We audited the City of New York’s Infrastructure Rehabilitation and Reconstruction of Public Facilities Program. We selected this program for review because the City had allocated nearly $91 million to the program and disbursed more than $59.6 million as of October 31, 2017, and as part of our ongoing oversight of the U.S. Department of Housing and Urban Development’s (HUD) Disaster Recovery programs. Our objective was to determine whether the City used Disaster Recovery funds under its program for eligible and supported costs.
We found that the City did not always use Disaster Recovery funds under its program for eligible and supported costs. Specifically, for one of two projects reviewed, the City did not (1) have sufficient documentation to show that the use of salary multipliers for overhead and profit, resulting in $594,012 in additional costs, was supported and eligible; (2) maintain adequate documentation to show compliance with Davis-Bacon and Related Acts requirements; and (3) identify billing and payroll errors made by subcontractors, including $1,198 in overpaid wages and $2,689 in wages that may have been overpaid. These deficiencies occurred because the City did not fully understand how to document compliance with Federal requirements and relied on its subrecipient instead of performing a detailed review of invoices to ensure that they contained adequate documentation showing compliance with requirements. As a result, HUD did not have assurance that the City used $597,899 in Disaster Recovery funds as intended for matching requirements for other federally funded infrastructure projects, and HUD could not be assured that funds were disbursed for only eligible and supported costs that complied with applicable Federal requirements.
We recommend that HUD require the City to (1) provide documentation to show that the $596,701 disbursed due to the use of multipliers and a higher than required overtime rate was for eligible, reasonable, necessary, and supported costs or reimburse its program from non-Federal funds; (2) reimburse its program from non-Federal funds $1,198 for overpaid wages; (3) provide documentation showing that it has strengthened its invoice review process to ensure that costs are eligible and supported before disbursing Disaster Recovery funds; and (4) provide documentation showing compliance with Davis-Bacon requirements and that restitution has been made to affected workers for any underpayments identified.
Recommendations
Community Planning and Development
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Status2018-NY-1007-001-AOpenClosed$594,012.00Questioned 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.
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the City to provide documentation to show that the $594,012 disbursed due to the use of multipliers was for eligible, reasonable, necessary, and supported costs or reimburse its program from non-Federal funds.
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Status2018-NY-1007-001-BOpenClosed$2,689.00Questioned 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.
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the City to provide documentation to show that the $2,689 disbursed due to a higher than required overtime rate was supported by documentation from the trade unions or reimburse its program from non-Federal funds.
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Status2018-NY-1007-001-COpenClosed$1,198.00Questioned 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.
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the City to reimburse its program $1,198 from non-Federal funds for overpaid wages due to billing and payroll errors.
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Status2018-NY-1007-001-DOpenClosed$544.00Funds 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.
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the City to pay $544 in unpaid wages to the subcontractors of the affected employees and submit evidence that these employees have been paid.
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Status2018-NY-1007-001-EOpenClosed
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the City to provide training to its staff to help ensure compliance with applicable cost principle, procurement, and Davis-Bacon requirements.
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Status2018-NY-1007-001-FOpenClosedClosed on Agosto 22, 2022
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the City to provide documentation showing that it has strengthened its invoice review process to ensure that costs are eligible and supported before disbursing Disaster Recovery funds.
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Status2018-NY-1007-001-GOpenClosed
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the City to provide documentation showing that payments made under the Rockaway Boardwalk construction management services contract complied with Davis-Bacon and Related Acts requirements and that restitution is made to affected workers for any underpayments identified.