We audited the Jefferson Metropolitan Housing Authority’s public housing program based on the activities included in our 2016 annual audit plan and a request from the U.S. Department of Housing and Urban Development (HUD).  Our audit objective was to determine whether the Authority complied with (1) Federal and its own procurement requirements and (2) HUD’s requirements for the administration of its energy performance contract. 

The Authority did not always comply with (1) Federal and its own procurement requirements and (2) HUD’s requirements for the administration of its energy performance contract.  Specifically, it failed to (1) maintain adequate documentation to support its procurements and (2) ensure that there were no real or apparent conflicts of interest in its contracting process.  Additionally, it failed to achieve the expected savings on its energy improvements.  As a result, HUD and the Authority lacked assurance that more than $964,000 in public housing operating funds was used appropriately.  Further, the Authority is at risk of defaulting on its nearly $6 million energy conservation loan, thus potentially encumbering public housing properties.

We recommend that the Director of HUD’s Cleveland Office of Public and Indian Housing require the Authority to (1) support or reimburse its program more than $964,000 from non-Federal funds for its unsupported procurement and contracting activities, (2) work with HUD to develop a plan to ensure that energy savings are realized to prevent a potential default on its nearly $6 million energy conservation loan used to purchase energy conservation equipment attached to the Authority’s public housing properties, and (3) develop and implement adequate procedures and controls to address the findings cited in this audit report.