The Houston Food Bank and Subsidiaries

Procurement, Suspension and Debarment

U.S. Department of Agriculture/Passed-through Texas Department of Agriculture Food Distribution Cluster Federal Assistance Listing Number 10.565 – Commodity Supplemental Food Program (Administrative Costs) Award Number: TX-101-4001 Award Years: 10/1/22 – 9/30/23 and 10/1/23 – 9/30/24

Federal Assistance Listing Number 10.568 – Emergency Food Assistance Program (Administrative Costs) Award Numbers: TX-101-7058 and 01534 Award Years: 10/1/22 – 9/30/23 and 10/1/23 – 9/30/24

U.S. Department of Treasury/Passed-through Harris County Public Health Federal Assistance Listing Number 21.027 – Coronavirus State and Local Fiscal Recovery Funds (CSLFR) (ARPA – COVID-19) Award Numbers: N/A Award Years: 10/1/22 – 9/30/23 and 10/1/23 – 9/30/24

Type of Finding: Other instance of noncompliance

Criteria: Management is responsible for internal controls over compliance with Procurement, Suspension and Debarment in accordance with the Uniform Guidance.

Condition: Management has a procurement policy in place to ensure compliance with federal law and standards. However, management was unable to provide supporting documentation for a formal bidding process and verification of suspension and debarment, as required according to the procurement policy, for two vendors.

Questioned Costs: Food Distribution Cluster – $30,850; CSLFR ARPA – COVID-19 grant – $13,895

Context/Sampling: A nonstatistical sample of 3 out of 21 vendors was selected for testing the Food Distribution Cluster. A nonstatistical sample of 1 out of 3 vendors was selected for testing the CSLFR ARPA – COVID-19 grant.

Cause: The Food Bank experienced turnover in its chief financial officer, controller, and accounting manager positions during the year.

Effect or Potential Effect: Lack of compliance with Procurement, Suspension and Debarment compliance requirement may result in reduced future funding for the program.

Identification as a Repeat Finding, if applicable: 2023-003 Recommendation: We recommend The Food Bank incorporate controls and procedures to ensure the Procurement Policy is being adhered to at all times.

Views of Responsible Officials: The Food Bank agrees with the finding, which is due to turnover and transitions in key positions.

Corrective Action Plan: A vendor analysis by the Procurement department has been completed and communicated to each director to create a RFP schedule for all contract renewals. Annual education of directors and managers on the procurement policy, informal bid, and formal bid processes was completed previously and will be completed again. The team will be working with the new COO to ensure that these processes are followed and implemented frequently as new personnel is onboarded.

2023-003 Procurement, Suspension and Debarment U.S. Department of Education/Pass-through Texas Department of Agriculture Federal Assistance Listing Number 10.568 – Emergency Food Assistance Program (Administrative Costs) Award Numbers: TX-101-7058 and 01534 Award Years: 10/1/21 – 9/30/22 and 10/1/22 – 9/30/23 Federal Assistance Listing Number 10.187 – Commodity Credit Corporation (Administrative Costs) Award Number: 01534 Aware Year: 10/1/22 – 9/30/23 Federal Assistance Listing Number 10.565 – Commodity Supplemental Food Program (Administrative Costs) Award Number: TX-101-4001 Award Years: 10/1/21 – 9/30/22 and 10/1/22 – 9/30/23 Type of Finding: Other instance of noncompliance Criteria: Management is responsible for internal controls over compliance with Procurement, Suspension, and Debarment in accordance with the Uniform Guidance. Condition: Management has a procurement policy in place to ensure compliance with federal law and standards. However, one vendor’s contract was renewed without a formal bidding process and verification of suspension and debarment as required according to the procurement policy. Questioned Costs: None Context/Sampling: A nonstatistical sample of 3 out of 14 vendors were selected for testing. Cause: During the time the vendor was due for renewal, there was turnover of the CFO. Therefore, The Food Bank did not allocate enough time and resources to properly prepare a bidding process. Effect or potential effect: Lack of compliance with Procurement, Suspension, and Debarment compliance requirement may result in reduced future funding for the program. Recommendation: We recommend The Food Bank incorporate controls and procedures to ensure the Procurement Policy is being adhered to at all times. Views of Responsible Officials: The Food Bank agrees with the finding. Due to turnover and transitions in key positions during the COVID-19 pandemic, a contract agreement was renewed with Houston Food Bank’s benefits broker without a formal bidding process. Corrective Actions: In FY 2024 vendor analysis by the Procurement department has been completed and communicated to each director to create an RFP schedule for all contract renewals. Annual education of directors and managers on the procurement policy, informal bid, and formal bid processes was completed in June 2023.

2023-004 Eligibility U.S. Department of Education/Pass-through Texas Department of Agriculture Federal Assistance Listing Number 10.187 – Commodity Credit Corporation Award Number: 01534 Award Year: 10/1/22 – 9/30/23 Type of Finding: Other instance of noncompliance Criteria: Management is responsible for compliance with Eligibility procedures in accordance with the Uniform Guidance. Condition: One of the subrecipients’ (i.e. , Agencies receiving food for distribution) eligibility requirements is for The Food Bank to conduct annual site visits to verify the site’s ability to operate in full compliance with the requirements of the agency agreement. Three subrecipients tested did not have evidence of an annual site visit. Questioned Costs: None Context/Sampling: A nonstatistical sample of 21 out of 209 subrecipients was selected for testing. Cause: The Food Bank experienced significant turnover in the Partner Services Department resulting in these annual visits being missed during 2023. Effect or Potential Effect: Lack of compliance with Eligibility compliance requirements may result in reduced future funding for the program. Recommendation: We recommend The Food Bank incorporate controls and procedures to ensure the subrecipient eligibility requirements are being followed. Views of Responsible Officials: The Food Bank agrees with the finding. Due to turnover and transitions in key positions, on-boarding of agencies did not include these three locations on the annual site visit schedule. Corrective Actions: In FY 2024 new procedures have already been implemented for on-boarding, new personnel have been assigned oversight of agencies, and two compliance departments, one in Accounting and one in Partner Services, have been fully established to monitor compliance.