Finding Text
Finding 2023-004: Procurement
Information About the Program: All Programs
Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain
effective internal control over the Federal award that provides reasonable assurance that the non-
Federal entity 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 Standards for Internal Control in the Federal Government issued by the Comptroller
General of the United States or the internal Control Integrated Framework, issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
Additionally, according to 2 CFR §200.318 Procurement standards, the non-Federal entity must
maintain records 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. Title 2, Subtitle A
Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the
acquisition of property or services required under a Federal award must be conducted in a manner
providing full and open competition consistent with the standards of this section and §200.320. The
non-Federal entity must have written procedures for procurement transactions. These procedures
must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical
requirements for the material, product, or service to be procured. Such description must not, in
competitive procurements, contain features which unduly restrict competition. The description may
include a statement of the qualitative nature of the material, product or service to be procured and,
when necessary, must set forth those minimum essential characteristics and standards to which it
must conform if it is to satisfy its intended use. Noncompetitive procurements can only be awarded in
accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, 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 micro-purchase threshold (see paragraph (a)(1) of this section);
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.
Condition: During our testing over procurement, we determined NFHA did not clearly document the
rationale for the method of procurement, selection of contract type, contractor selection or rejection,
and the basis for the contract price. In addition, for noncompetitive procurements, there was no
documentation to support which of the five criteria was met to allow for the noncompetitive
procurement.
Cause: Management did not have effective internal controls in place to ensure that procurement
requirements were adequately documented and retained.
Effect: Procurement records were insufficient to meet the requirements noted in the Criteria section
above, as well as NFHA's internal procurement policy.
Questioned Costs: None.
Context: We noted that several items selected for testing did not document the rationale for the
method of procurement, selection of contract type, contractor selection or rejection, and the basis for
the contract price. In addition, we noted that several items selected for testing for noncompetitive
procurements did not maintain documentation of which of the five criteria were met to allow for the
noncompetitive procurement.
Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend NFHA update its policies to treat Federal and non-Federal
procurement the same and ensure compliance with Uniform Guidance. NFHA should retain sufficient
procurement documentation to meet the requirements noted in the Criteria section above.