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

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.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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