CITY OF MINNEAPOLIS

Suspension and Debarment Prior Year Finding Number: 2023-003 Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLT0790; 2021 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. The City’s procurement policy requires a suspension and debarment clause be included in the contract and also requires the contract manager to verify the vendor is not suspended, debarred, or otherwise excluded at SAM.gov. Condition: The City did not maintain documentation of the verification that the vendor was not suspended or debarred at SAM.gov for one of 14 transactions tested. Questioned Costs: None. Context: 134 covered transactions were subject to suspension and debarment requirements. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City is not in compliance with federal regulations. Cause: The contract managers did not know verification of suspension and debarment using the federal listing was required. Recommendation: We recommend the City review its written policies and procedures and communicate with contract managers their responsibility for complying with the federal regulations and maintaining documentation to support that compliance. View of Responsible Official: Acknowledge

Finding Title: Suspension and Debarment Program: 21.027 COVID‐19 – Coronavirus State and Local Fiscal Recovery Funds Name of Contact Person Responsible for Corrective Action: Matthew Bower, Pam Fernandez, and George Hardgrove Corrective Action Planned: Procurement maintains control over which contracts have final approval. As part of the final contract approval, procurement will verify that debarment documentation has been maintained in the Comet software. Anticipated Completion Date: November 30, 2025

2023-003

2023-002 Suspension and Debarment and Build America, Buy America Act Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Transportation Program: 20.205 Highway Planning and Construction 20.205 COVID-19 - Highway Planning and Construction Award Number and Year: Not provided, 2023 Pass-Through Agency: Minnesota Department of Transportation Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. The suspension and debarment requirements apply to covered transaction amounts over $25,000. The City’s procurement policy requires a suspension and debarment clause be included in the contract and also requires the contract manager to verify the vendor is not suspended, debarred, or otherwise excluded at SAM.gov. Additionally, section 70914 of the Build America, Buy America Act (BABA), requires a Buy America preference be included in the terms and conditions of each award with an infrastructure project. Condition: The contract in one of four projects tested did not include the suspension and debarment clause or the BABA preference. In addition, the City did not verify suspension and debarment before entering into the contract. Questioned Costs: None. Context: Four of eight contracts were tested for compliance with applicable federal regulations. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Failure to verify vendors are not suspended, debarred, or otherwise excluded may result in the City entering into a transaction with a vendor that is not authorized to provide goods and services. Also, failure to include the BABA requirements in the contract may result in construction materials used in the project not complying with the requirement of the BABA. Cause: Federal requirements were not followed as the project was initially planned without the use of federal funds. Recommendation: We recommend the City review its written policies and procedures and communicate with contract managers/administrators their responsibility for complying with the federal regulations and maintaining documentation to support that compliance. View of Responsible Official: Concur

Finding Number: 2023-002 Finding Title: Suspension and Debarment and Build America, Buy America Act Program: 20.205 Highway Planning and Construction and COVID-19 - Highway Planning and Construction Name of Contact Person Responsible for Corrective Action: Bryan Dodds, City Engineer Corrective Action Planned: Our project managers work with State MNDOT representatives and ensure the City of Minneapolis contract with Contractors include appropriate Federal grant provisions. This includes Buy America provisions (BABA)/suspension/debarment/etc. The finding relates to one time money received up front that didn’t go through normal Federal grant channels. Anticipated Completion Date: System in place as of August 1, 2024.

2023-003 Procurement, Suspension, and Debarrment Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLT0790, 2021; E-20-MW-27-0003, 2020 Pass-Through Agency: Minnesota Department of Health Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the City must maintain records sufficient to detail the history of procurement, and the City must perform a cost or price analysis provided in Title 2 U.S. Code of Federal Regulations § 200.323. In addition, federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. The suspension and debarment requirements apply to covered transaction amounts over $25,000. Entities must use their documented procurement process compliance. The City’s procurement policy requires a suspension and debarment clause be included in the contract and also requires the contract manager to verify the vendor is not suspended, debarred, or otherwise excluded at SAM.gov. Condition: Five of the nine contracts tested exceeded the simplified acquisition threshold which requires a cost or price analysis. The City could not provide documentation that this analysis was performed for four contracts tested. Additionally, a sample of 20 covered transactions was tested for suspension and debarment. In two instances, the City included required suspension and debarment contract clauses but did not maintain documentation of the verification that the vendor was not suspended or debarred at SAM.gov. Questioned Costs: None. Context: Nine of 89 contracts were tested for compliance with applicable federal regulations. Additionally, there were 191 covered transactions subject to suspension and debarment. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City is not in compliance with federal regulations. Cause: Project/contract managers did not perform or maintain documentation of cost or price analyses. The project/contract managers did not know verification of suspension and debarment using the federal listing was required and, in one instance, relied on the state listing. Recommendation: We recommend the City review its written policies and procedures and communicate with contract managers their responsibility for complying with the federal regulations and maintaining documentation to support that compliance. View of Responsible Official: Concur

Finding Number: 2023-003 Finding Title: Procurement, Suspension, and Debarment Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Contact Person Responsible for Corrective Action: Ra Chhoth, Deputy Chief Finance Officer, Finance and Property Services OR Matt Bower, Manager Resource Coordination, Finance and Property Services Corrective Action Planned: Controllers Division staff will work with Procurement Division on further development of enhanced communication and training tools on federal procurement for city contract manager staff. Suspension and debarment subject has been shared with Grants Users Group and will be made a standing annual topic to be covered moving forward. Anticipated Completion Date: 12/31/2024

2021-002 Procurement, Suspension, and Debarment Prior Year Finding Number: N/A Repeat Finding Since: N/A Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Housing and Urban Development Program: 14.231 Emergency Solutions Grant Program and 14.231 COVID-19 ? Emergency Solutions Grant Program Award Number and Year: E-20-MW-27-0003, 2020; E-20-MC-27-0003, 2020; E-21-MC-27-0003, 2021 Pass-Through Agency: N/A Criteria: Title 2 U.S. Code of Federal Regulations ? 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, non-federal entities must follow federal guidance regarding verifying debarment, suspension, and exclusions, as provided in Title 2 U.S. Code of Federal Regulations ?? 180.300, 200.213, and 200.318(h), when entering into covered transactions. Condition: In a sample of two contracts tested over the covered transaction amount, the City did not have documentation to meet the verification requirements as to whether the vendor was suspended, debarred, or otherwise excluded. Questioned Costs: None. Context: Two contracts from a total population of 14 were tested for suspension and debarment. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City is not in compliance with federal grant requirements. Cause: The City was not aware that they should check the local government for suspension and debarment, and the other contract not being verified for suspension and debarment of the vendor was an oversight. Recommendation: We recommend the City review their policies and procedures related to the verification of vendors being suspended, debarred, or otherwise excluded and maintain documentation to support suspension and debarment procedures are performed in compliance with federal requirements. View of Responsible Official: Concur

Finding Number: 2021-002 Finding Title: Procurement, Suspension, and Debarment Program: Emergency Solutions Grant Program (AL # 14.231) Name of Contact Person Responsible for Corrective Action: Tiffany Glasper, Senior Project Coordinator & ESG Program Manager Corrective Action Planned: We will immediately begin reviewing and checking all vendors for suspension and/or debarment, including any governmental agencies. We have beefed up the language in our overall program guidance and particularly on the standard Closing Checklist for Emergency Solutions Grant projects. Anticipated Completion Date: December 31, 2022

Finding Number: 2019-001 Prior Year Finding Number: N/A Repeat Finding Since: N/A Outdoor Recreation ? Acquisition, Development and Planning: Procurement, Suspension and Debarment Program: U.S. Department of the Interior, Outdoor Recreation ? Acquisition, Development and Planning (CFDA No. 15.916), Award No. P15AP00179/27-01398, 2014 Pass-Through Agency: Minnesota Department of Natural Resources Criteria: Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations ? 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. The Minneapolis Park and Recreation Board follows the City of Minneapolis? purchasing policy, which requires federally-funded contracts be verified for suspension or debarment by the project manager and to have a clause or condition added into the contract. Condition: Based upon review of the City?s policies and procedures for contract management, language related to suspension and debarment is required to be included in all federally-funded contracts and the department?s project manager is responsible for verifying that vendors are not suspended or debarred prior to entering into a contract. One of the two contracts tested did not include language for suspension or debarment in accordance with City policy and also did not have documentation to show that suspension or debarment was checked prior to entering into the contract. Questioned Costs: Not applicable. Context: Departments are required to alert the City?s Purchasing Department if a contract is federally funded. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The Minneapolis Park and Recreation Board did not ensure that its contractors on projects funded with federal awards had been suspended or debarred by the federal government. Cause: Project Managers changed during the project. The original Project Manager was aware of the requirements and their roles and responsibilities; however that knowledge did not get transferred during the transition to the new Project Manager. Recommendation: We recommend the Minneapolis Park and Recreation Board review the written policies and procedures in place and communicate with program managers their responsibility to check for suspension and debarment. Procedures to ensure compliance with the requirements over suspension and debarment should be completed prior to awarding contracts to contractors or subrecipients on federally-funded projects, and documentation should exist to support the monitoring of and compliance with this requirement. We further recommend that the Minneapolis Park and Recreation Board continue to communicate with the City of Minneapolis Purchasing Department and alert them when a project is federally funded. View of Responsible Official: Concur

Finding Number: 2019-001 Finding Title: Procurement, Suspension and Debarment Program: Outdoor Recreation ? Acquisition, Development and Planning (CFDA # 15.196) Name of Contact Person Responsible for Corrective Action: Julia Wiseman, Finance Director Corrective Action Planned: A new process will be implemented by Planning Staff to check the federal SAM database to ensure that subrecipients of federal funds are registered. In addition to checking the name of the contracting firm, the name of the owner of the organization will also be checked for debarment, suspension or disqualification. Verification by Capital Project Accountant. Anticipated Completion Date: Construction season 2020

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