Finding Text
Finding 2023-006: Procurement
Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board
Program
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain
effective internal control over the Federal award that provides reasonable assurance that the non-
Federal entity is managing the Federal award 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). Additionally, according to 2 CFR
§200.318 Procurement standards, 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. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319
Procurement Standards. All procurement transactions for the acquisition of property or services
required under a Federal award must be conducted in a manner providing full and open competition
consistent with the standards of this section and §200.320. The non-Federal entity must have written
procedures for procurement transactions.
These procedures must ensure that all solicitations incorporate a clear and accurate description of the
technical requirements for the material, product, or service to be procured. Such description must not,
in competitive procurements, contain features which unduly restrict competition. The description may
include a statement of the qualitative nature of the material, product or service to be procured and,
when necessary, must set forth those minimum essential characteristics and standards to which it
must conform if it is to satisfy its intended use.
Noncompetitive procurements can only be awarded in accordance with
§200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances
in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded
if one or more of the following circumstances apply:
1. The acquisition of property or services, the aggregate dollar amount of which does not exceed
the micro-purchase threshold,
2. The item is available only from a single source;
3. The public exigency or emergency for the requirement will not permit a delay resulting from
publicizing a competitive solicitation;
4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive
procurement in response to a written request from the non-Federal entity; or
5. After solicitation of a number of sources, competition is determined inadequate.
Condition: During our testing over procurement, we determined that SAMU did not clearly document
the rationale for the method of procurement, selection of contract type, contractor selection or
rejection, and the basis for the contract price. In addition, we noted that while SAMU does have a
procurement policy in place, the policy does not include requirements for re-procuring long-term
contracts that continuously re-new.
Cause: Management did not have effective internal controls in place to ensure that procurement
requirements were adequately documented and retained.
Effect or Potential Effect: Procurement records were insufficient to meet the requirements noted in
the Criteria section above, as well as SAMU's internal procurement policy.
Questioned Costs: $75,000
Context: 2 of 4 samples selected for testing did not have adequate documentation for the rationale
related to the method of procurement, selection of contract type, contractor selection or rejection, and
the basis for the contract price. The sample is representative of the population.
Identification as a Repeat Finding, if Applicable: 2022-006
Recommendation: We recommend SAMU retain sufficient procurement documentation to meet the
requirements noted in the Criteria section above.