We audited the Housing Authority of the City of Hartford’s (the Authority’s) administration of its American Recovery and Reinvestment Act grant that funded a construction management contract based on a hotline complaint. Our objective was to determine if the Authority solicited, evaluated, and administered the $2.5 million grant funding and associated contract (the contract) properly and in accordance with federal requirements. We also visited a sample of sites to evaluate the impact the grant had on housing.
The Authority properly solicited and evaluated the construction management contract and generally improved housing conditions using its Recovery Act grant funds. However, it did not properly administer the management contract resulting in misuse of $415,692 that should have been used for physical improvements to better housing. This occurred in part because of the Authority’s decision to use more than $250,000 in administrative fees that HUD provided to administer this construction manager contact for paying costs of administering its state housing units. The use of fees for other purposes was allowed by HUD rules. However, this use reduced the funding meant for improving housing buildings and structures, which was instead spent on management contract fees. The Authority also paid profits that were not required by the contract, and for work that was unnecessary, unreasonable, or unsupported. The misuse of these funds had a real impact on housing improvements when only 38 of 102 boilers were replaced, and porches and a driveway included in the contract were not completed due to insufficient contract funds.
The Authority’s warranty inspection also failed to identify numerous and obvious defective items which if uncorrected will shorten the lifespan of some improvements. Further, the Authority did not conduct employee interviews to verify contractor workers were paid the wage rates required by law.
During the audit we observed some minor conditions that we addressed in a separate letter to management.
We are recommending that the Director of HUD’s Hartford Office of Public Housing require the Authority to; 1) repay more than $415,000 in ineligible, unreasonable, and unsupported costs, and 2) establish and implement controls to ensure contract payments are limited to budgeted and approved amounts, change orders are approved prior to initiating work and their price is negotiated, warranty items are identified and corrected in a timely manner, and employee interviews are completed to verify contractor workers are paid the required wages.