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Addressing criticism, Buffalo Municipal Housing Authority to revive centralized purchasing

A year after facing criticism over no-bid contracts and spending more than necessary on everything from floor tiles to rock salt, the Buffalo Municipal Housing Authority is set to re-establish a centralized purchasing office.

Employees have been selected and trained in federal procurement procedures in recent months for their new positions, which are aimed at reducing costs as well as ensuring compliance with U.S. Department of Housing and Urban Development regulations, BMHA officials said.

"By the end of the calendar year, we hope to have implemented a centralized procurement system,"  BMHA Executive Director Gillian Brown told his board of commissioners this week.

Currently, the BMHA's central office bids out purchases of $25,000 or more, but most other spending is done by staff at individual apartment complexes, often on an as-needed basis. Under the new system, the central purchasing office will take on an expanded role, annually bidding out purchases for items and services now purchased by the individual complexes, said Brown.

Brown also told his board that the housing agency will start buying office supplies from a contract offered through New York State, since the state gets better prices by buying in bulk than the BMHA has.

BMHA public housing stories (updated 7/25)

"We estimate we can save $11,000 for the same amount of supplies as last year," said Modesto Candelario, the BMHA's assistant executive director.

The actions are a response to a Buffalo News investigation last year that was followed by a scathing HUD audit detailing questionable purchasing practices at the BMHA.

The News found a contractor with ties to a BMHA assistant maintenance supervisor had received almost $400,000 in mostly no-bid payments in 2017. It also reported the housing authority was paying more than other local governments for identical products. And The News revealed that BMHA appeared to be bid splitting to avoid a $2,000 threshold that requires purchases to be bid.

A subsequent HUD report concluded the BMHA failed to follow procurement rules and its own policy by “purposefully breaking down similar purchases into small purchases, thus avoiding competition.” HUD refers to these purchase of less than $2,000 as "micro-purchases."

HUD ordered the BMHA to cease improper bid-splitting and micro-purchases, to obtain independent cost estimates before buying anything exceeding $50, and to report monthly to HUD on how much it is paying individual contractors.

Three price quotes are now required on purchases under $2,000, with the contract going to the lowest bidder, Brown said.

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GFY General Services & Cleaning of Batavia received $391,000 from the BMHA in 2017 to clean out and repair vacant apartments. Its owner Brandi A. Clark employed and had a close personal relationship with Jeffrey DiPalma. DiPalma's brother is a BMHA assistant maintenance superintendent with authority to help select contractors for some smaller jobs.

GFY was paid through 294 purchase orders in 2017, with all but a dozen for $2,000 or less, without bidding required.

The firm still does a lot of work for the authority — it received $169,000 in the first six months of 2019, records show — but now the work is bid, Brown said.

"They are getting the work because they are low bidder," Brown said of GFY.

Bidding the work does not seem to have changed the price to the BMHA, Brown said.

Brown was named interim BMHA executive director in March 2018 and executive director seven months later, replacing Dawn Sanders Garrett, who resigned from the post.

He began a series of purchasing reforms in response to The Buffalo News articles, even before the HUD audit was completed.

Brown had said the BMHA's shortcomings reflected a lack of adequate staff training following a decision made under Sanders-Garrett several years ago to decentralize its purchasing system. His goal, Brown had said, was to centralize purchasing as a way to increase supervision and ensure the agency obtains the best prices.

"I'm happy we are doing it," Brown said. "We had to get people trained and make sure we have space for them."

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