HUD stops city agency from giving contracts Housing Authority probed for safeguards in bidding process

January 26, 1996|By JoAnna Daemmrich | JoAnna Daemmrich,SUN STAFF

In another rebuke to the Baltimore Housing Authority, federal officials have stopped the agency from giving out contracts worth up to $100,000 without public bidding until they determine that there are adequate safeguards.

The U.S. Department of Housing and Urban Development ordered the agency last month to halt its new policy of setting a more liberal limit on nonpublic contracts, pending the outcome of a review sought by Sen. Barbara A. Mikulski, a Maryland Democrat.

Federal housing auditors now have completed their inquiry into the housing agency's contracting practices but have yet to issue a final report on their findings.

Housing Commissioner Daniel P. Henson III said yesterday that he "welcomed the review" and expressed confidence that his system of awarding contracts for lawyers, engineers, architects and for all types of supplies would withstand HUD's scrutiny.

"We don't expect any major problems," he said. "We're being good."

Mr. Henson said he asked HUD to sign off on the only large contract he awarded in the past month without public advertisement, which was for engineering work for the Lexington Terrace development that is scheduled to be torn down.

The federal review marks the fourth time in the past two years that the agency's contracting methods have been questioned.

Twice, HUD officials criticized the agency for awarding contracts without seeking competitive bids, and two months ago, the city had to toss out its controversial contract with the Nation of Islam Security Agency to patrol its public high-rise housing projects. The city still is appealing orders that it must repay hundreds of thousands in taxpayer dollars misspent on that contract and a troubled no-bid housing repair program.

After the repeated housing controversies, Ms. Mikulski was upset to learn that the housing agency had lifted its limit last fall from $25,000 to $100,000 for awarding all types of contracts without advertising for bids. The revised standard, more liberal than the one followed by most city agencies, allowed the Housing Authority to bypass advertised bidding and simply request informal proposals from three vendors before awarding a contract.

The agency was acting on a federal rule change in raising the limit. But noting the agency's past contracting troubles, Ms. Mikulski asked for a review in early December to determine if there were adequate safeguards. She also called for an investigation of a rundown Baltimore County apartment complex.

HUD already had begun an internal audit of what happened at the Riverdale Village Apartments in Essex-Middle River, where the owner continued to collect federal rent subsidies after defaulting on a government-backed mortgage. And a HUD official notified Mr. Henson that a review would be undertaken on the day Ms. Mikulski sought it.

In a Dec. 4 letter to Mr. Henson, a deputy assistant HUD secretary noted that the city had promised to take steps to improve its contracting practices after a highly critical audit in fall 1994. That audit faulted the agency for spending more than the going rate to fix apartments and paying contractors for work that was shabby or never done through its $25.6 million no-bid repair program.

"Given the serious problems identified to date, the department does not believe that [raising the threshold] would be a prudent business action," wrote Kevin Emmanuel Marchman, deputy assistant secretary for distressed and troubled housing recovery, in a Dec. 4 letter.

On Dec. 18, he followed up with a note advising the agency that it is "prohibited from implementing the revisions to its procurement policy which increased its small purchase threshold $100,000 until the department specifically authorizes it to do so."

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