We audited the U.S. Department of Housing and Urban Development’s (HUD) controls over its certifications of State disaster recovery grantee procurement processes.  We initiated the audit after prior audits identified issues with the procurement certification completed for the State of New Jersey.  Our objective was to determine whether HUD certifications of State disaster grantee procurement processes were accurate and supported.

HUD did not always provide accurate and supported certifications of State disaster grantee procurement processes.  Specifically, it (1) allowed conflicting information on its certification checklists, (2) did not ensure that required supporting documentation was included with the certification checklists, and (3) did not adequately evaluate the supporting documentation submitted by the grantees.  These conditions occurred because HUD did not have adequate controls over the certification process.  Due to the weaknesses identified, HUD did not have assurance that State grantees had proficient procurement processes in place and the Secretary’s certifications did not meet the intent of the Disaster Relief Appropriations Act of 2013.

We recommend that HUD perform a detailed review of the procurement procedures for each of the State grantees that received funds under the Act.  If the State did not demonstrate that its procedures met requirements, HUD should (1) require the grantee to update its procedures and provide an updated certification; (2) review the updated grantee certification to confirm that the State meets requirements and has a proficient procurement process in place, thereby putting up to $4.9 billion not yet disbursed or awarded to better use; and (3) review procurement files for contracts that were paid with funds provided under the Act and if the procurement did not comply with Federal procurement requirements, require the grantees to repay HUD from non-Federal funds for any amounts that they cannot support or were not fair and reasonable.  We also recommend that HUD continue to improve the guidance that it provides to grantees to ensure that future grantee certifications are accurate and supported, continue to improve its controls to ensure that its staff adequately reviews future grantee certifications to ensure that they are accurate and supported before certifying that grantees have a proficient procurement process, and increase monitoring of State grantees that certified that they had a procurement process that was equivalent to Federal procurement standards.