Finding 573027 (2024-007)

2024 – 007 Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Department of Interior Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds (ARPA) Outdoor Recreation Acquisition, Development and Planning ALN: 21.027 15.916 Pass-Through Agency: Coronavirus State and Local Fiscal Recovery Funds (ARPA) N/A Outdoor Recreation Acquisition, Development and Planning Arizona State Park Trails Pass-Through Number(s): Coronavirus State and Local Fiscal Recovery Funds (ARPA) N/A Outdoor Recreation Acquisition, Development and Planning 04-007-652304 Award Number and Period: Coronavirus State and Local Fiscal Recovery Funds (ARPA) 1505-0271 3/3/2021 – 12/31/2024 Outdoor Recreation Acquisition, Development and Planning 04/18/2022-12/31/24 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Nogales must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.324, the non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220). All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non- Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov | Home (click on Search Record, then click on Advanced Search-Exclusions) (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: The following is a summary results for each audited program. Coronavirus State and Local Fiscal Recovery Funds (ARPA) - Audit procedures included selection and testing of five competitively procured vendor contracts.  Three out of five vendors tested for procurement did not provide support for the procurement method used, price/bid comparison, and cost analysis performed.  One out of five vendors tested did not have a valid contract on file.  Five out of five vendors tested did not provide support for the SAMS verification check that the winning vendor was not suspended nor debarred from receiving federal funds prior to awarding the contract. Outdoor Recreation Acquisition, Development and Planning – Audit procedures included selection and testing of five competitively procured vendor contracts. • Five out of five vendors tested for procurement did not provide sample support requested to test procurement method selected, price/bid comparison, and cost analysis performed. • Five out of five vendors tested did not provide support for the SAMS verification check that the winning vendor was not suspended nor debarred from receiving federal funds prior to awarding the contract. Questioned costs: Unknown Context: See “Condition.” Cause: The City’s written procurement, suspension and debarment policies and procedures are in compliance with Uniform Grant Guidance but were not properly adhered to. Effect: The City is not in compliance with uniform grant guidance requirements related to procurement, suspension, and debarment. Repeat Finding: Yes. See 2024-005. Recommendation: The City of Nogales should enhance and/or modify existing controls over procurement, suspension and debarment policies and procedures to ensure adherence to all uniform grant guidance requirements. This could include implementing a more robust checklist that should be completed, signed off by management and included with each procurement which has all required items noted such as cost/price analysis and verification of suspension and debarment of vendors. Views of responsible officials: See corrective action plan. Corrective action plan: See corrective action plan.