Finding Text
Finding 2024-003 – Procurement and Suspension and Debarment — Material Weakness
Department of Health and Human Services
Research and Development Cluster
Department of Health and Human Services, National Institutes of Health, Assistance Listing No. 93.859 (Biomedical Research and Research Training)
Federal award year 2023-2024
Criteria: The Uniform Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure vendors are not suspended or debarred.
In accordance with 2 CFR 200.212 and 200.318(h)), when a nonfederal entity enters into a contract or purchase with an entity (vendor or subrecipient), the nonfederal entity must verify the entity is not suspended or debarred from participation in federal programs/grants when expending $25,000 or more in a year (or any amount in the case of a subrecipient).
Condition: The University’s controls were not operating effectively to reasonably ensure the University verified the vendor was not suspended or debarred from participation in federal programs/grants prior to entering into a contract with the vendor. The University’s procurement policy requires vendor transactions equal to or greater than $25,000 undergo verification to ensure the vendor is not suspended or debarred, prior to entering into a contract with the vendor.
Cause: A lack of controls to reasonably ensure this verification was performed.
Effect or potential effect: The University did not have controls in place to reasonably ensure compliance with suspension and debarment requirements of the Uniform Guidance. The potential effect is submitting unallowable costs, or loss of federal funding.
Questioned costs: $0
Context: For all sample selections tested in the major program, documentation was not maintained that could provide evidence that the University had performed the required verification. None of the samples tested were identified as suspended or debarred entities.
Identification as a repeat finding, if applicable: Not applicable.
Recommendation: We recommend the University develop proper controls and procedures to determine whether vendors have been suspended or debarred prior to entering into contracts or purchase orders for all transactions, and maintain documentation supporting this verification.
View of responsible officials: Management agrees with this finding. See corrective action plan.