We audited the City of High Point’s lead-based paint procurement and eligibility operations. We selected the Authority based on concerns from the U.S. Department of Housing and Urban Development’s (HUD) Office of Healthy Homes and Lead Hazard Control. Our audit objective was to determine whether the City administered its lead-based paint hazard control grants in accordance with HUD’s regulations and grant requirements for procurement of contracted services and expense eligibility.
The City did not properly manage its procurement activities in accordance with HUD’s requirements. Specifically, it continued using an expired contract to pay for environmental services from November 1, 2009, to July 15, 2013. Also, it did not consistently select the lowest bidder, retain required documentation, and perform cost analyses on change orders. As a result of the City’s noncompliance, HUD funds were used to pay more than $1 million for ineligible and unsupported procurement costs. In addition, the City improperly used its grant funds for expenses that did not contain lead-based paint and for ineligible lead-based paint expenses. As a result, HUD funds were used to pay more than $9,000 for ineligible costs, which the City was not able to use for other projects.
We recommend that the Director of the Office of Healthy Homes and Lead Hazard Control require the City to (1) reimburse $207,097 in ineligible costs from non-Federal funds, (2) support or reimburse $874,241 in unsupported costs from non-Federal funds, and (3) implement internal controls to ensure that regulations and procedures are followed. We also recommend that the Director continue the zero threshold process by reviewing the eligibility of the projects for approval under the 2011 grant until the grant is completed.