Finding 6437 (2023-002)

2023-002 – PROCUREMENT, SUSPENSION, AND DEBARMENT Other Matter/Significant Deficiency U.S. Department of Housing and Urban Development CFDA #: 14.850 – Public and Indian Housing Program CRITERIA For procurements, that do not exceed an aggregate amount of $10,000 for construction and $5,000 for all other purchases only one quotation need be solicited if the price received is considered reasonable. If practicable, a quotation shall be solicited from other than the previous source before placing a repeat order. (Housing Authority of the City of Newport Procurement Policy). Emergency purchases will be documented by the procurement officer and will include the specifics of the emergency, documentation from the Executive Director declaring the emergency and other backup documentation. As soon as practical after the declared emergency an analysis shall be performed to determine if the costs of the emergency purchase were fair and to determine if modification of operating policy and/or procedures would prevent similar emergency purchases in the future. Justification. Each procurement based on noncompetitive proposals shall be supported by a written justification for using such procedures. The justification shall be approved in writing by the Contracting Officer. CONDITION We examined a sample of seven vendors used for goods and services during fiscal year 2023, and identified an instance where the Authority did not follow their procurement policy or did not retain sufficient supporting documentation in instances where each individual purchase was below $10,000 and the aggregate amount of purchases exceeded the $10,000 threshold. CAUSE The Authority’s internal control over procurement was not effective at identifying the need for competitive procurement in instances where frequently recurring transactions resulted in aggregate purchases in excess of competitive procurement thresholds. EFFECT The Authority has not ensured that it is receiving the most competitive prices or rates for services that have been procured, which may have resulted in unnecessary additional costs to the Authority. QUESTIONED COSTS Estimated questioned costs of $30,075 representing the total payments to this vendors. CONTEXT We selected a sample of seven from a population of approximately seventy vendors paid in excess of the micro-purchase threshold. This was not a statistically valid sample. REPEAT FINDING This finding is repeated from Finding 2022-002. RECOMMENDATION We recommend that the Authority implement the following:  Periodically reviewing expenditures for frequently recurring transactions with vendors that could exceed the competitive procurement thresholds.  Periodically compare the contract register against frequently used vendors.  Solicit bids and competitively procure contracts for services and materials frequently used and maintain documentation supporting the procurement decision. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.