The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the City of Minot, ND’s Community Development Block Grant (CDBG) Disaster Recovery program because the City was awarded more than $67 million in CDBG Disaster Recovery funds in April 2012 and an additional $35 million in May 2013. Before our audit, the City had spent more than $26 million and $1.3 million, respectively. In addition, we had not audited the City’s activities in more than 10 years. Our audit objective was to determine whether the City complied with Federal and local procurement requirements.
The City did not fully comply with Federal and local procurement requirements. It did not prepare independent cost estimates before receiving bids or proposals for two grant administration and project delivery services contracts and the five amendments to those contracts or for the change orders for four construction projects. In addition, the City did not perform debarment checks before awarding three contracts. The City’s mayor signed two amendments for the 2012 grant administration and project delivery contract before the city council authorized the mayor to sign the documents on the City’s behalf. Finally, one construction contract was not dated and did not have an effective date of services.
We recommend that HUD (1) require the City to provide documentation demonstrating that the overall contract price for the two grant administration and project delivery services and the five amendments to those contracts totaling more than $11.5 million was fair and reasonable and if not, require the City to repay HUD from non-Federal funds any amount that it cannot support; (2) require the City to provide documentation demonstrating that the overall price for the change orders for the four construction projects totaling $121,771 was fair and reasonable and if not, require the City to repay HUD from non-Federal funds any amount that it cannot support; and (3) monitor the City to ensure that it follows its revised Federal grant procurement policy and newly adopted procurement checklist.