oversight

Mobile Housing Board Procurement Operations, Mobile, Alabama

Published by the Department of Housing and Urban Development, Office of Inspector General on 2000-11-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                MOBILE HOUSING BOARD
               PROCUREMENT OPERATIONS
                  MOBILE, ALABAMA


                      01-AT-204-1003
                    NOVEMBER 21, 2000


                      OFFICE OF AUDIT
                SOUTHEAST/CARIBBEAN DISTRICT




Table of Contents                              Exit
                                                            Issue Date
                                                                   November 21, 2000
                                                           Audit Case Number
                                                                    01-AT-204-1003




TO:           Mack C. Heaton, Director, Office of Public Housing, 4CPH




FROM:         Nancy H. Cooper
              District Inspector General for Audit-Southeast/Caribbean, 4AGA

SUBJECT:      Mobile Housing Board
              Procurement Operations
              Mobile, Alabama

We have completed an audit of the Mobile Housing Board’s (MHB) procurement operations.
The review was initiated in response to a citizen’s complaint. Our audit objective was to
determine whether the MHB administered its procurement activities in compliance with the
Department of Housing and Urban Development (HUD) requirements.

We focused our audit to evaluate the MHB’s controls and procedures over its procurement
activities for fiscal years 1998 and 1999. Our report presents one finding that details the MHB’s
need for improvement with recommendations for corrective action.

Within 60 days, please give us a status report for each recommendation in the report on:
(1) corrective action taken; (2) the proposed corrective action and a planned implementation
date; or (3) why action is not considered necessary. Also, please furnish us copies of any
correspondence or directives issued as a result of the audit.

Should you or your staff have any questions, please contact me or Sonya D. Lucas, Assistant
District Inspector General for Audit, at (404) 331-3369. We are providing a copy of this report
to the MHB.




   Table of Contents                                                             Exit
Management Memorandum




                        (This Page Left Blank Intentionally)




01-AT-204-1003                      Page ii


   Table of Contents                                           Exit
Executive Summary
We completed an audit of the Mobile Housing Board’s procurement operations. The review was
initiated in response to a citizen’s complaint. Our review disclosed significant weaknesses in the
Mobile Housing Board’s administration of its procurement activities. Specifically, the audit
disclosed that:

       The Mobile Housing Board utilized incorrect procedures to procure certain goods and
       services and did not procure contracts in accordance with HUD’s requirements. The
       MHB used small purchase procedures to procure flooring, paint, and window installation
       services when it should have used sealed bidding. Frequently, MHB: (1) obtained less
       than the required three quotes; (2) selected other than the lowest quote; and (3)
       repeatedly solicited and selected the same vendors. Also, contract deficiencies included:
       (1) issuing purchase orders without valid contracts in place; (2) improperly soliciting and
       awarding contracts without adequate competition; (3) awarding a sole source
       procurement without prior HUD approval; and (4) not performing independent cost
       estimates or cost and price analyses. As a result, the MHB procured services on a
       piecemeal basis when it would have been more efficient and cost effective to award
       larger contracts combining the work. Therefore, HUD lacked assurance that the MHB
       obtained goods and services at the most advantageous terms.

We presented three findings to the Mobile Housing Board and HUD’s Alabama State Office
officials during the course of the audit and at the exit conference on September 27, 2000.

The Mobile Housing Board provided written comments on October 21, 2000. We considered
the comments in finalizing the report and combined the three findings. The MHB generally
agreed with the finding in this report. The MHB’s comments are summarized in the finding and
included in their entirety as Appendix B.

We recommend HUD require the Mobile Housing Board to : implement procurement policies
and procedures to ensure proper procurement planning, appropriate selection methods, use of
authorized staff, proper contract administration, contract solicitations, cost estimates, price
analyses and training of the MHB’s procurement personnel.




                                           Page iii                              01-AT-204-1003


   Table of Contents                                                              Exit
Executive Summary




                       (This Page Left Blank Intentionally)




01-AT-204-1003                        Page iv


   Table of Contents                                          Exit
Table of Contents

Management Memorandum                                                       i


Executive Summary                                                       iii


Introduction                                                                1


Finding

      The Housing Board Did Not Procure Certain Goods and
      Services and Contracts Properly                                       3



Management Controls                                                     13


Follow-Up on Prior Audits                                               15

Appendices
      A Summary of Procurement and Contract Administration
        Deficiencies                                                    17

      B Auditee Comments                                                19

      C Distribution                                                    23


Abbreviations:

CFR          Code of Federal Regulations
HUD          Department of Housing and Urban Development
MHB          Mobile Housing Board




                                      Page v               01-AT-204-1003


                                                           Exit
Table of Contents




                       (This Page Left Blank Intentionally)




01-AT-204-1003                       Page vi


   Table of Contents                                          Exit
Introduction
The Mobile Housing Board is a non-profit corporation organized under the laws of the State of
Alabama by the City of Mobile. Its primary mission is to provide low-income housing for
qualified individuals.

The Housing Board is governed by a five-member Board of Commissioners appointed by the
City of Mobile. The Board has governance responsibilities over all activities related to the
housing activities within the Mobile Housing Board. The Board is responsible for approving an
annual operating budget, hiring its own management personnel, signing contracts, issuing bonds,
and deciding which programs to provide. The Executive Director of the Housing Board is
Stevens Gregory.

HUD’s Alabama State Office in Birmingham, Alabama, Office of Public Housing has the
responsibility for overseeing the Housing Board.

The Housing Board maintains its records at 151 South Claiborne Street, Mobile, Alabama. The
Housing Board owns and manages 16 public housing developments consisting of 4,177 public
housing units. In addition, the MHB administers 1,785 Section 8 Existing Certificates totaling
$6,257,855 and 495 Vouchers totaling $1,146,854. MHB received $1,943,063 to administer 422
Section 8 New Construction units and $319,038 to administer 87 Section 8 Moderate
Rehabilitation units. The Mobile Housing Board received $8,872,784 of HUD operating subsidy
for fiscal year 1998.


                                    Our audit objective was to determine whether the Mobile
  Audit objectives,                 Housing Board administered its procurement activities in
  scope and                         compliance with HUD requirements.
  methodology
                                    To accomplish the objective, we tested for compliance with
                                    program requirements. We interviewed Alabama State
                                    Office of Public Housing program officials, current and
                                    former Housing Board staff, and contractors. Specifically,
                                    we reviewed procedures over the Housing Board’s
                                    administration of the procurement activities during fiscal
                                    years 1998 and 1999; reviewed contracts, financial records
                                    and reports; and reviewed HUD’s Alabama State Office
                                    monitoring reviews. To test for the eligibility and proper
                                    support for expenditures, we judgmentally selected 16
                                    of 40 contracts from the Housing Board’s 1998 and 1999
                                    contract registers. Our review of contracts focused on the
                                    award and contract administration phases. In addition, we
                                    reviewed the purchase orders for the 16 contractors selected
                                    and for an additional vendor without an executed contract.
                                    (See Appendix A for deficiencies.)



                                          Page 1                               01-AT-204-1003
   Table of Contents                                                            Exit
Introduction

                       Our audit primarily covered the period of January 1998
                       through December 1999. We extended the period as
                       necessary. We performed on-site work from January
                       through April 2000. We conducted our audit in accordance
                       with generally accepted government auditing standards.




01-AT-204-1003                 Page 2
   Table of Contents                                            Exit
                                                                                           Finding


   The Housing Board Did Not Procure Certain
   Goods and Services and Contracts Properly
The Mobile Housing Board utilized incorrect procedures to procure certain goods and services
and did not procure contracts in accordance with HUD’s requirements. The MHB used small
purchase procedures to procureflooring, paint, and window installation services when it should
have used sealed bidding. Frequently, MHB: (1) obtained less than the required three quotes;
(2) selected other than the lowest quote; and (3) repeatedly solicited and selected the same
vendors. Also, contract deficiencies included: (1) issuing purchase orders without valid
contracts in place; (2) improperly soliciting and awarding contracts without adequate
competition; (3) awarding a sole source procurement without prior HUD approval; and (4) not
performing independent cost estimates or cost and price analyses.

These deficiencies occurred because MHB did not adequately plan its procurements in advance;
inappropriate staff, with limited or no training on the HUD procurement requirements,
performed solicitations; and, staff did not follow the procurement requirements.

As a result, the MHB procured services on a piecemeal basis when it would have been more
efficient and cost effective to award larger contracts combining the work. Therefore, HUD
lacked assurance that the MHB obtained goods and services at the most advantageous terms.


                                    HUD Procurement Handbook for Public and Indian
  Criteria                          Housing Authorities, 7460.8 REV-1, Paragraph 2-1 states
                                    that regardless of the method used, Housing Authorities
                                    should plan their contracts in advance and attempt to obtain
                                    full and open competition to ensure that quality goods and
                                    services are obtained at a reasonable price. Paragraph 4-3
                                    (A) states that if there is a recurring need for services and
                                    supplies which is estimated to go over the $25,000 limit,
                                    sealed bidding or competitive proposals procedures shall be
                                    used rather than small purchase procedures.

                                    The Mobile Housing Board’s procurement policy Part I, B
                                    (1) states that it is the Executive Director’s responsibility to
                                    ascertain that the yearly procurements are adequately and
                                    timely planned. Part II, Section A (2) states that purchases
                                    and contracts in excess of $1,000, but not exceeding
                                    $25,000, shall be made by the Executive Director (or
                                    another individual authorized by the Executive Director) on




                                           Page 3                                 01-AT-204-1003


   Table of Contents                                                               Exit
Finding

                        the basis of at least three price quotes obtained orally, by
                        telephone, or in writing. The Executive Director or any
                        other person authorized by the Executive Director shall be
                        responsible for maintaining files of all price quotes
                        requested and received. The files shall contain the names,
                        addresses, telephone numbers of the firms/persons
                        contacted, and their quotes.

                        Title 24 of the Code of Federal Regulations (CFR), Part
                        85.36 (b) (2) requires the Authority to maintain a contract
                        administration system which ensures that contractors
                        perform in accordance with the terms, conditions, and
                        specifications of their contracts; Section (d) (2) (i) states
                        that in order for sealed bidding to be feasible, two or more
                        responsible bidders are willing and able to compete
                        effectively and for the business; and Section (f) requires the
                        Authority to perform a cost or price analysis in connection
                        with every procurement action including modifications
                        regardless of the procurement method used.

                        HUD Procurement Handbook 7460.8 REV-1, Paragraph 4-
                        26 (E) states that if an Authority receives fewer than three
                        proposals, the Authority should analyze the proposals and
                        document the reason for the poor response. Depending on
                        the results of the analysis, the Authority may either reject
                        the proposals and issue a revised solicitation or proceed to
                        evaluate the proposals.

                        In a 1999 Public Housing Management Assessment
 HUD’s review results   Program Confirmatory Review, the HUD Alabama State
                        Office noted that the Housing Board did not properly plan
                        its procurements for flooring (carpet and tile work). The
                        Alabama State Office reported the MHB used small
                        purchase procedures when issuing 209 purchase orders
                        totaling $358,547.        The Alabama State Office
                        recommended that the MHB analyze its flooring needs and
                        take sealed bids, if the anticipated total amount exceeded
                        $25,000.




01-AT-204-1003                   Page 4


   Table of Contents                                                 Exit
                                                                      Finding

                    The Mobile Housing Board used the small purchase
Small purchase      procedures to procure its flooring, paint and window
procedures were     services. However, all of the services had recurring needs
inadequately used   which exceeded $25,000. Therefore, the MHB should have
                    used the sealed bidding or competitive proposals
                    procedures. As a result, the Authority inadequately
                    procured services without full and open competition as
                    shown below.

                       Purchases for Flooring Services

                       Our review of the 1998 flooring services purchase
                       orders revealed that the Housing Board issued 241
                       purchase orders totaling $387,368. The purchase
                       orders ranged from $11 to $28,266 and were issued
                       almost daily every month. Several of the purchase
                       orders total exceeded $20,000 and two of the purchase
                       orders were annotated “not to exceed $24,500.”

                       In 1999, the Housing Board issued 188 purchase orders
                       totaling $215,721. The purchase orders ranged from $8
                       to $23,937. Again, the Housing Board issued purchase
                       orders every month with two that exceeded $20,000.

                       The Housing Board staff informed us that there were
                       several ongoing modernization projects in 1998 and
                       1999. In 1999, the Housing Board was also operating
                       under a deadline to reduce vacancies at certain
                       developments. Under the circumstances, the staff
                       stated they believed issuing purchase orders was
                       quicker than soliciting for formal bids.

                       The MHB knew that several modernization projects
                       were being undertaken which would require significant
                       flooring services. Therefore, the Housing Board should
                       have anticipated that a large amount of funds would be
                       expended. In addition, the aggregate number and
                       amount of purchase orders issued in 1998 should have
                       highlighted the necessity for sealed bids in 1999.




                              Page 5                          01-AT-204-1003


Table of Contents                                             Exit
Finding

                            Purchases for Paint and Window Services

                            The Housing Board did not adequately plan its
                            procurement of paint and window services as shown
                            below:

                                                Purchase                  Purchase
                                                 Orders       Total        Order
                             Year   Services     Issued      Amount        Range
                             1998   Paint          151       $105,145     $28-$5,286
                             1999   Paint          107       $103,816     $23-$4,295
                             1998   Window          70        $ 77,133   $45-$16,060
                             1999   Window          70        $ 62,294   $57-$15,612

                            As with the flooring services, the Housing Board issued
                            multiple paint and window purchase orders during
                            every month. The MHB issued most of the paint
                            purchase orders to one vendor and all of the window
                            purchase orders to the same vendor. The MHB did not
                            have a contract with these vendors.

                         Overall, the Mobile Housing Board did not adequately plan
                         its purchases of goods and services in advance. When
                         making such purchases, the Housing Board’s planning
                         should have included determining the level of its recurring
                         need and the appropriate procurement procedures. Also,
                         the MHB needed contractual agreements with the vendors.
                         Such actions would have provided better assurance that the
                         MHB had procured goods and services at the most efficient
                         and cost effective method and received reasonable prices.

                         The Housing Board did not comply with HUD’s
 Three quotes were not   procurement requirements or its own procurement policy
 obtained                which required that typically at least three quotes be
                         obtained for each small purchase requisition. Our review
                         of the 1998 and 1999 purchase orders for flooring, paint,
                         and window installation services revealed that the MHB
                         frequently did not obtain the three quotes, as illustrated in
                         the following table.




01-AT-204-1003                   Page 6


   Table of Contents                                                  Exit
                                                                           Finding


                                                                 Percentage of
                                                   Purchase      Total Purchase
                                                  Orders with     Orders with
                                    Type of        Less than       Less than
                            Year     Service     Three Quotes    Three Quotes
                            1998    Flooring          49               20
                            1999    Flooring          70               37
                            1998    Paint            147               97
                            1999    Paint             97               90
                            1998    Windows           66               94
                            1999    Windows           63               90

                       The MHB staff performing the solicitations did not
                       demonstrate a clear understanding of HUD’s small
                       purchase solicitation requirements. Some staff believed
                       they only needed to contact three vendors and not actually
                       obtain three quotes. If a contacted vendor did not provide a
                       quote, the staff considered that to be one of the three
                       necessary quotes. Another reason staff gave for not
                       obtaining three quotes was that if a vendor was working at
                       a particular development, it was more convenient to give
                       that vendor related work rather than solicit other vendors.

                       Based on our review, staff considered a vendor’s non-
                       response as one of the quotes in only a few instances.
                       Generally, the staff did not solicit quotes from three
                       vendors. For example, the Housing Board often solicited
                       one vendor for paint and one vendor for the window
                       installation services.

                       Generally, the Housing Board awarded purchase orders
The lowest quote was   based on the lowest quote. However, in some instances in
not selected           1998 and 1999, the MHB issued purchase orders for
                       flooring, paint, and window installation services to other
                       than the vendor with the lowest quote. For example, the
                       MHB did not award 11 out of the 70 (16 percent) 1998
                       purchase orders for window services based on the lowest
                       quote. The MHB staff did not document the reason for
                       such selections.




                                 Page 7                           01-AT-204-1003


 Table of Contents                                                 Exit
Finding

                            The MHB repeatedly solicited and selected certain vendors
 Certain vendors were       when issuing its 1998 and 1999 purchase orders for
 repeatedly solicited and   flooring, paint, and window services.
 selected
                               Flooring Services

                               In 1999, a vendor filed a lawsuit against the Housing
                               Board alleging that around April 1999 the Housing
                               Board’s Executive Director instructed his staff not to
                               award the company any purchase orders for flooring
                               services. The vendor charged that he was excluded
                               from bidding, which resulted in him going out of
                               business.

                               Based on our review, we determined that the MHB
                               solicited the vendor in question for 90 percent of the
                               1998 purchase orders, resulting in payments totaling
                               over $280,000. Until April 1999 the MHB solicited
                               that vendor frequently. In 1999, the MHB paid the
                               vendor over $155,000, most of which pertained to
                               purchase orders from January through March. MHB
                               solicited the vendor at April 2 and April 20. The April
                               purchase orders totaled $3,159. From April 8 through
                               the 19 and April 23 through May 21, MHB did not
                               solicit the vendor. Records show that the MHB
                               solicited the vendor on June 3, at which time the vendor
                               stated he was out of business. Records further show
                               that the MHB solicited the vendor on July 12 and
                               awarded a purchase order.

                               The MHB solicited another vendor for 68 percent of the
                               1998 purchase orders. During this time, the MHB
                               maintained a bidders/quotes list consisting of seven
                               vendors for flooring services. However, the MHB only
                               solicited three other vendors for 2 to 24 percent of the
                               solicitations. Therefore, the MHB did not afford all
                               vendors an equal opportunity to bid. Similar actions in
                               early 1999 likely resulted in additional instances where
                               vendors were not given similar opportunities to bid.




01-AT-204-1003                      Page 8


   Table of Contents                                                   Exit
                                                                          Finding

                         Regarding the lawsuit allegations, the MHB’s
                         Executive Director stated that it was during the spring
                         of 1999 when he determined unauthorized staff, outside
                         of the Purchasing Department, were soliciting quotes
                         from flooring vendors. He also found that some staff
                         had established the practice of accepting bids from
                         certain vendors which were good from six months to a
                         year. This practice was not authorized. Instead of
                         obtaining current quotes for each requisition, the staff
                         would use the old quotes. Subsequently, he had a
                         purchase requisition quoted again. The Executive
                         Director stated that this was done to give vendors an
                         opportunity to bid. When the Purchasing staff re-
                         solicited bids, they did not solicit the vendor who filed
                         the lawsuit. The Executive Director stated the vendor
                         requested a bid package the day the bid was due.
                         However, the vendor did not submit the bid until after
                         the bid deadline.

                         Paint and window services

                         For the 1998 and 1999 purchase orders issued for paint
                         and window services, the MHB primarily solicited one
                         vendor for every requisition and usually awarded the
                         purchase order to that vendor. This practice of
                         soliciting only certain vendors limited other vendors’
                         opportunity to participate in small purchase
                         procurements.

                                    *    *    *    *    *    *    *

                      The former Purchasing Agent allowed the unauthorized
                      staff to solicit bids. The staff informed us that they were
                      unaware of the bidders lists and solicited based on prior
                      selection practices.      Also, they had established a
                      relationship with certain vendors and therefore solicited
                      those vendors.

Purchase orders       The MHB issued its 1999 purchase orders for paint services
were issued without   without a valid contract in place. We reviewed 107
valid contracts       purchase orders and found that the MHB awarded one
                      vendor 101 (94 percent) of the 1999 purchase orders. In
                      addition, the MHB only obtained one quote for 97 of the
                      101 (96 percent) purchase orders.


                                Page 9                           01-AT-204-1003


Table of Contents                                                 Exit
Finding

                          The staff informed us that the MHB publicly advertised and
                          solicited for paint services and received two responses.
                          Therefore, the MHB informally awarded a contract to
                          Mobile Paint and issued purchase orders for rendered
                          services. Subsequently, the Purchasing Department staff
                          determined that the Board of Commissioners had not
                          approved the contract and began soliciting other vendors.
                          However, at that time, the MHB had awarded numerous
                          purchase orders to the one vendor without soliciting other
                          vendors.

                          The MHB generally followed proper procedures when it
 Contracts were           received an adequate response to solicitations. However,
 improperly awarded       for 3 of the 16 contracts reviewed, the MHB improperly
 without adequate         awarded the contracts without adequate competition. In all
 competition              three instances, the MHB properly advertised and solicited
                          bids. However, in each case, the Housing Board only
                          received one bid and awarded the contracts to the sole
                          bidders. Although required by HUD, the Housing Board
                          did not document the reason for the poor response or justify
                          why it was not necessary to issue a revised solicitation.

                          The MHB did not follow HUD’s procurement requirements
  Sole source             for a lawn care maintenance contract awarded to a resident
  procurement was         owned business. We found no documentation to support
  awarded without prior   that the Housing Board advertised or otherwise sought
  HUD approval            competition for the 1998 contract totaling $128,520. In
                          addition, there were no proposals or other documentation
                          supporting that the MHB evaluated proposals before
                          awarding the contract. Also, we did not find any evidence
                          of HUD’s approval for this sole source procurement, as
                          required by 24 CFR 85.36 (g) (2) (ii). As a result, the
                          Housing Board incorrectly obtained services through non-
                          competitive procurement without prior HUD approval.

  Independent cost        In some instances, the MHB did not maintain complete and
  estimates or cost       proper documentation in their procurement files. The
  and price analysis      contract files did not contain supporting documentation to
  were not performed      show that the Board made an independent cost estimate or
                          performed a cost or price analysis for 5 of the 16 contracts
                          reviewed. (See Appendix A for deficiencies.)




01-AT-204-1003                    Page 10


   Table of Contents                                                  Exit
                                                                          Finding


                     The MHB generally agreed with the finding, which was
Auditee comments     discussed as three findings at the exit conference.

                     The MHB stated it has adopted a new procurement policy
                     and specific procurement directives/procedures that require
                     full and open competition. In addition, the MHB stated it
                     has implemented proper planning procedures and utilized
                     sealed bidding when appropriate; created a new position to
                     analyze procurement activities; and provided or will
                     provide supplementary procurement training for applicable
                     staff in the areas of contract administration, contract
                     solicitations, cost estimates, price analysis, and file
                     documentation.



                     We believe the MHB’s action will strengthen controls over
OIG evaluation of    the procurement operations.
auditee comments



Recommendations      We recommend that you require the Mobile Housing Board
                     to:

                     1A.    Establish and implement policies and procedures to
                            follow HUD’s procurement requirements and its own
                            procurement policy. The procedures should ensure
                            that: (1) proper procurement planning occurs,
                            including analysis of prior year(s) expenditures and
                            future needs; (2) sealed bidding is used when
                            appropriate; (3) three quotes are solicited from three
                            sources; (4) the lowest responsible bidder is selected;
                            (5) full and open competition is promoted; (6) only
                            authorized staff solicit quotes from potential bidders;
                            (7) invoices are not paid unless an executed contract
                            is properly in place; (8) proper procedures are
                            followed when response solicitations are inadequate;
                            and (9) sole source procurements are not awarded
                            without prior HUD approval.




                              Page 11                             01-AT-204-1003


 Table of Contents                                                Exit
Finding

                       1B.   Provide procurement training for responsible
                             Housing Board personnel that covers contract
                             administration, contract solicitations, cost estimates,
                             price analysis and file documentation.




01-AT-204-1003                Page 12


   Table of Contents                                               Exit
Management Controls
In planning and performing our audit, we considered the Housing Board’s management controls
to determine our audit procedures and not to provide assurance on those controls. Management
is responsible for establishing effective management controls to ensure that its goals are met.

Management controls include the plan of organization, methods and procedures adopted by
management to ensure that its goals are met. Management controls include the processes for
planning, organization, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.

We determined that the following management controls were relevant to our audit objectives:

       Procurement and contracting

We assessed controls in place. We obtained an understanding of MHB’s procedures and HUD’s
requirements, assessed control risk, and performed various substantive tests of the controls.

A significant weakness exists if management controls do not give reasonable assurance that
resource use is consistent with laws, regulations, and policies; that resources are safeguarded
against waste, loss, and misuse; and that reliable data are obtained, maintained, and fairly
disclosed in reports.

Based on our review, we believe that MHB had significant weaknesses in management controls.
The specific weaknesses are discussed in the finding.




                                          Page 13                              01-AT-204-1003


   Table of Contents                                                           Exit
Management Controls




                       (This Page Left Blank Intentionally)




01-AT-204-1003                        Page 14


   Table of Contents                                          Exit
Follow-Up on Prior Audits
This was the first Office of Inspector General audit of the Housing Board’s procurement
activities.

The last Independent Auditor’s audit report was completed by Edward F. Stockton, Certified
Public Accountant, for the fiscal year ending December 31, 1998. The report issued July 23,
1999, did not contain any findings which impacted the objectives of this audit.




                                        Page 15                            01-AT-204-1003


   Table of Contents                                                        Exit
Follow-Up on Prior Audits




                            (This Page Left Blank Intentionally)




01-AT-204-1003                             Page 16


   Table of Contents                                               Exit
                                                                            Appendix A


Summary of Procurement and Contract
Administration Deficiencies
                                        CONTRACT      CONTRACT
 VENDOR/ CONTRACTOR                        DATE         AMOUNT           DEFICIENCIES
 Air Comfort                              09/28/99       $327,134
 Atchison, Crosby, Saad, & Beebe          09/01/98   $2,000 per month           2
 Boys And Girls Club                      10/06/98       $130,500               4
 City Wide Resident Council               11/09/98       $128,520            2, 3, 4
 Delta Bay Security                       03/18/98        $56,456
 Edward Stockton, CPA                     08/12/98        $11,995
 J. C. Duke & Associates                  09/28/99       $560,987
 Mobile Paint                            No contract    No contract            1
 Mobile Police Department                 03/14/98       $192,000              4
 Porter Cabinets                          11/24/99       $100,000
 Prichard Police Department                7/28/98        $52,000              4
 Reliable Janitorial Services             06/30/99       $130,597
 R. P. Wallace                            08/10/99       $386,186
 Smith Electric & Associates              04/01/98       $200,000             2, 4
 Southern Ornamental Security             11/19/98        $68,265
 Waste Management Co. of Mobile           12/30/98        $27,744
 Youngblood/Barrett Construction &
 Engineering                               09/28/99           $136,846


DEFICIENCY EXPLANATIONS:

Inadequate Contract Administration

1.      Purchase orders issued without valid contract in place

Improper Solicitation and Awarding of Contracts

2.      Contracts awarded without adequate competition
3.      Sole source procurements awarded without prior HUD approval

Inadequate procurement records

4.      No independent cost estimate or cost/price analysis




                                            Page 17                         01-AT-204-1003


     Table of Contents                                                      Exit
Summary of Procurement and Contract Administration Deficiencies




                            (This Page Left Blank Intentionally)




01-AT-204-1003                             Page 18


   Table of Contents                                               Exit
                               Appendix B


Auditee Comments




                     Page 19   01-AT-204-1003


 Table of Contents             Exit
Auditee Comments




01-AT-204-1003         Page 20


   Table of Contents             Exit
                              Auditee Comments




                    Page 21     01-AT-204-1003


Table of Contents                Exit
Auditee Comments




01-AT-204-1003         Page 22


   Table of Contents             Exit
                                                                               Appendix C


Distribution
Executive Director, Mobile Housing Board, Mobile, Alabama
Secretary, S
Deputy Secretary, SD (Room 10100)
Chief of Staff, S (Room 10000)
Assistant Secretary for Administration, S (Room 10110)
Acting Assistant Secretary for Congressional and Intergovernmental Relations, J (Room 10120)
Deputy Assistant Secretary, Office of Public Affairs, S, (Room 10132)
Deputy Assistant Secretary for Administrative Services, Office of the Executive Secretariat, AX
    (Room 10139)
Deputy Assistant Secretary for Intergovernmental Relations,
Acting Deputy Chief of Staff, S (Room 10226)
Deputy Chief of Staff for Policy, S (Room 10226)
Deputy Chief of Staff for Programs, S (Room 10226)
Special Counsel to the Secretary, S (Room 10234)
Senior Advisor to the Secretary, S
Special Assistant for Inter-Faith Community Outreach, S (Room 10222)
Executive Officer for Administrative Operations and Management, S (Room 10220)
General Counsel, C (Room 10214)
Assistant Secretary for Housing/Federal Housing Commissioner, H (Room 9100)
Assistant Secretary for Policy Development and Research, R (Room 8100)
Assistant Secretary for Community Planning and Development, D (Room 7100)
Assistant Deputy Secretary for Field Policy and Management, SDF (Room 7108)
Office of Government National Mortgage Association, T (Room 6100)
Assistant Secretary for Fair Housing and Equal Opportunity, E (Room 5100)
Director, Office of Departmental Equal Employment Opportunity, U (Room 5128)
Chief Procurement Officer, N (Room 5184)
Assistant Secretary for Public and Indian Housing, P (Room 4100)
Director, Office of Departmental Operations and Coordination, I (Room 2124)
Office of the Chief Financial Officer, F (Room 2202)
Chief Information Officer, Q (Room 3152)
Acting Director, HUD Enforcement Center, X, 1250 Maryland Avenue, SW, Suite 200
Acting Director, Real Estate Assessment Center, X, 1280 Maryland Avenue, SW, Suite 800
Director, Office of Multifamily Assistance Restructuring, Y, 1280 Maryland Avenue, SW, Suite
4000
Inspector General, G (Room 8256)




                                          Page 23                              01-AT-204-1003


   Table of Contents                                                           Exit
Distribution


Secretary's Representative, 4AS
State Coordinator, Alabama State Office, 4CS
Director, Office of Public Housing, 4CPH
Audit Liaison Officer, 3AFI
Audit Liaison Officer, Office of Public and Indian Housing, PF (Room P8202)
Departmental Audit Liaison Officer, FM (Room 2206)
Acquisitions Librarian, Library, AS (Room 8141)
Counsel to the IG, GC (Room 8260)
HUD OIG Webmanager-Electronic Format Via Notes Mail (Cliff Jones@hud.gov)
Public Affairs Officer, G (Room 8256)
Stanley Czerwinski, Associate Director, Resources, Community, and Economic Development
  Division, U.S. GAO, 441 G Street N.W., Room 2T23, Washington DC 20548
The Honorable Fred Thompson, Chairman, Committee on Governmental Affairs,
  United States Senate, Washington DC 20510-6250
The Honorable Joseph Lieberman, Ranking Member, Committee on Governmental Affairs,
  United States Senate, Washington DC 20510-6250
The Honorable Dan Burton, Chairman, Committee on Government Reform,
  United States House of Representatives, Washington DC 20515-6143
The Honorable Henry A. Waxman, Ranking Member, Committee on Government Reform,
  United States House of Representatives, Washington, DC 20515-4305
Ms. Cindy Fogleman, Subcommittee on Oversight and Investigations, Room 212,
  O'Neil House Office Building, Washington, DC 20515-6143
Steve Redburn, Chief, Housing Branch, Office of Management and Budget, 725 17th Street, NW,
  Room 9226, New Executive Office Bldg., Washington, DC 20503
Sharon Pinkerton, Deputy Staff Director, Counsel, Subcommittee on Criminal Justice, Drug
  Policy and Human Resources, B373 Rayburn House Office Bldg., Washington, DC 20515
Armando Falcon, Director, Office of Federal Housing Enterprise Oversight, 1700 G Street, NW,
  Room 4011, Washington, DC 20552




01-AT-204-1003                             Page 24


   Table of Contents                                                         Exit