If New Jersey did not do so, the report recommends requiring the state to repay HUD for "any amount that it cannot support."
The inspector general issued the report, dated Aug. 29, nine months after Rep. Frank Pallone (D., N.J.) called for the office to review whether Gov. Christie had used federal Sandy recovery dollars to promote his reelection campaign in TV ads.
Of $1.8 billion in initial funding approved by Congress and awarded by the Obama administration to New Jersey, HUD had earmarked up to $25 million in Community Development Block Grants to be spent on a tourism marketing program.
The result was the "Stronger Than the Storm" campaign, which included TV ads featuring Christie and his family on the beach, promoting the Shore in the months after the October 2012 storm.
Some Democrats, fueled by media reports that indicated the contractor selected to produce the tourism campaign had promised to feature Christie in the ads, demanded that the governor return some of the money to storm victims.
But the inspector general's report rejected these claims, saying MWW Group L.L.C.'s bid made no mention of using the governor in any media. To the contrary, another firm that didn't win the contract had proposed using Christie on social media. "The commercials did not identify the governor or his family by name or title, mentioned no state race or office, did not solicit funds for any purpose, and included no political message," the report said.
It added that MWW submitted the lowest initial and overall bids and scored the best on the state's technical evaluation. "The audit represents another rebuke to the partisan sniping and misinformation peddling on this matter from elected officials who hoped to score political points," Christie spokesman Kevin Roberts said in an e-mail.
The administration also says the marketing program helped boost tourism at a time when other images on TV depicted a devastated Shore.
The report was critical of the Christie administration in other areas. For example, it said the state didn't produce an independent cost estimate and cost analysis before awarding the contract. Such information would have allowed the state and federal governments to evaluate the "reasonableness of the contractor's proposed costs or prices."
The report also said the state couldn't show that purchases of marketing services and products were made competitively, and didn't have paperwork to account for $3.5 million in labor costs.
The state erred, the report said, because it wasn't aware of all the requirements. New Jersey did comply with other regulations, such as publicizing requests for proposals and soliciting proposals from a number of qualified firms, the report said.