Finding Text
Criteria – The Agency has an established Procurement Policy which sets forth threshold and documentation requirements for management to follow to ensure that the Agency is in compliance with local as well as federal requirements. The Agency must follow the procurement standards established at 2 CFR sections 200.318 through 200.26.
In addition, as part of the internal controls over federal award programs, the Agency shall maintain records in sufficient detail to document procedures were followed to ensure contracts are awarded respective to local and federal requirements.
Condition - During our audit of Public Housing transactions, we noted instances where the procurement process was not adequately documented to ensure compliance with local and federal requirements. These items are summarized as follows:
• Procurement Policy – During our audit, we noted the Agency has not updated its policy for several years. The policy not only should comply with local requirements but also the compliance requirements contained in 2 CFR sections 200.318 through 200.326. The current policy applies to regulations at 24 CFR 85.36 and not the current language requirements.
• Procurement Approval – The Agency’s current policy requires any procurement in excess of $2,000 but not exceeding $100,000, no less than three price quotations shall be obtained where practical. The names, addresses and/or telephone numbers of the offerors and person contacted, and the date and amount of each quotation shall be recorded and maintained as public record. During our audit we noted the Agency entered into a contract for flooring and expended $43,073 but had no documentation to support that bids were obtained other than the vendor that was awarded the contract. Bids should have been obtained and documented as noted above.
• Wage Rates – Projects funded with Public Housing Funds are required to comply with Wage Rate Requirements contained in Par 4, 20-001 which requires all labors and mechanics employed by contractors or subcontractor to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project. During our audit we noted the flooring contract as noted in the previous bullet point was not monitored for the prevailing wage requirement.
Cause – The Agency’s internal controls are not adequate over the documentation of procurement procedures.
Effect or Potential Effect - The Agency’s internal controls over procurement documentation is not adequate and the procurement policy is not updated to reflect the Federal requirements contained in 2 CFR sections 200.318 through 200.326.
Recommendation - We recommend the Agency make a concentrated effort to maintain the procurement files in a manner sufficient to ensure proper procurement procedures were followed. This documentation should include the significant history of each procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection and the basis for the contract price. In addition, when required the Wage Rate compliance procedures should be documented.
View of Responsible Official: Management agrees with the Finding.