TRANSCOM Inc.

Finding 2021-001: Procurement (Significant Deficiency) Federal Assistance Listing Number: 20.205 Federal Agency: U.S. Department of Transportation Pass-through Entities: New Jersey Department of Transportation, New York Department of Transportation, Pennsylvania Department of Transportation Criteria: Under 2 CFR Section 200.318, non-federal entities must have and use documented procurements that conform to the procurement standards identified in 2 CFR Sections 200.317 through 200.327. Condition: TRANSCOM did not obtain proper approval from its pass-through entities in order to utilize the noncompetitive procurement method allowed under Uniform Guidance standards. Context: For eight of the 18 contracts selected for testing which exceeded the competitive procurement threshold as set forth by its procurement policy, we noted one instance where TRANSCOM did not obtain proper approval from its pass-through entities. Cause: TRANSCOM did not have adequate internal controls in place to ensure that its procurement procedures were in compliance with Uniform Guidance compliance requirements. Effect or Potential Effect: Without the proper internal controls in place to assure that its procurement procedures are in compliance with Uniform Guidance, TRANSCOM could contract with vendors that were not selected under proper procurement standards. Questioned Costs: $253,518 Repeat Finding: This is not a repeat finding. Auditor's Recommendation: We recommend that TRANSCOM review and enhance its procurement procedures to ensure compliance with Uniform Guidance's procurement standards. Views of Responsible Officials: It is in the best interests for the organization to revise its Procurement Procedures (TAP 8) so they are consistent with the procurement requirements outlined in 2 CFR 200.318-327, be derived from best practices, and that will serve all procurements, regardless of the source of revenue. The Corrective Action Plan details the past, ongoing and future activities that TRANSCOM has taken, currently is taking, and will take to revise its procurement procedures. TRANSCOM?s current internal controls will be revised to align with the revised procurement policy.

TRANSCOM CORRECTIVE ACTION PLAN Pursuant to 2 CFR 200.511(c), the following constitutes the ongoing and planned corrective actions that is being undertaken to address Finding 2021-001 contained in the 2021 audit report for TRANSCOM (fiscal year ending December 31, 2021). In December of 2021, TRANSCOM submitted a Draft Corrective Action Plan to the NJDOT External Audit Group that presented an approach on alternatives and impacts for changing procurement practices. These issues were further discussed at Board Meetings conducted on February 4th and 18th and June 27th of 2022 and specifically with the 3 State DOT?s on May 17th. Based on direction from those meetings TRANSCOM on August 3, 2022, engaged the services of Robert M. Lloyd, a qualified subject matter expert with more than 40 years of experience in federal award implementation. Mr. Lloyd is assisting management in the following tasks: (1) properly assess the applicability of the procurement standards contained in 2 CFR 200.318-327; (2) develop new procurement policies and procedures based on best practices applicable to non-profit organizations and procurement requirements applicable to non-federal entities receiving federal awards and to the federal government itself; (3) develop enhanced policies related to ethical behavior by those involved in TRANSCOM purchasing activities as well as in other organizational activities where unethical behavior should be prevented or detected; (4) determine the appropriate staffing pattern for the TRANSCOM procurement function. A preliminary report concerning the consultant?s findings was presented to responsible officials of the states of New Jersey, New York and Connecticut on September 20, 2022. A final report will be completed by November 30, 2022. The consultant?s work is being conducted under the direct supervision of Steven Levine, PE TRANSCOM Executive Director and Vincent Esposito, TRANSCOM Chief Financial Officer. In addition, TRANSCOM has documented its progress on the Draft Corrective Action Plan through monthly progress reports that have submitted to the NJDOT External Audit Group. Lastly, TRANSCOM has included funding in its CY 2023 Work Plan for Third- Party 2 CFR 200 Compliance Support and arrangement of staffing resources. Ideally these resources will be knowledgeable about Uniform Guidance (2 CFR 200) and desirably possess a recognized procurement certification. PROJECTED COMPLETION DATE: Our anticipated completion date for the Corrective Action Plan is 10/01/2023 or earlier if practical, contingent on the conduct and scheduling of the meetings with the Board of Trustees in accordance with our governance.