City of College PlaceLocal Government

2021-001 The City lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements. CFDA Number and Title: 21.027 ? COVID-19 Coronavirus State and Local Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: Pass-through Entity Name: Pass-through Award/Contract Number: Questioned Cost Amount: $0 Description of Condition The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to respond to the COVID-19 pandemic?s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer or broadband infrastructure. In 2021, the City spent $253,423 in program funds to provide public health services. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal requirements also prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended or debarred or otherwise excluded. The City may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The City must perform this verification before entering into the contract or paying the contractor more than $25,000, and it must keep documentation demonstrating compliance with this federal requirement. Our audit found the City did not have adequate controls and did not verify that one of two contractors paid more than $25,000 in federal funds was not suspended or debarred from participating in federal programs. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance The issue was not reported as a finding in the prior audit. Cause of Condition City employees responsible for monitoring this program did not intend to pay for the project with federal funding when procuring it, so they did not verify the contractor?s status. Staff also did not have a clear understanding of the requirements for suspension and debarment and did not verify the contractor was not suspended or debarred once it was determined federal funds would be used for the project. Effect of Condition The City did not obtain a written certification, insert a clause into the contract, or check SAM.gov to verify one contractor was not suspended or debarred. Without this verification, the City increases its risk of providing federal funds to contractors that are excluded from participating in federal programs. Any payments the City made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. We were able to verify the contractor was not suspended or debarred. Therefore, we are not questioning costs for these payments. Recommendation We recommend the City improve its internal controls and develop procedures to ensure staff understand suspension and debarment requirements and verify contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before contracting with them. In addition, the City should check suspension and debarment when federal funding sources change.