City of RhinelanderLocal Government

Finding 2024-003: Material Weakness - Procurement, Suspension and Debarment Federal Program: Water and Waste Disposal Systems for Rural Communities Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During testing for this program, one of two vendors tested did not go through the appropriate procurement process. The vendor was directly awarded the project. The City did not have documentation of ensuring either of the vendors selected for testing were not suspended or debarred before entering in to covered transactions. The sample was not a statistically valid sample. Cause: The City has not historically bid out their engineering services and has used the same vendor for all projects. Due to turnover, the City did not have documentation of the search for suspension or debarment of the vendors. Effect: The City could potentially not have selected an appropriate vendor for the project or vendors could be used who are not eligible to be paid with federal funds. Questioned Costs: None noted. Recommendation: The City should ensure contracts are following the procurement process for selection of vendors for federally funded projects. Program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects and retain documentation of such verifications. Views of Responsible Officials: The City of Rhinelander has had turnover in the mayor, city administrator and public works director positions in recent years. The City will be reviewing its procurement policy to define clearer expectations for the administrative staff to follow.

Finding 2023-003: Material Weakness - Procurement, Suspension and Debarment Federal Program: Water and Waste Disposal Systems for Rural Communities Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During testing for this program, one of two vendors tested did not go through the appropriate procurement process. The vendor was directly awarded the project. The City did not have documentation of ensuring either of the vendors selected for testing were not suspended or debarred before entering in to covered transactions. The sample was not a statistically valid sample. Cause: The City has not historically bid out their engineering services and has used the same vendor for all projects. Due to turnover, the City did not have documentation of the search for suspension or debarment of the vendors. Effect: The City could potentially not have selected an appropriate vendor for the project or vendors could be used who are not eligible to be paid with federal funds. Questioned Costs: None noted. Recommendation: The City should ensure contracts are following the procurement process for selection of vendors for federally funded projects. Program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects and retain documentation of such verifications. Views of Responsible Officials: The City of Rhinelander has had turnover in the mayor, city administrator and public works director positions in recent years. The City will be reviewing its procurement policy to define clearer expectations for the administrative staff to follow.

Finding 2021-003: Rural Development Loan Procurement, Suspension and Debarment Repeat Finding: 2020-003 Federal Program: Water and Waste Disposal Systems for Rural Communities Federal Agency: U.S. Department of Agriculture Pass-Through Entity: N/A CFDA Number: 10.760 Award Identification Number: 92-06 Award Year: 2018 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During our testing for this program in prior years, we noted the City had not updated its written procurement policies to conform with Uniform Guidance requirements. This situation existed until mid-year 2021. In addition, of the two vendors tested in prior years, one did not follow the requirements of Uniform Guidance in regards to the procurement standards. While the vendor did have an approved contract for the project, there was not a competitive process to award the contract, nor was there verification that the vendor was not barred from working on projects funded with federal dollars. Expenditures under this contract with the vendor continued into 2021. The sample was not a statistically valid sample. Cause: The City was initially not aware that a written policy was required to be in place outside of the terms and condition in the grant agreement. The City was also not aware that a formal procurement process was applicable for the selected vendor. Effect: This could potentially lead to higher costs for the project or selection of vendors who are not eligible to be paid with federal funds. Questioned Costs: None noted. Recommendation: As a procurement policy was approved during 2021, program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects. Views of Responsible Officials: The City Council approved a procurement policy on April 12, 2021. The policy was updated again on June 18, 2021 to include an addendum specific to federal awards.

Finding 2020-003: Rural Development Loan Procurement, Suspension and Debarment Repeat Finding: 2019-003 Federal Program: Water and Waste Disposal Systems for Rural Communities Federal Agency: U.S. Department of Agriculture Pass-Through Entity: N/A CFDA Number: 10.760 Award Identification Number: 92-06 Award Year: 2018 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During our testing for this program, we noted the City has not updated its written procurement policies to conform with Uniform Guidance requirements. In addition, of the two vendors tested, one did not follow the requirements of Uniform Guidance in regards to the procurement process. While the vendor did have an approved contract for the project, there was not a competitive process to award the contract, nor was there verification that the vendor was not prohibited from working on projects funded with federal dollars. The sample was not a statistically valid sample. Cause: The City was not aware that a written policy was required to be in place outside of the terms and condition in the grant agreement. The City was also not aware that a formal procurement process was applicable for the selected vendor. Effect: This could potentially lead to higher costs for the project or selection of vendors who are not eligible to be paid with federal funds. Questioned Costs: None noted. Recommendation: The City should adopt written policies and procedures, which align with the Uniform Guidance requirements to be used for all purchases using federal funds. Program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects. Views of Responsible Officials: The City Council approved a procurement policy on April 12, 2021. The policy was updated again on June 18, 2021 to include an addendum specific to federal awards.

FINDING 2019-003: RURAL DEVELOPMENT LOAN PROCUREMENT, SUSPENSION AND DEBARMENT Federal Program ? Water and Waste Disposal Systems for Rural Communities Federal Agency ? U.S. Department of Agriculture Pass-Through Entity ? N/A CFDA Number ? 10.760 Award Identification Number ? 92-06 Award Year ? 2018 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During our testing for this program, we noted the city has not updated its written procurement policies to conform with Uniform Guidance requirements. In addition, of the two vendors tested, one did not follow the requirements of Uniform Guidance in regards to the procurement process. While the vendor did have an approved contract for the project, there was not a competitive process to award the contract, nor was there verification that the vendor was not prohibited from working on projects funded with federal dollars. The sample was not a statistically valid sample. Cause: The city was not aware that a written policy was required to be in place outside of the terms and condition in the grant agreement. The city was also not aware that a formal procurement process was applicable for the selected vendor. Effect: This could potentially lead to higher costs for the project or selection of vendors who are not eligible to be paid with federal funds. Questioned Costs: None noted. Recommendation: The city should adopt written policies and procedures which align with the Uniform Guidance requirements to be used for all purchases using federal funds. Program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects. Views of Responsible Officials: The City will be reviewing the guidelines and incorporate the changes into an updated procurement policy addressing the selection of vendors for federal projects.

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