Finding 1099139 (2024-002)

Finding 2024-002 - Moving to Work Demonstration ALN 14.881- Procurement - Formal Competitive Requirements - Noncompliance & Significant Deficiency Condition & Cause: We reviewed the contracts associated with the largest purchases of the fiscal year to determine if the procurement procedures followed the Housing Authority's Procurement Policy and Federal Regulations. We found that large PHA-wide purchases for roofing materials and labor were being Improperly split into smaller contracts by individual property. The Authority gathered quotes for all properties at the same time under small purchase procedures, though the aggregate contract costs exceeded the small purchase ceiling. We feel these projects met the conditions for sealed bidding to be feasible as outlined in 2 CFR §200.320(b){l). Additionally, the Procurement Policy was last updated and approved by the Board 1n 2003. Failure to consistently enforce the requirements for competitive procurement methods for larger contracts may have been driven by a lack of oversight or understanding of the regulatory requirements. Criteria: The Code of Federal Regulations and the Housing Authority's Procurement Policy. Effect: Circumventing the competitive procurement process potentially leads to higher costs, lack of transparency, and limited competition. This practice undermines the integrity of the procurement process and may result in the inefficient use of federal funds, violating HUD's procurement standards. Recommendation: We recommend that the PHA review its procurement policies and training to ensure that all large purchases are properly identified and handled through competitive procurement methods, In compliance with applicable regulations. The PHA should also implement controls to prevent the improper splitting of contracts in the future. Questioned Costs: None Repeat Finding: No Was sampling statistically valid? No Views of responsible officials: The PHA agrees with the results of the audit and recommendations.