Assistance Listing Number, Federal Agency, and Program Name 20.509, U.S. Department of Transportation, Formula Grants for Rural Areas
Federal Award Identification Number and Year MI 2020 008 07
Pass through Entity Michigan Department of Transportation (MDOT)
Finding Type Material weakness and material noncompliance with laws and regulations
Repeat Finding No
Criteria Per 2 CFR 200.212 and 200.318, 2 CFR Section 180.300, and 48 CFR Section 52.209 6, recipients must have procedures in place for verifying that an entity with which they plan to enter into a covered transaction is not debarred, suspended, or otherwise excluded. They must also have procedures in place to ensure procurement policies are followed for all contracts that are partially or fully funded with federal funds.
Condition Of the 40 contracts with a contractor, 2 were entered into without verification that the entity was not debarred, suspended, or otherwise excluded. Additionally, 2 of the 40 contracts tested did not have documentation to support that either the small purchase procedures were followed or the rationale for a noncompetitive solicitation was documented.
Questioned Costs None
Identification of How Questioned Costs Were Computed N/A
Context Of the sample of 40 contracts procured this year that we selected for testing, 2 of them did not include adequate documentation regarding review that the contractor was not debarred, suspended, or otherwise excluded. The Authority has since confirmed, as of the date of the audit, that that contractor was not on the suspended or debarred list, and, therefore, there are no questioned costs. Also, 2 of the 40 samples selected did not have required support for the procurement method selected based on federal guidelines, as well as the Authority's purchasing policy.
Cause and Effect Internal control procedures related to compliance with suspension and debarment requirements and to ensuring the procurement policy is followed and all factors documented properly did not operate effectively. As a result, the Authority did not perform procedures to ensure that a contractor is not debarred, suspended, or otherwise excluded from entering into contracts with federal funding. The Authority has since confirmed, as of the date of the audit, that that contractor was not on the suspended or debarred list, and, therefore, there are no questioned costs. The Authority also did not obtain price quotes, as required by the small purchases provision, or have the appropriate rationale, as required by the noncompetitive solicitation provision, before selecting a vendor for services. That resulted in insufficient documentation to support the procurement for the 1 contract.
Recommendation Internal control procedures should be implemented to ensure that all contracts include verification that an entity is not debarred, suspended, or otherwise excluded and that documentation of this review is maintained in the contract file. The Authority should also implement internal control procedures to ensure the proper documentation is kept in the procurement files to support any and all procurement decisions in accordance with the purchasing policy.
Views of Responsible Officials and Corrective Action Plan Management will ensure that all contracts include verification that an entity is not debarred, suspended, or otherwise excluded and maintain documentation of this review in the contract file. While our current internal controls already support this practice, we acknowledge that there were instances in which this was unintentionally missed. We are re educating procurement staff regarding the necessity of these verifications.
Additionally, the contract in question related to emergency professional services in support of the Authority's response to the global pandemic. Due to the emergent situation, the ideal processes were not followed. We acknowledge that internal controls must be followed for all contracts, regardless of urgency. Furthermore, the contract should have been reevaluated when the public health emergency ended, and the processes used should have been fully documented. We will endeavor to have full documentation in the future.