Overview
We found that during our audit period, from July 1, 2018 through March 22, 2021, MRC contracted with, and made payments totaling $497,493 to, a vendor that was on the Massachusetts Department of Industrial Accidents’ debarment list. The vendor was on the list for a period of three years from March 22, 2018 through March 22, 2021 because of a “Stop Work Order” regarding unsafe conditions and was therefore not eligible to receive these payments.
Contracting with a vendor that has been debarred could result in MRC receiving substandard goods or services and may also result in MRC having to reimburse the federal government for any federal funds it used to pay debarred vendors.
Authoritative Guidance
In July 2004, the state’s Operational Services Division and the Office of the Comptroller of the Commonwealth jointly issued a policy entitled “State Finance Law and General Contract Requirements,” which identifies “the key state finance law and the minimum state accounting and contracting requirements related to purchases made by all state Departments in all branches of state government.” This policy explains that state finance law requires the following:
All departments must check the debarred vendor lists below before awarding or renewing a contract in order to ensure that they are not awarding a contract to a debarred vendor. No Department shall knowingly accept a response of award a contract to any Contractor, or approve a subcontract to any party which is currently subject to any state of federal debarment order or determination. . . .
A Procuring Department shall disqualify any response that the Department determines to be unresponsive, including, but not limited to: . . . (d) Responses submitted by a Bidder, or which identify a subcontractor, currently subject to any State or federal debarment order or determination.
This policy identifies websites that list debarred vendors that each state agency should check.
Reasons for Issue
MRC senior management stated that the Division of Capital Asset Management and Maintenance (DCAMM) had worked on its behalf in securing this contract and as such, it relied on DCAMM’s due diligence to ensure that this vendor was not on the debarment lists. However, because MRC was a signatory to the contract as the agency using and paying for the services from this vendor, it should have ensured that DCAMM followed all of the required procurement procedures. In addition, MRC had not established monitoring controls over this activity, including a requirement to document the monitoring, to ensure that DCAMM performed this analysis.
Recommendation
MRC should establish monitoring controls to ensure that MRC staff members check the debarment status of contractors before awarding or renewing contracts. These controls should include a requirement to document the monitoring.
Auditee’s Response
MRC respectfully objects to the findings of the Office of the State Auditor as described in Finding #2. While the audit accurately reflects that MRC acted in reliance on the Division of Capital Asset Management and Maintenance (DCAMM), they erred in their ultimate determination that MRC is the responsible contracting party. In identifying the applicable policy, the finding cites the Operational Services Division (OSD) and the Office of the Comptroller’s policy entitled “State Finance Law and General Contract Requirements.” The policy, quoted therein, states in relevant part that the “procuring department” must disqualify any bidder that is currently subject to disbarment. The procuring department in this instance is DCAMM. MRC, as the “User Agency,” signs onto the lease agreement assuring that sufficient program funds are available to support the contract between the parties. Therefore, in accordance with the OSD/Comptroller policy, DCAMM is the procuring department responsible for ensuring disbarred bidders are not selected for award. While MRC shares the Auditor’s concerns that the Commonwealth avoids contracting with disbarred vendors, MRC is neither the procuring department nor the oversight agency for DCAMM.
Auditor’s Reply
While MRC is correct in its assertion that DCAMM is the procuring department in this instance, this does not absolve MRC of its duty to ensure that debarred bidders are not ultimately awarded the contracts on which they bid. As signatory parties, both MRC and DCAMM are required to check the debarred vendor lists, and both failed to comply with the above-referenced policy and regulatory requirements to check the debarred vendor lists.
| Date published: | January 6, 2023 |
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