Mapleton CityLocal Government

#2021-001 The City did not have adequate internal controls to ensure compliance with the federal requirements for procurement, and suspension and debarment. CFDA Number and Title: 15.916 Outdoor Recreation Acquisition, Development and Planning Federal Grantor Name: U.S. Department of Interior Pass-through Grantor Name: Utah Department of Natural Resources Pass-through Contract Number: 49-00394 Questioned Cost Amount: $0 Criteria: Federal regulations prohibit entities from contracting with parties suspended or debarred from doing business with the federal government. For contracts of $25,000 or more, the City must verify the party is not suspended or debarred. This verification may be accomplished by checking the federal Excluded Parties List System maintained by the U.S. General Services Administration to verify the party?s status, obtaining a written certification from the party, or insert a clause into the contract where the party states it is not suspended or debarred. The City must perform one of these steps to meet this requirement before entering into a contract. Condition: The City issued a request for proposal which specifically stated that the project would not be federally funded. They hired an engineering firm to oversee the project and all compliance requirements related to it. After beginning the process, the City was able to obtain a grant to provide matching funds. The engineering firm was not notified that the project would, in fact, be federally funded. I consider this control deficiency to be a material weakness. Cause: As mentioned in the condition, the engineering firm was not properly notified by City personnel once federal funding had been obtained. The firm was unaware of the additional requirement to verify that the contractor was not on the suspended or debarred list. Effect: As a result of not having verified suspension and debarment status via written certification, clause insertion, or checking the Excluded Parties List System before entering into the contract, the City could have paid parties that were suspended or debarred and would have been responsible to pay the granting agency. The City paid the contractor $947,846 with funds expected to be reimbursed by the grant in 2021. Without adequate controls, the City cannot ensure that federal funds are paid only to parties that are eligible to participate in federal programs. Any payments to ineligible parties would be unallowed by the funding agency. City personnel determined, after the fact, that the contractor was not suspended or debarred; therefore, I am not questioning the related costs. Recommendation: I recommend that the City improve internal controls to ensure that staff administering federal programs properly identify and verify all parties paid over $25,000 from federal funding are not suspended or debarred from participating in federal programs before entering into a contract or a purchase order for goods and services. City?s Response: Mapleton City has improved internal controls and will verify that all parties paid over $25,000 from federal funding are not suspended or debarred from participating in federal programs before entering into a contract or a purchase order for goods and services. Since the completion of the audit the City has verified the aforementioned contractor was not on the suspended or debarred list.