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Finding No. 2022-002 Low Rent Public Housing, CFDA #14.850 Compliance Requirement: Procurement, Suspension & Debarment Type of Finding: Noncompliance, Material Weakness Condition During a HUD Compliance review, it was noted that the Authority did not adhere to sealed bid requirements and does not maintain required documentation for Sealed Bids in accordance with the below regulatory citations; the Authority signed and authorized a change order in the amount of $149,500 dated March 3, 2022; however, the contract end date was October 27, 2021; and the Authority did not follow emergency procurement rules. MHA failed to complete the emergency work that it received clearance for by the Meriden Fire Marshall. A contract to complete the work was not signed until November 5, 2022, while the Fire Marshall?s letter was dated October 25, 2021. Criteria The Authority must adhere to sealed bid requirements and maintain the required documentation for Sealed Bids. Sealed Bid procurement requires a public solicitation where a notice is published in a newspaper and/or on website that are generally used by the industry. Submissions must be sealed and received at a specified date and time and a published date and time for opening the sealed bids. The agency then awards the contract to the lowest responsible bidder for a firm, fixed price. The Authority must include a change order justification in the procurement file for any change orders awarded. The Authority took over a year to sign a contract to complete emergency work from the date it received clearance from the fire marshal. Cause The Authority was not properly following the Authority Procurement Policy or the HUD Procurement Handbook for PHAs. Effect A change order for $149,500 was signed on March 3, 2022, after the contract end date of October 27, 2021. The file did not contain a change order justification. Given that there was no documentation of a contract extension, the cost associated with the change order is not an eligible expense. Context A review of three contracts revealed the issues with the procurement policy. Questioned Costs $149,500 Recommendation We recommend the Authority design a system of internal controls to ensure that all procurement standards are followed in accordance with Authority procurement policy as well as the HUD Procurement Handbook for PHAs