We found that the photovoltaic systems (PV) and water tanks installed in participant’s homes had deficiencies. Such deficiencies included inverters and batteries with signs of rust; water intrusion that could lead to electrical shorts; electrical conduits that were degrading due to direct exposure to the sun; electrical conduits with water; and water tanks that were leaking, overflowing, or both. Based on statistical projections, at least 57 percent of installations had at least one deficiency. In addition, we noted that almost 33 percent of inverters and battery storage systems were not installed in accordance with the installer agreements and manufacturers’ specifications. The contractors who installed the batteries and inverters exposed them to the elements and direct sunlight, contrary to the terms of the agreements and manufacturer specifications. In addition, we determined that PRDOH’s installation oversight was inadequate. PRDOH disregarded its own contract terms and the equipment manufacturers’ guidelines, which required the equipment to be protected from direct sunlight and the elements. Although quality control inspections were performed, the inspections did not identify that the installations were improperly completed. PRDOH’s actions could lead to manufacturers voiding equipment warranties, equipment lasting less than the required timeframe, and malfunction of improperly installed equipment. Further, PRDOH spent more than $19 million on installation services that do not comply with the agreements and manufacturers’ specifications.
We also found that PRDOH did not provide adequate support to justify its contract amendments with installers to perform additional subtasks. PRDOH provided a memorandum to support its contract amendment, which cited that 99 percent of repair cases needed corrections to electrical components to install the PV system. However, PRDOH could provide support for only 2 percent of the repair cases, which significantly contradicts the 99 percent figure. This condition occurred because PRDOH’s original scope of work and contract was vague and did not specifically list the preliminary electrical work and three subtasks that PRDOH’s installers completed as part of the installations. By making these contract amendments, rather than clearly including the work in the original scope of work and contracts, PRDOH lost bargaining power and likely spent more than was necessary. As a result, PRDOH did not assist as many disaster recovery program participants as it could have without the costly $31 million contract amendments. Finally, we also found that the methodology PRDOH used when calculating household income for eligibility purposes of the CEWRI program led to inconsistent eligibility determinations among program participants with similar income amounts. This occurred because PRDOH incorrectly interpreted and applied the IRS 1040 methodology when determining the participant’s household income. As a result, PRDOH could not ensure that it adequately or appropriately distributed disaster recovery funds among low- and moderate-income program participants to whom the program is meant to benefit.
We recommend that the Director of the Office of Disaster Recovery instruct PRDOH to (1) remediate all outside installations that are directly exposed to sunlight and the elements or repay HUD more than $19 million from non-Federal funds, (2) submit supporting documentation so HUD can evaluate the basis of the contract amendments and determine the eligibility of more than $31 million in disaster recovery funds, (3) structure future contracts to ensure the scope of work is clearly defined so that all parties understand the agreement, and (4) re-evaluate the methodology used to determine income eligibility to ensure a consistent application that improves the outcomes of the program.
