Finding Text
Information on the federal program: Federal awarding agency: United States Department of Education (ED) Federal Program: COVID-19 ? Education Stabilization Fund ? Higher Education Emergency Relief Fund (HEERF), ALN 84.425 (F/L) Award year: 2021-2022 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR 200.303 requires that a non-federal entity must (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity 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 ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States and the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR 200.318 (i) General Procurement Standards states, ?the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.? 2 CFR 200.319 (e) Competition states, ?the non-Federal entity must ensure that all prequalified lists of persons, firms, or products which are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition. Also, the non-Federal entity must not preclude potential bidders from qualifying during the solicitation period.? The University of Incarnate Word?s Procurement and Bid Policy Version 1.0, Preferred Vendors, states ?Preferred vendors have been identified by the University?s Purchasing Department as providing fair and economical pricing on the goods or services that they provide; therefore, the University has decided to frequently utilize these vendors for purchasing needs. Goods or services purchased from a preferred vendor do not have to go through the bid process. A preferred vendor listing is maintained by the Purchasing Department which is available on the Policy website. Departments can submit justification to assign a vendor as preferred; however, the Director of Purchasing has ultimate discretion over the classification. All preferred vendors are formally reviewed annually by the Purchasing Department to assess whether they continue to provide the University with pricing that is within range or better than competitors. A sample of regularly purchased items is selected and the pricing from the preferred vendor is compared to the pricing of a few competitors to determine whether the preferred vendor is providing comparable pricing. Documentation of the annual pricing review is retained to justify the vendors being included on the preferred vendor listing.? Condition: The University did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Additionally, as required by the University?s Procurement and Bid Policy, the University did not maintain and provide documentation of the performance of an annual pricing review in order to assess whether preferred vendors continue to provide comparable pricing to other vendors. Questioned costs: $0 Context: EY selected and tested six procurements with expenditures totaling $1.1 million from a population of 23 procurements with expenditures totaling $2 million charged to the HEERF program during the year ended May 31, 2022. Of the six procurements tested: ? According to the University, two procurements were made from a preferred vendor included on a preferred vendor list; however, the history of the procurement was not documented, including the decision to use a preferred vendor for the procurement. Additionally, there was no evidence that the preferred vendor was reviewed to ensure comparable pricing. ? Three procurements were made from a single vendor using noncompetitive procurement ? sole source. A sole source justification memo was prepared; however, the memo did not address the history of the procurement and the reasons for lack of solicitation of other vendors in sufficient detail. ? According to the University, one procurement was made from a vendor using noncompetitive procurement ? public emergency; however, the history of the procurement and the emergency procurement were not documented. Effect: The University did not comply with the general procurement standards per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Additionally, if the University does not review and document the review of preferred vendors for comparable pricing on a periodic basis, noncompliance with federal competitive procurement requirements could occur. Cause: The University did not have effective internal controls and procedures in place to ensure the University maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Identification as a repeat finding, if applicable: Not Applicable. Recommendation: The University should retain written documentation for procurements documenting the history of the procurement prior to the procurement of goods or services, including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. The University should perform and maintain documentation of pricing reviews for preferred vendors to ensure continued comparable pricing and maximum open and free competition. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to correct the finding.