Public Housing

In response to a congressional request, GAO reviewed the rehabilitation of the Daniel Daly and Kennedy Heights public housing projects in Glen Cove, New York, with funds from a Department of Housing and Urban Development (HUD) program, to determine: (1) the reasons for the delay in construction after work started; (2) how much work was completed; and (3) how much money the Glen Cove Housing Authority (GCHA) spent.

GAO found that: (1) the general contractor's poor performance and slow work pace prevented the other prime contractors from effectively carrying out their work; (2) it took the surety companies almost a year to reach an agreement with GCHA and the new general contractor to resume work after the first contractor's default; (3) as of January 1987, rehabilitation work was complete on 67 of the 148 units, including 20 that the dismissed contractor had nearly completed; (4) total project costs will exceed $7.7 million, which is about $1.6 million more than originally budgeted; and (5) although HUD paid the increased costs to avoid further delay, it may try to recover the costs from the surety companies in the future. GAO believes that, if HUD had taken action to resolve concerns regarding the acceptance of faulty contractor work and overpayments for the general contractor's work, it would not have jeopardized the contractor's bonding agreement or had to pay for cost overruns due to default.