We audited the City of Houston’s Community Development Block Grant Disaster Recovery (CDBG-DR) 2015 program. Under this program, the Consolidated Appropriations Acts of 2016 and 2017 made funds available for necessary expenses related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization. We audited this program based upon the U.S. Department of Housing and Urban Development, Office of Inspector General’s (HUD OIG) 2019 audit plan priority to review disaster assistance programs. Our objective was to determine whether the City ensured that it maintained adequate supporting documentation for disbursements and its program complied with procurement requirements.
We found that the City generally ensured that it maintained adequate supporting documentation for disbursements; however, it did not always ensure that its program complied with procurement requirements. Specifically, the City did not always ensure that (1) it procured its master contractor agreements in accordance with competition and other procurement requirements for its home repair program; (2) it and its subrecipients maintained documentation to support that it performed independent cost estimates and cost analyses for its home repair and housing buyout programs; or (3) it and its subrecipients included all contract provisions in awarded contracts for its home repair, housing buyout, and infrastructure programs. This condition occurred because the City did not always understand procurement requirements and ensure that its subrecipients understood and followed requirements and had adequate controls and procedures. As a result, the City could not (1) show that it awarded 12 contracts worth more than $10 million in a manner that allowed for unrestricted competition and provided the most advantage to it and HUD, (2) support the cost reasonableness of more than $1.2 million in contract disbursements, and (3) provide reasonable assurance to HUD that it had adequate procurement control systems to ensure the proper administration and expenditure of disaster funds.
We recommend that HUD require the City to (1) support that it awarded contracts without restriction and in a manner advantageous to it and HUD or put the more than $9.7 million in contract awards to better use, (2) support or repay more than $1.2 million in contract disbursements, and (3) develop and implement written procedures and take actions to better ensure that it and its subrecipients meet all program procurement requirements.
Recommendations
Community Planning and Development
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Status2021-FW-1002-001-AOpenClosed$9,736,636.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on Octubre 13, 2022We recommend that the Director of HUD’s Office of Community Planning and Development require the City to provide documentation, including but not limited to showing that it (1) notified and allowed a response from bidders regarding the bidding and scoring processes; and (2) awarded home repair master agreement contracts without restriction and were in line with the bid evaluation requirements, or provide a documented re-evaluation of the procurement showing that it provided the best advantage to it and HUD, thereby putting the remaining $9,736,636 award amount to better use.
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Status2021-FW-1002-001-BOpenClosed$1,063,364.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Octubre 27, 2022We recommend that the Director of HUD’s Office of Community Planning and Development require the City to support $1,063,364 or repay its CDBG-DR program from non-Federal funds for payments made to one prequalified contractor under its home repair program without independent cost estimates and cost analyses.
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Status2021-FW-1002-001-COpenClosed$170,066.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Octubre 13, 2022We recommend that the Director of HUD’s Office of Community Planning and Development require the City to support $170,066 or repay its CDBG-DR program from non-Federal funds for payments made to the demolition contractor under its housing buyout program without independent cost estimates and cost analyses.
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Status2021-FW-1002-001-DOpenClosed$27,250.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Octubre 06, 2022We recommend that the Director of HUD’s Office of Community Planning and Development require the City to support $27,250 or repay its CDBG-DR program from non-Federal funds for payments made to three appraisal contractors under its housing buyout program without cost analyses.
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Status2021-FW-1002-001-EOpenClosedClosed on Septiembre 27, 2022
We recommend that the Director of HUD’s Office of Community Planning and Development require the City to develop and implement a HUD-approved written plan and checklists that will correct and prevent the deficiencies outlined in the finding.
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Status2021-FW-1002-001-FOpenClosedClosed on Septiembre 30, 2022
We recommend that the Director of HUD’s Office of Community Planning and Development require the City to provide training to City staff to ensure that it understands and follows procurement requirements, such as performing independent cost estimates, cost analysis, scoring, including all contract provisions, ensuring that subrecipients understand and follow procurement requirements, and maintaining appropriate procurement documentation.
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Status2021-FW-1002-001-GOpenClosedClosed on Septiembre 30, 2022
We recommend that the Director of HUD’s Office of Community Planning and Development require the City to Update its procurement policies and procedures to ensure compliance with disaster assistance program requirements
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Status2021-FW-1002-001-HOpenClosedClosed on Septiembre 30, 2022
We recommend that the Director of HUD’s Office of Community Planning and Development require the City to ensure that monitoring includes a review of its subrecipients’ (1) policies and procedures to ensure that the policies and procedures are current and comply with HUD requirements, (2) documentation supporting cost reasonableness to ensure that the documentation is sufficient, and (3) training provided regarding procurement and other program requirements to ensure that trainings are adequate.