Federal Reports

We audited the U.S. Department of Housing and Urban Development’s (HUD) implementation of the prevailing wage provisions of the Davis-Bacon Act for its Federal Housing Administration (FHA)-insured multifamily construction projects.  We conducted the audit because we received an anonymous complaint alleging that HUD did not implement correct wage determinations for a $33 million multifamily construction project located in Oxnard, CA.  Our audit objectives were to determine whether (1) the allegation in the complaint had merit and (2) HUD implemented the correct Davis-Bacon wage determinations for its multifamily construction projects.The allegation that HUD did not implement correct wage determinations for the FHA-insured multifamily construction project in Oxnard, CA, had merit.  HUD’s use of incorrect wage determinations caused wage rates paid to laborers and mechanics to be incorrect.  Additionally, our review of wage determinations associated with four other FHA-insured multifamily construction projects not mentioned in the complaint showed that HUD also did not implement correct wage determinations for them.  This condition occurred because HUD lacked controls and did not implement guidance provided by the U.S. Department of Labor’s longstanding policy regarding the application of multiple wage determinations for construction categories in construction projects covered by prevailing wage provisions of the Davis-Bacon Act.  As a result, workers could have been underpaid.We recommend that HUD (1) seek guidance from the Department of Labor to correct the wage determinations for the five projects addressed in this report; (2) determine the correct wages to be paid to workers and ensure that appropriate actions are taken to pay the workers; (3) update HUD’s guidance to comply with the Department of Labor’s policies and guidance on the application of multiple wage determinations for construction projects; and (4) develop and implement controls to ensure that the appropriate Davis-Bacon wage rate determinations are implemented in the contracts of FHA-insured multifamily construction projects that require multiple wage determinations, including the requirement that contract specifications clearly identify the portions of the contract subject to each assigned wage determination.

Irena Shut, a medical marketer based in Los Angeles, California, was sentenced in United States District Court, Central District of California, on October 5, 2020, to two years’ probation for conspiracy to commit health care fraud. Our investigation found that Shut was paid commissions for facilitating the referral of prescriptions for medically unnecessary compounded drugs and other items reimbursed by health care benefit programs. As a result of the scheme, Amtrak’s insurance providers were fraudulently charged approximately $22,000. Criminal judicial proceedings for other defendants in this case are pending.

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), audited the Nampa Housing Authority’s public housing program in response to a local OIG, Office of Investigation, referral. Our objective was to determine whether the Authority followed U.S. Department of Housing and Urban Development (HUD) public housing requirements pertaining to (1) calculating contract rents, (2) maintaining its waiting lists, (3) providing its staff the credentials needed to access HUD systems, and (4) storing and securing tenant files.We found that the Nampa Housing Authority charged 11 tenants the incorrect rent for at least 1 month, improperly maintained its waiting lists by housing tenants out of order, could not show that all HUD system users had proper credentials and that only employees with credentials accessed the system, and generally stored and secured tenant files properly.We recommend that the director of the Seattle Office of Public and Indian Housing require the Nampa Housing Authority to (1) reimburse the six tenants who overpaid rent totaling $1,550 using non-Federal funds, (2) develop and implement internal control procedures that support its policy and ensure a proper tenant selection process when selecting tenants for housing, and (3) ensure that the Authority follows all applicable HUD requirements related to accessing, use, and safeguarding credentials of HUD systems.

While conducting a site visit for the Employee Safety – Postal Service COVID-19 Response audit, we identified building maintenance and safety issues at Philadelphia’s Spring Garden Station that were not directly related to the scope of the audit. Specifically, we identified 30 deficiencies ranging from minor to more serious violations. We believe these issues warrant management’s immediate attention and corrective action.