Because of an anonymous complaint, we reviewed the Housing Authority of Bexar County, TX.  The complaint included allegations of improper procurement, improper use of Authority funds, misuse of the Authority’s credit card, and violations of Housing Choice Voucher regulations.  Our objective was to determine whether the Authority operated its public housing and Housing Choice Voucher programs in accordance with the U.S. Department of Housing and Urban Development’s (HUD) requirements.  More specifically, we wanted to determine whether the complainant had valid allegations regarding procurement, expenditures, and the misuse of HUD program funds. 

The complainant had some valid allegations concerning housing assistance payments, utility reimbursement payments, and misuse of Authority credit cards.  Our testing identified additional issues with the Authority’s operation of its HUD-funded programs.  Specifically, the Authority (1) could not support its allocation of employee and contractor salaries, (2) improperly purchased goods and services, (3) mismanaged its independent contractors, and (4) inconsistently allocated other costs.  These conditions occurred because Authority management (1) disregarded directions from HUD, (2) relied on its contracted attorneys, (3) did not appoint a procurement officer to oversee procurement activities, (4) did not establish a written cost allocation method, and (5) failed to exercise proper oversight.  As a result, the Authority incurred $583,756 in questioned costs and created a tax liability for Federal and State employer-related taxes. 

We recommend that the Director of HUD’s San Antonio Office of Public Housing require the Authority to (1) support or repay $583,756 in questioned costs; (2) update and implement compliant policies, procedures, and controls; (3) take action concerning its contracts with its independent contractors; and (4) determine and pay any tax liabilities owed.  We further recommend that the Director require training for the board, request that the county commissioners evaluate the board’s capabilities, and take appropriate action as necessary.  In addition, we recommend that the Director of the Departmental Enforcement Center impose appropriate administrative sanctions.