We audited the Housing Authority of the County of San Bernardino’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund formula and competitive grants. We performed the audit because Recovery Act reviews are part of the Office of Inspector General’s (OIG) annual plan and the Los Angeles Office Public Housing’s 2011 risk assessment rated the Authority as high risk based on data from the Authority’s most recent Real Estate Assessment Center physical inspections and Financial Data Schedule submission. Our audit objective was to determine whether the Authority completed procurements for Recovery Act capital funds in accordance with 24 CFR (Code of Federal Regulations) Part 85 and U.S. Department of Housing and Urban Development (HUD) Recovery Act requirements.
The Authority did not complete all procurements for its Recovery Act capital funds in accordance with 24 CFR Part 85 and HUD Recovery Act requirements. Specifically, it procured one vendor through noncompetitive procurement without adequate justification, and the related contracts were missing 5 of 13 required provisions. In addition, we identified an expired assurance of completion for ongoing work, a lack of backup documentation for the independent cost estimates in two of the files reviewed, and a control weakness in the Authority’s process for approving change orders. Therefore, the Authority may have spent more Recovery Act money toward its projects than it would have had it completed proper procurement procedures.
As a result, we recommend that the Director of HUD’s Los Angeles Office of Public Housing require the Authority to (1) support the reasonableness of the $247,834 contracted through noncompetitive procurement or repay the Recovery Act funding expended thus far and ensure that no additional Recovery Act funding is disbursed under the contracts, (2) amend the ongoing noncompetitive procurement contracts to include the missing contract provisions, (3) implement a policy to ensure that its procurement and contracts manager reviews all contracts before they are executed, (4) implement controls to ensure that assurance of completion documents are obtained and valid for the duration of an ongoing contract, (5) implement controls to ensure that all contractor backup documentation is retained and accessible, and (6) implement controls to ensure that all documents requiring signature are approved by multiple parties as intended and that one person does not sign on multiple lines.