Federal Reports

U.S. International Development Finance Corporation (DFC), Office of Inspector General (OIG), Semiannual Report to Congress for the reporting period October 1, 2025 - March 31, 2026, in accordance with the Inspector General Act of 1978, as amended (IG Act). 

Our office is currently conducting three audits of crime prevention and eligibility determinations at Public Housing Authorities (PHA) in Washington, DC; Chicago; and Los Angeles.  The objective of our audits is to (1) determine whether the Authority complied with HUD’s and its own requirements for verifying eligibility of individuals for HUD-assisted housing based on criminal activity, citizenship, and immigration status, and (2) evaluate the Authority’s practices for preventing and addressing criminal activity.

While the audits remain ongoing, this memorandum provides some of the initial results we believe could result in ineligible tenants participating in HUD’s public housing and voucher programs. We have also made some recommendations for HUD to implement regulatory and procedural changes to improve the program effectiveness in ensuring safe communities and assistance provided to only eligible participants.

Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in March 2020. The CARES Act, “Federal Contract Authority,” Section 3610, clarifies that reimbursement requests must be reduced by any credits received from other COVID-19 relief programs, including Paycheck Protection Program (PPP) loans. There were 149 subcontractors that collectively received forgiveness for more than $196 million of PPP loans at the Portsmouth Paducah Project Office (PPPO) sites. In addition, the Department of Energy paid subcontractors about $13 million in Section 3610 safety pay from 2020 through 2022.

Given the risk, we initiated this audit to determine if the Department paid PPPO subcontractors for the same costs that were covered by forgiven PPP loans.

We identified approximately $5.2 million in duplicate payments, unsupported costs, and unallowable profit paid to the Department’s subcontractors at the PPPO that received CARES Act funds. Specifically, we identified 19 subcontractors that received approximately $2.6 million in either duplicate payments and/or unallowable profit under Section 3610. Additionally, we identified seven subcontractors that certified the need for PPP loan forgiveness after already billing and receiving $2.6 million in payments from the PPPO for work performed. These subcontractors also received loan forgiveness paid by the Small Business Administration for costs the Department already paid.

These issues were caused by incomplete policy guidance, inadequate oversight, and inappropriate behavior by subcontractors. For example, the PPPO did not enforce internal controls and labor monitoring during COVID-19 to prevent duplicate payments and erroneous reimbursements. In addition, the PPPO subcontractors did not always uphold ethical standards and comply with contract requirements.

To address the issues identified in this report, we have made seven recommendations that, if fully implemented, should help ensure that the Department’s safeguards reduce future risks associated with similar programs and protect taxpayer funds.