Finding Text
Finding Reference 2023-005
Federal Agency: U.S. Department of Treasury
Pass-through Agency: P.R. Department of Treasury – Puerto Rico Fiscal Agency and Financial Advisory Authority
Program: Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027)
Compliance Requirement: Procurement Suspension & Debarment (I)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for none of the contract agreements evaluated.
Criteria 2 CFR Section 200.327 references Appendix II to Part 200, which establishes contract provisions that must be included in non-federal entity contracts under federal awards.
Cause of Condition The Municipality has been disclosing the federal contract provisions in the Public Notices inviting to Bid Auctions or Request for Proposals as a requirement to be awarded for a federal award contract. However, the contract provisions have not been included in the signed agreements.
Effect of Condition The program is not in compliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327.
Recommendation We recommend to the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action Although the sample selected in relation to the contracts did not contain the required federal clauses, the contracted companies did comply with the main provisions established by 2 CFR Section 200.327 in Appendix II Part 200, such as equal employment opportunity under 41 CFR Part 60, Davis-Bacon Act as amended 40 USC 3141-3148 and the Contract Work Hours and Safety Standards Act 40 USC 3701-3708. Also, for the three contracts, it was reviewed and validated that they had their SAM registration on the day prior to the formalization of the contract and/or disbursement of any payment. However, this situation has already been remedied since the federal clauses required by 2 CFR Section 200 Appendix II Part 200 were and are included in all contracts financed with federal funds.
Implementation Date: During fiscal year 2023-2024.
Responsible Person: Mrs. Natasha Vásquez
Federal Programs Director