Finding Text
Type of Finding: Material Weakness in Internal Control over Compliance
Federal Agency: U.S. Department of Defense
Federal Program Name: Natural Resource Survey and Habitat Enhancement
Assistance Listing Number: 12.005
Federal Award Identification Number and Year: H79TI083313 - 2020
Pass-Through Agency: U.S. Army Corps of Engineers, Seattle District
Pass-Through Number(s): W912DW-20-2-0003
Award Period: September 28, 2020, through September 27, 2025
Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record 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". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity".
Condition: During our testing, it was noted that the Organization was not performing suspension and debarment checks prior to entering into vendor contracts to ensure the vendor was not listed in the suspended or debarred database maintained by the General Services Administration. In addition, The Organization does not have an established procurement policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 8 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320.
Questioned costs: None.
Context: A sample of 8 was made from a population of 29 procurement transactions charged to the major program that exceeded $3,500 ((the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $69,944.43. Of the 8 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons.
Cause: Staff were not aware of the specific compliance requirements and procedures for procurement, suspension and debarment status.
Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected.
Repeat Finding: No.
Recommendation: We recommend the Organization design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommend The Organization formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance.
Views of responsible officials: There is no disagreement with the audit finding.