In the aftermath of hurricanes Katrina and Rita, the Texas Department of Housing and Community Affairs, or TDHCA, broke several regulations when it contracted with a firm to distribute more than $200 million in federal disaster recovery funds, according to a summer audit by the Department of Housing and Urban Development's Office of the Inspector General.
The money was earmarked for housing aid to homeowners affected by the hurricanes — and as of March, 1,129 homes had been rehabilitated with it. But the federal audit found that the TDHCA violated several rules in its selection of a private contractor to distribute the money. According to the audit, TDHCA approved this fund-distribution contract with the only firm that bid on it — even when the proposed cost exceeded the agency's own estimates by $3.68 million. The agency also budgeted $210,000 in "prohibited costs," upped the contract's maximum cost by $2 million in the middle of negotiations, and executed a contract that lacked sufficient detail to comply with federal regulations, the audit notes.
"TDHCA cannot ensure it received the best value for the state" and paid out more nearly $19 million in unsupported and ineligible costs, the audit notes. "The lack of contract details also placed TDHCA at risk of paying unidentified, unallowable, or possible duplicate construction management and oversight costs."