Finding Text
Finding 2023-001: Special Education Cluster Suspension and Debarment Procedures
U.S. Department of Education
Pass-through agency: Michigan Department of Education
Assistance Listing Numbers: 84.027A, 84.027X, 84.173A and 84.173X
Award numbers: 220450 21-22, 230493 22-23, 230450 22-23, COVID-19 221280 21-22, 220460 21-22, 230460 22-23 and COVID-19 221285 21-22
Award year ends: June 30, 2023, September 30, 2023 and September 30, 2024
Specific Requirement: Suspension and Debarment
Criteria: Section 200.214 of the Cost Principles of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) restricts awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. This guidance requires a non-federal entity to establish policies and procedures for verifying the status of contractors and vendors whenever the value of a contract or cumulative transactions is expected to equal or exceed $25,000 to protect the federal government from fraud, waste and abuse.
Questioned Costs: None.
Condition: During our detailed testing of suspension and debarment for the Special Education Cluster, we noted that the School District did not verify that its contractors and vendors receiving payments in excess of $25,000 were not suspended or debarred prior to doing business with them.
Context: One vendor charged to the Special Education Cluster received payments in excess of the $25,000 testing threshold during the fiscal year, but the School District did not perform the necessary suspension or debarment testing prior to doing business with them. A subsequent vendor search on the federal System for Award Management (SAM.gov) website indicated that the vendor was not ineligible for participation in federal assistance programs or activities. The sample was not a statistically valid sample.
Effect: Failure to verify the status of contractors and vendors prior to entering into business contracts or transactions that equal or exceed $25,000 could result in business activities with ineligible vendors and disallowed federal program expenditures.
Cause: The School District did not follow its established procedure for verifying that its contractors and vendors were not suspended or debarred prior to entering into business contracts or transactions that equaled or exceeded $25,000 for any of its grant-funded programs.
Repeat Finding: This is not a repeat finding.
Recommendation: The School District should follow its suspension and debarment procedures for verifying the eligibility of its contractors and vendors prior to entering into business contracts or transactions that equal or exceed $25,000 in value. In addition, the School District should retain supporting documentation of these verifications performed, such as the printing of vendor search results from the SAM.gov website.
Views of Responsible Officials: The School District agrees with this finding.