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New York City Comptroller William C. Thompson, Jr. today issued an audit finding a “significant” lack of oversight by the New York City Housing Authority (NYCHA) of its Resident Employment Program (REP) contracts.

“Overall, the Resident Employment Program did not appear to be a high priority,” Comptroller Thompson said. “As a result, NYCHA allowed contractors to largely ignore provisions in their contracts, and still be fully paid. A serious lack of NYCHA management oversight and commitment to the REP program resulted in its goals not being achieved.”

The audit – which you can view at www.comptroller.nyc.gov – covered Fiscal Year 2007 (July 1, 2006 to June 30, 2007). It focused on whether NYCHA implemented six recommendations made by the Comptroller in an audit issued in 2004.

In addition to housing, NYCHA offers its residents opportunities to take part in a number of community, educational and recreational programs as well as job readiness and training initiatives. Among its charges, NYCHA’s Department of Resident Employment Services (RES) implements REP, which was launched in 2001 and requires that every construction and building maintenance contract in excess of $500,000 expend 15 percent of the total estimated labor cost on hiring and/or training NYCHA residents.

The 2004 audit determined that NYCHA did not have effective controls to ensure that REP was operating as intended. The audit noted that contracts generally did not comply with REP requirements and in a number of instances overstated the amount of money that went to NYCHA residents. The Comptroller made six recommendations to remedy the problems.

Today’s audit found that of the six, NYCHA has since implemented only one, partially implemented one, and did not execute the other four. While NYCHA strengthened some controls over REP contracts, it failed to make changes to achieve the program’s goals.

Among Thompson’s findings:

• Since the last audit, NYCHA has established written procedures that define the responsibilities of the parties involved in REP and identify controls that could help ensure that the program works as intended.

• Since the last audit, NYCHA failed to coordinate the efforts of RES and the administering department to ensure that contractors comply with REP requirements. Thompson noted there was little evidence of effective management oversight of the REP program to ensure proper coordination.

The Comptroller pointed out that there was a lack of communication between the parties involved in REP, and that contractors’ requests for payment often failed to contain accurate and complete supporting documentation, such as hiring summaries, and yet still generated payments.

“NYCHA should reinforce controls over the processing of REP hiring summaries so that no payments are made without proper approval,” Thompson said.

• NYCHA’s lack of commitment to the REP program was reinforced by the fact that it did not take any action against contractors who did not comply with REP requirements.

• Auditors determined that RES could not even provide an accurate list of all contracts that participate in REP.

“NYCHA’s inability to produce an accurate list of REP contracts raises further questions about its ability to effectively monitor REP contracts and meet its program goals,” Thompson said.

• Auditors noted a lack of oversight to ensure that resident hires are actually on the job and working. By not monitoring the residents hired to work, the agency is allowing contractors to report resident hires who may not actually be working.

Comptroller Thompson’s auditors also detected one case in which a worker was not paid according to the prevailing wage schedule on a contract. Thompson recommended that NYCHA ensure that all resident hires receive no less than the minimum wage and benefit amounts stipulated in contracts’ prevailing wage schedules.

Additionally, to address the issues that still exist, Thompson in part recommended that NYCHA ensure that administering departments consistently provide hiring summaries and related documents to RES and ensure that payments are made to contractors only if all required supporting documents are submitted.

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