Finding Text
Statement of Condition: Haven House did not include the following required clause in their contract with Nieto Custom Builders, Inc.: “The work to be performed under this Agreement is a project assisted under a program providing direct Federal financial assistance from HUD and is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended_ (12 U.S.C. 1701). Section 3 requires that to the greatest extent feasible opportunities for training and employment be given to low- and very low-income residents of the project area, and that contracts for work in connection with the project be awarded to business concerns that provide economic opportunities for low- and very low-income persons residing in the
metropolitan area in which the project is located.”
Criteria: Per the grant agreement with the City of Rio Rancho, compliance with the provisions of Section 3 of the HUD Act of 1968, as amended, and as implemented by the regulations set forth in 24 CFR 135 shall be a condition of the Federal financial assistance provided under this contract and binding upon the subrecipient and any of the subrecipient's subrecipients and subcontractors.
Cause: Haven House did require the contractor to provide the required reports but did not modify their standard contract to include the required clause.
Effect: Per the grant agreement with the City of Rio Rancho, failure to fulfill HUD Section 3 requirements shall subject Haven House and subcontractors to those sanctions specified by the agreement through which federal assistance is provided.
Recommendation: We recommend that Haven House carefully review all grant award agreements prior to initiating contracts with subcontractors or subrecipients to ensure compliance with the requirements of all agreements and federal funding.