Finding Text
Assistance Listing Number, Federal Agency, and Program Name 20.205, U.S. Department of Transportation, Federal Highway Administration Highway Planning and Construction
Federal Award Identification Number and Year CPG222, CPG23, CPG223, MT23, OZ23, OZ22, IC22, IC23, PC23, PC22, RS23, RS22
Pass through Entity Michigan Department of Transportation
Finding Type Material weakness and material noncompliance with laws and regulations
Repeat Finding No
Criteria Under Uniform Guidance 2 CFR 200.319(d), a non federal entity must have written procedures for procurement transactions.
Further, under 2 CFR 200.320(c), there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply:
1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micropurchase threshold;
2) The item is available only from a single source;
3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation;
4) The federal awarding agency or pass through entity expressly authorizes a noncompetitive procurement in response to a written request from the non federal entity; or
5) After solicitation of a number of sources, competition is determined inadequate.
In addition, under 2 CFR 200.318(h), the non federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. Further, the regulations under 2 CFR Part 180 restrict 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.
Condition The Council did not have adequate controls in place to ensure compliance with the applicable procurement and suspension and debarment standards and its own internal procurement policy.
Questioned Costs $125,000
Identification of How Questioned Costs Were Computed The questioned costs represent contracts entered into under noncompetitive procurement methods with opportunities for full and open competition and activity related to those contracts reported on the schedule of expenditures of federal awards for the period under audit.
Context - During procurement testing, we noted two contracts over the Council's formal procurement threshold of $50,000 where the Council procured these services using noncompetitive methods. However, opportunities existed to procure services with full and open competition. Additionally, we noted six instances for which a check for suspension and debarment was not performed. The Council did perform the suspension and debarment check after we identified the noncompliance and noted that none of the six contractors were suspended or debarred; therefore, noting no questioned costs.
Cause and Effect - Per review of the Council's financial management manual, we noted procurement guidelines for primary use vendors (those procured using noncompetitive methods) wer not clearly defined). Additionally, the Council's procurement guidelines are silent on services provided on an extended contract. Further, we noted a lack of controls surrounding chcks for suspension and debarment on primary use vendors. The lack of clarity within the Council's policies and procedures to align with procurement, suspension, and debarment resulted in the noncompliance.
Recommendation - We recommend the Council update its policies and procedures to align with procurement, suspension, and debarment requirements under the Uniform Guidance.
Views of Responsible Officials and Corrective Action Plan - Management has revised the financial management manual with an updated procurement policy in accordance with federal regulations. The Council has developed detailed procedures and required documentation for staff to ensure compliance. Mandatory training will be provided to staff that engage in purchasing activities.