction list.
Questioned Costs: N/A
Context: The Organization failed to adhere to its procurement policy, and hence, noncompliance
with Federal standards. Our audit work in this area consisted of internal control testwork over a
random sample of expenditures. We consider our samples to be representative of the respective
populations, and thus, are statistically valid samples.
Identification as a Repeat Finding, if Applicable: Yes, continuation of Finding 2023-003
Recommendation: We then recommend that the Organization ensure its policy is distributed and
communicated in a formal manner to its employees, and that management properly enforce
compliance with its policy. All procurement actions should be clearly documented in writing and
maintained in the vendor or contractor files. We also recommend that the Organization enhance its
existing policy related to noncompetitive procurement to ensure include the five specific
circumstances in which noncompetitive procurement can be used under CFR 200.320. Additionally,
we recommend that the Organization enhance its policies to include screening procedures related to
200.213 Reporting a determination that a non-Federal entity is not qualified for a Federal award.