City Council Meeting: September 11, 2012

Agenda Item: 3-O 

To:†††††††††††††††††† Mayor and City Council 

From:††††††††††††† Andy Agle, Director of Housing and Economic Development

Subject:††††††††† Modification of Professional Services Agreement #9164 for Program Compliance Solutions


Recommended Action


Staff recommends that the City Council authorize the City Manager to negotiate and execute a modification to the Professional Services Agreement #9164 with Program Compliance Solutions (PCS) to continue providing fraud investigation services for the Housing Division. This modification would extend the contract for one additional year ending September 30, 2013 and increase the contract amount by $50,000 for a total of $268,400.



Executive Summary


The Housing Division is required by the U.S. Department of Housing and Urban Development (HUD) to investigate fraud activity of persons participating in federally funded housing programs. These programs include: Section 8 Housing Choice Vouchers, Family Self-Sufficiency, HOME, CDBG, Shelter Plus Care, and Supportive Housing Program (SHP). HUD programs have strict regulatory requirements regarding income and asset eligibility. Staff recommends that PCS continue to provide investigation services for the Housing Division. This action would increase the total contract amount from $218,400 to $268,400 and extend the contract for one additional year ending September 30, 2013.





On January 19, 2010, City Council authorized the approval of the three-year professional services agreement with PCS.





An increase and extension of the existing contract with PCS is recommended to ensure continuity in the monitoring of the Housing Divisionís subsidy programs. Fraud investigations are triggered when a discrepancy is discovered or reported to the Housing Division involving federally funded rental assistance programs. PCS is not involved in decisions and consequences regarding the outcome of investigations and only conducts such investigations based on staff referrals when evidence warrants.  Staff refers potential fraud cases to the investigator who then interviews the recipient and other relevant persons and gathers all available documentation to determine if a recipient gave false information to secure or sustain a housing voucher.Investigations include: unreported income or assets, disposition of assets for the purpose of eligibility, leased housing units that are not occupied by the recipient, and unreported household members who reside in a unit.


Potential ramifications for not continuing fraud investigation services include participant program abuse, increased and unnecessary financial obligations of the Housing Division and negative audit findings from HUD.Additionally, fraud activity would likely increase, thereby, reducing the number of eligible low-income households receiving assistance through housing subsidy programs.


Contractor Selection

A request for qualifications for professional services was posted on the City of Santa Monica website in June 2009 to provide fraud investigation services. Staff reviewed the submittals and rated each on qualifications, project understanding, experience, price and references. Responses were received from Sotomayor & Associates LLP, Stovefield Josephson, Inc., and Program Compliance Solutions.  Staff determined that PCS is the most qualified contractor to support the services of the Housing Division. Mr. Douglas Eaton, Principal of Program Compliance Solutions (PCS), has extensive familiarity with the City of Santa Monica.  Mr. Eaton has been providing services to four other Housing Authorities for the past ten years and is very knowledgeable regarding Housing Authority programs and the regulatory compliance applications. Mr. Eaton was a police officer for nine years with the City of Santa Monica and worked as a District Attorney Investigator for 24 years.  Mr. Eaton has continued to successfully provide services to the Housing Authority. Additionally, Mr. Eatonís hourly rate was more competitive than the other applicants.Since PCS has an existing contract with the City, this report recommends extending the contract for one additional year ending September 30, 2013 and increasing the existing professional services agreement with PCS to a total of $268,400.



Financial Impacts & Budget Actions


The contract modification to be awarded to PCS is $50,000, for a new contract total of $268,400.Funds are included in the FY12-13 budget at account 122691.555060.



Prepared by:Lucie Loach, Acting Housing Authority Administrator





Forwarded to Council:







Andy Agle, Director

Housing and Economic Development


Rod Gould

City Manager