Finding Text
2023-002 – PROCUREMENT
Material Weakness/Material Noncompliance
U.S. Department of Housing and Urban Development
ALN #: 14.850 – Public and Indian Housing Program
ALN #: 14.872 – Public Housing Capital Fund Program
CRITERIA
For any amounts above the Petty Cash ceiling, but not exceeding $50,000.00, the JCHA may
use small purchase procedures. Under small purchase procedures, the JCHA shall obtain a
reasonable number of quotes (preferably three); however, for purchases of less than $2,000.00,
also known as Micro Purchase, only one quote is required provided the quote is considered
reasonable. To the greatest extent feasible, and to promote competition, small purchases should
be distributed among qualified sources. Quotes may be obtained orally (either in person or by
phone), by fax, in writing, or through e-procurement. Award shall be made to the qualified
vendor that provides the best value to the JCHA. If award is to be made for reasons other than
lowest price, documentation shall be provided in the contract file. The JCHA shall not break
down requirements aggregating more than the small purchase threshold (or the Micro Purchase
threshold) into several purchases that are less than the applicable threshold merely to: (1)
permit use of the small purchase procedures or (2) avoid any requirements that apply to
purchases that exceed the Micro Purchase threshold. (Procurement Policy)
CONDITION
As a part of our audit, we examined a selection of service providers and vendor transactions
for the year ended June 30, 2023. As a result of our procedures, we identified the following
deviations from the Authority’s policy:
> Eight instances in which the Authority did not document an Independent Cost Estimate
> Two instances in which a bid solicitation/advertisement could not be located.
> Two instances in which the Authority did not appear to use the correct procurement
methodology.
> Eight instances in which the Authority did not conduct a search to verify that the vendor
was not suspended or debarred from federal contracts.
CAUSE
The Authority does not have a process in place for adhering to and documenting the
requirements of its procurement policy and HUD procurement regulations.
EFFECT
The Authority has not ensured that it is receiving the most competitive prices or rates for
services that have been procured, which may have resulted in unnecessary additional costs to
the Authority.
QUESTIONED COSTS
None identified.
CONTEXT
All procurements must be made in accordance with the Authority’s procurement policy. We
selected a sample of ten procurements representing total expenditures of $653,196. This was
not a statistically valid sample.
REPEAT FINDING
See finding 2022-003
RECOMMENDATION
We recommend that the Authority make the following improvements to internal controls:
> Evaluate the need for open-end contracts and procure these services in accordance with
the procurement policy at least annually.
> Implement a procurement checklist for all procurements to ensure all applicable
elements of the Authority’s procurement policy are accounted for in each procurement
action.
> Provide sufficient procurement training to all employees responsible for procurement.