We selected the Housing Authority of the City of New Haven (Authority), a Moving to Work agency, because it obligated a majority of its $6 million in Public Housing Capital Fund Stimulus (formula) Recovery Act Funded grant (grant) received under the American Recovery and Reinvestment Act of 2009 (Recovery Act) just before the required obligation deadline. Our objectives were to determine whether the Authority (I) obligated its Recovery Act formula funds for eligible projects/activities, (2) properly supported obligations and expenditures, (3) had adequate controls over obligations and expenditures, and (4) procured contracts in accordance with Recovery Act requirements and U.S. Department of Housing and Urban Development (HUD) rules and regulations.
Overall, the Authority obligated its Recovery Act formula funds for eligible activities, supported its obligations, and had adequate controls over the obligation and expenditure process. However, it did not always procure contracts in
accordance with Recovery Act and Federal requirements that involved more than $1.4 million of its $6 million in Recovery Act funds. Specifically, the Authority could not show cost reasonableness for more than $1.4 million in vacancy reduction contracts primarily because it did not complete an
independent cost estimate before solicitation and failed to complete a formal cost or price analysis of the bids. In addition, the Authority did not obtain competitive bids for the renovations. This condition occurred because the Authority did not follow HUD's and its own procurement policies and procedures regarding the Recovery Act funds. As a result, Recovery Act funds may not have been used efficiently, and the maximum number of vacant housing units may not have been returned to service.
The Authority also did not properly obligate and execute its Recovery Act physical needs assessment contract. The contract was not properly obligated because it included a $60,000 contingency for additional work that may have required expenditure; thus, the Authority was not obligated to spend Recovery Act funds. The contract was not properly executed because the Authority used the contingency
for a study that was not included in the contract scope of work and, thus, was not an eligible contract cost. This condition occurred because the Authority did not ensure that costs identified for funding with the $60,000 represented an eligible cost under the contract. If this situation is not corrected, $60,000 may be spent for ineligible activities, and funds may be recaptured in accordance with the Recovery Act.
We recommend that the Director of HUD's Boston Office of Public Housing require the Authority to support the cost reasonableness or repay any amounts it cannot support from the more than $1.4 million in Recovery Act capital funds spent for vacancy reduction contracts. We also recommend that the Authority improve its procurement controls to include obtaining appropriate procurement training and fully implementing procurement requirements regarding cost
estimates, cost analysis, and competitive bids. We recommend that HUD require the Authority to pay for the Section 8 conversion study, assigned under task order one, from non-Recovery Act funds. Lastly, we recommend that the Director of HUD's Boston Office of Public Housing ensure that the $60,000 is expended according to the contract; however, if eligible costs cannot be identified, the $60,000 should be recaptured in accordance with the Recovery Act.