Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-federal entity must:
$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 the 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)], 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).
Condition: We tested a selection of procurements to ascertain whether the County complied with the above purchasing requirements. 24% of the transactions tested did not obtain an adequate number of quotations from qualified sources or satisfy sole source requirements.
Cause: Failure to adhere to and/or document County’s compliance with its own purchasing requirements.
Effect: Noncompliance with procurement policies and procedures violates state and federal grant compliance requirements.
Questioned costs: Known questioned costs total $439,749; known and projected questioned costs total $936,968. These amounts are the known and projected costs of those transactions that did not obtain an adequate number of quotations from qualified sources or satisfy sole source requirements.
Recommendation: Conduct control self-assessments to identify, document, and implement systems of internal grant compliance controls to reduce the number of purchasing exceptions.
Management’s Response: The County Auditor will arrange for control assessment workshops to identify, document, and implement systems of internal accounting and grant compliance controls that satisfy federal requirements by September 1, 2024.
· For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c).
· Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements.
· Conduct all procurement transactions in manner providing full and open competition, in accordance with 2 CFR section 200.319.
· Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a)(1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis- Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(b)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)).
Finding Type: Material Non-Compliance – Procurement and Suspension and Debarment
Criteria: Texas Uniform Grant Management Standards; Compliance Supplement – Part 3 – Compliance Requirements and Part 4 – Agency Program Requirements.
· Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(b)).
· 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
· Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section
200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.”