Finding Text
Criteria
Uniform Guidance requires non-federal entities to follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. The Organization is required to adopt and maintain a written procurement policy in accordance with Uniform Guidance procurement standards and perform and document suspended and debarment searches for potential vendors prior to procuring services from the contractor. If bids are not obtained in accordance with the Organization’s procurement procedures due to using the noncompetitive procurement method, documentation must be prepared and retained including justification for sole-source procurement.
Condition and Context
The Organization does not have a documented procurement policy in accordance with 2 CFR Part 200. We noted four contractors that had total 2024 purchases over $10,000 and selected two for testing. We noted the following deficiencies in our testing:
- For the two contractors tested, the Organization had no documentation to support that its suspension and debarment verification procedures were performed prior to procuring services from contractors. Therefore, we have concluded that such verifications were not timely performed.
- The two contractors tested were selected using the noncompetitive procurement method. When the Organization relied on sole-source justification to procure services, the Organization did not document its sole-source justification prior to procuring services from the contractor.
Cause
The Organization assumed that following the procurement standards in 2 CFR Part 200 was a sufficient procurement policy and the Organization was not aware that a documented procurement policy in accordance with 2 CFR Part 200 was required. Further, the Organization was not aware of the necessity to document its suspension and debarment search procedures and justification for sole-source procurements prior to procuring services from contractors.
Effect
Without a formal procurement policy, or abidance of the documentation requirements of 2 CFR Part 200, there is an increased risk that procurement activities may not be conducted in compliance with federal requirements, potentially leading to unallowable costs or questioned costs.
Questioned Cost:
None due to auditor agreeing with verbal justification of sole-source procurements.
Recommendation
We recommend that management develop and implement a formal procurement policy that aligns with the requirements of the Uniform Guidance. We recommend that management ensure all procurement policy requirements are performed and documented prior to entering into procurement transactions.
Views of Responsible Officials and Planned Corrective Actions
See Correction Action Plan.