Finding Text
2 CFR 180.305 states that Non-Federal entities are prohibited from entering into a covered transaction with
parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal
agency responsible for the transaction grants an exception under 2 CFR § 180.135.
2 CFR 180.200 identifies “covered transactions” as nonprocurement or procurement transactions at the
primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered
transaction and another person. Procurement contracts for goods and services awarded under a
nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts
are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR §180.220.
All nonprocurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are
considered covered transactions, unless exempt by 2 CFR §180.215.
When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the
entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by
checking SAM exclusions (https://sam.gov ); collecting a certification from the entity, or adding a clause or
condition to the covered transactions with that entity.
31 CFR Part 19 has analogous provisions to 2 CFR Part 180. 31 CFR § 19.100 states that Part 19 adopts
a governmentwide system of debarment and suspension for Department of Treasury nonprocurement
activities. 31 CFR § 19.305 prohibits participants from entering into a covered transaction with an excluded
person unless the Department of Treasury grants an exception and prohibits participants from entering into
any transaction with a disqualified person unless the participant has obtained an exception under the
disqualifying statute, Executive order, or regulation.
31 CFR § 19.200 identifies “covered transactions” as nonprocurement or procurement transactions at the
primary tier, between a Federal agency and a person; or at a lower tier, between a participant in a covered
transaction and another person. 31 CFR § 19.220(b)(1) specifically provides that a contract for goods or
services is a covered transaction if the contract is awarded by a participant in a nonprocurement transaction
covered under § 19.210, and the amount of the contract is expected to equal or exceed $25,000. Under 31
CFR § 19.210, all nonprocurement transactions, as defined in § 19.970, are covered transactions unless
listed in § 19.215.
31 CFR § 19.300 provides that when entering into a covered transaction with another person at the next
lower tier, the participant must verify that the person at the lower tier is not excluded or disqualified. This
may be done by checking the EPLS (Excluded Parties List System), collecting a certification from that
person if allowed by this rule, or adding a clause or condition to the covered transaction with that person.
The District did not have the proper internal controls in place to verify that all entities, with whom the District
had entered into covered transactions, had not been suspended or debarred. During testing of
Procurement, Suspension, and Debarment for the Child Nutrition Cluster, we noted one instance in which
a vendor was paid more than $25,000 and there was no evidence that the District checked the SAM
exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction
with the vendor. Due to the deficient internal control structure, the required verification was not completed
for the only covered transaction in the Child Nutrition Cluster during Fiscal Year 2021.
Failing to have the appropriate controls in place may result in vendors receiving federal funds that are
suspended or debarred.
Prior to contracting with vendors that will be paid with federal funds, the District should verify the vendor is
not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or
adding a clause or condition to the covered transaction with the vendor.