TWIN CITIES AREA TRANSPORTATION AUTHORITYLocal Government

Failure to Follow Procurement Policy Finding 2024-002 Condition: The Authority did not comply with the current procurement policy as procedures were not fully followed and forms required by the Authority’s procurement policy were not completed for the heating ventilation and cooling project, new roof, and electric vehicle charging stations. The following forms required by either 2 CFR 200 and/or the Authority’s own procurement policy were not completed for the current year capital asset purchases: Written Record of Procurement Checklist Form, Method of Procurement Decision Matrix, Advertisement and Solicitation Form, Bid Quotations, Fewer Than 3 Offers Received Evaluation if applicable, Proposal Tabulation, Certification of Compliance with Federal Clauses for the assets less than $25,000, and Responsibility Determination (sam.gov debarred verification). Criteria: The following requirements are documented in 2 CFR 200-Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. 2 CFR 200.214 Suspension and Debarment Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2 CFR Part 200.318 General Procurement Standards (a) The Non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (i) 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. 2 CFR 200.320 Methods of Procurement to be Followed (b) The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. 2 CFR 200.324 Contract Cost and Price (a) The Non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Concurrently, the Authority’s did not comply with its own current procurement policy as it did not follow or prepare the required documentation detailed in the following sections. Procurement Requests-The Authority will maintain sufficient records to detail the history of a procurement. Such records shall include method of procurement, selection of contract type, contractor selection (or rejection), and the contract price. The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as nonresponsible and ineligible for contract award. Debarment and Suspension- The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as non-responsible and ineligible for contract awards. To see if a prospective contractor is eligible, we will look on the website www.SAM.gov and when the bid has been received. Methods of Procurement- a. Micro and Emergency Purchases (do not exceed $10,000)-(a) A written determination as to why price is deemed fair and reasonable must be on file with each purchase made under this method of procurement using Micro-Purchase Price Reasonableness Determination Form. (b) Splitting of procurements to avoid the competitive procurement requirements of federal and state statues shall not be condoned. b. Small Purchase Procurement ($10,000 to $250,000)-(a) A minimum of two price or rate quotations shall be obtained from qualified sources; (b) The procurement will be made from the lowest priced qualified bid, if products or goods are equal; (c) MDOT requires for procurements under $25,000.00. Included Procurement Appendix A, B, E, F, G, H, or I and Vehicle Specification certification if applies. (d) MDOT requires for procurements over $25,000.00 solicitations, including specifications and written selection procedures (lowest bids), Include Procurement Appendix A, F, G, H or I and Vehicle Specification certification if applies. Third Party Contracts with applicable clauses and bond documents must be included. Cause: The Authority did not follow its own procurement policy. Effect: The Authority is noncompliant with 2 CFR 200 and its own procurement policy. Directive: We direct the Authority review and update its procurement policy and implement procedures to ensure that the Authority is complying with the federal requirements, required forms are being completed, and documentation is being maintained. Management’s Response--Corrective Action Plan: Contact person is Todd Shurn, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority acknowledges the finding and is currently working to correct this.

Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.

Failure to Follow Procurement Policy Finding 2023-003 Condition: The Authority did not comply with the current procurement policy as procedures were not fully followed and forms required by the Authority’s procurement policy were not completed. The following forms required by either 2 CFR 200 and/or the Authority’s own procurement policy were not completed for the current year capital asset purchases: Written Record of Procurement Checklist Form, Method of Procurement Decision Matrix, Advertisement and Solicitation Form, Bid Quotations, Fewer Than 3 Offers Received Evaluation if applicable, Proposal Tabulation, Certification of Compliance with Federal Clauses for the assets less than $25,000, and Responsibility Determination (sam.gov debarred verification). Also, as stated in the prior finding, the procurement policy needs to be updated. Criteria: According to 2 CFR 200.214 Suspension and Debarment, Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The following excerpts are from 2 CFR Part 200.318 General Procurement Standards. (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (i) 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. According to 2 CFR 200.320 Methods of Procurement to be Followed, the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Concurrently, the Authority’s did not comply with its own current procurement policy as it did not follow or prepare the required documentation detailed in the following sections. Procurement Requests-The Authority will maintain sufficient records to detail the history of a procurement. Such records shall include method of procurement, selection of contract type, contractor selection (or rejection), and the contract price. The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as nonresponsible and ineligible for contract award. Debarment and Suspension- The Authority will treat any prospective contractor or sub-contractor listed on a centralized State government debarment and suspension list as non-responsible and ineligible for contract awards. To see if a prospective contractor is eligible, we will look on the website www.SAM.gov and when the bid has been received. Methods of Procurement- a. Micro and Emergency Purchases (do not exceed $10,000)-(a) A written determination as to why price is deemed fair and reasonable must be on file with each purchase made under this method of procurement using Micro-Purchase Price Reasonableness Determination Form. (b) Splitting of procurements to avoid the competitive procurement requirements of federal and state statues shall not be condoned. b. Small Purchase Procurement ($10,000 to $250,000)-(a) A minimum of two price or rate quotations shall be obtained from qualified sources; (b) The procurement will be made from the lowest priced qualified bid, if products or goods are equal; (c) MDOT requires for procurements under $25,000.00. Included Procurement Appendix A, B, E, F, G, H, or I and Vehicle Specification certification if applies. (d) MDOT requires for procurements over $25,000.00 solicitations, including specifications and written selection procedures (lowest bids), Include Procurement Appendix A, F, G, H or I and Vehicle Specification certification if applies. Third Party Contracts with applicable clauses and bond documents must be included. Cause: The Authority did not follow its own procurement policy. Effect: The Authority is noncompliant with 2 CFR 200 and its own procurement policy. Directive: We direct the Authority review and update its procurement policy and implement procedures to ensure that the Authority is complying with the federal requirements, required forms are being completed, and documentation is being maintained. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will review and update its procurement policy to comply with federal requirements. The Authority’s management, consultant, and finance director will review the procedures in the policy to ensure they are being acted upon accordingly going forward.

Submission of Fiscal Year 2021 Single Audit Finding 2022-003 Condition: The Authority did not officially certify and submit its fiscal year 2021 single audit until July 6, 2022. Criteria: Per 2 CFR Part 200.512 (a)(1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. Cause: The Authority did not officially certify the 2021 single audit until July 6, 2022. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority to implement procedures to ensure that the fiscal year 2022 is certified within the required nine-month deadline. Management?s Response--Corrective Action Plan: Contact person is Oliver Lindsay, Interim Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Executive Director at the time of the audit last year was new in their role and was managing many tasks and organizational updates. They are no longer employed at TCATA and the current Interim Director and contracted accounting firm are working with the auditor to ensure timely filing.

Echo Documentation Deficient Finding 2021-004 Condition: The Authority was unable to sufficiently document that it had the proper information to track its ECHO requests. As an example, TCATA was unable to sufficiently document that it had the proper information to track the underlying transaction amount of $275,335 in its February 2021 ECHO request for Award MI-2020-026. The attached documentation provided for only $179,224 to be requested for a difference to $96,911. Criteria: Per 2 CFR Part 200.302 (b)(4) Financial Management, the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. Further, 2 CFR Part 200.303, Internal Controls, requires the non-Federal entity must (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in `Standards for Internal Control in the Federal Government?, issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Cause: The Authority requested an amount that did not agree with its own calculations for the amount to be reimbursed. Effect: The Authority is noncompliant with 2 CFR 200. Also, while the amount overdrawn was still considered to be earned before the fiscal year ended and did not need to be repaid, the Authority would have had to return an excess received had there not been additional eligible expenses for the additional amount received. Directive: We direct the Authority to implement procedures to ensure that each ECHO request has accurate documentation to support the request for reimbursements being made. Further, we direct the Authority to establish an internal control process over the procedure to ensure such documentation is created, reviewed, and approved by an additional person knowledgeable of the process. Management?s Response--Corrective Action Plan: Contact person is Angel Crayton, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority has contracted an outside accounting firm and consultant to assist with the process and to provide guidance. All draws are being properly supported. The Executive Director is very involved with the draw process and is ensuring proper federal procedures are being followed.

Procurement and Suspension and Debarment Finding 2019-006 Condition: During the fiscal year, the Authority purchased six capital assets using Federal Section 5307 and Section 5309 funding. For the six capital assets purchased, all qualify as ?small purchases? per the Code of Federal Regulations (CFR). The Authority did not verify that the six vendors used were not on the debarment list. For five of the assets purchased, the Authority maintained no procurement documentation which is noncompliant with Federal requirements. By not performing the procurement procedures and maintaining related documentation, the Authority is also not complying with its own Procurement Policy. Criteria: The CFR and the Authority?s procurement policy states the following. CFR 200.318(a) - The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. The Authority has approved a Procurement Policy, however; it is not following its own policy as further demonstrated below. CFR 200.318(i) - 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. The Authority?s Procurement Policy, Procurement Requests Section IV (page 5) ? ?TCATA will maintain sufficient records to detail the history of a procurement. Such records shall include the method of procurement, section of contract type, contractor selection (or rejection), and the contract price.? CFR 200.319(a) - All procurement transactions must be conducted in a manner providing full and open competition consistent with the standards of this section. CFR 200.320 - The non-Federal entity must use one of the following methods of procurement. (b) Procurement by small purchase procedures. 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. The Authority?s Procurement Policy, Method of Procurement Section I and II (page 8) ? ?Small Purchase Procurement ? for supplies, materials, and services which shall not cost more than $100,000 in the aggregate. Such procurement shall be made in the following manner: (a) A minimum of two price or rate quotations shall be obtained from qualified sources; (b) The procurement will be made from the lowest priced qualified quote, if products are good and equal; (c) If a procurement is established as a DEB set aside, a minimum of three price or rate quotations shall be obtained from qualified DBE sources. In addition, one price quote from a non-DBE firm shall be obtained to ensure that competive prices are secured. The procurement will be made from the lowest priced DBE quotations unless the non-DBE firm is substantially lower. In such a case, FTA will be advised of the price quotes with a request for release of the DBE ?set-aside? and to procure from non-DBE firms. (d) MDOT requirements for procurements under $25,000, include Procurement Appendix A, B, E, F, G, H, or I and Vehicle Specification certification if applies. (e) MDOT requirements for procurements over $25,000, solicitatioons, including specifications and written selection procedures (lowest bids), include Procurement Appendix A, F, G, H, or I and Vehicle Specification certification if applies. Third Party Contract with applicable clauses and bond documents must be included.? CFR 200.205 ? Review of OMB-designated repositories of governmentwide data. (1) Prior to making a Federal award, the Federal awarding agency is required by 31 U.S.C. 3321 and 41 U.S.C. 2313 note to review information available through any OMB-designated repositories of governmentwide eligibility qualification or financial integrity information as appropriate. See also suspension and debarment requirements at 2 CFR part 180 as well as individual Federal agency suspension and debarment regulations in title 2 of the Code of Federal Regulations. (2) In accordance 41 U.S.C. 2313, the Federal awarding agency is required to review the non-public segment of the OMB-designated integrity and performance system accessible through SAM (currently the Federal Awardee Performance and Integrity Information System (FAPIIS)) prior to making a Federal award where the Federal share is expected to exceed the simplified acquisition threshold, defined in 41 U.S.C. 134, over the period of performance. At a minimum, the information in the system for a prior Federal award recipient must demonstrate a satisfactory record of executing programs or activities under Federal grants, cooperative agreements, or procurement awards; and integrity and business ethics. The Authority?s Procurement Policy, Debarment and Suspension (page 6) ? ?To see if a prospective contractor is eligible we will look on the website www.SAM.gov when the bid has been received. Cause: While the Authority has established a written policy for procurement procedures, the Authority is not consistently following its own policy and has established no oversight to ensure the policy is followed. Effect: The Authority has violated its own policy and Federal regulations. Directive: We direct the Authority to comply with its own policy when purchasing capital assets with Federal funds. We further direct the Authority to establish additional procedures to ensure oversight of the procedures and compliance with the Authority?s directives and Federal regulations. Management?s Response--Corrective Action Plan: Contact person is Paul Gillespie, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority?s management acknowledges that prior procurements in fiscal year 2019 have not adhered to established and approved procurement policy. The Authority is committed to making sure that new employees like the Executive Director and Grant Manager familiarize themselves with and adhere to existing procurement policies. Going forward, all procurements will have their own file that will hold all relevant materials related to the procurement. Procurements will be identified by type and the appropriate checklists will be followed. Working together at every step of each procurement, the Executive Director and Grant Manager will follow agency and federal guidelines to ensure fair and compliant procurements.

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