We audited the U.S. Department of Housing and Urban Development’s (HUD)’s plans and procedures for data conversion of the HUD Integrated Core Financial System (ICFS).

Our audit objective was to review HUD’s readiness to fully implement ICFS and determine whether HUD had properly managed the payments related to data conversion activities.
We determined that OCFO incorrectly paid the Integrated Financial Management Improvement Project contractor for tasks that were not completed. Specifically, OCFO incorrectly paid more than $1.3 million to the Project contractor for one contract task, although it did not receive the contract deliverables associated with those tasks. Also, OCFO paid the entire amount of another contract task before ensuring that the task had been completed.

We recommend that the Office of the Chief Procurement Officer (OCPO) obtain reimbursement for payment from the Project contractor for the incomplete contract tasks. Also, it should ensure that future fixed-price contracts require that a contract deliverable be associated with each payment on the partial payment schedule. Lastly, it should ensure that future fixed-price contracts with partial payment schedules include a requirement to withhold a percentage of the contracted amount for each task until the task is completed.