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We audited the Housing Authority of the City of Annapolis’ procurement activities due to a hotline complaint.  The complaint alleged that the Authority failed to follow procurement requirements.  This is the second of two audit reports on the Authority.  Our audit objective was to determine whether the Authority procured services and products using operating and capital funds in accordance with applicable requirements.

The Authority did not always follow applicable requirements when it procured services and products.  The allegation in the complaint had merit.  Specifically, it (1) did not document cost estimates before making purchases or selecting a developer, (2) did not make purchases competitively, (3) acquired services and products without having contracts in place, (4) paid vendors for services after their contracts had expired, (5) did not select a developer competitively, and (6) did not properly extend a contract.  These conditions occurred because the Authority lacked controls to ensure that it complied with applicable requirements.  As a result, the U.S. Department of Housing and Urban Development (HUD) had no assurance that the prices the Authority paid for services and products using $3 million in Federal funds were fair and reasonable.

We recommend that HUD require the Authority to (1) provide documentation to show that prices paid for services and products totaling $3 million were fair and reasonable or reimburse the applicable program from non-Federal funds for any amount that it cannot support, (2) develop and implement controls to ensure that it complies with all applicable procurement requirements, and (3) provide training to all employees involved in the procurement process.