EXCLUSIVE: Feds Question Jobs & No-Bid Contracts at Providence Housing

Wednesday, September 19, 2012


Less than two weeks after Providence Housing Authority (PHA) board members voted to accept former executive director Stephen O’Rourke’s resignation in exchange for a $250,000 severance package, the Department of Housing & Urban Development (HUD) found “several programmatic issues that require further review,” according to a report obtained by GoLocalProv.

The report, which was addressed to board chairman Thomas Ryan, highlights six issues, including employee time sheets, the hiring of the husband of a board member, misallocation of Section 8 funds and several contracts where the PHA “did not always follow required procurement practices and procedures.”

Ryan did not return a phone call or e-mail seeking comment and newly appointed interim executive director Paul Tavares said did not wish to comment until the PHA issues a response to HUD, which is expected to come next week.

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But O’Rourke dismissed most of the report Tuesday in an e-mail, arguing that many of the issues raised by HUD have already been addressed or that HUD had incorrect information about the PHA.

O’Rourke specifically took issue with questions HUD raised about time sheets with Providence Police Officers who work with the PHA. The report notes “irregularities” that included time sheets that only ask for total hours worked rather than a start and end time. The report also “noted a lack of oversight and control over the employment arrangement, as police officers determine their own hours of work as well as the numbers of hours they work each week.”

But O’Rourke maintains the HUD has it wrong: “The review team is incorrect when they state the police officers of the Public Housing Unit do not document their start and end time. That information is not included on their time sheets, rather it is on the scheduling document.”

He continued: “Further, they are incorrect in stating they choose their own time. That is determined by the Security Operations Manager according to the needs of the housing authority.”

Hiring and Salaries in Question

O’Rourke did acknowledge that the husband of a board member was hired, but said he was terminated once the PHA realized it was against the board’s policy.

“It should be stated that HUD policy under the Annual Contributions Contract would have allowed the PHA to seek a waiver from HUD in order to allow the hiring of a board member’s family,” O’Rourke said. “The board chairman decided not to elect that approach.”

O’Rourke, a 25-year veteran who is credited with helping to transform a nearly-insolvent agency into one of the highest-performing housing authorities in the country, resigned last month after having been on paid administrative leave since April following a scathing complaint filed by a PHA employee that included claims of “serious misconduct, fraud and perhaps criminal activity” against her boss. Following the complaint, several employees came forward with similar claims, which O’Rourke dismissed as accusations from “disgruntled employees.”

In his letter of resignation, O’Rourke said he was leaving with a clear conscience and claimed the sexual harassment and financial mismanagement allegations against him were “proven false.” The PHA has refused to release a report filed by lawyer looked into the claims.

The HUD report does not address any of the sexual harassment claims, but it does question how the agency was spending Section 8 funds.

According to the report, the PHA’s fraud investigator’s entire salary is paid with Section 8 dollars even though “only 52.5 percent of his investigations were related to the Section 8 program.” HUD said the remainder of the investigator’s time should have been charged elsewhere.

In addition, the report suggests the PHA may owe HUD additional fraud recovery funds, noting that a 2010 spreadsheet showed that “a total of $136,766 was collected from Section 8 fraud, but $142,092 in time was used for the recovery.”

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O’Rourke said he doesn’t expect that the PHA will be forced to return any funds to HUD.

“This allocation of funds to pay for the Fraud Investigator will always be an issue because it’s impossible to determine ahead of time the amount of time the Fraud Investigator will spend on each program’s (Section/Public Housing) issues,” he said.

No-Bid Contracts

In addition to the sexual harassment claims filed against O’Rourke, the 37-page complaint from accuser Elizabeth Herosy suggested that the PHA was handing out no-bid contracts and misusing federal funds.

HUD’s review found six contracts where “an independent cost estimate or a cost price analysis” was not performed. In three instances, HUD noted that there was no competitive bidding process for contracts and in one case, a “contracting file did not include any written proposals.”

For those contracts, “the PHA must provide further documentation to show that the contracts were procured in accordance with HUD regulations and PHA policy. If the PHA cannot provide adequate documentation, the PHA may be required to repay HUD for the amounts of these contracts with nonfederal funds.”

With the exception of one contract where he served as the project manager for a major grant connected with the project, O’Rourke maintains that all the contracts in question went through the same process.

“HUD does not require competitive bids for selecting architects, engineering firms and other professional services,” he said. “They are selected on technical and other qualifications. The PHA had architect technical qualifications on hand from previous request for qualifications. Each were selected because of their experience in the type of work that was being undertaken.”

The PHA has until next Thursday to respond to HUD’s report.

Dan McGowan can be reached at [email protected]. Follow him on Twitter: @danmcgowan.


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