Finding 596364 (2022-001)

Material Weakness
Requirement
I
Questioned Costs
$1
Year
2022
Accepted
2023-01-24

AI Summary

  • Core Issue: The School Board did not follow proper procurement processes for sole source vendors and professional services, leading to potential non-compliance with federal regulations.
  • Impacted Requirements: Noncompetitive proposals must meet specific criteria under 2 CFR section 200.320, including adequate documentation and approval processes.
  • Recommended Follow-Up: Strengthen internal controls by ensuring all procurement documentation is approved by both the program and purchasing directors, and retain this evidence for compliance.

Finding Text

Criteria: The Uniform Guidance Federal regulations per 2 CFR section 200.320 requires, among other things, that specific criteria be met for the procurement of noncompetitive proposals. Procurement of noncompetitive proposals is procurement through solicitation of a proposal from only one source, also known as a sole source vendor. This method may only be used when one or more of the following circumstances apply: ? The item is available only from a single source. ? The purchase is in response to a public emergency that will not permit a delay resulting from the competitive process. ? The purchase is expressly authorized by awarding or pass-through agency in response to a written request from the non-Federal entity or after solicitation of a number of sources, competition is determined inadequate. Additionally, The Uniform Guidance federal regulations per 2 CFR section 200.320 also requires, among other things, that specific criteria be met for the procurement of professional services. Procurement of professional services are required to follow the following procedures: ? The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. ? Formal procurement methods require public advertising unless a non-competitive procurement can be used. To ensure compliance with these requirements, justification of the use of noncompetitive proposals and research on the availability from multiple sources must be documented. Documentation of authorization must be retained, and any initial solicitations from multiple sources which are concluded to be inadequate, and such reasoning must be documented. Universe/Population: The total population was all vendors of the Special Education Cluster whose transactions for the year ended June 30, 2022, exceeded the micro-purchase threshold of $10,000. Payroll and benefit-related transactions were excluded from the population. Based on these requirements, the population consisted of twenty-five vendors totaling $1,179,048. Conditions: Four vendors with expenditures totaling $451,259 were selected for testing. We noted one of the vendor selected for testing was deemed to be a sole source provider of hardware and software equipment by the School Board totaling $45,000. A sole source letter was obtained from the vendor, which outlined the uniqueness of the goods and services to be provided. However, it was determined that School Board did not appropriately follow the process for reviewing a sole source provider, per their federal procurement policy. Additionally, the form used by the School Board to document the justification of a sole source vendor was deemed insufficient for the following reasons: (1) an adequate analysis or comparison of like products was not properly completed and (2) the request form was not approved (i.e. no signature) by the purchasing department. For the remaining three vendors selected, we noted that payments were made for professional service in excess of procurement thresholds under Uniform Guidance which were not properly procured. Cause: The School Board did not adhere to its established procurement policy for professional services or noncompetitive proposals to sole source vendors and control and internal review process was not properly followed. Effect: Without proper internal controls over procurement to sole source or professional service vendors, the School Board may enter into contracts with vendors where the price may not be fair or reasonable. Recommendations: The School Board should strengthen controls at the program administration level to ensure appropriate consideration to competitors are given and adequate documentation is obtained with respect to procurement of professional services and sole source products in accordance with the Uniform Guidance 2 CFR section 200.320(f). This documentation should be approved by the program director, as well as the purchasing director, and retained as evidence of the internal controls over procurement.

Categories

Questioned Costs Procurement, Suspension & Debarment

Other Findings in this Audit

  • 19922 2022-001
    Material Weakness
  • 19923 2022-001
    Material Weakness
  • 596365 2022-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
10.553 School Breakfast Program $9.67M
10.555 National School Lunch Program $5.29M
84.027 Special Education_grants to States $5.10M
32.009 Emergency Connectivity Fund Program $4.56M
84.010 Title I Grants to Local Educational Agencies $4.25M
10.558 Child and Adult Care Food Program $4.03M
93.600 Head Start $1.78M
84.367 Improving Teacher Quality State Grants $1.12M
10.559 Summer Food Service Program for Children $737,252
84.424 Student Support and Academic Enrichment Program $360,241
84.048 Career and Technical Education -- Basic Grants to States $298,182
84.371 Striving Readers $278,609
93.558 Temporary Assistance for Needy Families $231,137
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $180,287
84.173 Special Education_preschool Grants $141,503
12.U00 Rotc $122,885
84.365 English Language Acquisition State Grants $114,224
10.582 Fresh Fruit and Vegetable Program $47,291
93.575 Child Care and Development Block Grant $38,647
93.596 Child Care Mandatory and Matching Funds of the Child Care and Development Fund $37,030
93.434 Every Student Succeeds Act/preschool Development Grants $31,588
93.959 Block Grants for Prevention and Treatment of Substance Abuse $8,684
84.425 Education Stabilization Fund $564