In accordance with our goal to review funds provided under the American Recovery and Reinvestment Act of 2009 (Recovery Act) and based on the U. S. Department of Housing and Urban Development’s (HUD) concerns about the capacity of the City of Tulsa’s (City) subrecipient, we audited the City’s Community Development Block Grant Recovery (CDBG-R) program. Our objective was to determine whether the City complied with HUD’s CDBG-R obligation, procurement, expenditure, and reporting requirements.
The City poorly managed its Recovery Act activities by selecting a subrecipient that did not have the capacity to complete the project within the required time limit. Further, the City did not adequately monitor the subrecipient, did not comply with Federal requirements, and did not apply good financial controls. This condition occurred because the City did not ensure that a subrecipient had the capacity to complete an activity and lacked the required policies and procedures. As a result, it committed more than $3 million in Federal funds for a project that it might not complete. Further, the City disregarded procurement requirements, did not have policies or procedures regarding the disposal of hazardous waste, and did not implement sound controls over the grant. As a result, it could not comply with regulations or ensure that its contractors followed requirements.
We recommended that the Acting Director, Community Planning and Development Division, Oklahoma City, OK, require the City to select a subrecipient that has the capacity, both financially and administratively, to complete and operate the Shoppes on Peoria and to provide documentation by November 30, 2011. If the City cannot obtain a subrecipient that can complete the project, it should select another project that it can complete by September 30, 2012. Further, the City should support or repay more than $49,000 that it spent without a contract and improve its controls for its grants. Also, HUD should seek administrative sanctions against the subrecipient and its related entities to protect HUD and the City from future instances of noncompliance.