PHA Didn't Follow Proper Procurement Procedures

Catalyst: An anonymous caller contacted HUD’s Office of Inspector General (OIG) complaint hotline claiming that the Charlottesville Redevelopment and Housing Authority improperly awarded an Internet services contract for more than $200,000 without receiving competitive bids.

Findings: Auditors didn’t find any merit to the allegation. However, they found that the Virginia-based PHA didn’t always follow federal, HUD, and state procurement requirements and its own procurement policy.

Specifically, the PHA lacked documentation to show that it properly procured products and services in accordance with applicable requirements from seven of eight vendors reviewed. The Code of Federal Regulations, at 2 CFR 200.318(i), states that non-federal entities must maintain records that detail the history of the procurement, including the basis for the contract price.

In addition, auditors found that the PHA didn’t have executed, written contracts for services from two vendors to which it paid $298,945. For Dumpster rental services from one vendor, the contract period was November 2014 to November 2015. The PHA didn’t have documentation to show that it extended the contract beyond November 2015. It also didn’t have documentation to show that it executed a contract with another vendor for pest control services.

Also, the PHA didn’t obtain at least three price quotes before purchasing appliances totaling $99,642 from one vendor. Of this amount, $89,020 was for individual purchases of more than $3,000. HUD Handbook 7460.8, REV-2, paragraph 5.3(A) states that PHAs must solicit price quotes from three or more sources for purchases of more than $3,000.

Recommendations: OIG recommended that the PHA be required to provide documentation to show that it purchased products and services totaling $728,516 at fair and reasonable prices or reimburse either its operating fund or capital fund from non-federal funds for any amounts that it can’t support. OIG also recommended that the PHA provide documentation to show that it had contracts for Dumpster rentals and pest control services or re-procure these services. Finally, OIG recommended that the PHA develop and implement controls to ensure that it complies with all applicable procurement requirements.

• HUD Audit 2019-PH-1002