Finding 2025-006 I. Procurement, Suspension and Debarment Identification of the Federal Program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2025 through December 31, 2025 Program No.: IL002-01-00025D Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): The Uniform Guidance 2 CFR section 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” The Uniform Guidance 2 CFR section 200.318, general procurement standards states “(a) Documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services.” The Uniform Guidance 2 CFR section 200.319 states that “all procurement transactions under the Federal award must be conducted in a manner that provides for full and open competition and is consistent with the standards of this section and §200.320.” The Authority’s procurement policy for an intergovernmental purchasing agreement requires an agency contract and amendments. The Authority’s internal control procedures require procurements of more than $500,000 to have Board of Commissioners’ approval. Recipients and subrecipients are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. When a recipient or subrecipient enters into a covered transaction with an entity at a lower tier, the recipient or subrecipient must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). Condition: For one of nine (11.1%) procurement transactions and one of 40 (2.5%) procurement transactions tested for internal controls over and compliance with federal procurement compliance requirements, respectively, we identified one procurement exception. Specifically, the procurement lacked Board of Commissioners approval, and no executed agreement or amendment existed for fiscal year 2025. Therefore, the Authority was unable to demonstrate compliance with Uniform Guidance procurement standards. For three of 40 (7.5%) procurement transactions tested for internal controls over and compliance with the suspension and debarment compliance requirement, the suspension and debarment check was not performed or retained on file before entering the covered transaction. Therefore, the Authority was unable to demonstrate compliance with Uniform Guidance suspension and debarment standards. Cause: The Authority’s internal controls over the review and approval of procurement transactions and the review and retention of suspension and debarment checks were not operating effectively. Effect or Potential Effect: Procurements may not be made in accordance with Uniform Guidance procurement standards. Contractors/vendors may be suspended or debarred. Questioned Costs: A total of $6,412,600 related to Assistance Listing No. 14.881, representing one procurement with a procurement exception (invoices totaling $6,412,600). Context: The one procurement and three suspension and debarment transactions totaled $8,443,452 out of 40 procurement transactions sampled for compliance totaling $38,544,823. Public Housing expenditures reported in the schedule of expenditures of federal awards were $253,935,873 for the year ended December 31, 2025, representing 21.32% of total federal expenditures under Assistance Listing No. 14.881 of $1,190,937,657. Identification as a Repeat Finding, if Applicable: The finding is a partial repeat of finding 2024-006 from the prior year. Recommendation: The Authority should follow its established internal controls over the review and approval of procurement transactions and the review and retention of suspension and debarment checks. Views of Responsible Officials: CHA Management agrees. This finding pertains to an intergovernmental contractual agreement with the Chicago Police Department, which was under renegotiation and not yet approved by the Board. Although the suspension and debarment check had been performed, it was not documented in accordance with CHA procedures. Going forward, the CHA will ensure compliance with its existing procurement process and procedures.