In accordance with our goal to review funds provided under the American Recovery and Reinvestment Act of 2009 (Recovery Act), we audited the Housing Authority of the City of Port Arthur’s (Authority) Public Housing Capital Fund Stimulus (formula) Recovery Act Funded activities. We wanted to determine whether (1) Public Housing Capital Fund formula grant obligations made between January 30 and March 17, 2010, were appropriate, prudent, eligible, and supported and (2) related procurements were made in accordance with 24 CFR (Code of Federal Regulations) Part 85 and Recovery Act requirements. Additionally, we assessed the Authority’s compliance with Recovery Act reporting and environmental review requirements.

We found the Authority’s Recovery Act obligation was not appropriate, prudent, eligible, and supported because its related procurement was not made in accordance with 24 CFR Part 85 and Recovery Act requirements. The Authority violated procurement requirements designed to ensure full and open competition and reasonable cost and did not practice sound financial controls over the grant. As a result, the Authority’s obligation of its $725,546 Recovery Act grant and its resulting expenditures were ineligible. In addition, the Authority did not comply with Recovery Act environmental review reporting requirements and it commenced site work for its project before receiving environmental clearance to proceed.

We recommend that the U. S. Department of Housing and Urban Development (HUD) rescind the Authority’s Recovery Act grant, including the $67,640 expended, and return the entire $725,546 allocation to the U. S. Treasury for the sole purpose of deficit reduction. HUD should also ensure that the Authority complies with procurement requirements, adopts adequate financial controls, and complies with environmental review requirements. We further recommend that HUD prohibit the Authority from conducting further site work until it receives environmental clearance to do so, regardless of the funding source.