Finding 2023-001
significant deficiencyquestioned costs
- Program
- CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (21.027)
- Compliance requirement
- Procurement and suspension and debarment
- Questioned costs
- amount not determinable
- FAC record
- FY2023 audit on fac.gov
Finding text from the filing
Identification as a repeated finding, if applicable: N/A
Recommendation: The Organization should follow the contract cost and price guidelines as outlined in the Uniform Guidance.
Views of responsible officials and planned corrective actions: Management does not disagree with the finding 2023-001 related to the COVID-19 Coronavirus State and Local Fiscal Recovery Funds. See separate report for key considerations and planned corrective action.
Cause: The Organization entered into an agreement with a previously used general contractor to oversee the construction project. The general contractor assisted in soliciting bids from subcontractors, which were brought to the Regional East Texas Food Bank for evaluation and selection. However, the general contractor’s fee was structured in the agreement as a percentage of construction costs.
Criteria: Procurement, Suspension and Debarment (2 CFR section 300.324)
Condition: Federal regulations prohibit the cost plus a percentage of cost and percentage of construction costs methods of contracting.
Questioned costs: ALN 21.027 – Unknown questioned costs for the general contractor’s fee based on 2.5% percentage of the construction costs.
Context: Out of a population of 8 vendors, 2 vendors were selected for testing. Our sampling method was not, and is not intended to be, statistically valid. Of the vendors tested, one vendor contract was structured as a fee based upon the percentage of construction costs.
Effect or potential effect: Federal contract costs and price guidelines were not followed.