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Schroeder calls on Council to investigate 'troubling' BMHA no-bid purchasing

City Comptroller Mark J.F. Schroeder Thursday called on lawmakers to take more responsibility for the Buffalo Municipal Housing Authority, suggesting the Common Council investigate no-bid work awarded to a company with ties to an agency supervisor.

Schroeder also suggested Mayor Byron W. Brown and the Common Council initiate a comprehensive financial review of BMHA operations – bringing in an outside consultant to help with a more in-depth review than the comptroller's office can do with its limited resources.

"'We are very concerned," Schroeder said. "I believe a full comprehensive audit is in order. We are not equipped to do that."

Schroeder was responding to BMHA purchasing issues raised in an article published Sunday by The Buffalo News.

The News reported that GFY General Services & Cleaning, a Batavia company with ties to one of the BMHA's assistant maintenance superintendents, received almost $400,000 in payments for cleaning and repairing housing authority apartments in 2017 – just months after the business was created. BMHA paid GFY almost twice as much as any other company doing similar work for the agency.

A majority of the work awarded to GFY was in increments of $2,000 or less. Such spending, known as micropurchases, are exempt from federal bidding rules. BMHA assistant maintenance superintendents picked which companies were given the jobs.

GFY is owned by Brandi Clark, who has a professional and personal relationship with Jeffrey DiPalma. DiPalma's brother, Darryl DiPalma, is a BMHA assistant maintenance superintendent who The Buffalo News learned was involved in some of the GFY contracts.

The article was based on The News' analysis of BMHA purchasing records. The analysis found 90 percent of $2.5 million in outside work done for the authority was based on individual purchase orders of $2,000 or less. The News found some of these micropurchases – awarded to GFY as well as other firms – appear to violate federal laws that prohibit breaking down purchases into small increments to avoid reaching the federal bidding threshold.

Firm with ties to BMHA supervisor gets $391,000 from BMHA, mostly without bidding

"While the no-bid friends and family scheme is troubling, it isn't that surprising to us," Schroeder said. "It's another example of government plagued by mismanagement, patronage and cronyism."

Schroeder put the onus on Mayor Byron W. Brown, who is responsible for appointing a majority of the BMHA board, and whom, Schroeder charged, has also played a role in BMHA hiring and promotions.

The BMHA, he said, was created in 1934 by the city, with approval from the state Legislature. The mayor as well as the Council, Schroeder said, need to take more responsibility for the way the BMHA operates.

A spokesman for Mayor Brown said the mayor is not involved in BMHA hiring or promotions.

The BMHA top management has already begun an internal review to determine if BMHA purchasing policies have been violated, spokesman Michael J. DeGeorge said.

In addition, he said, Gillian Brown, the agency's recently appointed interim executive director, has begun a management restructuring that is expected to increase supervision and address some of the purchasing issues raised in The News article.

DeGeorge also said that the U.S. Department of Housing and Urban Development is currently auditing BMHA operations, so authorizing a city audit would be duplicative.

Common Council President Darius G. Pridgen was not immediately available for comment, but Council Finance Chairman Richard A. Fontana said he will ask the Council to bring BHMA officials to Council chambers to discuss their procurement policies and practices.

Fontana, who is Lovejoy District councilman, said any discussion of a full-scale audit should wait until after the Council has that meeting with BMHA officials. He also said that, in general, he doesn't like micropurchasing, which only requires contacting one vendor, who can be given the work providing the cost does not exceed $2,000.

Informal bidding, where three companies are contacted, is preferable, he said.

Fontana suggested the BMHA may need to enact an ethics policy prohibiting the BMHA from doing business with families of housing authority employees, if it hasn't already.

BMHA Board Chairman David Rodriguez said the housing authority has already begun an internal review of its policies in response to The News article.

"If there are violations of any internal policies, we will make changes as necessary," added Gillian Brown, who was named interim executive director after Dawn Sanders-Garrett resigned as executive director in mid-March.

In response to The News article, HUD, the BMHA's overseer, said it is also reviewing the Buffalo agency's use of micropurchases to determine if federal rules are being violated.

Meanwhile, the HUD Inspector General's Office last January began auditing the BMHA's operating expenses. That audit is ongoing,

"Our audit is ongoing and we currently expect to issue a final report in September 2018," said Darryl Madden, a spokesman for the HUD Inspector General's Office.

Neither Clark nor Darryl DiPalma responded Thursday to requests for comment.

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