HUD OIG audited the City of Memphis’ administration of its Homelessness Prevention and Rapid Re-Housing Program (HPRP) and Community Development Block Grant-Recovery (CDBG-R) funds received under the American Recovery and Reinvestment Act. We selected the City for audit because it received more than $3.3 million in HPRP funds and more than $2.1 million in CDBG-R funds, the most for any Tennessee city. The City had expended more than $1.5 million, or about 47 percent, of its HPRP funds, and $846,713, or about 39 percent, of its CDBG-R funds by March 14, 2011. Our objective was to determine whether the City’s Division of Housing and Community Development administered its HPRP and CDBG-R funds in compliance with the Recovery Act and other applicable requirements. Specifically, our objective was to determine whether the City ensured that (1) program participants were eligible, (2) program expenditures were supported with adequate documentation, (3) program reporting requirements were met, and (4) subgrantees were monitored and trained.
Although the City complied with most Recovery Act requirements, its program administration was deficient in some areas. The City (1) procured an architectural and engineering contract using the incorrect procurement methodology and without an adequate cost analysis, (2) paid a contractor for work performed without an executed contract, (3) delayed the execution of a greening and demolition contract to such an extent that the lowest bidder dropped out, (4) did not always comply with U.S. Department of Housing and Urban Development (HUD) guidance for implementing the “Buy American” provision of the Recovery Act, and (5) could not support the job figures reported in its most recent quarterly report for either the HPRP or CDBG-R grants. These conditions occurred because the City did not follow all of the requirements of the Recovery Act or its own policies and procedures. As a result, it incurred $619,114 in questioned costs related to its procurements and could not ensure compliance with all Recovery Act requirements.
We recommend that the Director of the Knoxville Office of Community Planning and Development require the City to (1) provide adequate support and justification for the procurement deficiencies and repay its program any portion of the $619,114 in questioned costs that it cannot support, (2) provide staff training on procurement requirements, and (3) provide HUD assurance that it has sufficient controls in place to ensure compliance with applicable procurement and Recovery Act requirements.