Report: CRHA can’t prove it followed procurement laws on $728K in purchases | Local News

However, the audit report contains a slew of allegations that the authority violated internal, state and federal procurement regulations. HUD couldn’t determine if the services examined were obtained at a “fair and reasonable price” because CRHA couldn’t provide documents to prove it.

The report, released in August, includes charges that CRHA didn’t conduct cost analyses, document board approval, evaluate proposals or obtain price quotes.

Since the report was released, CRHA officials have worked with HUD to provide documentation ensuring that the funds were spent properly.

“The majority of this was really just a question of documentation on procurement,” said CRHA’s interim director of operations, Kathleen Glenn-Matthews.

CRHA is a quasi-governmental agency that is not directly overseen by the city of Charlottesville. It receives funding from federal, state and local sources and manages the city’s public housing stock.

The audit kicked off last year after HUD received a tip about an improperly awarded contract. The department eventually found that the tip was incorrect, but decided to conduct its first-ever formal audit of the Charlottesville agency.

The audit covered contracts that were awarded or were in effect between Oct. 1, 2016, and Sept. 30, 2018.

Out of the 231 vendors that CRHA paid more than $4.3 million during that time, HUD officials selected a sample of eight vendors for review and found problems with seven of them. The review was for $739,138 in capital and operating funds and represented 17% of all expenditures in the audit period.

In total, nearly 99% of the spending that HUD reviewed did not have documentation to prove CRHA followed procurement guidelines.

CRHA has an annual budget of around $4.5 million, Glenn-Matthews said. Federal funding makes up the majority of the budget.

The allegations of mismanagement focused on a lack of required documentation to prove that contracts were awarded in a proper manner.

The violations occurred, the report says, because CRHA “lacked controls” to ensure it complied with procurement laws and misinterpreted federal regulations.

CRHA is required to prove that the $728,516 in products and services were acquired at “fair and reasonable prices,” or reimburse those costs without federal funds. Glenn-Matthews said CRHA is providing the documentation.

‘Piggyback’ contracts

CRHA obtained services from five of the vendors reviewed under so-called “piggyback” procurement rules.

The rules allow a government entity to purchase goods or services from a vendor that is under contract with another government entity. For example, if Albemarle County had a contract for Dumpster rentals, CRHA could then purchase services from the contractor without seeking other proposals.

However, such regulations require a written agreement between the two localities. The rules also cannot be used for certain procurements, such as construction services. State regulations require that the request for services says that it is on behalf of another government agency.

HUD found that CRHA did not have such an agreement with five different government entities for services and one contract was for construction work, which is not allowed through such agreements.

The contracts in question were procured through vendors that had been retained by Charlottesville; Fairfax County; Virginia Commonwealth University; the Housing Authority of Columbus, Georgia; and Maricopa County, Arizona. CRHA could not provide written agreements between the authority and the government entities.

In total, the spending under the piggyback regulations covered $506,716 in funds.

HUD found that CRHA didn’t have cost estimates or analyses to support purchases of $548,859 from five vendors, in violation of federal guidelines and its own internal rules.

HUD determined that CRHA lacked proper documentation to show regulations were followed in a variety of instances.

According to the audit, CRHA could not prove that it:

» publicly solicited proposals for $370,719 worth of products and services from four vendors;

» negotiated profits on $357,227 of purchases from three vendors;

» evaluated proposals for $197,944 in services from two vendors;

» received approval from the board of commissioners for two contracts totaling $298,945; 

» obtained written contracts for services from two vendors for pest control and Dumpster rental services for $298,945; nor

» obtained the required three price quotes before purchasing $99,642 in appliances from one vendor.

HUD found that CRHA amended a contract for a chiller replacement totaling $159,283 without seeking other proposals. State requirements weren’t followed in contracts with two vendors totaling $78,656, the report said.

Betsy Roettger, chairwoman of the authority’s board, said there are no concerns that goods or services weren’t acquired properly. The issue instead, she said, was tracking down the paperwork to prove it among a high employee turnover.

“Some of this was probably because we were somewhat understaffed and the paperwork part probably fell through the cracks, and we need to make sure we have someone on top of that,” she said.

The report doesn’t blame any specific official. In fact, it notes that two vendors received contracts before Grant Duffield was hired as executive director in May 2016. Duffield announced his resignation in October with an effective departure date of Nov. 22 to take a job in Newport News.

His position hasn’t been filled. CRHA is operating with a three-person management team of Glenn-Matthews, Housing Director Claudette Green and former Mayor Dave Norris, who is CRHA’s redevelopment coordinator.

Norris said in a voicemail that the management team is working with HUD to resolve the issues and is “on the right path.” Glenn-Matthews said the required documentation should be submitted by the end of March and CRHA is planning procurement training for its employees.

Duffield responded to a draft of the report in an August letter to HUD, citing several examples of documentation that were provided and recognizing that more work needed to be done. Duffield noted that CRHA would either find documentation to support the contracts or follow proper protocols and seek new contracts.

Duffield and Glenn-Matthews noted that CRHA plans to issue a request for proposals for Dumpster rental and pest control services. Those services covered about $298,000 in costs without supported documentation.

The housing authority, which was formed in the 1950s, has a troubled history. This isn’t the first time it has run afoul of federal scrutiny.

HUD listed CRHA as a “troubled” agency for several years in the 2000s, a title given to housing authorities underperforming in several metrics.

The housing authority also has a tumultuous history of management, staff shortages and decreases in federal funding.

The authority has cycled through seven executive directors since 1998. Of those, only two approached four years in the position.

Duffield’s predecessor, Constance Dunn, came under fire for the same issues that have been the source of constant cries from public housing residents — spotty maintenance and poor customer service.

A 2013 HUD report charged the agency with poor financial oversight, failures to collect on rent and inadequate internal and budgetary controls.

Among the concerns HUD cited: inexperienced and under-trained staff, overcharging some residents and undercharging others for rent, failing to collect unpaid rent and a toothless occupancy policy.

One of the issues raised in that report was unorganized documentation.

Improving efficiency at the housing authority was also a key goal for former City Manager Maurice Jones, who left his position in 2018.

Officials contend that CRHA is moving forward from its troubled past as the city is finally investing in public housing through a three-phase redevelopment of all its units, including Crescent Halls and Westhaven.

Said Roettger, “We’re in good shape.”