We audited the Housing Choice Voucher and Federal public housing programs at the Medford Housing Authority due to a complaint received by the U.S. Department of Housing and Urban Development (HUD). Our overall audit objective was to determine whether the Authority had acceptable management practices to efficiently and effectively administer its housing programs while providing decent, safe, and sanitary housing in compliance HUD requirements and its annual contributions contract.
The Authority did not always administer its Housing Choice Voucher and public housing programs in accordance with HUD regulations and its annual contributions contracts. It failed to conduct a proper rent reasonableness study to ensure that rents paid for assisted units were reasonable in relation to rents charged for comparable unassisted units. As a result, $7.8 million in housing assistance paid during the period July 2010 to September 2011 was not properly supported.
The Authority also did not follow required procurement practices and procedures. The deficiencies identified included not performing cost estimates before soliciting bids, selecting contractors or architects without proper or adequate competition, not following HUD procedures for interagency agreements, not justifying noncompetitive awards, and paying for services or work performed without a contract. In addition, the Authority failed to maintain a complete contract register. As a result, it could not assure HUD that its procurement process was fair and equitable and it obtained the most favorable prices for more than $1.3 million charged to Federal programs.
In addition, the Authority did not enforce HUD's housing quality standards including ensuring that reinspections of its Housing Choice Voucher program units were performed in a timely manner or units were abated, when required. The Authority paid landlords $36,774 in housing assistance for 31 units reviewed that did not meet HUD's housing quality standards.
Also, a lack of controls over the use of credit cards issued in the name of the Authority to five of the Authority's employees and a concern regarding the excessive subsistence allowance for overnight travel were addressed in a separate letter to the Board of Commissioners.
We recommend that the Director of Public Housing require the Authority to conduct proper rent reasonableness determinations, using all nine of the evaluation factors required by HUD and provide supporting documentation to show that rents were reasonable. We also recommend that the Director require the Authority to conduct an independent cost analysis for each of the procurements making up the more than $1.3 million charged to Federal programs to ensure that they were reasonable and supported. For any amounts that cannot be supported, HUD should require the Authority to reimburse the HUD programs from non-Federal funds. Additionally, the Authority must ensure that it complies with HUD rules and regulations and its own Federal procurement policies that require performing independent cost estimates for each procurement, soliciting bids or price quotes, maintaining documentation supporting the basis for contract awards, and executing written contracts for all procurements.
Additionally, we recommend that the Director require the Authority to develop and implement a written policy to ensure the timely reinspection of units and the abatement of housing assistance payments to landlords. The Authority must repay the Housing Choice Voucher program $36,774 from non-Federal funds for ineligible housing assistance payments made to landlords for units that were not properly abated.