We completed an audit of the Puerto Rico Public Housing Administration (authority) central office procurement system. We selected the authority for review as part of our strategic plan. The objectives of the audit were to determine (1) whether the authority’s procurement policies and procedures were in compliance with the U.S. Department of Housing and Urban Development’s (HUD) requirements, (2) whether it followed its policies and procedures and HUD procurement requirements, (3) whether it adequately supported the reasonableness of the cost of goods and services acquired, and (4) whether an electronic surveillance system installed at several of its public housing projects generated the intended benefits.

Generally, the authority complied with requirements for planning, soliciting, and awarding contracts and purchase orders. However, our review identified procurement deficiencies in two contracts and three purchase orders, which resulted in monetarily significant deficiencies. The authority used an improper procurement procedure, failed to perform required cost analyses, and paid for equipment that was not used or missing. It also awarded purchase orders for other than the lowest quoted price without justification and paid more than the contract price. In addition, the electronic surveillance system installed at several of its public housing projects did not generate the intended benefits. As a result, the authority did not support the reasonableness of more than $9.7 million in contracts, paid more than $3.57 million for equipment that did not provide the intended benefits, and paid more than $28,000 for excessive expenditures.

We recommend that the Director of the Office of Public and Indian Housing require the authority to provide support showing the eligibility and reasonableness of more than $9.7 million spent on contracts that were not awarded in accordance with HUD requirements or reimburse its programs from non-Federal funds. We also recommend that the Director require the authority to reimburse its public housing program more than $3.6 million paid for excessive costs and unused/missing equipment. In addition, we recommend that the Director evaluate the surveillance system installed throughout the authority’s public housing projects and determine whether it was implemented in an effective and efficient manner.