Chicago Housing Authority Needs To Improve Its Management and Controls Over Purchasing

CED-80-93: Published: Apr 28, 1980. Publicly Released: May 1, 1980.

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The controls used by the Chicago Housing Authority (CHA) over its procurement of goods and services was surveyed. CHA, a major Chicago landlord housing 140,000 people in the 40,000 rental units it owns and/or manages, has about two-thirds of its funds provided by the Department of Housing and Urban Development (HUD). Since 1977, CHA has been operating at a deficit and has continued to stay solvent only because HUD has paid in advance subsidies totaling $20 million through 1979.

CHA management and control of procurement activities need to be strengthened. Controls are being circumvented by CHA staff, resulting in less than free and open competition and incomplete reporting to the Board of Commissioners. CHA management lacks the necessary information to manage procurement effectively and to detect the abuses. Because CHA does not know where and how it is spending its purchasing dollars, it cannot adequately plan its purchases. HUD has provided little help beyond operating subsidy advances, and in violation of its own requirements, it has not given CHA sufficient management review. Now, when CHA is facing imminent insolvency, HUD is requesting a supplemental appropriation to clear the deficit accrued as of December 1979. Thus, the Performance Funding System, which was intended to encourage efficiency and avoid full funding operating deficits, may be circumvented and the incentive for efficiently managing operating activities, including procurement, may be weakened.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of HUD should verify, as part of the current management review of CHA, that actions have been taken to correct the deficiencies discussed and require audits and regular monitoring of financially distressed housing authorities as a prerequisite for those authorities to receive any payments in excess of those allowed under the Performance Funding System.

    Agency Affected:

 

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