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Finding 2: The Authority Did Not Always Follow Federal Procurement
Requirements When Awarding Contracts
Contrary to federal procurement regulations and its own procurement policy, the Authority did
not always perform required cost or price analyses to justify awarding contracts. This occurred
because Authority staff did not follow established policy and was otherwise unaware of the
requirements. As a result, the Authority awarded three contracts to sole bidders totaling
$560,207 without having assurance that the prices were fair and reasonable. During the audit,
the Authority created the documentation to properly justify awarding the three contracts.
The Authority Did Not Always
Perform Required Analyses
The Authority did not always follow federal procurement regulations or its own
procurement policy for acquiring goods and services. It was not able to provide
documentation to demonstrate that three contracts awarded to sole bidders, valued
at $560,207, were fair and reasonable. We selected eight contracts with values
greater than $50,000 totaling $1.2 million (about 70 percent) from 150 contracts
valued at $1.7 million with ending dates of September 30, 2005, or later, as of
May 2006. Contrary to federal regulations and the Authority鈥檚 procurement
procedures, the Authority did not prepare a cost or price analysis to justify
awarding three of the eight contracts reviewed. Federal regulations 8 require that a
cost or price analysis be completed when adequate price competition is lacking,
such as when only one bid is received for a contract. Further, HUD Handbook
7460.8 9 states that for a sealed bid that only receives one bid, a cost analysis is
required. Also, the Authority鈥檚 procurement policy 10 requires a cost or price
analysis for all procurement actions and specifically states that if only one
responsive bid is received from a responsible bidder, the award shall not be made
unless a cost or price analysis verifies the reasonableness of the price. The
following chart provides details of the three contracts.
Contract type Contract amount
Plumbing services $292,500
Water heaters $211,332
Heating, ventilation, and $ 56,375
air conditioning services
Total $560,207
Although the Authority did not perform the required analyses before awarding the
contracts, it created price analysis documentation, which properly justified
8
24 CFR [Code of Federal Regulations] 85.36(f)(1).
9
Section 4-33(B).
10
Sections F(1) and C(3).
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