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The group that runs the D.C. General shelter overbilled the city for services last year.

The organization that runs the troubled D.C. General family homeless shelter and oversees the city’s homeless services overbilled the District by more than $5 million last year, according to a report released today by the District of Columbia Auditor.

The Community Partnership for the Prevention of Homelessness, which has coordinated the city’s homeless services since 1994 and run D.C. General since 2010, billed the city for an extra $4.2 million for its management contract, the audit found. The nonprofit organization, known as TCP, had $62.3 million in actual costs in fiscal year 2014, including the management fees it collected, but billed the city for $66.5 million. That’s largely because TCP employed an unusual billing practice, using the first and last monthly invoices of the fiscal year for cash-flow estimates.

“The advance payments of estimated costs not only constitutes a violation of the terms of the contract but also violates District law,” the audit finds. “[The Department of Human Services’] practice of paying for estimated costs also presents Home Rule Act and Anti-Deficiency Act concerns.”

Additionally, TCP overcharged the city by $1.2 million for its so-called sole source contract, through which TCP assigns homeless-services subcontracts to certain providers without a competitive bid. Again, the cause was the unusual billing practice using cost estimates.

In total, the city overpaid TCP by $5,352,115 in fiscal year 2014, the audit finds.

TCP’s management fee is capped at 8 percent of the total cost of services. But because TCP overbilled for those services, it also claimed a management fee that was more than $150,000 over the allowable amount.

TCP told the auditor’s office that the unspent funds are carried over to the next fiscal year. But according to the audit, that violates D.C. law. “The Home Rule Act requires that all unspent money be returned to the General Fund at the end of the fiscal year because there remains no ongoing appropriations authority, unless otherwise specified by law,” the audit states. “Additionally, there are Anti-Deficiency Act concerns arising from the over-payment from DHS to TCP. In general, the Anti-Deficiency Act (both federal and local) prohibits the obligation or expenditure of funds in advance or in excess of an appropriation. It is well established that when resources remain unspent at the end of a fiscal year, they may not be carried over or used in the next fiscal year without an appropriation for the following fiscal year.”

DHS told the auditor’s office that in order to spare TCP from potential cash-flow issues, “DHS allows TCP to invoice monthly to cover such expenses. It is not an estimated bill, but an anticipated bill based on past and current expenditure levels.”

The audit also raised concerns about the proportion of spending that went to non-program costs. Overall, program costs (direct services) comprised just 70 percent ($73,087,846) of the funds the city paid organizations for homeless services, excluding the overpayments, while 30 percent ($30,657,486) went to non-program costs. Although the audit cautions that determining exactly what’s a program cost and what’s a non-program cost is “imprecise because of differing definitions and interpretations,”  it still finds that “the wide range in non-program expenditures raises concerns that a higher proportion of funds could be directed to direct services than is consistently the case with the current programs and current oversight by both TCP and DHS.”

TCP Chief of Policy and Programs Tom Fredericksen referred a request for comment to DHS spokeswoman Dora Taylor, who did not immediately return a phone call.

A year after an 8-year-old girl was abducted from D.C. General, TCP has come under criticism for its management of the shelter and of the overall homeless services contract. D.C. Auditor (and former Ward 3 D.C. Councilmember) Kathy Patterson concludes her audit with a call for greater oversight of TCP. “It is our hope,” she writes, “that this examination of expenditures prompts additional oversight by the new administration and the D.C. Council.”

The full audit is below:

[documentcloud url=”https://www.documentcloud.org/documents/1682610-homeless-report-final-3-5-15-1.html”]

Photo by Darrow Montgomery; chart from the audit