Finding Text
2024-002 Procurement
Federal Agency U.S. Department of the Treasury
Federal Assistance Listing Numbers 21.027 – Coronavirus State and Local Fiscal Recovery Funds
Criteria [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness
Entities receiving federal awards must have and follow documented procurement policies. Title 2 CFR 200.320 outlines acceptable methods of procurement and establishes applicable threshold requirements.
Condition During our review of federally funded purchases, we noted several instances where procurement transactions were not conducted in accordance with these federal guidelines.
For purchases falling between the micro-purchase threshold and the simplified acquisition threshold, the District did not retain documentation to demonstrate that price quotations were obtained from an adequate number of qualified sources. Additionally, for purchases exceeding the simplified acquisition threshold, the District was unable to provide documentation showing that the required number of bids were solicited. In one instance, a sole source acquisition was made without sufficient written justification, as required by 2 CFR 200.320(c), which permits noncompetitive procurement only under specific and well-documented circumstances.
Furthermore, the District could not provide documentation verifying that vendors were screened against the federal System for Award Management (SAM.gov) to confirm that they were not suspended or debarred from participating in federal programs.
Lastly, the District could not demonstrate that it performed conflict of interest checks to ensure that employees or officers participated in the selection, award or administration of a contract where conflicts of interest exist.
This finding appears to be a systemic problem.
Cause The District’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy.
Effect Noncompliance with federal procurement requirements increases the risk of unallowable costs, noncompetitive vendor selection, and potential questioned costs. This could result in financial penalties or the need to return federal funds. The absence of conflict of interest checks also exposes the District to the risk of biased procurement decisions and compromised integrity.
Recommendation The District should update and enforce procurement policies and procedures to fully comply with 2 CFR 200.318–200.327. These procedures must include documented competitive procurement processes, appropriate documentation retention, sole source justification protocols, and mandatory screening of vendors through SAM.gov. Written standards of conduct should be maintained and enforced to prevent conflicts of interest. Additionally, all staff involved in procurement should receive comprehensive training on federal procurement requirements and internal control responsibilities. The District should also implement a monitoring process to ensure ongoing compliance with these requirements.
Views of responsible officials and planned corrective actions Two new policies will be implemented; a board policy to cover board approvals for the bidding of large projects and an internal policy and procedure which spells out additional requirements, like requiring three written bids for large purchases. In addition, all members of the Board of Directors and senior leadership team will sign Conflict of Interest statements on an annual basis to confirm that they do not have any potential conflicts that could impact purchasing decisions.