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We reviewed the U.S. Department of Housing and Development’s (HUD) process for ensuring that grantee public housing agencies (PHA) receiving American Recovery and Reinvestment Act of 2009 (Recovery Act) Capital Funds complied with Section 152 of the 2005 Energy Act. We reviewed this process because during a recent Recovery Act audit we identified some non-Energy Star compliance and premature replacement purchases and during 2008 grantees paid $1.6 billion for utilities, representing 24 percent of their operating costs. Our objectives were to evaluate HUD’s management controls to ensure that grantees (1) conducted energy audits and implemented cost-saving measures, (2) purchased equipment that met Federal efficiency standards, and (3) only replaced equipment that was obsolete or near the end of its expected useful life.

HUD’s controls over energy audits could be improved to ensure that grantees conduct energy audits and implement cost-saving measures. However, HUD indicated that the controls should be improved in fiscal year 2012 when new regulations are issued, and HUD included new energy audit procedures and directed grantees to complete energy audits at least every 5 years as part of its physical needs assessment process. Also, the review showed that grantee PHAs generally purchased equipment that met Federal efficiency standards, and 14 of 15 grantee PHAs evaluated completed energy system modernization in accordance with their annual and/or 5-year plan.