We audited the City of Durham (City), North Carolina's HOME Investment Partnerships (HOME) program. Our audit objective was to determine whether the City complied with applicable federal procurement requirements with respect to its homeowner rehabilitation activity. This is the second of two audits of the City's program.

The City did not advertise for homeowner rehabilitation contractors as required. Also, it did not take necessary affirmative steps to ensure that minority firms, women's business enterprises, and labor surplus area firms were used when possible. This condition occurred because the City lacked adequate procedures to ensure compliance with all applicable federal procurement regulations. As a result, it could not support that the program activities were subject to full and open competition. In addition, it could not ensure that minority firms, women's business enterprises, and labor surplus area firms were given proper consideration.

We recommend that the U.S. Department of Housing and Urban Development (HUD) require the City to provide documentation to support that the HOME program homeowner rehabilitation activities, totaling $790,364 for fiscal years 2006 and 2007, were awarded to the most responsible firm with a proposal that was most advantageous to the program, considering price and other factors. We also recommend that HUD require the City to develop and implement procedures to ensure that future services for homeowner rehabilitation are procured in accordance with applicable federal procurement requirements.