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We audited the Weslaco Housing Authority, Weslaco, TX, based on a referral to our office concerning issues with the Authority’s process for awarding its 2014 legal services contract.  Our audit objective was to determine whether the Authority procured its U.S. Department of Housing and Urban Development (HUD) Housing Choice Voucher Program- and operating subsidy-funded legal services contract in accordance with Federal, State, and Authority requirements.

The Authority did not follow Federal, State, and Authority procurement and Federal cost principle requirements when contracting for legal services.  Specifically, it (1) did not competitively procure its 2014 legal services contract and (2) paid unreasonable and unsupported costs.  These conditions occurred because the Authority’s chairman of the board mistakenly believed that State rules allowed the Authority to list a professional services contract on the board meeting agenda and approve it without competition or a cost analysis.  Thus, the Authority could not support that it obtained the best provider and price for its legal services, resulting in its paying $118,170 in unsupported and unreasonable costs for legal services.

We recommend that the Director of HUD’s San Antonio, TX, Office of Public Housing require the Authority to (1) support or repay $118,170 in questioned costs paid for legal services, (2) revise its procurement policies to include current Federal cost principles, and (3) provide training on Federal procurement requirements and cost principles to its board members and staff.