2009 ARRA WEATHERIZATION ASSISTANCE PROGRAM MONITORING REPORT

CITY OF HOUSTON

Section I. Financial Review

Recommended Improvement #1: The COH Administrative costs were at 9% as of March I, 2011. This is above the maximum allowable of 5% for the DOE/ARRA contract. COH is reminded that the Administrative costs must be at 5% or lower upon final close-out of the DOE ARRA contract or any costs over 5% will be disallowed. Finding #1: ExpenditurelProduction Rate At the time of the review COH had low expenditures for the DOE/ARRA contract. Based on the data reported through February of2011, COH was at 27% expenditure, while 71 % of the contract period had passed.

Action Required:

In order to COH to successfully fulfill the ARRA WAP contract, COH must increase unit production and expenditures. COH has in the past assured the Department that expenditures and production would increase to a level that would allow the COH to be successful; that has not yet happened. The Department requires that COH review its planning and provide an updated plan of action to address expected outcomes for the contract as part of the response to this report. Reference: Texas Department of Housing and Community Affairs Contracts Section 4 and Section 3 of ARRA and DOEILi-Heap Contracts; Texas Administrative Code, Title 10, Part 1, Chapter 5, Subchapter A, Rule 5.14

Section V. Procurement
Finding #2: Subcontractor Contract COH contracts do not include the provision for compliance with the reporting of patent rights. The missing provision is required per the Texas Administrative Code and OMB circulars.

Action Required:

COH must revise its contracts with its contractors to include the provision noted above. Reference: Texas Administrative Code, Title 10, Part 1, Chapter 5, Subchapter A, Rule 5.10: OMB A-110 Appendix A Procurement Procedures COH did not submit to the Department an electronic version of a notice of procurement opportunity to be posted on the Department's website. COH must assure the Department that an electronic version of any notice of procurement opportunity for any future procurement that the COH initiates for the expenditure of DOE ARRA funding will be forwarded to the Department for posting. Reference: ARRA Contract Section 19

Finding #3:

Action Required:

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2009 ARRA WEATHERIZATION ASSISTANCE PROGRAM MONITORING REPORT

CITY OF HOUSTON

Section VII. Personnel Policies and Practices

Recommended Improvement #2: A review of the COH's Personnel Policies and Practices, including COH's Executive Orders, concluded that the COH's Affirmative Action/Equal Opportunity Policy #102 with an effective date of February 7, 1983 did not contain a provision to prohibit discrimination on the basis of political affiliation or belief. The Department recommends this provision be added to the COH's policy manual. Finding #4: Whistleblower The ARRA contract requires the posting of the rights and remedies afforded whistle blowers under Section 1553 of the American Recovery and Reinvestment Act of 2009. This notice was not posted anywhere throughout the COH's General Services Department.

Action Required:

The Department requires the COH's General Services Department to place the poster where it can be viewed by staff. Downloadable copies are available at: http://www.recovery.gov/Contact/ReportFraudlDocuments/WhistleblowerPoster. pdf. Reference: ARRA Contract Section 31

Section VIII. Performance Review

Finding #5: Final Inspections Onsite inspection of weatherized units revealed that twenty one (21) of the sixtyfive (65) units inspected would require a return to address deficiencies in subcontractor workmanship not noted during final inspections. Deficiencies included: large air leaks inside mechanical closets of newly installed HVAC units and improper measures addressing knob and tube electrical wiring in a single family home.

Action Required:

The COH must return to the client units listed in Attachment A and address the deficiencies noted on the unit. The COH must also assure the Department in its response to this report that proactive measures will be taken to prevent future instances of poor final inspections. Those measures at a minimum should include both periodic visits to client units while work is in progress and ensure that final inspections will be conducted once all work is finished, to ensure that the quality of work that is being performed meets the COH requirements, and the Department's expectations. Reference: 10 CFR Part 440; 440.16 (g) Materials Specifications Material specifications were not available for all contractors working within the program. Only one contractor had provided a partial list of the material specifications, of those items the following was missing:

Finding #6:

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2009 ARRA WEATHERIZATION ASSISTANCE PROGRAM MONITORING REPORT CITY O~ HOUSTON

Action Required:

Floor insulation Replacement doors Electric furnaces and water heaters Gas furnaces and water heaters Central air and/or heat pumps

COH must obtain the material specifications from all of the contractors for all materials they are installing and maintain a file with this information. COH must ensure that all materials installed meet DOE 10 CFR 440 Attachment A specifications. COH must also forward a copy of these specifications with its response to this report. Failure to do so will result in disallowed costs for all materials installed to date for which adequate specifications are not provided. Reference: 10 CFR 440 Appendix A Questioned and Disallowed Cost COH installed eighty (80) new water heaters at the Gulf Coast Apartments. Forty (40) of the water heaters were non-existent prior to weatherization, resulting in $47,892.00 in Disallowed Costs. The forty (40) existing water heaters did not have adequate justification for replacement, resulting in $47,892.00 in Questioned Costs. The Department requires the COH to provide justification for the replacement of the forty (40) existing water heaters; Failure to do so will result in disallowed costs for each water heater for which justification for replacement is not provided. The $47,892.00 of Disallowed Costs for the added water heaters must be reimbursed to the department in the form of a check provided with the response to this report, payable to the Department. Please ensure that the check is noted "Disallowed Costs" and includes the ARRA WAP contract number. Reference: Texas Administrative Code Rule 5.528, 10 CFR 440.18 Client File Review

Finding #7:

Action Required:

Finding #8:

Inadequate Support Documentation A review of the COH files indicates that some AlC replacements were not included in the NEAT or the BWRs. These files include GCA-19 GCA-14, GCA-19, GCA-17, and GCA-18.

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2009 ARRA WEATHERIZATION ASSISTANCE PROGRAM MONITORING REPORT CITY OF HOUSTON

Action Required:

The Department requires COH to re-run the NEAT on the units listed above to include the AlC replacements to determine if they rank with an SIR of I or greater. COH must ensure that a duplicate audit is created so that the original audits are not destroyed. In any case where the AlC does not rank at I or greater the cost will be disallowed. These files are part of a multifamily project in which this particular measure ranked in all other units. Reference: ARRA Contract Section 13; 10 CFR Part 440; 440.24; Texas Administrative Code 5.526 Inadequate Support Documentation The files indicated below had discrepancies in audits, required forms, signatures, lack of justifiable pictures and or form dates, etc. resulting in incomplete files. None of the multi-family files reviewed contained a completed assessment, resulting in Questioned Costs of $248,664.00 for all measures performed.

Finding #9:

Sin Ie Familv Units Client file #(s) Issues 11479-10 Final inspection date on blower door sheet was one month later than siQ:ned BWR. 10128-09 No assessment in file - priority list. 14758-10 Failed to reach 30% reduction at final assessment. 12125-10 No client siQ:llature on final inspection form. 12125-10,11905-10,10057-04 No audit in files. 12479-10 Assessment did not contain site plan or sketch of home. Multi-Familv 12632-10, 12650-10, 12649-10, No assessments in files for NEAT audits, 12652-10, 12860-10, 12850-10, apparently the contractor has on file. 12640-10, 12641-10, 12642-10, 12645-10, 12691-10, 12670-10, 12843-10, 12787-10, 12665-10, 12782-10, 15372-11, 12828-10, 12718-10, 12703-10, 12838-10, 12836-10, 12662-10, 15371-11, 12793-10, 12790-10, 12834-10, 12811-10, 12725-10, 12721-10, 12740-10, 12734-10, 12809-10, 12780-10, 12826-10, 12804-10, 12,808-10, 12742-10, 12730-10, 12766-10, 12814-10, 12816-10 All files above No mold forms in all files 12808, 12734, 12804,12652 12742, 12725, The NEAT for these files gave gas water heaters an SIR of2.0. They were not input

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2009 ARRA WEATHERIZATION ASSISTANCE PROGRAM MONITORING REPORT CITY OF HOUSTON

12734,12662 15371 12650,12652

under health and Safety. No CO readings noted for oven replacement in file. Furnace replaced no pictures or CO readings in file. Solar screens installed but not included in NEAT audit.

Action Required:

The Department requires the COH to develop a policy to ensure that all forms and file documentation are completed fully and any omissions are clearly explained and recorded in each file. COH must also either (1) submit to the Department completed and accurate assessment forms justifying the measures installed for the units listed above; or (2) COH must reimburse the Department $248,664.00 in the form a check for all work performed on the multi-family units reviewed. These costs would include the previously identified questioned and disallowed costs for water heater replacements. Reference: Texas Administrative Code Rule 5.529, 5.530, 5.601, ARRA Contract Section 13, 10 CFR Part 600.121 (3), 600.220, 600.153

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