oversight

The Puerto Rico Public Housing Administration Needs To Improve Its Procurement Procedures

Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-08-13.

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

                                                                   Issue Date
                                                                          August 13, 2010
                                                                   Audit Report Number
                                                                          2010-AT-1009




TO:         Olga I Sáez, Director, Public and Indian Housing, San Juan Field Office, 4NPH


            //signed//
FROM:       James D. McKay, Regional Inspector General for Audit, Atlanta Region, 4AGA

SUBJECT: The Puerto Rico Public Housing Administration, San Juan, PR, Needs
          To Improve Its Procurement Procedures



                                    HIGHLIGHTS

 What We Audited and Why

             We completed an audit of the Puerto Rico Public Housing Administration
             (authority) central office procurement system. This was an Office of Inspector
             General (OIG)-initiated assignment. We selected the authority for review as part
             of our strategic plan. The objectives of the audit were to determine (1) whether
             the authority’s procurement policies and procedures were in compliance with the
             U.S. Department of Housing and Urban Development’s (HUD) requirements, (2)
             whether it followed its policies and procedures and HUD procurement
             requirements, (3) whether it adequately supported the reasonableness of the cost
             of goods and services acquired, and (4) whether an electronic surveillance system
             installed at several of its public housing projects generated the intended benefits.

 What We Found

             Generally, the authority complied with requirements for planning, soliciting, and
             awarding contracts and purchase orders. However, our review identified
             procurement deficiencies in two contracts and three purchase orders, which
             resulted in monetarily significant deficiencies. The authority used an improper
             procurement procedure, failed to perform required cost analyses, and paid for
           equipment that was not used or missing. It also awarded purchase orders for other
           than the lowest quoted price without justification and paid more than the contract
           price. In addition, the electronic surveillance system installed at several of its
           public housing projects did not generate the intended benefits. As a result, the
           authority did not support the reasonableness of more than $9.7 million in
           contracts, paid more than $3.57 million for equipment that did not provide the
           intended benefits, and paid more than $28,000 for excessive expenditures.


What We Recommend

           We recommend that the Director of the Office of Public and Indian Housing
           require the authority to provide support showing the eligibility and reasonableness
           of more than $9.7 million spent on contracts that were not awarded in accordance
           with HUD requirements or reimburse its programs from non-Federal funds. We
           also recommend that the Director require the authority to reimburse its public
           housing program more than $3.6 million paid for excessive costs and
           unused/missing equipment. In addition, we recommend that the Director evaluate
           the surveillance system installed throughout the authority’s public housing
           projects and determine whether it was implemented in an effective and efficient
           manner.

           For each recommendation without a management decision, please respond and
           provide status reports in accordance with HUD Handbook 2000.06, REV-3.
           Please furnish us copies of any correspondence or directives issued because of the
           audit.

Auditee’s Response


           We discussed the findings with HUD and the authority during the audit. We
           provided a copy of the draft report to the authority on June 2, 2010, for its
           comments and discussed the report with Department officials at the exit
           conference on June 18, 2010. The authority provided its written comments to our
           draft report on June 23, 2010. In its response, the Department generally disagreed
           with the findings and recommendations.

           The complete text of the authority’s response, along with our evaluation of that
           response, can be found in appendix B of this report. Attachments to the
           authority’s comments were not included in the report but are available for review
           upon request.




                                            2
                           TABLE OF CONTENTS

Background and Objectives                                                4

Results of Audit
      Finding 1: The Authority’s Procurement Procedures Had Weaknesses   5

Scope and Methodology                                                    10

Internal Controls                                                        12

Appendixes
   A. Schedule of Questioned Costs                                       14
   B. Auditee Comments and OIG’s Evaluation                              15
   C. Criteria                                                           25




                                          3
                     BACKGROUND AND OBJECTIVES


The Puerto Rico Public Housing Administration (authority) is a governmental entity created by
Commonwealth Law No. 66, dated August 17, 1989. The authority implements governmental
policy for the administration of public housing projects. It is the second largest public housing
agency in the Nation, administering around 55,700 units with a combined authorized budget of
more than $406 million in operating funds and more than $273 million in capital funds for fiscal
years 2008 and 2009. The authority’s records are maintained at 606 Barbosa Avenue, San Juan,
PR.

Housing agencies are required to administer procurement activities in accordance with 24 CFR
(Code of Federal Regulations) 85.36 and U.S. Department of Housing and Urban Development
(HUD) Handbook 7460.8. Agencies must make purchases from and award contracts to the
lowest responsible bidder after properly advertising for proposals. The dollar thresholds at
which agencies are required to follow procurement procedures depend on the amount of goods
and services procured and Federal, State, and local laws as well as the agency’s own
procurement policy.

Our audit objectives were to determine whether the authority complied with HUD regulations,
procedures, and instructions related to the administration of its public housing programs.
Specifically, we evaluated (1) whether the authority’s procurement policies and procedures were
in compliance with HUD requirements, (2) whether it followed its policies and procedures and
HUD procurement requirements, (3) whether it adequately supported the reasonableness of the
cost of goods and services acquired, and (4) whether an electronic surveillance system installed
at several of its public housing projects generated the intended benefits.




                                                4
                                RESULTS OF AUDIT

Finding 1: The Authority’s Procurement Procedures Had Weaknesses
Generally, the authority complied with requirements for planning, soliciting, and awarding
contracts and purchase orders. However, it used an improper procedure, failed to perform
required cost analyses in two contracts, and paid for equipment that was not used or missing. In
addition, the authority awarded three purchase orders for other than the lowest quoted price
without justification and paid more than the contract price. These conditions occurred because
the authority did not develop and implement adequate internal controls and procedures to ensure
compliance with HUD requirements. As a result, it did not support the reasonableness of more
than $9.7 million in contracts, paid more than $3.57 million for equipment that did not provide
the intended benefits, and paid more than $28,000 for excessive expenditures.


We analyzed 14 contracts and 40 purchase orders awarded between May 1, 2008, and September
30, 2009, totaling more than $84.5 million. There were procurement deficiencies in two
contracts and three purchase orders reviewed.


 Improper Procedure and Cost
 Analysis Not Performed

              The authority awarded two contracts totaling more than $20 million for the
              acquisition and installation of a surveillance system and multifunction printers for
              its public housing projects. It acquired the goods and services using contractors
              from the Commonwealth of Puerto Rico General Services Administration
              (PRGSA) schedule.

              HUD Handbook 7460.8, REV-2, states that a housing agency may enter into
              intergovernmental or interagency purchasing agreements without competitive
              procurement only if the agreement provides for greater economy and efficiency
              and results in cost savings to the housing agency and the agreement is used for
              common supplies and services that are of a routine nature only.

              Contrary to HUD Handbook 7460.8, REV 2, the authority used an improper
              procedure and failed to ensure that the procurement resulted in greater economy,
              efficiency, and cost savings. The procurements were not for common supplies
              and services, and the files did not contain documentation showing that proper cost
              analyses were performed to demonstrate that the PRGSA intergovernmental
              agreements resulted in cost savings to the authority. Therefore, HUD had no
              assurance of the reasonableness of the contracted amounts.



                                               5
                 Further, the authority’s records showed that the surveillance system contract price
                 was higher than the price of other vendors included in the PRGSA listing. For
                 example, the contract prices of some of the surveillance system items were
                 between $810 and $28,285 higher than the lowest price of other potential vendors.


                               Item                         Lowest price Contract price          Difference
                  Room preparation                               $1,715        $30,000              $28,285
                  Video encoder                                  $1,300         $9,116                $7,816
                  Managed video services
                  software                                         $150              $6,200           $6,050
                  Server rack device                             $3,995              $8,586           $4,591
                  Labor & setup cost for fixed
                  camera installation                                $25             $2,600           $2,575
                  Labor and setup cost for
                  pan/tilt/zoom camera
                  installation                                     $143              $2,600           $2,457
                  Pan/tilt/zoom camera                           $1,650              $4,059           $2,409
                  Work station                                   $4,860              $7,067           $2,207
                  Fixed camera                                     $440              $1,250             $810

                 The authority did not provide support demonstrating that the services were
                 obtained at the most advantageous terms or their reasonableness. This
                 noncompliance occurred because the authority’s written procurement procedures
                 did not contain guidelines concerning the purchase of goods and services through
                 intergovernmental agreements. Therefore, disbursements totaling more than $9.7
                 million for the surveillance system and printers are unsupported pending a HUD
                 eligibility determination.


    Unused and Missing Equipment


                 The surveillance system contract provided for the installation of 710 cameras at
                 30 public housing projects. According to the authority’s records, only 195
                 cameras were installed. On December 22, 2009, the authority cancelled the
                 contract because of the unsatisfactory performance of the system and problems
                 with vandalism.1 The surveillance system installation was completed at only 9 of
                 the 30 proposed public housing projects. As a result, the contract did not generate
                 the intended benefits to its public housing projects. An authority official
                 informed us that a consultant was assessing the work performed under the
                 surveillance system contract. Once the consultant submits the results of the
                 assessment, the authority will decide what to do with the system.

1
 According to the authority’s records, 40 (20 percent) of the 195 cameras installed were damaged due to vandalism
or technical problems.
                                                        6
           On March 8, 2010, we visited the contractor’s facilities and found a significant
           amount of unused surveillance equipment stored at its warehouse.




           The unused surveillance equipment stored at the contractor’s warehouse.

           The authority disbursed more than $3.5 million for unused equipment that was not
           installed at the public housing projects and stored at a warehouse for more than 12
           months. Contrary to regulations at 2 CFR Part 225 (appendix C), the authority
           allowed the disbursement of funds for goods that did not provide the intended
           benefits for the administration of its public housing programs. Therefore, the
           more than $3.5 million in disbursements was not an allocable expense.

           The authority also disbursed $63,708 for 24 cameras purchased for the Jardines de
           Selles public housing project, but it could not locate the equipment or show where
           it had been installed. Consequently, $63,708 was an ineligible cost and must be
           reimbursed.

Lowest Quote Not Selected


           The authority awarded three purchase orders and paid $46,608 for Internet
           services and kitchen appliances. Although an adequate number of price
           quotations were obtained, the authority did not procure goods and services at the
           lowest price. The files did not contain adequate support to justify the selection of
                                                 7
             a higher priced purchase or its reasonableness. Therefore, the authority paid
             $17,810 for excessive expenditures.

              Purchase          Purpose                 Amount       Lowest      Excessive
                order                                    paid         quote       amount
               09-108 Internet service                   $19,749       $7,699      $12,050
               09-116 Internet service                    10,749        7,699        3,050
               09-086 Kitchen appliances                  16,110       13,400        2,710
                           Total                         $46,608     $28,798       $17,810


Excessive Expenditures


             The authority paid a higher price for electronic surveillance equipment than that
             established by the intergovernmental agreement. Records showed that the
             agreement established a price of $8,167 for each server rack device. However, a
             review of invoices disclosed that the authority paid $8,586—$419 more than the
             established price. The authority purchased 26 racks and paid $10,894 in
             excessive expenditures. The files did not contain support explaining the increase
             or its reasonableness. Therefore, the $10,894 was an excessive expenditure. The
             authority’s internal auditor identified the same deficiency in June 1, 2009;
             however, no efforts were made to recover the excessive expenditures.


Conclusion

             Generally, the authority complied with HUD procurement requirements when it
             awarded contracts and purchase orders. However, there were procurement
             deficiencies in two contracts and three purchase orders reviewed. The authority
             could improve its procurement process by using the correct procurement
             procedure, consistently performing required cost analyses, ensuring that goods
             and services acquired generate the intended benefits, and avoiding excessive
             expenditures.

Recommendations

             We recommend that the Director of the San Juan Office of Public and Indian
             Housing




                                              8
                1A. Require the authority to provide support showing the eligibility and
                    reasonableness of $9,784,1572 disbursed for the surveillance system and
                    multifuncion printers or reimburse this amount to its operational fund
                    account or HUD, as appropriate, from non-Federal funds.

                1B. Require the authority to reimburse its operational fund account or HUD, as
                    appropriate, from non-Federal funds $3,576,521 paid for equipment that did
                    not provide the intended benefits and/or was unaccounted for.

                1C. Require the authority to reimburse its operational fund account or HUD, as
                    appropriate, from non-Federal funds $28,704 paid for the excessive
                    expenditures.

                1D. Require the authority to develop and implement procurement policies and
                    procedures to comply with HUD’s intergovernmental purchasing agreement
                    requirements, to ensure that goods and services are obtained at the most
                    advantageous terms, and to ensure that it consistently complies with
                    procurement requirements.

                1E. Evaluate the surveillance system installed throughout the authority’s public
                    housing projects and determine whether it was implemented in an effective
                    and efficient manner.




2
 Total disbursements of $13,371,572 were adjusted to consider $3,576,521 questioned in recommendation 1B and
$10,894 questioned in recommendation 1C.

                                                      9
                               SCOPE AND METHODOLOGY

To accomplish our audit objectives, we

           Reviewed applicable laws, regulations, and other HUD program requirements.

           Reviewed procurement policies and procedures to determine whether they were in
           compliance with HUD requirements.

           Obtained an understanding of the authority’s management controls and procedures as
           they related to our objectives.

           Analyzed the authority’s disbursement records.

           Interviewed HUD staff and the authority’s management and staff.

           Performed a site inspection of the surveillance system project contractor facilities.

           Reviewed the authority’s records, including contract register, purchase order register,
           procurement records, and purchase orders.

           Reviewed monitoring reports and the authority’s latest independent public accountant
           report.

According to its records the authority awarded 111 contracts totaling more than $266 million
between July 1, 2008, and September 30, 2009. We reviewed a sample of 11 contracts totaling
more than $81.5 million, based on the amount of the contracts, and reviewed three additional
contracts totaling more than $1.4 million, based on the type of procurement the authority used.3
We selected contracts related to the Capital Fund Program for $41.3 million, to the Public
Housing Operational Fund Program for $25 million, and to the Public Housing Capital Fund
Stimulus [Formula] Recovery Act for $16.5 million. We selected this approach since testing 100
percent of the population was not feasible. Therefore, the sampling results apply only to the
items tested and cannot be projected to the universe or population.

The authority issued 803 purchase orders totaling more than $4 million between July 1, 2008,
and September 30, 2009. We reviewed 40 purchase orders totaling more than $1.6 million. We
selected 22 purchase orders with amounts that were greater than $30,000. We selected eight
additional purchase orders, dated between May and August 2008, based on the vendor name or
type of goods and services acquired. In addition, we selected 10 purchase orders lower than
$30,000 to replace purchase orders paid out of the authority’s central office service fees. We
selected this approach as it allowed us to review purchase orders with higher inherent risk and

3
    Contracts related to management agents and the Drug Elimination Grant program were excluded from the review.
    Additionally, the audit did not cover procurements made by management agents, or procurements funded with fees
    paid to the authority for central office services.
                                                         10
materiality. The results apply only to the items tested and cannot be projected to the universe or
population.

To achieve our audit objectives, we relied in part on computer-processed data contained in the
authority’s database. In addition, we relied on an inventory taken by the authority of its unused
surveillance equipment. Although we did not perform a detailed assessment of the reliability of
the data, we performed a minimal level of testing, including testing the integrity of the data using
Audit Command Language software, and found the data to be adequate for our purposes.

We conducted our fieldwork from November 2009 through April 2010 at the authority’s offices
in San Juan, PR. Our audit generally covered the period of July 1, 2008, through September 30,
2009, and we expanded our audit period as needed to accomplish our objectives.

We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.




                                                11
                              INTERNAL CONTROLS

Internal control is a process adopted by those charged with governance and management
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals and objectives with regard to:

       Effectiveness and efficiency of operations,
       Reliability of financial reporting, and
       Compliance with applicable laws and regulations.

Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.




 Relevant Internal Controls


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

                  Effectiveness and efficiency of operations- Policies and procedures that the
                  audited entity has implemented to provide reasonable assurance that a
                  program meets its objectives, while considering cost effectiveness and
                  efficiency.

                  Compliance with laws and regulations - Policies and procedures that
                  management has implemented to reasonably ensure that resource use is
                  consistent with laws and regulations.

               We assessed the relevant controls identified above.

               A deficiency in internal control exists when the design or operation of a control does
               not allow management or employees, in the normal course of performing their
               assigned functions, the reasonable opportunity to prevent, detect, or correct (1)
               impairments to effectiveness or efficiency of operations, (2) misstatements in
               financial or performance information, or (3) violations of laws and regulations on a
               timely basis.




                                                 12
Significant Deficiency


            Based on our review, we believe that the following item is a significant deficiency:

                   The authority did not develop and implement controls and procedures to
                   ensure that all procurement actions were conducted in accordance with
                   HUD requirements (see finding 1).




                                             13
                                   APPENDIXES

Appendix A

                 SCHEDULE OF QUESTIONED COSTS


      Recommendation                                                  Unreasonable or
          number               Ineligible 1/        Unsupported 2/    unnecessary 3/
            1A                                       $9,784,157
            1B                  $3,576,521
            1C                  _________            _________               $28,704
           Total                $3,576,521           $9,784,157              $28,704


1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law; contract; or Federal, State, or local
     policies or regulations.

2/   Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
     or activity when we cannot determine eligibility at the time of the audit. Unsupported
     costs require a decision by HUD program officials. This decision, in addition to
     obtaining supporting documentation, might involve a legal interpretation or clarification
     of departmental policies and procedures.

3/   Unreasonable/unnecessary costs are those costs not generally recognized as ordinary,
     prudent, relevant, and/or necessary within established practices. Unreasonable costs
     exceed the costs that would be incurred by a prudent person in conducting a competitive
     business.




                                               14
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation                 Auditee Comments

                   Auditee Comments




Comment 1




                                       15
            Auditee Comments




Comment 2




Comment 3
Comment 4

Comment 4




                               16
Auditee Comments




                   17
Comment 5




Comment 5




            18
            Auditee Comments




Comment 6




Comment 6




Comment 7




Comment 8




                               19
            Auditee Comments




Comment 3




Comment 9




                               20
             Auditee Comments




Comment 10




                                21
                           OIG Evaluation of Auditee Comments

Comment 1 The authority stated that it provided additional information that should put OIG in
          a position to remove the proposed findings.

             The additional information provides insight as to why management decided to
             acquire and install a surveillance system on several of its public housing projects.
             However, the authority failed to include documentation to demonstrate the
             reasonableness of the cost incurred in relation to the surveillance system and
             whether it was purchased at the most advantageous terms. In addition, the
             authority did not provide evidence that would justify not selecting the lowest
             vendors during the small purchase procurement actions in question. Finally, the
             authority did not provide evidence that over $3 million spent in surveillance
             equipment that was warehoused and idled, provided the intended benefits to its
             public housing residents. Accordingly, we did not remove or modify the report
             findings, conclusions, and recommendations.

Comment 2 The authority asserted that the findings were inaccurate, unsupported, and
          inconsistent with OIG’s own auditing standards. It also stated that “the OIG’s
          conclusions are based on a fundamental misunderstanding of the (i) characteristics
          of the projects wherein the camera systems were installed, (ii) special
          circumstances surrounding the acquisition and installation of the surveillance
          system; and (iii) applicable rules and regulations.”

             Our findings are supported by source documents provided by the authority during
             the review. The authority did not provide documentation showing that the findings
             were inaccurate, unsupported, and inconsistent with the OIG’s audit standards.
             Circumstances surrounding the acquisition and installation of surveillance systems
             through several of its public housing projects were evaluated and discussed with
             authority officials during the audit. These circumstances did not justify the
             authority’s failure in ensuring that all procurement actions were made in
             accordance to HUD regulations. Applicable rules and regulations were also
             carefully analyzed and properly applied.

Comment 3 The authority stated that the report does not cite any legal requirements or
          misapplies existing standards to support its conclusions.

             Our report cites applicable legal requirements that support the conclusions (see
             appendix C of the report).

Comment 4 The authority alleged it did not receive sufficient information from the OIG to
          determine how we drew our conclusions. For this reason its response identifies
          only some of the critical areas discussed in the draft report. It also requested a
          meeting to obtain necessary explanations and clarifications in relation to our
          findings.

                                               22
             We discussed the findings with authority officials during the audit. On May 20,
             2010, we met with authority officials to provide preliminary finding details.
             Furthermore, on June 18, 2010 we held an exit conference with authority officials
             in relation to the findings and recommendations included in the draft report.
             During the conference, we specifically asked for any concerns the authority
             officials may have in relation to our findings. Authority officials did not request
             any specific documentation or clarifications pertaining to the audit findings.

Comment 5 The authority stated that it was facing a high rate of crime in several public
          housing projects and that several law enforcements agencies endorsed the steps
          taken by the authority regarding the installation of a surveillance system on the
          public housing projects. As a result, and based on the exemption provided by 24
          CFR 85.36 (d) (4), the authority opted to cancel a request for proposal previously
          issued and used an alternate procedure completed by the PRGSA.

             The report questions the reasonableness of the cost incurred in relation to the
             surveillance system and whether it was purchased at the most advantageous terms.
             The authority failed to perform a proper cost analysis in relation to the surveillance
             system which resulted in a higher priced contract without proper justification. As
             a result, the authority did not provide the required documentation to substantiate
             that they followed applicable procedures when entering into the agreement.

Comment 6 The authority argued that it completed a regular cost analysis in compliance with
          all applicable regulations and that its decision for using the PRGSA contract was
          permissible. They also stated that the decision was based on efficiency, cost,
          security, economy, need, and effectiveness.

             The authority did not provide documentation showing that a proper cost analysis
             was performed. Therefore we do not have any assurance that the procurement
             resulted in greater economy, efficiency, and cost savings. The intergovernmental
             agreement provided for the contracting of other suppliers that offered similar
             services more economically. The authority did not provide evidence to support
             that they properly evaluated the proposal from the contractor, nor that they
             properly evaluated the other available suppliers. Consequently, the authority could
             not demonstrate the reasonableness of the cost incurred in relation to the contract
             or show that they followed HUD’s applicable policies and procedures when
             entering into such agreement.

Comment 7 The authority stated that stored equipment will be installed after a new Request for
          Proposal (RFP) for a comprehensive security surveillance system is conducted.

             The authority has not provided evidence that equipment missing or in storage is in
             operational condition or that it has provided the intended benefits for which it was
             acquired. Regulations at 2 CFR Part 225, Appendix A, Part C, Number 3, state
             that a cost is allocable when the goods or services received are assignable to a cost
             objective “in accordance with relative benefits received.” Because such equipment
                                               23
              has not been used for its intended purpose, the relative benefit on such unused
              equipment was not received. We contend that the funds paid for the unused
              equipment is unallowable until the authority can demonstrate that the intended
              benefit for the purchase of the equipment has been obtained.

Comment 8 The authority stated in relation to the excessive payments for server rack devices
          that the additional amounts were due to the fact that the racks were modified to
          include additional components which were necessary to make the surveillance
          system more suitable for its intended use.

              The authority did not provide any evidence in support of the excessive payments.

Comment 9 The authority asserts that OIG incorrectly applied both the facts and the law and
          that there is no justification for the finding.

              While regulations at 24 CFR 85.36(b)(5) provide for the use of intergovernmental
              agreements for the purchase of common goods and services, HUD guidance in
              Handbook 7460 requires that goods and services must be of a routine nature only
              and that the agreement provides for economy and cost savings to the government.
              The authority has failed to provide any justification for changing the finding.

Comment 10 The authority alleged that it did not select the lowest quotations for the acquisition
           of goods and services since lower bidders were not able to provide the necessary
           services and equipment.

              The authority did not provide any evidence that the lower bidders were not able to
              provide the necessary services and equipment.




                                               24
Appendix C
                                         CRITERIA


24 CFR 85.36 (b) (5)

To foster greater economy and efficiency, grantees and subgrantees are encouraged to enter into
State and local intergovernmental agreements for procurement or use of common goods and
services.

HUD Handbook 7460.8, REV 2, Paragraph 14.2A

Housing agencies may enter into intergovernmental or interagency purchasing agreements
without competitive procurement provided, among other things, that the following conditions are
met:

       The agreement provides for greater economy and efficiency and results in cost savings to
       the housing agency.
       The agreement is used for common supplies and services that are of a routine nature only.
       Housing authorities take steps to ensure that any supplies or services obtained using
       another agency’s contract are purchased in compliance with 24 CFR 85.36.
       The procurement files contain documentation showing that cost and availability were
       evaluated before the agreement was executed.

2 CFR Part 225 (Appendix A)

A cost is allocable to a particular cost objective if the goods or services involved are chargeable
or assignable to such cost objective in accordance with relative benefits received.




                                                 25