Finding 564142 (2024-001)

Significant Deficiency
Requirement
I
Questioned Costs
-
Year
2024
Accepted
2025-06-08
Audit: 358297
Organization: Guam Waterworks Authority (GU)
Auditor: Ernst & Young

AI Summary

  • Core Issue: GWA failed to verify the eligibility of vendors before contracts, violating 2 CFR section 180.300.
  • Impacted Requirements: Noncompliance with federal regulations on procurement, specifically regarding debarment and suspension checks.
  • Recommended Follow-Up: GWA should create a formal procedure for vendor verification, including regular checks against SAM.gov.

Finding Text

Finding No.: 2024-001 Federal Agency: U.S. Environmental Protection Agency AL No. and Title: 66.600 – Environmental Protection Consolidated Grants for the Insular Areas – Program Support Federal Award No.: Various Area: Procurement, Suspension and Debarment Questioned Costs: $0 Criteria: 2 CFR section 180.300 requires entities that enter into a covered transaction must verify that the person with whom you intend to do business is not excluded or disqualified by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Condition: Of 5 out 5 samples tested (100%), GWA did not perform the required verification of persons required by 2 CFR section 1800.300. No questioned cost was identified as subsequent checking of the samples in SAM.gov did not result in identification of suspended or debarred individuals. Cause: There is no formalized procedure in place for verifying the debarment, suspension, or exclusion status of entities prior to entering into covered transactions. Effect or potential effect: GWA is in noncompliance with the applicable requirements. Recommendation: GWA should develop and implement a formal procedure for verifying the debarment, suspension, or exclusion status of entities prior to entering into covered transactions, which includes regular checks against the System for Award Management (SAM) database and other relevant resources. Views of Responsible Officials: GWA acknowledges the audit finding and concurs that a verification through the System for Award Management (SAM.gov) was not completed and documented prior to executing a contract with the identified vendors. GWA recognizes the importance of complying with federal requirements and preventing ineligible parties from participating in federally funded projects.

Corrective Action Plan

Corrective Action Plan: 1. Policy and Procedure Update: GWA's procurement procedures have been revised to include a mandatory SAM.gov exclusion check prior to awarding any contract or subcontract funded by federal assistance. This requirement has been incorporated into the standard procurement checklist and contract file documentation process. Additionally, all related Standard Operating Procedures (SOPs) will be updated by December 2025. 2. Training: GWA will conduct training for procurement, project management, and finance personnel on federal compliance requirements, including procedures for verifying suspension and debarment status. Training will be completed by December 31, 2025, and as needed as staff turnover or new regulations are issued. 3. Documentation Requirement: Staff are now required to print and retain a copy of the SAM.gov search results in the procurement file as documentation that the contractor is not debarred or suspended at the time of award. 4. Ongoing Compliance Monitoring: The Internal Audit team will conduct periodic reviews of federally funded procurement files to ensure compliance with this requirement and to verify that proper documentation is maintained. Expected Completion Date: Procedures were put in place on April 4, 2025. Updates to all relevant SOPs as well as training will be completed by December 2025. Point of Contact for Follow-Up: Prudencio F. Aguon, Grants Administrator Janet L. Taitano-Arroyo, Internal Auditor

Categories

Procurement, Suspension & Debarment

Other Findings in this Audit

  • 1140584 2024-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support $2.13M
21.027 Coronavirus State and Local Fiscal Recovery Funds $672,340
15.875 Economic, Social, and Political Development of the Territories $198,427