We performed an audit of the selection of management and marketing contractors for single-family properties owned by the U.S. Department of Housing and Urban Development (HUD). This audit was initiated based on a complaint to our hotline alleging possible mismanagement, political influence, and violations of law in the procurement strategy used to select firms for the third generation management and marketing (M&M III) contracts. Our objective was to determine whether the allegations of mismanagement, political influence, and possible violations of law were valid.

We found the allegation of mismanagement credible; however, we did not find support to substantiate the allegations of political influence or violations of law. The Office of Single Family Asset Management and the Office of the Chief Procurement Officer did not have adequate controls to ensure that the M&M III contracts were awarded in a timely and efficient manner. Specifically, key stakeholders were not included in the initial planning for these contracts, and acquisition plans were not developed in a timely manner. As a result, the M&M III contracts were delayed for nearly a year, and bridge contracts with an estimated cost of more than $275 million had to be awarded to the existing M&M II contractors to avoid a lapse in the management and marketing services.

We recommend that the Deputy Assistant Secretary for Single Family Housing develop controls to award contracts in a timely manner, thus avoiding unnecessary expenditures for extending contracts. We also recommend that the Deputy Assistant Secretary (1) follow the procurement office's established acquisition planning requirements and procurement acquisition lead time (PALT)[1] guidance, (2) submit timely and complete performance work statements on all future contracts, and (3) use in-house resources when forming the integrated program team for all significant acquisitions to avoid unnecessary expenditures such as those paid to a contractor for writing performance work statements.

In addition, we recommend that HUD's Chief Procurement Officer (1) assign significant acquisitions to offices that have sufficient staff and expertise to avoid unnecessary expenditures such as those paid to an administrative support contractor, and (2) ensure that the PALT schedule is followed and require written justification when significant delays are encountered.