Finding Text
2023 – 006 Procurement and Suspension and Debarment
Federal Agency: Department of the Treasury
Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds (ARPA)
ALN: 21.027
Pass-Through Agency: N/A
Pass-Through Number(s): N/A
Award Number and Period: 1505-0271
3/3/2021 – 12/31/2024
Statistically Valid Sample: No, and not intended to be a statistically valid sample
Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance
Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Nogales must establish and
maintain effective internal control over the Federal award that provides reasonable assurance that it is
managing the federal award in compliance with federal statutes, regulations, and the terms and
conditions of the federal award. These internal controls should be in compliance with guidance in the
“Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
Per 2 CFR 200.324, the non-Federal entity must perform a cost or price analysis in connection with
every procurement action in excess of the Simplified Acquisition Threshold including contract
modifications. The method and degree of analysis is dependent on the facts surrounding the particular
procurement situation, but as a starting point, the non-Federal entity must make independent estimates
before receiving bids or proposals.
Non-federal entities are prohibited from contracting with or making subawards under covered
transactions to parties that are suspended or debarred. “Covered transactions” include contracts for
goods and services awarded under a non-procurement transaction (e.g., grant or cooperative
agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2
CFR section 180.220). All non-procurement transactions entered into by a pass-through entity (i.e.,
subawards to subrecipients), irrespective of award amount, are considered covered transactions,
unless they are exempt as provided in 2 CFR section 180.215.
When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-
Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting
regulations, is not suspended or debarred or otherwise excluded from participating in the transaction.
This verification may be accomplished by:
(1) checking the System for Award Management (SAM) Exclusions maintained by the General
Services Administration (GSA) and available at SAM.gov | Home (click on Search Record, then
click on Advanced Search-Exclusions) (Note: The OMB guidance at 2 CFR part 180 and agency
implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System
(EPLS)),
(2) collecting a certification from the entity, or
(3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED)
2023 – 006 Procurement and Suspension and Debarment (Continued)
Condition: Audit procedures included selection and testing of five competitively procured vendor
contracts. No evidence of procurement documentation provided for review.
Five out of five vendors tested for procurement did not provide support for the procurement
method used, price/bid comparison, and cost analysis performed.
Two out five vendors tested over with purchases over $100,000 did not provide support for the
control in place for the review and approval by the City Manager.
Five out of five vendors tested did not provide support for the SAMS verification check that the
winning vendor was not suspended nor debarred from receiving federal funds prior to awarding
the contract.
Questioned costs: Unknown
Context: See “Condition.”
Cause: The City’s procurement, suspension and debarment policies and procedures are in compliance
with Uniform Grant Guidance but were not properly adhered to. The City notes that no contracts or
agreements were set up with the vendors, as they were locally established and had valid business
licenses with the City.
Effect: The City is not in compliance with uniform grant guidance requirements related to procurement,
suspension, and debarment.
Repeat Finding: No
Recommendation: The City of Nogales should enhance and/or modify existing controls over
procurement, suspension and debarment policies and procedures to ensure adherence to all uniform
grant guidance requirements. This could include implementing a more robust checklist that should be
completed, signed off by management and included with each procurement which has all required
items noted such as cost/price analysis and verification of suspension and debarment of vendors.
Views of responsible officials: See corrective action plan.
Corrective action plan: See corrective action plan.