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The U.S. Department of Housing and Urban Development’s Office of Inspector General audited the Youngstown Metropolitan Housing Authority’s American Recovery and Reinvestment Act of 2009 Public Housing Capital Fund Stimulus formula and competitive grants. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the Authority for audit based on the U.S. Department of Housing and Urban Development’s monitoring review and a recent newspaper article. Our objective was to determine whether the Authority administered its grants in accordance with Recovery Act, HUD’s, and its requirements.

The Authority’s procurement process had weaknesses. Specifically, the Authority did not ensure that contracts were awarded to the contractor that provided the best overall value to the Authority. This condition occurred because the Authority did not properly evaluate the contractors’ proposals by not conducting a review of each evaluator’s reasoning behind his or her scoring of the contractors. As a result, the Authority used $97,705 in formula grant funds contrary to its annual contributions contract with HUD and its procurement requirements. As a result, HUD lacked assurance that the Authority effectively managed its grant.

We recommend that the Director of HUD’s Cleveland Office of Public Housing require the Authority to (1) reimburse $97,705 from non-Federal funds to HUD for transmission to the U. S. Treasury for the inappropriate use of grant funds and (2) implement adequate procedures to ensure that its procurement policy requirement that a contract shall be made to the lowest responsive and responsible bidder unless justified in writing based on price and other specific factors is followed.