Knox County District Board of HealthLocal Government

2 CFR § 2400 gives regulatory effect to Housing and Urban Development (HUD) for Appendix II to 2 CFR § 200 which states, in part, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following: (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-Federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. The contracts must also include a provision for compliance with the Copeland “Anti-Kickback” Act (40 U.S.C. 3145), as supplemented by Department of Labor regulations (29 CFR Part 3, “Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States”). The Act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency.The lack of controls over the prevailing wage requirements pertaining to the UMD revolving loan led to them not meeting the requirements of the Davis-Bacon Act. The County did not obtain copies of the weekly certified payroll reports from the contractor to verify prevailing wages were paid on a weekly basis for each week in which any contract work was performed. Failure to obtain the required approvals and to ensure compliance can result in improper budgeting, regulatory noncompliance, and reduced effectiveness of management oversight.This noncompliance also resulted in a qualified opinion over the AL# 14.228 Community Development Block Grants/State’s Program. Failure to have effective controls in place over wage-rate requirements may result in the Knox County and its contractors or subcontractors failing to pay prevailing wages when required by Federal law and could result in reduction of future Federal funding or other sanctions imposed by Federal grantors. When required by Federal grant legislation, the County should develop and implement an internal control process to ensure prime construction contracts in excess of $2,000 paid with Federal grant monies contain provisions that require the contractor to comply with wage rate requirements and the DOL regulations (29 CFR Part 5). Further, the County should develop and implement an internal control process to ensure certified payroll reports are provided weekly by the contractor.

2 CFR § 2400 gives regulatory effect to Housing and Urban Development (HUD) for Appendix II to 2 CFR § 200 which states, in part, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following: (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-Federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. The contracts must also include a provision for compliance with the Copeland “Anti-Kickback” Act (40 U.S.C. 3145), as supplemented by Department of Labor regulations (29 CFR Part 3, “Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States”). The Act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency.The lack of controls over the prevailing wage requirements pertaining to the UMD revolving loan led to them not meeting the requirements of the Davis-Bacon Act. The County did not obtain copies of the weekly certified payroll reports from the contractor to verify prevailing wages were paid on a weekly basis for each week in which any contract work was performed. Failure to obtain the required approvals and to ensure compliance can result in improper budgeting, regulatory noncompliance, and reduced effectiveness of management oversight.This noncompliance also resulted in a qualified opinion over the AL# 14.228 Community Development Block Grants/State’s Program. Failure to have effective controls in place over wage-rate requirements may result in the Knox County and its contractors or subcontractors failing to pay prevailing wages when required by Federal law and could result in reduction of future Federal funding or other sanctions imposed by Federal grantors. When required by Federal grant legislation, the County should develop and implement an internal control process to ensure prime construction contracts in excess of $2,000 paid with Federal grant monies contain provisions that require the contractor to comply with wage rate requirements and the DOL regulations (29 CFR Part 5). Further, the County should develop and implement an internal control process to ensure certified payroll reports are provided weekly by the contractor.

2 CFR 1200.10 gives regulatory effect to 2 CFR 180.305 which provides that participants are prohibited from entering into a covered transaction with parties that are excluded or disqualified and 2 CFR 180.315 prohibits participants from entering into covered transactions with parties whose principals are excluded or disqualified, unless the Federal agency responsible for the transaction grants an exception under 2 CFR § 180.135, or unless the participants has obtained an exception under the disqualifying statute, Executive order, or regulation. 2 CFR 1200.10 gives regulatory effect to 2 CFR 180.200 identifies “covered transactions” as non-procurement or procurement transactions subject to the prohibitions of 2 CFR § 180 subpart B, and may be a transaction at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Under 2 CFR § 180.220, procurement contracts for goods and services awarded by a participant in a non-procurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria. All non-procurement transactions (i.e., sub-awards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt under 2 CFR § 180.215. 2 CFR 180.330 requires that before a participant enters into a covered transaction with another party, the participant must verify that the party the participant is seeking to do business with is not excluded or disqualified. This verification may be accomplished by checking SAM exclusions (https://sam.gov); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. Additionally, the County established the "Federal Procurement Policy" through Resolution # 2018-868 which states “sub awards and contract will not be permitted with parties that are debarred, suspended or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Departmental Fiscal Supervisors are responsible for checking the Excluded Parties List System (EPLS) website, also known as the Debarred Contractors List prior to the approval of federal sub-awards or contacts of any amount or purchased of $50,000 or higher of federal awards.” The County did not have proper internal controls in place to help verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. During testing of nonpayroll disbursements for AL # 20.205 Highway Planning and Construction Program, we noted for all procurement transactions tested with a payment to a vendor of more than $25,000, there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verification was not completed for the covered transaction in the AL # 20.205 Highway Planning and Construction Program during the fiscal year ended December 31, 2023. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor. In addition, the County should amend their policy to ensure the dollar threshold agrees to the CFR.

2 CFR 1201.1 gives regulatory effect to 2 CFR §200.320 that states that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR §200.320, 200.317, 200.318, and 200.319. Furthermore, 2 CFR §200.320(a)(2) states that "small purchases are the acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." Additionally, the County established the "Federal Procurement Policy" through Resolution # 2018-868 which states "for all procurements of $15,000 and greater, the purchaser should obtain documentation verifying that the purchase price is fair and reasonable. Price analysis and cost analysis are the two primary techniques used to accomplish this purpose. 1. Price Analysis: Comparison of prices of multiple bids or information from other sources, such as established catalog or market prices or prices for similar past purchases. 2. Cost Analysis: Evaluation of the separate elements (e.g., labor, materials, etc.) that make up a contractor's total cost proposal or price (for both new contracts and modifications) to determine if they are allowable, directly related to. the requirement and reasonable for the value received. A price analysis should always be performed and documented; under certain circumstances, while a cost analysis also needs to be performed and documented (cost analysis is always required if payment is based in whole or in part on reimbursement of costs, and it may also be required for other contract types when there is not adequate price competition). The County did not follow their established policy which results in errors noted during testing of federal procurement requirements. During testing of the 2023 AL # 21.027 Coronavirus State and Local Fiscal Recovery Funds, for one of six procurements selected for testing (17%), which exceeded the micro-purchase threshold but did not exceed the small purchase threshold, the County could not provide documentation supporting that they obtained price or rate quotations from an adequate number of qualified sources. Failure to follow the County's internal policies and failure to adhere to the requirements of 2 CFR §200.320 could result in unallowable purchases, misuse of public funds, or questioned costs related to federal monies. The County should ensure they are following both their internal policies and Federal formal procurement methods when purchases fall within the small purchase threshold.

2 CFR 1200.10 gives regulatory effect to 2 CFR 180.305 which provides that participants are prohibited from entering into a covered transaction with parties that are excluded or disqualified and 2 CFR 180.315 prohibits participants from entering into covered transactions with parties whose principals are excluded or disqualified, unless the Federal agency responsible for the transaction grants an exception under 2 CFR § 180.135, or unless the participants has obtained an exception under the disqualifying statute, Executive order, or regulation. 2 CFR 1200.10 gives regulatory effect to 2 CFR 180.200 identifies “covered transactions” as non-procurement or procurement transactions subject to the prohibitions of 2 CFR § 180 subpart B, and may be a transaction at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Under 2 CFR § 180.220, procurement contracts for goods and services awarded by a participant in a non-procurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria. All non-procurement transactions (i.e., sub-awards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt under 2 CFR § 180.215. 2 CFR 180.330 requires that before a participant enters into a covered transaction with another party, the participant must verify that the party the participant is seeking to do business with is not excluded or disqualified. This verification may be accomplished by checking SAM exclusions (https://sam.gov); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. Additionally, the County established the "Federal Procurement Policy" through Resolution # 2018-868 which states “sub awards and contract will not be permitted with parties that are debarred, suspended or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Departmental Fiscal Supervisors are responsible for checking the Excluded Parties List System (EPLS) website, also known as the Debarred Contractors List prior to the approval of federal sub-awards or contacts of any amount or purchased of $50,000 or higher of federal awards.” The County did not have proper internal controls in place to help verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. During testing of nonpayroll disbursements for AL # 20.205 Highway Planning and Construction Program, we noted for all procurement transactions tested with a payment to a vendor of more than $25,000, there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verification was not completed for the covered transaction in the AL # 20.205 Highway Planning and Construction Program during the fiscal year ended December 31, 2023. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor. In addition, the County should amend their policy to ensure the dollar threshold agrees to the CFR.

2 CFR 1201.1 gives regulatory effect to 2 CFR §200.320 that states that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR §200.320, 200.317, 200.318, and 200.319. Furthermore, 2 CFR §200.320(a)(2) states that "small purchases are the acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." Additionally, the County established the "Federal Procurement Policy" through Resolution # 2018-868 which states "for all procurements of $15,000 and greater, the purchaser should obtain documentation verifying that the purchase price is fair and reasonable. Price analysis and cost analysis are the two primary techniques used to accomplish this purpose. 1. Price Analysis: Comparison of prices of multiple bids or information from other sources, such as established catalog or market prices or prices for similar past purchases. 2. Cost Analysis: Evaluation of the separate elements (e.g., labor, materials, etc.) that make up a contractor's total cost proposal or price (for both new contracts and modifications) to determine if they are allowable, directly related to. the requirement and reasonable for the value received. A price analysis should always be performed and documented; under certain circumstances, while a cost analysis also needs to be performed and documented (cost analysis is always required if payment is based in whole or in part on reimbursement of costs, and it may also be required for other contract types when there is not adequate price competition). The County did not follow their established policy which results in errors noted during testing of federal procurement requirements. During testing of the 2023 AL # 21.027 Coronavirus State and Local Fiscal Recovery Funds, for one of six procurements selected for testing (17%), which exceeded the micro-purchase threshold but did not exceed the small purchase threshold, the County could not provide documentation supporting that they obtained price or rate quotations from an adequate number of qualified sources. Failure to follow the County's internal policies and failure to adhere to the requirements of 2 CFR §200.320 could result in unallowable purchases, misuse of public funds, or questioned costs related to federal monies. The County should ensure they are following both their internal policies and Federal formal procurement methods when purchases fall within the small purchase threshold.

2 CFR § 3474.1 gives regulatory effect to the Department of Education (DOE) for Appendix II to 2 CFR § 200 which states, in part, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following: (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-Federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. The contracts must also include a provision for compliance with the Copeland “Anti-Kickback” Act (40 U.S.C. 3145), as supplemented by Department of Labor regulations (29 CFR Part 3, “Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States”). The Act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. Lack of effective controls led to the Educational Service Center expending $24,320 of expenditures for AL# 84.425 Education Stabilization Fund for remodeling services which did not meet the requirements of the Davis-Bacon Act. The Educational Service Center did not obtain copies of the weekly certified payroll reports from the contractor to verify prevailing wages were paid on a weekly basis for each week in which any contract work was performed. This noncompliance also resulted in a qualified opinion over the AL# 84.425 Education Stabilization Fund program. Failure to have effective controls in place over wage-rate requirements may result in the Educational Service Center and its contractors or subcontractors failing to pay prevailing wages when required by Federal law and could result in reduction of future Federal funding or other sanctions imposed by Federal grantors. When required by Federal grant legislation, the Educational Service Center should develop and implement an internal control process to ensure prime construction contracts in excess of $2,000 paid with Federal grant monies contain provisions that require the contractor to comply with wage rate requirements and the DOL regulations (29 CFR Part 5). Further, the Educational Service Center should develop and implement an internal control process to ensure certified payroll reports are provided weekly by the contractor.

2 CFR ? 180.305 states that Non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR ? 180.135. 2 CFR ? 180.200 identifies ?covered transactions? as nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR ? 180.220. All nonprocurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 2 CFR ? 180.215. When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov ); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. During testing of nonpayroll disbursements for the AL #21.027 ARPA Coronavirus State and Local Fiscal Recovery Fund, we noted five instances out of seven tested in which the program had a payment to a vendor of more than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verification was not completed for the covered transaction in the AL #21.027 ARPA Coronavirus State and Local Fiscal Recovery Fund during the fiscal year ended December 31, 2022. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.

2 CFR ? 180.305 states that Non-Federal entities are prohibited from entering into a covered transaction with parties that are suspended or debarred or whose principals are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR ? 180.135. 2 CFR ? 180.200 identifies ?covered transactions? as nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR ? 180.220. All nonprocurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless exempt by 2 CFR ? 180.215. When a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions (https://sam.gov ); collecting a certification from the entity, or adding a clause or condition to the covered transactions with that entity. The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. During testing of nonpayroll disbursements for the AL #21.027 ARPA Coronavirus State and Local Fiscal Recovery Fund, we noted five instances out of seven tested in which the program had a payment to a vendor of more than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Due to the deficient internal control structure, the required verification was not completed for the covered transaction in the AL #21.027 ARPA Coronavirus State and Local Fiscal Recovery Fund during the fiscal year ended December 31, 2022. Failing to have the appropriate controls in place may result in vendors receiving federal funds that are suspended or debarred. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.

2 CFR ? 200.320(b) indicates small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Knox County Competitive Bid and Comparative Pricing Policy Section 1 Procedures Purchases over $5,000 but less than $25,000: All purchases over $5,000 but not exceeding $25,000 require (if feasible) at least three (3) quotations from different suppliers. All quotations must be in a written/electronic form so they can be attached to the requisition. If there are limited sources of supply, or the low bid or price is found unacceptable because of some factual circumstance or requirement of a responsible supplier, the division director should write a clear, concise and factual justification for not accepting the lowest bid/price or not having three quotes utilizing the Sole Source Justification Form. If the District finds cause for use of a selected or sole source, the section of this policy for waiving the competitive bidding process must be followed. This category does not require a formal Request for Bid or Request for Proposal. Price quotes may be obtained through the following methods: current price lists, advertisements, facsimile quotations, e-mail quotes or written bids. Vendors contacted for price quotes must be documented whether they bid or not. Bids must be for similar products and services. For the higher end of this category, a Request for Quote should be sent to the bidder outlining the requirements both parties, the Health District and the supplier, have agreed upon The District did not obtain or maintain required price and/or rate quotations or complete the Sole Source Justification Form for 1 vendor out of 16 tested. The District routinely uses this vendor due to the relationship they have with certain medical brands, thus allowing the District to obtain special pricing. Failure to obtain and maintain documentation demonstrating procurement provisions of 2 CFR ? 200.320(b), as well as, adhering to the District's internal policy on small purchases could result in the District paying more for goods or services than is necessary. Prior to contracting with vendors that will be paid with federal funds, the District should ensure price and/or rate quotations are obtained and maintained or a Sole Source Justification Form is used for small purchases as indicated by its policy and procedures. In addition, the District should evaluate their internal control process for maintaining those documents to help ensure compliance with Federal regulations.

2 CFR ? 200.320(b) indicates small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Knox County Competitive Bid and Comparative Pricing Policy Section 1 Procedures Purchases over $5,000 but less than $25,000: All purchases over $5,000 but not exceeding $25,000 require (if feasible) at least three (3) quotations from different suppliers. All quotations must be in a written/electronic form so they can be attached to the requisition. If there are limited sources of supply, or the low bid or price is found unacceptable because of some factual circumstance or requirement of a responsible supplier, the division director should write a clear, concise and factual justification for not accepting the lowest bid/price or not having three quotes utilizing the Sole Source Justification Form. If the District finds cause for use of a selected or sole source, the section of this policy for waiving the competitive bidding process must be followed. This category does not require a formal Request for Bid or Request for Proposal. Price quotes may be obtained through the following methods: current price lists, advertisements, facsimile quotations, e-mail quotes or written bids. Vendors contacted for price quotes must be documented whether they bid or not. Bids must be for similar products and services. For the higher end of this category, a Request for Quote should be sent to the bidder outlining the requirements both parties, the Health District and the supplier, have agreed upon The District did not obtain or maintain required price and/or rate quotations or complete the Sole Source Justification Form for 1 vendor out of 16 tested. The District routinely uses this vendor due to the relationship they have with certain medical brands, thus allowing the District to obtain special pricing. Failure to obtain and maintain documentation demonstrating procurement provisions of 2 CFR ? 200.320(b), as well as, adhering to the District's internal policy on small purchases could result in the District paying more for goods or services than is necessary. Prior to contracting with vendors that will be paid with federal funds, the District should ensure price and/or rate quotations are obtained and maintained or a Sole Source Justification Form is used for small purchases as indicated by its policy and procedures. In addition, the District should evaluate their internal control process for maintaining those documents to help ensure compliance with Federal regulations.

42 CFR 51c.303(f) requires the District to have prepared a schedule of fees or payments for the provision of its services designed to cover its reasonable costs of operation and a corresponding schedule of discounts adjusted on the basis of the patient?s ability to pay. Additionally, 42 CFR 51c.303(g)(2) requires the District to secure from patients payments for services in accordance with the schedule of fees and discounts required by paragraph (f) of this section. The District entered the 2019 sliding fee scale amounts into the eClinical system in February 2019, the eClinical system reverted to the 2018 sliding fee scale amounts at some point during early 2019. It was determined that four patients were charged a higher amount than should have been, due to the eClinical system reverting to the 2018 Sliding fee scale amounts. It was also noted that one patient was charged at the correct sliding fee scale rate but was undercharged by $14.50, due to an anomaly within the eClinical system. Failure to ensure that the discount rate is appropriately used may result in charging an incorrect fee, which may result in an under/overstatement of revenue. The District should put into place an additional step to ensure the Sliding Fee discount is appropriately calculating within the eClinical system each year for determining the correct Sliding Fee Discount for Patients; as well as ensuring that the discounted rates are accurate for patients.

45 CFR ? 75.329(b) states: ?Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.? Additionally 45 CFR ? 75.329(d) states: ?Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or cost-reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply: (1) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals must be considered to the maximum extent practical; (2) Proposals must be solicited from an adequate number of qualified sources; (3) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and for selecting recipients; (4) Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and (5) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors' qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort.? It was noted that the District did not maintain support for small purchases between $3,501 - $5,000. The District policy does not state that the employees need to maintain documentation only the ability to demonstrate the comparison on the employee?s agency history. History was not available at the time of the audit to demonstrate completion of the process for the District policy or per above CFR requirements. It was also noted that the District did not complete Procurement by competitive proposal steps over one vendor during the audit period. Lack of maintaining documentation could result in the process not being properly completed by the District and a lack of completing competitive proposal steps with vendors could result in non-compliance of Federal regulations and could jeopardize the Districts future federal funding. We recommend the District update its procurement policy to indicate documentation be maintained for purchase cost comparisons. We also recommend the District complete competitive proposal steps for vendors according to Federal regulations and the Districts procurement policy.

42 CFR 51c.303(f) requires the District to have prepared a schedule of fees or payments for the provision of its services designed to cover its reasonable costs of operation and a corresponding schedule of discounts adjusted on the basis of the patient?s ability to pay. Additionally, 42 CFR 51c.303(g)(2) requires the District to secure from patients payments for services in accordance with the schedule of fees and discounts required by paragraph (f) of this section. The District entered the 2019 sliding fee scale amounts into the eClinical system in February 2019, the eClinical system reverted to the 2018 sliding fee scale amounts at some point during early 2019. It was determined that four patients were charged a higher amount than should have been, due to the eClinical system reverting to the 2018 Sliding fee scale amounts. It was also noted that one patient was charged at the correct sliding fee scale rate but was undercharged by $14.50, due to an anomaly within the eClinical system. Failure to ensure that the discount rate is appropriately used may result in charging an incorrect fee, which may result in an under/overstatement of revenue. The District should put into place an additional step to ensure the Sliding Fee discount is appropriately calculating within the eClinical system each year for determining the correct Sliding Fee Discount for Patients; as well as ensuring that the discounted rates are accurate for patients.

45 CFR ? 75.329(b) states: ?Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.? Additionally 45 CFR ? 75.329(d) states: ?Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or cost-reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply: (1) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals must be considered to the maximum extent practical; (2) Proposals must be solicited from an adequate number of qualified sources; (3) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and for selecting recipients; (4) Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and (5) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors' qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort.? It was noted that the District did not maintain support for small purchases between $3,501 - $5,000. The District policy does not state that the employees need to maintain documentation only the ability to demonstrate the comparison on the employee?s agency history. History was not available at the time of the audit to demonstrate completion of the process for the District policy or per above CFR requirements. It was also noted that the District did not complete Procurement by competitive proposal steps over one vendor during the audit period. Lack of maintaining documentation could result in the process not being properly completed by the District and a lack of completing competitive proposal steps with vendors could result in non-compliance of Federal regulations and could jeopardize the Districts future federal funding. We recommend the District update its procurement policy to indicate documentation be maintained for purchase cost comparisons. We also recommend the District complete competitive proposal steps for vendors according to Federal regulations and the Districts procurement policy.

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