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Report Fraud, Waste and Abuse
December 01, 2014
  • Housing
2015-NY-0001
2015-NY-0001.pdf

We audited the U.S. Department of Housing and Urban Development’s (HUD) procurement and administration of its multifamily mortgage loan and property management servicing and accounting contract.  We conducted this review based on concerns communicated to the HUD Office of Inspector General (OIG) by the Federal Housing Commissioner and HUD housing officials.  The objectives of the audit were to determine whether HUD officials (1) ensured that the contract scope of services was appropriate and necessary, (2) maximized competition, (3) provided sufficient oversight and monitoring, and (4) provided adequate communication and coordination among the departments involved.

HUD officials ensured that the scope of services was appropriate and necessary but did not always follow applicable requirements or use best practices in the procurement and administration of HUD’s contract for multifamily mortgage loan and property management servicing and accounting.  Specifically, HUD officials did not sufficiently track contract payments, identify and deobligate excess funds at contract closeout, or ensure adequate communication and coordination with the departments involved with this contract.  Also, HUD officials did not obtain sufficient bidders; ineffectively selected the procurement method used, and did not maximize vendor awareness and visibility for this contract.  We attributed these deficiencies to HUD’s high rate of turnover and lack of central and consistent accountability and communication in the offices responsible for this contract

We recommend that HUD officials (1) deobligate the almost $10 million in excess obligations on HUD’s most recent award of the contract for these services and ensure that these funds are put to better use, and (2) implement procedures to ensure that obligated amounts are tracked and are consistent with funding needs, consistent oversight, accountability, and communication are promoted, best practices are followed to provide maximum competition, and decisions are made with the input of all parties involved.