FA 2024-001 Improve Controls over Procurement and Suspension and Debarment
Compliance Requirement: Procurement and Suspension and Debarment
Internal Control Impact: Significant Deficiency
Compliance Impact: Nonmaterial Noncompliance
Federal Awarding Agency: U.S. Department of Education
Pass-Through Entity: Georgia Department of Education
Assistance Listing Numbers and Titles: 84.027 – Special Education Grants to States
84.173 – Special Education Preschool Grants
Federal Award Numbers: H027A220073 (Year: 2022), H027A230073 (Year: 2023), H173A230081 (Year: 2023)
Questioned Costs: $44,955.00
Description:
A review of expenditures charged to the Special Education Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement and suspension and debarment procedures were followed.
Background Information:
The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). SEC funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities.
SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local education agencies (LEAs) and overseeing the expenditure of funds by LEAs. SEC funds totaling $1,949,036.43 were expended and reported on the City of Valdosta Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.”
Furthermore, Title 2 CFR Section 180.300 states in part that the non-federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.”
Lastly, the School District’s applicable purchasing policy required at least two competitive prices if the price of the “…equipment, materials, or services…” exceed $1,000.00. The Valdosta City Schools Federal Programs Procedures Manual also states, “The Program Director is responsible for archiving source documentation of each purchase, such as hard copy Purchase Order Forms, printed electronic copies of Purchase Orders, quotes, sole source documentation, and Suspension and Debarment documentation.”
Condition:
The School District could not provide contract files or documentation for the selection or approval of one vendor that provided a software application associated with one Special Education Cluster procurement transaction. Therefore, auditors were unable to determine if the procurement transaction complied with the School District's procurement procedures, proper oversight was maintained to ensure that contractors were performing according to their contracts, and appropriate reviews were performed to verify that vendors were not suspended, debarred, or otherwise excluded prior to entering into covered transactions.
Questioned Costs:
Known questioned costs of $44,955.00 were identified for procurements that were not supported by adequate documentation. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. The following Assistance Listing Number was affected by known questioned costs: 84.027.
Cause:
The School District’s purchasing policy that was valid when the expenditures took place was not followed due to oversight.
Effect:
The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement and suspension and debarment compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures.
Recommendation:
The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately.
Views of Responsible Officials:
We concur with this finding.