We audited the City of Houston’s Community Development Block Grant Disaster Recovery (CDBG-DR) 2015 program. Under this program, the Consolidated Appropriations Acts of 2016 and 2017 made funds available for necessary expenses related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization. We audited this program based upon the U.S. Department of Housing and Urban Development, Office of Inspector General’s (HUD OIG) 2019 audit plan priority to review disaster assistance programs. Our objective was to determine whether the City ensured that it maintained adequate supporting documentation for disbursements and its program complied with procurement requirements.
We found that the City generally ensured that it maintained adequate supporting documentation for disbursements; however, it did not always ensure that its program complied with procurement requirements. Specifically, the City did not always ensure that (1) it procured its master contractor agreements in accordance with competition and other procurement requirements for its home repair program; (2) it and its subrecipients maintained documentation to support that it performed independent cost estimates and cost analyses for its home repair and housing buyout programs; or (3) it and its subrecipients included all contract provisions in awarded contracts for its home repair, housing buyout, and infrastructure programs. This condition occurred because the City did not always understand procurement requirements and ensure that its subrecipients understood and followed requirements and had adequate controls and procedures. As a result, the City could not (1) show that it awarded 12 contracts worth more than $10 million in a manner that allowed for unrestricted competition and provided the most advantage to it and HUD, (2) support the cost reasonableness of more than $1.2 million in contract disbursements, and (3) provide reasonable assurance to HUD that it had adequate procurement control systems to ensure the proper administration and expenditure of disaster funds.
We recommend that HUD require the City to (1) support that it awarded contracts without restriction and in a manner advantageous to it and HUD or put the more than $9.7 million in contract awards to better use, (2) support or repay more than $1.2 million in contract disbursements, and (3) develop and implement written procedures and take actions to better ensure that it and its subrecipients meet all program procurement requirements.