Maple Heights City School DistrictLocal Government

2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR § 200.318 through 200.327 which describe specific procedures non-Federal entities must follow when making procurement transactions using Federal funds. 2 CFR § 200.318(a) indicates that a non-Federal entity must use its own documented procurement procedures which reflect applicable State and local laws and regulations, provided that such procurements conform to applicable Federal law and standards. 2 CFR § 200.320 indicates the non-Federal entity must use one of the following methods of procurement: (a) procurement by micro-purchases, which are acquisitions of supplies or services for which the aggregate dollar amount does not exceed the micro-purchase threshold; (b) procurement by small purchase procedures, which are relatively simple and informal procurements that do 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; (c) procurement by sealed bids, which are purchases made through publicly solicited bids and result in a firm fixed-price contract (lump-sum or unit price) awarded to the lowest responsive and responsible bidder whose bid conforms to all material terms and conditions of the invitation for bids. This method is appropriate when a complete, adequate, and realistic specification or purchase description is available, two or more responsible bidders are willing and able to compete effectively for the business, and the procurement lends itself to a firm fixed-price contract with the selection of the successful bidder made principally on price; (d) procurement by competitive proposals, which is appropriate when purchases are large and competitive bidding is not appropriate; or (e) procurement by noncompetitive proposals, which are appropriate when the item is available only from a single source, the noncompetitive procurement is expressly authorized in the Federal award, competition is deemed inadequate after solicitation of multiple sources, or the item must be purchased without delay due to a public emergency or exigent circumstances. 2 CFR § 200.318(i) indicates the non-Federal entity must maintain records sufficient to detail the history of procurement. Such records must include, but are not necessarily limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Maple Heights City School District Board Policy EAG – Administration of Federal Grant Funds requires that all purchases of property and services using federal funds be conducted in accordance with applicable federal, state, and local laws and regulations, the Uniform Guidance, and the District’s written policies and procedures. The policy also requires the District to perform a cost or price analysis for every procurement exceeding the simplified acquisition threshold. In addition, purchasing records must be maintained in sufficient detail to document the history of each procurement, including at a minimum: the rationale for the method of procurement, the selection of contract type, the contractor selected or rejected, the basis for the contract price, and verification that the contractor is not suspended or debarred. Although the District provided verbal justification for the four vendors selected during procurement testing for the Child Nutrition Cluster, it did not maintain written documentation sufficient to detail the history of the procurements, as required by federal regulations and District procurement policy. The procurements tested were below the simplified acquisition threshold; however, for three of the four procurements, required price or rate quotations from an adequate number of qualified sources were not documented. As a result, the District could not demonstrate compliance with federal procurement requirements. Failure to follow Uniform Guidance requirements and district federal procurement policies could lead to reduced future federal funding and questioned costs. The District should adopt and implement procedures to ensure that the history of each procurement is documented, including the rationale for the method of procurement, vendor selection, cost or price analysis, if applicable, and the justification for limiting competition, such as the use of a sole source provider or procurement due to emergency or exigent circumstances.

2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR § 200.317 through 200.327 which describe specific procedures non-Federal entities must follow when making procurement transactions using Federal funds. 2 CFR § 200.318(a) indicates a non-Federal entity must use its own documented procurement procedures, consistent with which reflect applicable State and local laws and regulations, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documentation of procurement procedures must conform to the procurement standards identified in § § 200.318 through 200.327. 2 CFR § 200.320(a) indicates, in part, when the value of the procurement for property or services under a Federal financial assistance award is higher than the micropurchase threshold, but does not exceed the simplified acquisition threshold, small purchase procedures can be used. If small procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined by the non-Federal entity. 2 CFR § 200.320(c) indicates non-competitive procurement can be used only if the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; 2. The item is available only from a single source; 3. The public or exigency or emergency for the requirement will not permit a delay resulting from publicizing a competition solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate.2 CFR § 200.318(i) indicates the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Maple Heights City School District Board Policy EAG- Administration of Federal Grant Funds indicates all purchases of property and services using Federal funds must be conducted in accordance with all applicable Federal, State, and local laws and regulations, the Uniform Guidance, and the District's written policies and procedures. The District will perform a cost and price analysis for every procurement over the established simplified acquisition threshold. Purchasing records will be sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. For three out of five vendors tested during procurement testing of the Nutrition Cluster, the District did not maintain the written justification documenting the history of procurement. The procurements were below the simplified acquisition threshold; therefore, small purchase procedures require the District to obtain “price or rate quotations…from an adequate number of qualified sources as determined appropriate by” the District. The District’s procurement policy does not specify the number and form of quotations required under small purchasing procedures. However, the justification for using the vendors was provided verbally during the audit, with the District indicating the one vendor was selected because of quick response time, past visits, and availability, and the other two vendors were considered sole source providers. The issue noted above was due to a lack of internal controls regarding Federal procurement at the District.The District should adopt procedures to ensure the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition, based on the criteria above. The District should also amend their procurement policy to indicate the number of quotations required when using small purchase procedures.

2 CFR ? 400.1 gives regulatory effect to the Department of Agriculture and 2 CFR 3474.1 gives regulatory effect for the Department of Education for 2 CFR ? 200.317 through 200.327 which describe specific procedures non-Federal entities must follow when making procurement transactions using Federal funds. 2 CFR ? 200.318(a) indicates a non-Federal entity must use its own documented procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and standards. 2 CFR ? 200.320 indicates the non-Federal entity must use the following methods of procurement: (a) Procurement by micro-purchases, which the aggregate dollar amount does not exceed the dollar threshold; (b) Procurement by small purchase procedures, which are procurements of relatively simple and informal nature, which do 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; (c) Procurement by sealed bids, are purchases made with publicly solicited and a firm fixed price contract (lump-sum or unit price) is awarded to the responsible bidder whose bid, conforming with all material terms and conditions in the invitations to bid, is the lowest in price. In order to be feasible, a complete, adequate and realistic specification or purchase description is available, two or more responsible bidders are willing and able to compete effectively for the business, and the procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on cost; (d) Procurement by competitive proposals, which is appropriate when purchases are large and competitive bidding is not appropriate, or (e) Procurement by non-competitive proposals, which are appropriate when an item can be obtained only from a sole source, the non-competitive proposals are specifically authorized in the Federal award, after solicitation through competitive means, competition is deemed in adequate, and/or the item must be purchased without delay due to an emergency or exigent circumstances. 2 CFR ? 200.318(i) indicates the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Maple Heights City School District Board Policy EAG- Administration of Federal Grant Funds indicates all purchases of property and services using Federal funds must be conducted in accordance with all applicable Federal, State, and local laws and regulations, the Uniform Guidance, and the District's written policies and procedures. The District will perform a cost and price analysis for every procurement over the established simplified acquisition threshold. Purchasing records will be sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. The District?s procurement policy does not indicate the number of quotations required when using the simplified acquisition threshold. Ohio Rev. Code ? 3313.46 indicates when a Board of Education determines to build, repair, enlarge, or demolish any school building with a cost in excess of $50,000, the Board is required to: 1. Prepare plans and specifications; 2. Advertised for bids once a week for not less than two consecutive weeks or as provided in Ohio Rev. Code ? 7.16, in a newspaper in general circulation in the district before the date specified for receiving bids. The board may also cause notice to be inserted in trade papers or other publications designated by it or to be distributed by electronic means, including posting the notice on the board?s internet web site. If the board posts the notice on its web site, it may eliminate the second notice otherwise required to be published in a newspaper of general circulation within the school district, provided that the first notice published in such newspaper meets all of the following requirements: (a) It is published at least two weeks before the opening of bids; (b) It includes a statement that the notice is posted on the board of education?s internet web site; (c) It includes the internet address of the board?s internet web site; and (d) It includes instructions describing how the notice may be accessed on the board?s internet web site; 3. Open the bids at the time and place specified by the Board in the advertisement for bids; 4. The award of the contract is to the lowest responsible bidder; 5. The contract is between the board and the bidders. The board is required to approve and retain estimates and make them available to the Auditor of State upon request; and, 6. If two or more bids are equal and are lower than any others, either may be accepted. However, the work is not to be divided among the bidders. The above requirements do not apply to: ? an urgent necessity; ? acquisition of educational materials used for teaching; ? any item which the Board, by a two-thirds vote, determines is available and can be obtained only through a single source; ? energy conservation measures, with the approval of two-thirds of the Board; ? acquisition of computer software or hardware for instructional purposes; or, ? School districts that participate in a joint purchasing contract are exempt from using competitive bidding. For one out of four vendors tested during our procurement testing of the Nutrition Cluster, the District did not maintain written justification documenting the history of the procurement. The vendor performed repairs on kitchen equipment totaling $37,382. The procurement was within the simplified acquisition threshold and quotes should have been obtained. The justification for using the vendor was provided verbally during the audit, with the District indicating the vendor was selected because of quick response time, past visits, and availability. Additionally, the District paid $303,004 for a roof replacement using Education Stabilization Fund- Elementary and Secondary School Emergency Relief (ESSER II) funds, which would be required to be competitively bid under the Ohio Rev. Code ? 3313.46 and 2 CFR 200.320. The District could not provide us with the following documentation: proof of the advertisement for bids of the project in a newspaper of general circulation in the District and/or advertisement of the project on the District?s website, the Board resolution approving the award of the contract, and the bid packages submitted from the losing bidders. Because of the lack of available documentation, the District was in non-compliance of the Federal procurement and Ohio competitive bidding requirements. Both of the issues noted above were due to a lack of internal controls regarding Federal procurement at the District. The District should adopt procedures to ensure the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition, either because they are from a sole source provider or due to emergency or exigent circumstances are documented and maintain written documentation of such procedures. The District should also amend their procurement policy to indicate the number of quotations required when using the simplified acquisition threshold.

2 CFR 3474.1 gives regulatory effect to the Department of Education for Appendix II to 2 CFR ? 200 Paragraph D which states the Davis-Bacon Act, as amended (40 U.S.C. 3141-3148) requires all prime construction contracts in excess of $2,000 awarded by non-Federal entities to include a provision for compliance with the Davis-Bacon Act 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. 2 CFR - ? 176.190 Award term - Wage rate requirements under Section 1606 of the Recovery Act indicates when issuing announcements or requesting applications for Recovery Act programs or activities that may involve construction, alteration, maintenance, or repair the agency shall use the award term described in the following paragraphs: (a) Section 1606 of the Recovery Act requires that all laborers and mechanics employed by contractors and subcontractors on projects funded directly by or assisted in whole or in part by and through the Federal Government pursuant to the Recovery Act shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code. Lack of proper internal controls over Federal grants management led to the District expending $351,738 of its Education Stabilization Fund (ESSER) Federal grant funds for the roof replacement at the administration building without complying with the above requirements. The District?s contract with the vendor for these updates did not include a provision to ensure the contractor complied with Federal wage rate requirements. Additionally, the District did not obtain certified payroll reports from the vendor to verify prevailing wages were paid. Without proper controls over wage rate requirements, there is an increased risk that the District and its contractors and subcontractors are not in compliance with applicable federal regulations. Additionally, noncompliance could result in federal funding being reduced or taken away, or other sanctions imposed by the federal grantor agency. The District should ensure contracts for construction in excess of $2,000 paid with federal grant monies contain a provision the contractor comply with the wage rate requirements and ensure certified payroll reports are provided weekly by the contractor. The District should also review the certified payroll reports and report all suspected or reported violations to the Federal awarding agency.