Finding Text
Low Rent #14.850 and Capital Fund #14.872
Finding 2023-001-Procurement and Special Tests
Criteria and Condition
(a)-The Authority should follow its procurement policy, which complies with state and federal regulations. Louisiana Revised Statute 39:1702, for required expenditures in excess of $5,000 but less than $15,000, requires quotes from at least three vendors by telephone, or in writing. Purchases in excess of $15,000 require more strict procedures, depending on the dollar amount. If an item(s) cost less than $5,000 but it is reasonable that the Authority will require more of the same item in the audit year, then three quotes are required. For example, assume the Authority purchases several refrigerators that total to $4,500. If it reasonable to assume that the Authority will need more than another $500 of refrigerator purchases in the audit year, then three quotes are needed on the initial purchase.
(b)-Federal regulations require that monitoring of construction or rehabilitation-type expenses be documented in writing. Monitoring notes of construction progress, lack of progress, or issues such as contractor delay must be timely available and available to third parties. There are no required forms or format.
Context
(a)-Approximately $ 170,802 was paid to one contractor for various repairs and make readies for various units. This was paid in twenty-five payments, of which most covered multiple invoices. An additional $75,000 ($245,802 total to one contractor for the audit year) was paid to the same contractor for roofing, for which proper procurement procedures were followed and three quotes obtained. We noted that there were other rehab-type contracts as well as others ( other rehab, pest control, lawn maintenance, etc.) for which the Authority received various quotes and rewards were made to other contractors.
(b)-It appears that there were no written monitoring reports on the make readies, repairs, or roof work prepared by the Authority.
Cause
(a)-Management asserts that attempts were made to secure other quotes. For one particular rehab, another contractor bid and was awarded the contract. The contractor performed adequately. Management states that they requested the contractor to provide bids on other make readies. However, due to other commitments, the contractor declined. The issue was further aggravated that the Authority had only one full-time maintenance employee for the entire year. A second maintenance employee was employed for only four months.
(b)-Management claims that work was physically reviewed during the job and also at the end, in a punch list-type review.
Effect
Documentation is not as good as required that best efforts were made to secure the most favorable quote. In addition, lack of written monitoring means that assurance was not as strong as best practices that the work was properly done and in accordance with specifications.
Questioned Costs
None
Recommendation
(a)-Management should emphasize that price is not the sole determining factor of making rewards. This should be noted in written advertisements. When taking bids orally, management should follow up oral requests with the reminder that various factors are considered, including references, turnaround time, quality of work done for the Authority previously, and others. All contractors should have proof of insurance.
When the sufficient number of quotes cannot be obtained locally, the Authority should solicit quotes from other locales, such as Ruston and Monroe. Likely the travel time will render those quotes non-competitive. However, management should determine what the plumber, etc. charges for those services in Ruston or Shreveport. This will provide context of whether the local quote is reasonable.
(b)-As noted above, written monitoring reports may follow various formats. For a small PHA like this one with limited staff, someone qualified about construction not associated with the particular job, might be retained by the Authority to monitor the work. The Executive Director could accompany this person and they could make notes together.
View of Responsible Officials
I am Sharon Dixon, Executive Director and Designated Person to answer this audit finding. We will comply with the auditor’s recommendation.