Inspector General Says Demo Program Lacks Accountability

“Full and open competition for contracts involving federal dollars plays a critical role in protecting taxpayers against fraud waste and abuse.”

April 8, 2018- In a recently released report, the Special Inspector General for the Troubled Asset Releif Program (SIGTARP) said that a Federal Program used by local municipalities to demolish homes lacked rules which would prevent fraud, waste and abuse. According to the report, the Blight Elimination Program could be abused because there is no requirement that federal bid procedures be followed.

“SIGTARP found that the contractor running Nevada’s HHF program recently awarded six figure contracts without request for proposals—a violation of the contractor’s own policies,” said Special Inspector General Christy Goldsmith Romero. “Further analysis found that Treasury has no competition
requirements for contracts awarded with HHF dollars, except for a recently added one-sentence guidance applicable solely to the blight subprogram. The federal government has a long history ofprotecting federal taxpayers that fund grants administered by state agencies. With $2.35 billion available for spending by 19 state agencies until December 2021, Treasury should apply these same taxpayer protections—federal procurement standards—to the Hardest Hit Fund, just as it applied the cost standards for grants. Given that HHF operates much like a grant program, and has the same vulnerabilities of a grant program, taxpayers should receive the same federal protections against fraud, waste and abuse that exists with grants.” (see https://www.sigtarp.gov/Press%20Releases/HHF_Competition_Audit_Press_Release_3_08_2018.pdf )

In a prior report, the SIGTARP found that lack of controls failed to adequately track dangerous debris including asbestos in Flint, Michigan. “House demolitions funded by the Hardest Hit Fund’s (HHF) $806 million Blight Elimination Program could expose residents to hazardous materials and other risks” according to the Audit Report issued by SIGTARP and the Army Corps of Engineers. After finding issues with recordkeeping and environmental compliance in Flint, MI, Special Inspector General Christy Goldsmith Romero urged action in all areas where demolitions are being funded with federal dollars:

“. . . With risk in all 248 cities and counties across eight Rust Belt and Southern states in the program, there is no time to waste: state agencies should require local partners and contractors to follow industry-standard, common sense safeguards. These safeguards protect against risk of exposure to asbestos and other hazardous materials, illegal dumping of debris, and contaminated material filling the demolition hole. And the Corps raises an important point that Treasury should require state agencies to strengthen their oversight. Trust is not enough to protect the residents of Flint and other cities across the country where these demolitions are occurring: they need active measures to mitigate these serious risks. We thank the Corps for working with SIGTARP to prevent harm to residents and prevent fraud, waste, and abuse to taxpayers.”

If you have information relating to fraud, waste or abuse in a demolition program, you should contact SIGTARP via their fraud report form at the report a crime page or by
Phone: (877) 744-2009, Fax: (202) 622-4559 or regular mail:

Office of the Special Inspector General for the Troubled Asset Relief Program
Hotline
1801 L. ST. NW, 4th Floor
Washington, D.C., 20220

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