Finding Text
Finding 2024-002 Procurement and Suspension and Debarment
Federal Grantor: United States Department of Health and Human Services
Assistance Listing No.: 93.817 Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities
Criteria or specific requirement (including statutory, regulatory, or other citation):
2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”
Uniform Guidance 2 CFR Section 200.320 (a)(2) states regarding the applicability of simplified acquisition procedures: “The aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. “
Section V.A.1.a.ii of the procurement policy of Fairview Health Services requires that for procurements by small purchase ($10,000–$249,000), where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from three qualified sources. If three separate qualified sources cannot be obtained the reason needs to be formally documented.
Condition:
For one procurement transaction tested, we noted that Fairview Health Services did not complete a sole-source justification form timely to support the vendor that was selected.
Cause:
Management does not have sufficient internal controls in place to ensure that Fairview Health Services’ procurement policies are followed for all procurement transactions prior to entering the procurement.
Effect or potential effect:
Fairview Health Services entered into a procurement that did not go through a competitive solicitation process.
Questioned costs:
None
Context:
Total Federal expenditures subject to procurement for HPP were $616,107 for the year ended December 31, 2024. Total expenditures related to the procurement at issue were $29,041. Total Federal expenditures were $1,656,727 for the year ended December 31, 2024.
Identification as a repeat finding, if applicable:
The finding is not a repeat finding from the prior year.
Recommendation:
Management should review its policies and procedures to ensure all procurement transactions are in accordance with Fairview Health Services’ procurement policies and have the appropriate supporting documentation.
Views of responsible officials:
Management agrees with the finding and has developed a plan to correct the finding. Fairview updated its internal control processes to better retain and document sole source procurement justification before entering vendor agreements. A standard form for sole source justification will be implemented to enhance documentation.