Aug 2, 2002 By Paul Sunyak 4 min read

The executive director of the Fayette County Housing Authority violated the authority’s procurement policy by doing business with two firms that employed his relatives, according to the U.S. Department of Housing and Urban Development. HUD’s Pittsburgh Office has given the authority 30 days to address its concerns over Thomas L. Harkless’ relationship with employees of Niche Networks Inc. and the authority’s dealings with Chestnut Ridge Communications Inc.

Failure to do so may result in HUD disallowing $15,270 paid to Niche Networks for computer work and more than $83,000 paid to Chestnut Ridge for telephone system work. The president of Niche Networks is the niece of Harkless’ wife, while the authority’s Chestnut Ridge contact was his brother-in-law.

“The authority’s procurement policy … specifically prohibits the authority from doing business with relatives,” noted the HUD review forwarded to Harkless by James D. Cassidy, HUD Pittsburgh’s director of public housing. “(And) the authority’s new procurement policy, dated March 2001, prohibits the contracting officer (Harkless) from doing business with a brother-in-law.”

HUD’s review also found violations of federal regulations in the manner in which the authority dealt with both firms.

Regarding Niche Networks, HUD basically found that the authority misused its small purchase procedures – which require competitive bidding if the total project cost is over $10,000 – to award a total of $15,270 to that firm. This was done by using the small purchases procedure, where obtaining competitive telephone price quotes is the norm, a total of three times after Niche’s initial contract.

“The authority’s own procurement policy prohibits this practice, as well as (federal regulations),” noted HUD. “The last three procurements (with Niche) were awarded through noncompetitive procedures even though it was feasible to use other methods.”

HUD also found no evidence in the authority’s files to support Harkless’ contention that hiring Niche Networks was an “due to an emergency” involving a computer server vulnerable to penetration by outside sources. The firm is based in Herndon, Va.

“A review of the procurement file did not produce any documentation to support this claim,” noted HUD, which wants a written justification that includes a description of the efforts to find competitive sources to perform the work, among other things.

HUD likewise found fault with the authority’s use of the small purchases procedure to award $22,459 worth of business to Chestnut Ridge, based in Blairsville. That sum was awarded in five separate installments, each under $10,000.

“The authority’s procurement policy prohibits this practice,” noted HUD. The requirements of (the federal government) also prohibit the authority from breaking down procurements into several purchases … merely to permit a contract under the small purchase procedures.”

HUD further noted that if recurring need for a particular service or supplies is expected to exceed $10,000, “sealed bidding or competitive proposal procedures shall be used rather than small purchase procedures.”

Also regarding the authority’s dealings with Chestnut Ridge, HUD found:

– No signed contract in the procurement file, even though the authority’s board of directors approved a $48,481 contract with the firm at its June 8, 2001 meeting.

– That the authority did not conduct a cost estimate prior to soliciting bids for the telephone system work, as required by federal regulations.

– That the bid specifications did not provide for “truly open competition” as required by federal regulations.

– That Harkless had Chestnut Ridge provide the specifications for the contract, then “incorrectly” allowed the firm to bid on that contract.

HUD added that since Chestnut Ridge was allowed to write the bid specifications and included their own type of equipment in those specifications, “They had a clear advantage over other firms.”

In addition to the aforementioned $22,459, HUD said that $59,851 worth of work was awarded to Chestnut Ridge using purchase orders that “lacked documentation explaining the work,” as required by federal regulations.

Because of that shortcoming, HUD said it was not clear if any of that work was covered by the $48,481 contract awarded by the board or if it was for additional work.