The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Flint Housing Commission’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund competitive grants. We selected the Commission based upon our analysis of risk factors relating to the housing agencies in Region 5’s jurisdiction. Our objective was to determine whether the Commission administered its grants in accordance with Recovery Act, HUD’s, and its own requirements. This is the first of two planned audit reports on the Commission’s Recovery Act grants.

The Commission generally complied with the requirements of the Davis-Bacon Act for all four of its Recovery Act competitive grants. However, it failed to follow HUD’s and its own procurement requirements for its Recovery Act competitive grants. Specifically, it did not (1) provide an adequate rationale for using a noncompetitive procurement method for its Recovery Act contracts, (2) prepare an independent cost estimate or analysis before the solicitation of offers, and (3) obtain approval from HUD and its board before revising its plan for use of the funds. Additionally, the Commission did not (1) issue payments to its contractor in accordance with HUD’s requirements and (2) ensure that its contractor included Section 3 clauses in contracts for work funded by the Recovery Act grants. As a result, the Commission hindered full and open competition, and HUD and the Commission lacked assurance that more than $3.1 million in Recovery Act competitive grant funds was used appropriately.

We recommend that the Director of HUD’s Detroit Office of Public Housing require the Commission to (1) reimburse HUD more than $3 million in grant funds for the inadequate procedures used in the procurement process and (2) implement adequate procedures and controls to ensure that contracts are awarded and managed in accordance with HUD’s requirements and its own procurement policy.