The Philadelphia Housing Authority, Philadelphia, PA, Did Not Comply With Procurement and Conflict-of-Interest Requirements

We audited the Philadelphia, PA, Housing Authority’s use of public housing program operating funds because we received a complaint alleging that the Authority misused U.S. Department of Housing and Urban Development (HUD) funds. Our objective was to determine whether allegations from the complaint had merit. We focused the audit on whether the Authority properly procured (1) relocation services, (2) job training services, (3) a vehicle, (4) tablet computers, and (5) an office chair in accordance with HUD requirements. We also wanted to determine whether it was owed funds from its agent, the City’s Redevelopment Authority, for past projects and followed its procedures for approving its chief executive officer’s salary. Of the seven allegations in the complaint, two allegations had merit. The Authority could not show that proposals for relocation services were evaluated based on the established evaluation criteria. It also violated conflict-of-interest requirements when procuring job training services. These conditions occurred because the Authority (1) lacked procedures to monitor its agent’s compliance with procurement requirements, (2) believed that an intergovernmental agreement was sufficient to address the conflict-of-interest situation, and (3) lacked controls to ensure that it obtained a waiver from HUD to avoid conflict-of-interest situations. As a result, (1) HUD had no assurance that the proposal of the vendor that the Authority paid $860,132 for relocation services was the most advantageous to the project, and (2) the Authority made ineligible payments totaling $156,675 for job training services. The Authority properly procured a vehicle for its chief executive officer, tablet computers, and an office chair. It also was not owed funds from its agent, and it followed its procedures for approving its chief executive officer’s salary. We recommend that HUD require the Authority to (1) provide documentation to show that the proposal of the vendor that it selected and paid $860,132 was the most advantageous or reimburse its program from non-Federal funds for any amounts that it cannot support, (2) develop and implement controls to monitor its agent to ensure that it procures products and services in accordance with procurement requirements, (3) reimburse its program $156,675 from non-Federal funds for the ineligible payments it made due to the conflict-of-interest situation identified by the audit, and (4) develop and implement controls to ensure that it obtains waivers from HUD before entering into agreements that create conflict-of-interest situations.