We completed an audit of the Housing Authority of the County of Monterey’s (Authority) administration of more than $2.9 million in Capital Fund Recovery Grant funding as part of the American Recovery and Reinvestment Act of 2009. Our objective was to determine whether the Authority administered the procurement and contracting of its grant funds in accordance with HUD laws and regulations. The Authority did not administer the procurement and contracting of $99,900 in grant funds in accordance with HUD laws and regulations. It did not follow HUD's or its own procurement policies and procedures when it procured grant-funded construction contracts. The Authority also included required geographic preference clauses in its grant-funded construction contracts. These clauses restricted the procurement process in a manner that was not fair and open to competition.

We recommend that the Director of HUD's San Francisco Office of Public Housing require the Authority to

Provide to HUD documentation of at least three written price quotations to HUD showing justification of the $99,900 in unsupported costs incurred for the electrical wiring upgrades at 15 housing units. This documentation should include a tabulation of quotations received, certified, and retained by the Authority. Otherwise, repay HUD $99,900 from nonfederal funds for the unsupported payments incurred.
Conduct all future procurements in compliance with HUD laws and regulations to ensure fair and open competition. If the Authority does so, it would avoid instances such as the roofing and solar panel installation contracts identified in this report that were conducted with limited competition.
Establish a record-keeping system that ensures complete, consistent, and accurate documentation of all future procurements to ensure compliance with HUD laws and regulations.

Provide appropriate training to responsible personnel to ensure better understanding HUD procurement laws and regulations.