DELTARES USA, INC.Non-Profit

Information on the Federal Programs: Research and Development Cluster (all federal programs)Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): 2 CFR 220.318 indicates that non-federal entities must have and use documented procurement policies for the acquisition of property or services required under a federal award or subaward. It goes on to note that non-federal entities must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. As a recipient of federal award funding, Deltares is also subject to the suspension and debarment policies outlined in 2 CFR Part 180, which require that organizations have procedures in place to prevent the flow of federal funds to any parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities.Condition: During our audit, we reviewed Deltares? policies and procedures and noted that, while policies are in place concerning internal control over financial reporting, and the current practices are designed to take compliance requirements into consideration, enhancements are needed formalize the policies and procedures concerning procurement, vendor and employee screenings, and conflicts of interest.Cause: Deltares is a relatively small organization and is going through the process of gaining familiarity with the Uniform Guidance requirements associated with federal award funding. While Deltares is aware of the compliance requirements and has taken steps to address them, it has not yet formalized certain associated policies and procedures.Effect or Potential Effect: Without proper procurement policies in place, there is a risk that Deltares may not receive goods or services of adequate value for a reasonable price. Without a proper suspension and debarment policy in place, there exists a risk that Deltares may inadvertently provide federal funding to parties that are prohibited from participation in federal awards. Transactions unsupported by adequate documentation of the procurement and screening processes may be subject to disallowance.Questioned Costs: NoneContext: Deltares typically agrees in advance with its donors regarding significant procurements to be performed under federal awards, and all significant contracts for goods and services are reviewed by legal counsel. Accordingly, risks are somewhat mitigated, however formalized written policies and procedures around procurement and suspension and debarment have not yet been put in place.Identification as a Repeat Finding, if Applicable: N/ARecommendation: We recommend that Deltares adopt a formal written procurement policy. This policy should describe the practices to be followed when purchasing goods or service with federal funds, and include dollar value thresholds at which specific procedures and documentation must be performed. The written procurement policies should conform to the procurement standards of the Uniform Guidance. We also recommend that the current conflict of interest statement be signed annually be all employees rather than by only the Director. In regards to suspension and debarment, we recommend that Deltares formalize in writing the procedures to be followed to ensure that no federal award funds flow to sanctioned or debarred individuals or entities.