Finding 560545 (2024-007)

U.S. Department of Health and Human Services Federal Financial Assistance Listing Number 93.829 Section 223 Demonstration Programs to Improve Community Mental Health Services - 1H79SM088927-01 Procurement and Suspension and Debarment Material Weakness in Internal Control over Compliance and Noncompliance Criteria The Uniform Guidance, Section 200.303 Internal Controls, requires the non-federal entity must establish and maintain effective internal controls over federal awards that provide reasonable assurance that awards are being managed in compliance with federal statutes, regulations and the terms and conditions of the federal award. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.318 through 200.327. Condition The Organization did not have a written procurement policy that was consistent with Federal, State, local, and tribal laws and regulations. In addition, the Organization entered into a contract with a vendor for services without obtaining quotes from other vendors. Cause There is a lack of controls over the written procurement, suspension and debarment policy and over procurement, suspension and debarment as a whole. Effect Failure to maintain a written procurement policy that was consistent with Federal, State, local, and tribal laws and regulations may result in disallowed costs. Questioned Costs $37,000 was paid during fiscal year 2024 to a vendor without obtaining quotes. Context/Sampling EB reviewed the procurement, suspension and debarment policy. A nonstatistical sample of 3 vendors were selected for testing. Of these 3, 1 did not follow appropriate procurement, suspension and debarment procedures. Repeat Finding from Prior Year(s) Yes Recommendation We recommend that management implement a written procurement, suspension and debarment policy that meets Federal, State, local, and tribal laws and regulations. We recommend that management review this policy regularly to confirm that it meets the requirements. We also recommend that management review this policy prior to entering into any contracts with vendors. Views of Responsible Individuals Management agrees with the finding.