DEPARTMENT OF 

HOUSING AND 

URBAN 

DEVELOPMENT 

Actions Needed to 

Incorporate Key 

Practices into 

Management 

Functions and 

Program Oversight

Report to Congressional Requesters

July 2016

GAO-16-497

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-497, a report to 

congressional requesters

July 2016

DEPARTMENT OF HOUSING AND URBAN 

DEVELOPMENT

Actions Needed to Incorporate Key Practices into 

Management Functions and Program Oversight

What GAO Found

The Department of Housing and Urban Development (HUD) has struggled to 

resolve persistent management challenges, in part because it has not

consistently incorporated requirements and key practices identified by GAO to 

help ensure effective management into its operations. In addition, HUD’s past 

remedial actions were not always effective because they were not sustained. 

Turnover among senior leadership, shifting priorities, and resource constraints

have contributed to HUD’s difficulties in implementing needed changes. As a 

result, GAO and others continue to find deficiencies in numerous aspects of 

HUD’s operations. Sustained focus on integrating requirements and key

practices into agency management could enhance HUD’s ability to more 

effectively accomplish its mission.

HUD has not fully met some requirements or implemented a number of key 

practices for its management functions, including performance planning and 

reporting and information technology (IT), human capital, financial, and 

acquisition management (see figure). In particular, some HUD plans for 

executing critical management functions are missing key elements, as described 

below. HUD also has not always maintained current and complete policies and 

procedures, an important component of agency governance. These challenges 

stem partly from a lack of controls to help ensure timely updates of plans, 

policies, and procedures. 

Extent to Which the Department of Housing and Urban Development (HUD) Met Requirements 

or Was Following Key Practices for Management Functions

View GAO-16-497. For more information, 

contact Daniel Garcia-Diaz at (202) 512-8678

or garciadiazd@gao.gov.

Why GAO Did This Study

Through its $48 billion fiscal year 2016 

budget, HUD administers a wide 

variety of programs that help millions of 

households obtain safe, decent, and 

affordable housing and that seek to 

build and strengthen communities.

However, GAO and HUD’s Office of 

Inspector General have identified 

management deficiencies that limit the 

effectiveness and efficiency of HUD's 

operations. For example, the Inspector 

General cited human capital 

management, financial management 

systems, and information security 

among the major management 

challenges facing HUD in fiscal year 

2016 and beyond. GAO was asked to 

review HUD’s management practices.

This report examines HUD’s efforts to 

(1) meet requirements and implement 

key practices for management 

functions, including financial, human 

capital, acquisition, and IT

management; and (2) oversee and 

evaluate programs. GAO reviewed 

HUD policies and compared them with

federal requirements, key practices, 

and internal control standards. GAO 

also interviewed HUD officials and 

industry stakeholders.

What GAO Recommends

GAO makes eight new 

recommendations designed to improve 

HUD’s strategic and human capital 

planning, governance, and program 

oversight and evaluation. HUD 

concurred with our recommendations. 

GAO also maintains that 63

recommendations it made in prior work

should be fully implemented to help 

improve aspects of HUD management.
Highlights of GAO-16-497 (Continued)

United States Government Accountability Office

• Performance planning and reporting. HUD met most 

of the requirements in the GPRA Modernization Act of 

2010 for its strategic plan and annual performance plan 

and report. But HUD’s strategic plan does not clearly 

link HUD’s goals and objectives with federal priority 

goals. In addition, HUD did not have formal procedures 

or controls related to conducting outreach to help 

ensure the department met all requirements for

obtaining and documenting input from Congress and 

industry stakeholders. More fully incorporating these 

elements into the strategic planning process would 

help ensure that HUD’s plans are relevant and 

responsive to its current environment. 

• Information technology management. HUD has not 

demonstrated that it has the capacity to effectively plan 

for and manage IT projects. For instance, a recent 

effort to modernize its financial management systems 

was not adequately planned and resulted in ending the 

program without replacing aging systems. In addition, 

HUD’s IT governance activities have not fully 

addressed a number of key practices outlined in GAO’s 

IT investment management guide. For example, HUD 

has not yet developed 3 of the 11 policies that support 

its IT management framework but anticipates 

completing the remaining policies by July 2016. 

Furthermore, HUD’s Office of Inspector General (OIG) 

has found continued and extensive noncompliance 

with federal information security and privacy 

requirements, although HUD has made some progress 

in addressing these issues recently. GAO also 

identified four recommendations from prior IT reports

as being among the highest priorities for 

implementation, which HUD is in the process of 

addressing.

• Human capital management. HUD has made 

progress in developing new human capital plans and 

mostly followed key principles and practices for 

strategic workforce planning, succession planning, and 

training planning. But HUD has struggled to maintain 

current plans, as required by Office of Personnel 

Management regulation. For example, HUD’s previous 

strategic workforce plan expired in 2009, and HUD did 

not complete the next plan until 2015. HUD has been 

unable to maintain current plans in part because it 

lacks a process to help ensure that it reviews and 

updates the plans before existing plans expire.

Assessing and updating these plans on a regular basis 

would help ensure that HUD has a strategic vision for 

managing its workforce and addressing human capital 

challenges.

• Financial management. HUD did not follow seven of 

eight key practices for financial management, including 

receiving a clean audit opinion on its financial 

statements and operating in compliance with laws and 

regulations. Furthermore, HUD’s financial management 

systems do not comply with requirements, and HUD 

was unable to provide assurance that its internal 

controls over financial reporting were operating 

effectively in fiscal years 2014 and 2015. According to 

OIG, HUD’s outdated and incomplete financial 

management handbooks contributed to the agency’s 

significant control deficiencies. According to HUD 

officials, efforts to revise and update these handbooks

were ongoing.

• Acquisition management. HUD partially followed key

practices for acquisition relating to organizational 

alignment and human capital. For example, OIG found 

that HUD has not always followed effective planning 

and program management practices for some recent

acquisition improvement initiatives, including initiatives 

related to human capital. In February 2016, OIG 

recommended that HUD incorporate an acquisition 

human capital plan (among other practices) into its 

acquisition improvement strategy, which HUD agreed 

to do. 

Additionally, in assessing HUD’s efforts to oversee and 

evaluate its programs, GAO found that HUD has not 

formalized key practices for program oversight and 

evaluation. For oversight, HUD uses a risk-based approach 

but has not formally designated entities to manage fraud 

risk. GAO and OIG have identified oversight challenges, 

including a number that have been highlighted by 

instances of fraud, waste, and abuse. For example, 

investigations into loans insured by the Federal Housing 

Administration (FHA) identified a high percentage of loans 

that should not have been insured because of underwriting 

deficiencies. In fiscal years 2012 through 2015, the federal 

government reached civil settlements related to FHA loan 

underwriting totaling $3.5 billion for alleged statutory 

violations. HUD’s vulnerability to fraud stems partly from 

the large number of intermediaries—such as lenders and 

nonprofit organizations—that help administer its programs. 

HUD does not have a team or official formally dedicated to 

managing fraud risk because it seeks to manage it within 

existing program activities. In addition, HUD has 

implemented some practices to enhance program 

evaluation within the agency but not others. For instance, it 

has developed a strategic plan for its evaluations but lacks 

documented policies to help ensure their quality and 

consistency. HUD officials said that they had not 

considered creating such a policy because the evaluation 

principles they used were ingrained in HUD’s culture. 

Leading practices indicate that having designated entities 

to manage fraud risk and formal policies for evaluations 

would strengthen the performance of HUD’s oversight and

evaluation functions.
Page i GAO-16-497 HUD Management

Letter 1

Background 5

Weaknesses in Planning and Governance Exist across HUD 

Management Functions 15

HUD Has Not Formalized Key Practices to Address Program 

Oversight and Evaluation Challenges 38

Conclusions 58

Recommendations for Executive Action 59

Agency Comments 60

Appendix I Objectives, Scope, and Methodology 62

Appendix II Open GAO Recommendations to the Department of Housing and 

Urban Development 68

Appendix III Recent Changes to the Department of Housing and Urban 

Development’s Field Office Structure 81

Appendix IV Performance Planning and Reporting 86

Appendix V Human Capital Planning 94

Appendix VI Financial Management 107

Appendix VII Information Technology Management 118

Appendix VIII Acquisition Management 126

Contents
Page ii GAO-16-497 HUD Management

Appendix IX Comments from the Department of Housing and Urban 

Development 136

Appendix X GAO Contact and Staff Acknowledgments 139

Tables

Table 1: Open and In-Process GAO Recommendations to the 

Department of Housing and Urban Development (HUD) 

from Fiscal Years 2012 through 2015 by Program Office, 

Including Recommendations Designated as High Priority 

for Implementation by the Comptroller General, as of June 

2016 69

Table 2: Extent to Which the Department of Housing and Urban 

Development (HUD) Met Process and Content 

Requirements for Its Strategic Plan for Fiscal Years 2014–

2018 87

Table 3: Extent to Which the Department of Housing and Urban 

Development (HUD) Met Federal Requirements for its 

Fiscal Year 2017 Annual Performance Plan 89

Table 4: Extent to Which the Department of Housing and Urban 

Development (HUD) Met Federal Requirements for its 

Fiscal Year 2015 Annual Performance Report 91

Table 5: Extent to Which the Department of Housing and Urban 

Development (HUD) Followed Key Principles and 

Practices in Developing the 2015–2018 Human Capital 

Strategic Plan and the 2015-2018 Strategic Workforce 

Plan 96

Table 6: Extent to Which the Department of Housing and Urban 

Development (HUD) Followed Key Principles in 

Developing the 2015-2018 Succession Plan 99

Table 7: Extent to Which the Department of Housing and Urban 

Development (HUD) Was Following Key Principles for 

Training and Development Programs 102

Table 8: Extent to Which the Department of Housing and Urban 

Development (HUD) Follows Key Practices for Financial 

Management, as of Fiscal Year 2015 108

Table 9: Department of Housing and Urban Development’s (HUD) 

Material Weaknesses Identified by HUD’s Office of 

Inspector General, Fiscal Years 2012–2015 111
Page iii GAO-16-497 HUD Management

Table 10: Extent to which the Department of Housing and Urban 

Development’s (HUD) Information Technology 

Governance Was Following Key Practices for 

Foundational Processes from GAO’s Information 

Technology Investment Management Framework 

(GAO-04-394G) 120

Table 11: Extent to Which the Department of Housing and Urban 

Development’s (HUD) Information Security Practices Met 

Federal Information Security Requirements in Fiscal Year 

2015 123

Table 12: Extent to Which the Department of Housing and Urban 

Development’s (HUD) Privacy Practices Met Federal 

Requirements and Followed Guidelines, as of February 

2016 125

Table 13: Extent to Which the Department of Housing and Urban 

Development (HUD) Was Following Key Principles and 

Practices for Acquisition Management 128

Figures

Figure 1: Simplified Partial Organizational Chart for the 

Department of Housing and Urban Development (HUD), 

as of April 2016 8

Figure 2: Department of Housing and Urban Development (HUD) 

Regional and Field Office Locations, as of April 2016 9

Figure 3: Cross-cutting Challenges Affecting HUD’s Management 

Functions, as of April 2016 15

Figure 4: Department of Housing and Urban Development 

Intermediaries 39

Figure 5: Status of GAO Recommendations to the Department of 

Housing and Urban Development (HUD) Overall and by 

Fiscal Year, as of June 2016 68

Figure 6: Estimated Improper Payment Amounts for Fiscal Years 

2008 through 2014 114
Page iv GAO-16-497 HUD Management

Abbreviations

ACM Acquisition Career Manager

AEA American Evaluation Association

ARC Administrative Resource Center

CAP goals cross-agency priority goals

CDBG Community Development Block Grant

CIO Chief Information Officer

CPD Office of Community Planning and Development

CPO Chief Procurement Officer

DHS Department of Homeland Security

FFMIA Federal Financial Management Improvement Act

FHA Federal Housing Administration

FHEO Office of Fair Housing and Equal Opportunity

FTE full-time equivalent

GAAP generally accepted accounting principles

Ginnie Mae Government National Mortgage Association

GPRA Government Performance and Results Act of 1993

GRPAMA GPRA Modernization Act of 2010

HOME HOME Investment Partnerships

HUD Department of Housing and Urban Development

IPERA Improper Payments Elimination and Recovery Act of 2010

IT information technology

LEARN Learning, Enrichment, and Resource Network

MFH Office of Multifamily Housing

MFT Multifamily for Tomorrow

MTW Moving to Work

NAPA National Academy of Public Administration

OCFO Office of the Chief Financial Officer

OCHCO Office of the Chief Human Capital Officer

OCIO Office of the Chief Information Officer

OCPO Office of the Chief Procurement Officer

OIG Office of Inspector General

OMB Office of Management and Budget

OPM Office of Personnel Management

OSPM Office of Strategic Planning and Management
Page v GAO-16-497 HUD Management

PBCA performance-based contract administrators

PD&R Office of Policy Development and Research

PHA public housing agency

PIH Office of Public and Indian Housing

PII personally identifiable information

SES senior executive service

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-16-497 HUD Management

441 G St. N.W.

Washington, DC 20548

July 20, 2016

The Honorable Jeb Hensarling

Chairman

Committee on Financial Services

House of Representatives

The Honorable Blaine Luetkemeyer

Chairman

Subcommittee on Housing and Insurance

Committee on Financial Services

House of Representatives

For over 50 years, the Department of Housing and Urban Development 

(HUD) has administered a wide variety of programs aimed at helping 

households obtain quality, affordable housing and at building and 

strengthening communities. Each year, for example, these programs 

provide rental assistance to millions of lower-income households, 

mortgage insurance to hundreds of thousands of home buyers, and 

community development grants to hundreds of state and local 

governments. HUD’s net budget authority for fiscal year 2016 totals about 

$48 billion. In addition, its portfolio of insured mortgages was nearly $1.3 

trillion as of the end of fiscal year 2015.

Over a number of years, we and HUD’s Office of Inspector General (OIG) 

have identified management deficiencies that limit the effectiveness and 

efficiency of HUD’s operations. In all, we made nearly 400 

recommendations to HUD in fiscal years 2001 through 2015, many of 

which have been implemented. But 63 of the 108 recommendations we 

made in fiscal years 2012 through 2015 have not been implemented (see 

app. II). In addition, OIG identified nine management and performance 

challenges facing HUD in fiscal year 2016 and beyond, five related to 

HUD’s management functions and four to program oversight or 

evaluation.

In light of these challenges, you asked us to conduct a broad assessment 

of HUD’s management of its operations and programs. This report 

examines HUD efforts to (1) meet federal requirements and implement 

key practices for management functions, including performance planning 

and reporting and human capital, financial, acquisition, and information 

technology (IT) management; and (2) oversee and evaluate programs.

Letter
Page 2 GAO-16-497 HUD Management

To examine HUD’s management functions, we reviewed relevant laws, 

regulations, and HUD documents and interviewed senior HUD officials 

from the administrative support offices responsible for these functions 

about their plans, policies, and practices. We assessed HUD’s policies 

and practices against federal internal control standards and various key 

requirements and practices.1 Specifically:

• For performance planning and reporting, including HUD’s strategic 

planning efforts, we reviewed HUD’s strategic plans for fiscal years 

2010 through 2015 and 2014 through 2018, its annual performance 

plan for fiscal year 2017, and its annual performance report for fiscal 

year 2015 and compared them and HUD’s planning and reporting 

practices with requirements in the Government Performance and 

Results Act of 1993 (GPRA), as updated by the GPRA Modernization 

Act of 2010 (GPRAMA).2 We also interviewed officials from HUD’s 

Office of Strategic Planning and Management (OSPM).

• To evaluate HUD’s human capital management practices, we 

reviewed regulations issued by the U.S. Office of Personnel 

Management (OPM) and HUD’s current human capital plans, 

employee engagement plans, and policies and procedures. We then 

compared HUD’s human capital plans with key principles identified in 

our previously issued work.3 In addition, we reviewed HUD’s 2011 

through 2015 Federal Employee Viewpoint Survey results on 

employee engagement and training.4 To assess the reliability of the 

survey data, we reviewed the methodology used to conduct the 

survey and the employee response rate. We determined that the data 

we used were sufficiently reliable for our purposes. We also 

 1

GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014). These standards went into effect October 1, 2015.

2

Pub. L. No. 103-62, 107 Stat. 285 (1993) and Pub. L. No. 111-352, 124 Stat. 3866 

(2011).

3

See GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C.: Dec. 11, 2003); Human Capital: Insights for U.S. Agencies 

from Other Countries’ Succession Planning and Management Initiatives, GAO-03-914 

(Washington, D.C.: Sept. 15, 2003); and Human Capital: A Guide for Assessing Strategic 

Training and Development Efforts in the Federal Government, GAO-04-546G 

(Washington, D.C.: March 2004). 

4

The Federal Employee Viewpoint Survey is an annual survey administered by OPM. 

HUD’s response rate in 2014 was 51.5 percent; in 2015, it was 73.5 percent.
Page 3 GAO-16-497 HUD Management

interviewed officials from HUD’s Office of the Chief Human Capital 

Officer (OCHCO).

• To assess HUD’s financial management efforts, we reviewed HUD’s 

financial statement audits for fiscal years 2004 to 2015. We also 

interviewed OIG officials who oversaw the financial statement audits 

about their findings and recommendations for HUD. We did not 

independently assess the findings in these financial statement audits 

and internal control reviews. In addition, we assessed HUD’s financial 

management practices using guidelines developed by the Office of 

Management and Budget (OMB) and criteria we developed in prior 

work.5 We also interviewed officials from HUD’s Office of the Chief 

Financial Officer (OCFO).

• To evaluate HUD’s acquisition management, we assessed HUD 

acquisition policies, practices, and internal reviews against statutory 

and OMB requirements and leading practices from our prior work.6

We also interviewed officials from the Office of the Chief Procurement 

Officer (OCPO).

• For IT management, we incorporated information gathered in prior 

and ongoing work, as well as prior work by OIG and others. 

Specifically, we reviewed and assessed documentation and interview 

responses obtained during our concurrent review of HUD’s financial 

management system modernization effort and efforts to follow up on 

the status of open IT recommendations, as well as information from 

prior reports that assessed HUD’s project planning practices and IT 

 5

GAO, Executive Guide: Creating Value Through World-class Financial Management, 

GAO/AIMD-00-134 (Washington, D.C.: April 2000); Office of Management and Budget, 

Management’s Responsibility for Internal Control, OMB Circular No. A-123 (Washington, 

D.C.: Dec. 21, 2004); Requirements for Effective Estimation and Remediation of Improper 

Payments, Appendix C to OMB Circular No. A-123 (Washington, D.C.: Oct. 20, 2014); 

Compliance with the Federal Financial Management Improvement Act of 1996, Appendix 

D to OMB Circular No. A-123 (Washington, D.C.: Sept. 20, 2013); and Financial Reporting 

Requirements, OMB Circular No. A-136 (Washington, D.C.: Sept. 18, 2014).

6

GAO, Framework for Assessing the Acquisition Function At Federal Agencies, 

GAO-05-218G (Washington, D.C.: September 2005). We developed this framework by 

consulting with federal government and industry experts in the areas of human capital, 

information management, financial management, and acquisition practices and drew on 

decades of experience within GAO in reviewing these areas.
Page 4 GAO-16-497 HUD Management

governance against leading practices we identified in prior work.7 We 

also reviewed and summarized information from OIG’s 2015 annual 

assessment of HUD’s information security program against 10 

requirements and its 2014 comprehensive review of HUD’s privacy 

program against seven categories of requirements and guidelines.

To assess HUD’s efforts to oversee its programs, we reviewed policies 

and procedures, risk assessments, and other pertinent documents. We 

compared HUD’s oversight practices with leading practices outlined in our 

framework for managing fraud risks.8 We interviewed senior officials in 

HUD’s program offices as well as several industry stakeholders, including 

representatives from public housing, community development, and 

mortgage industry associations, about HUD’s monitoring, oversight, and 

evaluation efforts. To assess HUD’s efforts to evaluate its programs and 

measure outcomes, we reviewed relevant HUD documents, including 

policies and procedures and HUD’s strategic plan for research and 

evaluations, and assessed them against federal internal control standards 

and practices in American Evaluation Association (AEA) guidance.9 We 

also interviewed senior officials in HUD’s Office of Policy Development 

and Research (PD&R).

 7

We plan to issue the report on HUD’s financial management system modernization effort 

in July 2016. See also GAO, Information Technology: HUD Needs to Improve Key Project 

Management Practices for Its Modernization Efforts, GAO-13-455 (Washington, D.C.: 

June 12, 2013) and Information Technology: HUD Can Take Additional Actions to Improve 

Its Governance, GAO-15-56 (Washington, D.C.: Dec. 10, 2014).

8

GAO, A Framework for Managing Fraud Risks in Federal Programs, GAO-15-593SP 

(Washington, D.C.: July 2015). To develop this framework, we solicited a wide range of 

views on developing leading practices and ensuring their applicability to the federal 

government. This process included interacting with selected federal agency program 

officials, Offices of Inspector General, the World Bank, the Organisation for Economic Cooperation and Development, as well as antifraud experts from state and local 

governments, private companies, other national audit institutions, and nongovernmental 

organizations.

9

GAO-14-704G and American Evaluation Association, An Evaluation Roadmap for a More 

Effective Government (October 2013). AEA is an international professional association of 

evaluators devoted to the application and exploration of program evaluation, personnel 

evaluation, and many other forms of evaluation, as well as technology used in evaluations. 

AEA has approximately 7,000 members representing all 50 U.S. states and over 60 

foreign countries. It has published guides for individual evaluators and for developing and 

implementing U.S. government evaluation programs.
Page 5 GAO-16-497 HUD Management

For both objectives, we reviewed our prior reports as well as reports by 

OIG and other organizations, such as the National Academy of Public 

Administration and the National Research Council. In addition, we 

interviewed two former HUD Secretaries to obtain historical perspective 

on HUD’s management challenges. (See app. I for a detailed description 

of our scope and methodology.)

We conducted this performance audit from November 2014 through July

2016 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

HUD’s organizational structure comprises program offices and support 

offices spread across headquarters and field locations. Six program 

offices manage the bulk of the agency’s programs, which provide services 

that contribute to various components of HUD’s mission.

• The Office of Public and Indian Housing (PIH) provides assistance to 

low-income families through three programs. Public housing offers 

units for eligible tenants in properties generally owned and 

administered by state and local public housing agencies (PHA). The 

Housing Choice Voucher program provides tenant-based rental 

assistance that eligible households can use to rent houses or 

apartments in the private housing market. Native American programs 

provide block grants and loan guarantees to tribal entities for housing 

development and assistance and housing-related services. Within 

PIH, the Real Estate Assessment Center is responsible for providing 

information on the condition of HUD’s housing portfolio (through tools 

like property inspections, analysis of financial and management 

reports, and resident surveys) and for identifying fraud, waste, and 

abuse of HUD resources.

Background

Organizational Structure 

and Resources
Page 6 GAO-16-497 HUD Management

• The Office of Housing/Federal Housing Administration (FHA) provides 

insurance on loans made by approved lenders for single-family 

mortgages and multifamily projects, including manufactured homes 

and hospitals. FHA insures a variety of mortgages for initial home 

purchases and refinancing and also insures reverse mortgages.10 In 

addition, the office provides support to a nationwide network of 

housing counseling agencies and counselors.

• The Office of Community Planning and Development (CPD) provides 

financial and technical assistance to states and localities in order to 

promote community-based efforts to develop housing and economic 

opportunities through programs like the Community Development 

Block Grant (CDBG) and HOME Investment Partnerships (HOME), 

which are the federal government’s largest block grant programs for 

community development and affordable housing production, 

respectively.11 CPD also leads a number of HUD’s efforts to combat 

homelessness.

• The Office of Fair Housing and Equal Opportunity (FHEO) handles 

complaints of housing discrimination under the Fair Housing Act (Title 

VIII of the Civil Rights Act of 1968, as amended).12 In addition, FHEO 

administers the Fair Housing Assistance Program, which provides 

funding annually to state and local agencies to enforce fair housing 

laws that are substantially equivalent to the Fair Housing Act. It also 

administers the Fair Housing Initiatives Program, which provides 

funding to fair housing organizations and other nonprofits to assist 

people who believe they have been victims of housing discrimination.

 10A reverse mortgage is a loan that converts the borrower’s home equity into payments 

from a lender and typically does not require any repayments as long as the borrower 

continues to live in the home. Available to homeowners aged 62 and older, most of these 

loans are made under HUD’s Home Equity Conversion Mortgage program. HUD insures 

the mortgages, which are made by private lenders, and oversees agencies that provide 

mandatory counseling to prospective borrowers.

11CDBG provides communities with resources to address a wide range of community 

development needs. HOME provides formula grants to states and localities that 

communities use, often in partnership with local nonprofit groups, to fund a wide range of 

activities including building, buying, and/or rehabilitating affordable housing for rent or 

homeownership or providing direct rental assistance to lower-income households.

12Pub. L. No. 90-284, 82 Stat. 81 (1968) (codified, as amended, at 42 U.S.C. §§ 3601-

3619).
Page 7 GAO-16-497 HUD Management

• The Government National Mortgage Association (Ginnie Mae) is a 

wholly owned government corporation that guarantees the timely 

payment of principal and interest on securities issued by financial 

institutions and backed by pools of federally insured or guaranteed 

mortgage loans. Most of these loans are insured by FHA or 

guaranteed by the Department of Veterans Affairs or the Department 

of Agriculture.

• The Office of Policy Development and Research (PD&R) maintains 

current information on housing needs, market conditions, and existing 

programs and conducts research on priority housing and community 

development issues. Using in-house staff and contractors, PD&R is 

the primary office responsible for data analysis, research, program 

evaluations, and policy studies to inform the development and 

implementation of programs and policies across HUD offices. PD&R 

also sponsors major surveys to provide information about housing 

markets.

These program offices are supported by a number of administrative 

offices that are responsible for agency-wide management functions, 

including financial management (OCFO), human capital management 

(OCHCO), information technology management (Office of the Chief 

Information Officer, or OCIO), acquisition management (OCPO), and 

performance planning and reporting (OSPM). In addition, the 

Departmental Enforcement Center was formed in 1998 to consolidate 

most enforcement functions of PIH, CPD, FHEO, and Housing/FHA under 

one authority. Figure 1 shows a simplified and partial organizational chart 

of HUD’s program offices and administrative support offices that are 

responsible for agency-wide management functions.
Page 8 GAO-16-497 HUD Management

Figure 1: Simplified Partial Organizational Chart for the Department of Housing and Urban Development (HUD), as of April 

2016

HUD’s field structure is organized into 10 regions that are managed by a 

regional administrator. There is at least one field office or regional office 

in each state, and a total of 65 offices nationwide (see fig. 2). The field 

offices are managed by field office directors who report to the regional 

administrators. The Office of Field Policy and Management develops 

policy for the field and regional offices and serves as a liaison between 

the field and regional offices and the program offices, which also have 

staff distributed across the field offices. Nearly two-thirds of HUD’s 

employees were in the field in fiscal year 2015, and most were assigned 

to a particular program or program support office rather than the Office of 

Field Policy and Management. The number and location of field staff 

varies across program and program support offices. For example, FHA 

has consolidated its single-family housing field staff in four 

homeownership centers, while PIH has staff in 46 field offices and 6 

Native American program offices. HUD has updated and streamlined 
Page 9 GAO-16-497 HUD Management

parts of its organizational structure in recent years. Two of its streamlining 

initiatives are described in appendix III.

Figure 2: Department of Housing and Urban Development (HUD) Regional and Field Office Locations, as of April 2016

For fiscal year 2016, HUD’s net budget authority is $47.9 billion, an 

increase of more than 8.5 percent from the fiscal year 2015 level of $44.1 

billion. HUD’s budget has fluctuated over the past decade, ranging in 

nominal dollars from a low of $35 billion in fiscal year 2007 to a high of 

nearly $69 billion in fiscal year 2013. The increase in the fiscal year 2013 

budget authority was largely due to supplemental appropriations for 
Page 10 GAO-16-497 HUD Management

disaster relief efforts. Meanwhile, the number of full-time equivalent staff 

employed by HUD (including OIG) decreased from nearly 9,500 in fiscal 

year 2010 to fewer than 8,300 in fiscal year 2015.

In accordance with the Reports Consolidation Act of 2000, OIG issues 

annual reports in which it identifies HUD’s most serious management and 

performance challenges. OIG’s most recent report identified nine such 

challenges for fiscal year 2016 and beyond—five related to HUD’s 

management functions and four to program management.13 In response, 

HUD stated that it was committed to overcoming these challenges and 

outlined a number of initiatives underway to address them.

Among the five challenges in management functions, OIG has cited two—

financial management systems and human capital management—each 

year for at least 15 years. OIG initially identified the remaining three 

challenges—financial management governance, compliance with the 

Improper Payments Elimination and Recovery Act of 2010, and 

information security—in either fiscal year 2014 or 2015.

• Human capital management. In its most recent annual report, OIG 

noted that HUD continued to lack a valid basis for assessing its 

human resource needs and allocating staff within program offices. 

OIG also stated that HUD faced challenges in executing and 

managing temporary assignments of nonfederal personnel to 

positions within the agency because it lacked a central point of 

authority over the assignment agreements.14 In May 2014, OIG 

identified an inherent conflict of interest, overpayments, and a 

potential Antideficiency Act violation in connection with two temporary 

assignees.15 Additionally, in February 2015 the Inspector General 

testified on ethical, lobbying, and hiring violations at HUD and the 

 13HUD publishes the annual report from OIG as part of the annual agency financial report. 

See Department of Housing and Urban Development, Agency Financial Report Fiscal 

Year 2015 (Washington, D.C.: Nov. 23, 2015).

14These types of assignments are authorized by the Intergovernmental Personnel Act of 

1970, as amended.

15Among other things, the act prohibits agencies from obligating or expending federal 

funds in advance or in excess of an appropriation. 

Management and 

Performance Challenges
Page 11 GAO-16-497 HUD Management

hiring of convicted criminals into key housing positions.16 OIG’s 

annual report stressed the importance of effective implementation and 

maintenance of human capital management improvements in light of 

the high percentage of HUD employees nearing retirement eligibility. 

In its response to OIG, HUD noted, among other things, that it was 

finalizing revisions to policies for managing temporary assignments of 

nonfederal personnel and was overhauling its hiring plan process.

• Financial management systems. OIG noted that HUD lacked an 

integrated financial management system. According to OIG, HUD’s 

financial management system limitations inhibit its ability to produce 

reliable, useful, and timely financial information. OIG also noted that 

other IT systems, such as those used by FHA, are outdated and that 

few initiatives to modernize them have been completed due to funding

constraints. According to OIG, the use of aging systems has resulted 

in poor performance and high maintenance costs. OIG noted that 

weaknesses in internal controls and security also place HUD’s 

financial management systems at risk of compromise. In its response 

to OIG, HUD cited progress in implementing OIG recommendations 

and in migrating its financial management systems and services to a 

federal shared service provider (as discussed later in this report).

• Financial management governance. According to OIG, HUD 

continued to struggle to establish and implement a successful 

financial management governance structure and system of internal 

control over financial reporting. OIG cited weaknesses in HUD’s 

capability to monitor the issuance of accounting policies and 

standards and to interpret program offices’ financial reporting policies 

to determine whether they comply with federal generally accepted 

accounting principles and other financial management regulations. In 

addition, OIG stated that HUD’s current financial management 

structure relied on the delegation of several key financial management 

functions to program offices, where program-related issues often take 

a higher priority than financial management and the requirements for 

proper financial accounting. HUD responded, among other things, that 

it had established formal partnerships between financial management 

 16David Montoya, Inspector General, Department of Housing and Urban Development, 

Exploring Alleged Ethical and Legal Violations at the U.S. Department of Housing and 

Urban Development, testimony before the House Committee on Financial Services, 

Subcommittee on Oversight and Investigations, 114th Cong., 1st sess., February 4, 2015.
Page 12 GAO-16-497 HUD Management

staff in the Office of the Chief Financial Officer and program office 

financial management staff to improve accountability.

• Compliance with the Improper Payments Elimination and 

Recovery Act of 2010. HUD continued to face challenges in 

complying with the requirements of the Improper Payments 

Elimination and Recovery Act of 2010, according to OIG.17 OIG 

determined that HUD did not comply with the act’s requirements for a 

second straight year due to deficiencies in its reporting and risk 

assessments. HUD responded that it had designated the Chief 

Financial Officer as the lead official for overseeing actions to bring 

HUD into compliance with the act.

• Weaknesses in information systems security controls. OIG cited 

weaknesses in information security controls as another ongoing 

challenge, noting that 36 recommendations from the fiscal year 2013 

information security evaluation had not been implemented, along with 

all 23 recommendations from the fiscal year 2014 evaluation (also see 

app. VII). OIG also stated that HUD had not adequately planned for its 

future IT and IT security needs. In its response, HUD said it had 

published guidance to address some areas of concern and had 

initiated a number of projects to improve HUD’s IT security posture.

OIG’s four management and performance challenges related to HUD’s 

programs generally focus on monitoring and oversight issues, as the 

following summaries show.

• Single-family programs. OIG noted that effective management of 

FHA’s single-family mortgage insurance portfolio represented a 

continuing challenge for HUD. OIG stated that HUD was often 

hesitant to take strong enforcement actions against lenders because 

of its competing mandate to continue FHA’s role in restoring the 

housing market and ensuring the availability of mortgage credit and 

 17An improper payment is defined as any payment that should not have been made or 

that was made in an incorrect amount (including overpayments and underpayments) 

under statutory, contractual, administrative, or other legally applicable requirements. The 

Improper Payments Information Act of 2002, as amended by the Improper Payments 

Elimination and Recovery Act of 2010 and the Improper Payments Elimination and 

Recovery Improvement Act of 2012, requires executive branch agencies to annually 

identify programs and activities susceptible to significant improper payments, estimate the 

amount of improper payments, and report these estimates along with actions planned or 

taken to reduce them.
Page 13 GAO-16-497 HUD Management

continued lender participation in the FHA mortgage insurance 

program. According to OIG, FHA also faces a number of more specific 

challenges. These include ensuring that homeowners comply with the 

occupancy requirements for Home Equity Conversion Mortgages (that 

is, are using the mortgaged property as their principal residence) and 

that guidance for the loss mitigation program is clearly written for 

effective implementation.18 HUD’s response discussed improvements 

in the health of FHA’s primary insurance fund and HUD’s effort to 

make its guidance clear and unambiguous.

• Public and assisted housing program administration. According 

to OIG, HUD faced a number of challenges related to its public and 

assisted housing programs. For example, HUD’s monitoring of the 

Housing Choice Voucher program relied on self-assessments from 

PHAs and other self-reported information that were not always 

accurate or reliable. In addition, OIG stated that HUD’s monitoring and 

oversight of PHAs participating in the Moving to Work (MTW) program 

was also a challenge, particularly as it relates to developing programwide performance indicators that would not inhibit participants’

abilities to creatively impact the program.19 OIG also noted that HUD 

continued to face challenges related to environmental review 

requirements, including a lack of resources, unclear guidance, and a 

perceived lack of authority to impose corrective actions or sanctions. 

Furthermore, OIG pointed to challenges with financial management, 

specifically monitoring public housing agencies’ compliance with 

federal cash management requirements. Among other things, HUD’s 

response noted the agency’s efforts to improve monitoring and 

evaluation of MTW PHAs (discussed later in this report) and enhance 

guidance and procedures for environmental reviews.

• Office of Community Planning and Development (CPD) 

programs. OIG noted that at least seven audits from fiscal years 

2014 and 2015 found that little or no monitoring of CPD programs had 

 18When home buyers fall behind on their mortgage obligations, FHA instructs mortgage 

servicers (typically large financial institutions) to assist the home buyers in bringing their 

mortgage payments current, because foreclosure proceedings can impose high costs on 

financial institutions and homeowners. These efforts are referred to as “loss mitigation.”

19Moving to Work is a demonstration program intended to give participating public housing 

agencies the flexibility to design and test innovative strategies for providing and 

administering housing assistance.
Page 14 GAO-16-497 HUD Management

occurred in some instances, particularly at the subgrantee level.20

OIG stated that it had concerns regarding subgrantee capacity. In 

addition, OIG identified serious deficiencies in CPD’s community 

development loan guarantee program, finding a number of loans in 

which loan agreement provisions and HUD requirements were not 

followed. As a result, projects were incomplete or abandoned and 

funds were used for ineligible and unsupported efforts. Further, OIG 

identified challenges related to IT and financial management 

associated with CPD programs. Efforts to remove an incorrect 

accounting methodology from CPD’s information system were 

delayed due to funding issues, and additional modifications will be 

needed to bring the system into compliance with requirements.21

Similarly, OIG cited ongoing issues with the method HUD used to 

determine grantees’ compliance with statutory deadlines for 

committing funds for the HOME Investment Partnerships Program.22

HUD’s response included a disagreement with OIG over the steps 

needed to identify and recapture funds that were not committed within 

deadlines.

• Administering programs directed toward victims of natural 

disasters. OIG identified six subchallenges for HUD regarding 

disaster recovery programs: (1) ensuring that expenditures were 

eligible and supported; (2) approving the program waiver process; (3) 

certifying that grantees were following federal procurement 

regulations; (4) conducting consistent and sufficient monitoring efforts 

on disaster grants; (5) promoting disaster resiliency within 

communities trying to recover; and (6) keeping up with communities in 

the recovery process. OIG stated that HUD would continue to face 

these challenges until it had controls and adequate resources in place 

 20For some CPD grant programs, grant recipients may use independent governmental 

agencies and nonprofit organizations to carry out certain activities. These entities are 

referred to as subgrantees or subrecipients.

21Specifically, CPD used a methodology under which disbursements by grantees were not 

matched to the original obligations. According to OIG, this methodology is not consistent 

with federal generally accepted accounting principles. 

22The HOME Investment Partnership Act requires any uncommitted funds to be 

reallocated or recaptured after the expiration of the 24-month commitment deadline. CPD 

measured grantees’ compliance with the commitment requirement without regard to the 

year in which the grant funds were allocated. See GAO, Decision on Matter of HUD Home 

Program Grants—Statutory Commitment Deadline, B-322077 (Washington, D.C.: July 17, 

2013).
Page 15 GAO-16-497 HUD Management

to provide the necessary oversight and enforcement of requirements. 

In its response, HUD contended that grantees had documentation to 

support some of the questioned expenditures and took issue with 

OIG’s characterization of certain program violations and challenges.

Weaknesses in HUD’s planning and governance across various 

management functions may reduce the agency’s ability to effectively and 

efficiently accomplish its mission and resolve the challenges identified by 

OIG (see fig. 3). While HUD has met many requirements and 

implemented key practices related to planning, we identified shortcomings 

in a number of its planning efforts. In addition, HUD’s governance 

deficiencies include outdated or incomplete policies and procedures and 

lines of reporting that could limit direct communication. Appendixes to this 

report provide additional details on compliance with requirements and key

practices within each of the following management functions: 

performance planning and reporting (app. IV), human capital planning 

(app. V), financial management (app. VI), IT management (app. VII), and 

acquisition management (app. VIII).

Figure 3: Cross-cutting Challenges Affecting HUD’s Management Functions, as of April 2016

HUD has developed a number of key plans to manage agency 

performance, guide human capital activities, and address IT needs. But 

we identified a number of shortcomings in HUD’s planning efforts that 

could limit the effectiveness of these plans in guiding HUD’s actions.

Weaknesses in 

Planning and 

Governance Exist 

across HUD 

Management 

Functions

Some of HUD’s Planning 

Efforts Do Not Fully Align 

with Requirements and 

Key Practices
Page 16 GAO-16-497 HUD Management

HUD’s performance management planning efforts did not fully meet some 

of the requirements outlined in GPRAMA. Consistent with GPRAMA, 

HUD has produced a strategic plan and annual performance plan to help 

it achieve its mission, measure progress towards goals, and improve 

coordination. These plans and HUD’s processes met most of the 

requirements outlined in GPRAMA. However, HUD’s strategic plan for 

fiscal years 2014 through 2018 (its current plan) did not fully meet certain 

content and process requirements. In addition, the combined fiscal year 

2017 annual performance plan and fiscal year 2015 annual performance 

report did not fully meet 2 of the 17 content requirements for these 

documents.23 (See app. IV for additional information on the content of 

these plans and HUD’s performance review efforts and use of 

performance data.)

GPRAMA requires agencies to describe how goals and objectives 

contribute to federal government priority goals in their strategic plans and 

annual performance plans.24 HUD contributed to a number of federal 

priority goals (called cross-agency priority (CAP) goals) in fiscal year 

2015. For example, quarterly progress updates for two CAP goals—

customer service and infrastructure permitting modernization—explicitly 

listed HUD as a contributing agency.25 In addition, the progress update for 

another CAP goal listed as contributors all Chief Financial Officers Act 

agencies, of which HUD is one. While the strategic plan provides a link to 

a federal government website (Performance.gov) that contains 

information on CAP goals, the strategic plan and annual performance 

plan and report do not contain a description of how HUD’s goals and 

 23According to OMB guidance, in order to reduce duplication and communicate plans in 

the context of historical trends, agencies are strongly encouraged to consolidate the 

annual performance plan with the annual performance report, deliver them concurrently 

with the Congressional Budget Justification, and post them on Performance.gov by 

strategic objective. See Office of Management and Budget, Preparation and Submission 

of Strategic Plans, Annual Performance Plans, and Annual Performance Reports, OMB 

Circular No. A-11, Part 6 (Washington, D.C.: June 2015). 

24Pub. L. No. 111–352, § 2, 124 Stat. 3866 (2011) (codified at 5 U.S.C. § 306).

25The customer service CAP goal aims to make it faster and easier for individuals and 

businesses to complete transactions and have a positive experience with government. 

The infrastructure permitting modernization CAP goal aims to modernize the federal 

permitting and review process for major infrastructure projects to reduce uncertainty for 

project applicants, reduce the aggregate time it takes to conduct reviews and make 

permitting decisions by half, and produce better environmental and community outcomes.

Performance Planning and 

Reporting
Page 17 GAO-16-497 HUD Management

objectives contribute to these goals.26 HUD officials stated that the 

strategic plan and annual performance plan and report did not include a 

description of how goals and objectives contributed to CAP goals 

because OMB had not listed the agency as a CAP goal leader or direct 

contributor. However, information from the progress updates for several 

CAP goals listed HUD as contributing to these goals, as noted earlier. 

Therefore, HUD is required to describe how its goals and objectives 

contribute to the CAP goals in its strategic plan and annual performance 

plan. Without explicitly linking HUD’s strategic goals to CAP goals, the 

agency cannot provide assurance that its efforts fully align with broader 

federal efforts.

In addition, GPRAMA requires that agencies consult with and obtain 

majority and minority views from congressional authorizing, 

appropriations, and oversight committees at least every 2 years, solicit 

and consider stakeholder input when developing or adjusting the strategic 

plan, and describe how these views have been incorporated into the 

plan.27 According to documentation provided by HUD, HUD officials met 

with congressional appropriations committee staff in December 2013 to 

discuss HUD’s draft strategic goals and objectives. HUD also provided 

comments submitted by individuals through an online tool and a summary 

of comments collected by field office staff from local stakeholders on the 

draft strategic plan. However, HUD officials could not recall and did not 

document meeting with authorizing and oversight committee staff to 

obtain input on the draft strategic plan and had not sought input from 

congressional stakeholders on its strategic goals and objectives in more 

than 2 years. Similarly, representatives from five industry associations 

representing lenders, PHAs and PHA officials, and community 

development agencies told us that HUD’s efforts to reach out to them and 

obtain comments on the strategic plan had decreased over time or were 

not occurring. Officials from several of HUD’s program offices also said 

that they did not believe their offices reached out to external stakeholders 

to obtain input on the current strategic plan.

 26GPRAMA required OMB to establish a single, performance-related website by October 

1, 2012, to provide program and performance information that would be accessible to 

members and committees of Congress and the public. First developed by OMB in 2010 for 

executive branch use, Performance.gov was made available to the public in August 2011. 

27Pub. L. No. 111–352, § 2, 124 Stat. 3866 (2011) (codified at 5 U.S.C. § 306).
Page 18 GAO-16-497 HUD Management

HUD officials stated that they did not conduct more outreach for the 

strategic plan because they needed to produce the plan quickly and faced 

resource constraints. Additionally, they said that the current plan did not 

differ significantly from the previous strategic plan (which covered fiscal 

years 2010 through 2015), for which the agency engaged in an extensive 

outreach effort. Furthermore, HUD officials said they did not establish 

formal procedures or controls related to conducting outreach to help 

ensure they met all requirements. Federal internal control standards 

require agencies to implement control activities through policies. Further 

defining policies through procedures, including the timing of when control 

activities occur, can help agencies ensure that proper control activities 

are implemented. Without such procedures or controls, HUD may 

continue to only partially meet GPRAMA requirements for conducting 

outreach. By not fully engaging congressional stakeholders and external 

stakeholders throughout the process of developing and updating the 

strategic plan, HUD may not have identified specific congressional and 

industry concerns and priorities that could affect the implementation of its 

strategic plan or ensured that it is providing the types of performance 

information that Congress needs.

Finally, GPRAMA requires that agencies describe the reasons a 

performance goal was not met and plans for achieving it in their annual 

performance reports.28 HUD only partially met this requirement. HUD 

identified which performance goals were not met and in a number of 

cases described the reasons the goals were not met and its plans for 

achieving them. However, for some goals it did not describe the reasons 

they were not met or the plans for achieving them.29 According to OMB 

guidance, an agency that is not making sufficient progress in meeting a 

performance goal should briefly address future improvement, including 

explaining why the performance goal was not met and plans for achieving 

it.30 HUD officials told us they attempted to comment on all areas in which 

 28Pub. L. No. 111–352, § 4, 124 Stat. 3871 (2011) (codified at 31 U.S.C. § 1116).

29For example, HUD stated that it missed its target for the percentage of mortgage loans 

insured with a borrower credit score under 680, but did not describe the reasons this 

happened or how the target will be achieved in the future. HUD also stated that it missed 

its target for the number of clients counseled through its housing counseling program and 

provided reasons for the shortfall, but did not describe plans to achieve the goal in the 

future. 

30OMB Circular No. A-11, Part 6.
Page 19 GAO-16-497 HUD Management

HUD did not meet its performance goals, but were unable to do so 

because of time constraints and reporting delays. Without providing 

complete information on the reasons performance goals were not met 

and how they will be met in the future, HUD cannot demonstrate that it 

has effectively planned how it will achieve its goals. The incomplete 

information also provides a limited basis for ensuring HUD’s 

accountability for meeting its goals.

HUD incorporated most of the key principles for strategic workforce, 

succession, and training planning that we identified in prior work in its 

recently developed human capital plans (see appendix V for a more 

complete discussion). These plans include:

• a human capital strategic plan that identifies HUD’s strategic goals 

and objectives for addressing human capital challenges;

• a strategic workforce plan that assesses workforce needs and 

determines staff resources required to fulfill its mission;

• a succession plan that describes approaches and strategies for 

identifying and preparing employees for future work performance; and

• a learning plan that outlines efforts to foster a continual learning 

culture, minimize skill gaps, and promote career development.

Although HUD recently made updates to its human capital plans, it 

historically has not consistently maintained current plans, as required by 

federal regulation.31 Over the years, we and others have repeatedly 

recommended that HUD develop or revise these plans. HUD has 

generally taken action in response to the recommendations but has not 

taken the initiative to sustain these efforts on its own. For example, in 

1984 we recommended that HUD establish a staff development planning 

program linked to overall organizational planning to coordinate 

departmental efforts to forecast personnel needs.32 HUD implemented 

this recommendation by completing a skills inventory for program staff to 

determine how well they met present and future skill needs. In July 2002, 

we again recommended that HUD develop a comprehensive strategic 

 315 C.F.R. § 250.203.

32GAO, Increasing The Department of Housing and Urban Development’s Effectiveness 

Through Improved Management, GAO/RCED-84-9 (Washington, D.C.: Jan. 10, 1984).

Human Capital Management
Page 20 GAO-16-497 HUD Management

workforce plan, and in 2004 HUD completed a strategic workforce plan 

for Housing/FHA, CPD, PIH, and FHEO, with plans to expand it to cover 

the entire agency by 2005.33 HUD published an agency-wide workforce 

plan in 2005 covering fiscal years 2005–2009 and a revised plan in 2008 

for fiscal years 2008–2009. However, we noted in a 2013 report that HUD 

had no current plans in place and, echoing a June 2012 OPM report, 

recommended that HUD finalize and implement a strategic human capital 

plan and strategic workforce plan.34 HUD completed these efforts in 2015.

HUD has not been able to maintain current human capital plans because 

it did not have a process in place to help ensure that it reviewed and 

updated the plans before existing plans expired. In addition, changes to 

priorities and HUD leadership have sometimes disrupted efforts to update 

plans. HUD has stated that it faces challenges integrating a new 

generation of employees into the workforce while maximizing the talents 

of its existing workforce. HUD has also noted that it stands to lose much 

of its institutional knowledge because of retirements and attrition in key 

positions over the next few years. Without assessing and updating its 

human capital planning documents on a regular basis, HUD cannot 

ensure that it has a strategic vision for managing its workforce and 

addressing these challenges. While OCHCO has developed operations 

plans to identify and track key human capital activities and objectives, 

OCHCO does not currently have a mechanism to prompt revisions of 

overarching human capital plans, such as the human capital strategic 

plan and succession plan.

Separately, HUD has also developed plans to improve employee 

engagement, an area that has posed challenges for the agency. 

Employee engagement is generally defined as the sense of purpose and 

commitment employees feel toward their employer and its mission. Based 

on results from the 2015 Federal Employee Viewpoint Survey, HUD’s 

score on OPM’s Employee Engagement Index was 62 percent—a 5 

 33GAO, HUD Human Capital Management: Comprehensive Strategic Workforce Planning 

Needed, GAO-02-839 (Washington, D.C.: July 24, 2002).

34GAO, Housing and Urban Development: Strategic Human Capital and Workforce 

Planning Should be an Ongoing Priority, GAO-13-282 (Washington, D.C.: Mar. 15, 2013). 

See also U.S. Office of Personnel Management, U.S. Department of Housing and Urban 

Development Human Capital Management Evaluation Report Quarter 3—FY 2012 

(Washington, D.C.: June 11, 2012). 
Page 21 GAO-16-497 HUD Management

percentage point increase over the prior year—which placed HUD in a tie 

for 32nd out of 37 departments and large agencies.35 HUD also increased 

its participation rate for the Federal Employee Viewpoint Survey from 51 

percent in 2014 to 74 percent in 2015. In December 2014, OMB and OPM 

issued employee engagement guidance to federal agencies stating, 

among other things, that they should create action plans to address 

issues raised by employee survey responses. In response, HUD offices 

we met with had developed a number of strategies and action steps, such 

as establishing a mentoring program and holding periodic informal 

gatherings with senior leadership to open up lines of communication. 

Following through on these plans will be critical to improving employee 

engagement.

HUD has developed a number of plans in recent years to guide its IT 

management efforts, including plans that outline how it intended to spend 

IT funds, an information resource management strategic plan, and an 

enterprise architecture roadmap. These plans contain information related 

to IT modernization efforts and actions aimed at improving its capacity to 

manage IT. Among other things, HUD has taken action to structure its 

enterprise architecture, establish technology and data standards, and 

establish project management processes. In general, however, HUD 

acknowledged that historically it has had a fragmented approach to 

adopting technology that has led to multiple platforms and services 

competing for resources. HUD has also faced challenges finding the right 

balance of contracting support and in-house expertise to manage the 

agency’s data and systems effectively and affordably.

HUD has a history of persistent weaknesses in its planning for some IT 

projects, which has been particularly evident in its repeated efforts to 

 35The Employee Engagement Index is composed of 15 survey questions covering the 

following areas: (1) leaders lead, which surveys employees’ perceptions of the integrity of 

leadership and leadership behaviors such as communication and workforce motivation; (2) 

supervisors, which surveys employees’ perceptions of the interpersonal relationship 

between workers and supervisors, including trust, respect, and support; and (3) intrinsic 

work experience, which surveys employees’ feelings of motivation and competency 

relating to their role in the workplace. In July 2015, we reported on trends in employee 

engagement from 2006 through 2014, practices for improving employee engagement, and 

OPM’s tools and resources to support employee engagement. See GAO, Federal 

Workforce: Additional Analysis and Sharing of Promising Practices Could Improve 

Employee Engagement and Performance, GAO-15-585 (Washington, D.C.: July 14, 

2015).

Information Technology 

Management
Page 22 GAO-16-497 HUD Management

modernize outdated financial management systems. Between 1991 and 

2016, the department invested approximately $370 million in efforts that 

did not result in fully modernizing its financial management systems and 

have left the department needing to pursue additional efforts to replace its 

aging systems. For example, the failure in 2012 of the HUD Integrated 

Financial Management Improvement Project, which cost more than $35 

million, was partly attributable to inadequate planning.36 More recently, 

the department initiated an effort to move certain financial management 

capabilities to the Department of the Treasury’s Administrative Resource 

Center (ARC), a federal shared service provider.37 In 2014 and 2015, 

HUD transitioned to using ARC’s shared service solutions for travel, time 

and attendance, core accounting and budget, and procurement.38

However, in November 2015 HUD suspended plans to modernize an 

additional 10 planned capabilities, citing insufficient funding as a primary 

reason. But in our concurrent review of HUD’s implementation of this 

effort, we found that inadequate planning, including the lack of a roadmap 

for decommissioning legacy systems or fully moving accounting 

transactions to the federal shared service provider, also contributed to 

this result. Congress halted funding for additional modernization for fiscal 

year 2016 and required HUD to submit plans for retiring its legacy 

financial management system and for completing the development of 

other modernization efforts.

Since 2008, Congress has raised concerns about HUD’s IT planning and 

required that HUD develop IT expenditure plans that satisfied statutory 

conditions before fully obligating available funds in fiscal years 2010 

 36A government assessment team, which was formed to conduct an operational 

assessment of the project after it was deemed to be at risk of missing key project 

milestones, identified a number of planning issues, including the lack of a truly integrated 

master schedule for the project.

37ARC provides a full range of administrative services for other federal agencies, including 

financial management, Internet-based procurement, travel services, IT, human resources 

management, and investment portfolio management. 

38HUD indicated that it expected to spend a total of about $96 million by the end of fiscal 

year 2016 to deliver, operate, and maintain the new financial management system. 
Page 23 GAO-16-497 HUD Management

through 2014.39 We were required to review the department’s expenditure 

plans submitted through fiscal year 2013 and, accordingly, have reported 

on the results of our assessments.40 In summary, we found that the initial 

fiscal year 2010 plan did not fully meet statutory conditions but that HUD 

revised its subsequent plan, consistently satisfied the conditions, and 

outlined IT management controls. As a result, Congress eliminated the 

requirement for HUD to submit annual IT expenditure plans beginning in 

fiscal year 2015.41

Nevertheless, HUD has not yet demonstrated that it has fully matured its 

capacity to plan for and manage IT projects effectively. Our experience 

with major modernization efforts has shown that adhering to federal law 

and best practices can help agencies effectively plan, manage, and 

 39The Consolidated Appropriations Act, 2010, Pub. L. No. 111-117, 123 Stat. 3034, 3094

(2009); Department of Defense and Full-Year Continuing Appropriations Act, 2011; Pub. 

L. No. 112-10, § 2259, 125 Stat. 38, 197-98 (2011); Consolidated and Further Continuing 

Appropriations Act, 2012, Pub. L. No. 112-55 (2011); Consolidated and Further Continuing 

Appropriations Act, 2013; Pub. L. No. 113-6 § 1101, 127 Stat. 198, 412-13 (2013); 

Consolidated Appropriations Act, 2014, Pub. L. No. 113-76, 128 Stat. 5, 623 (2014). The 

statutory conditions called for HUD to identify for each project the functional and 

performance capabilities to be delivered, expected mission benefits, estimated life-cycle 

costs, and planned key milestones and to demonstrate that each project complied with the 

department’s enterprise architecture, was being managed in accordance with applicable 

life-cycle policies and guidance, conformed to capital planning and investment control 

requirements, and was supported by an adequately staffed project office. For fiscal year 

2012, HUD reported that it did not obligate more than 25 percent of the appropriations 

made available to it for IT modernization and thus did not develop an expenditure plan.

40GAO, Information Technology: HUD Needs to Better Define Commitments and Disclose 

Risks for Modernization Projects in Future Expenditure Plans, GAO-11-72 (Washington, 

D.C.: Nov. 23, 2010); Information Technology: HUD’s Expenditure Plan Satisfies Statutory 

Conditions, and Implementation of Management Controls Is Under Way, GAO-11-762 

(Washington, D.C.: Sept. 7, 2011); Information Technology: HUD’s Fiscal Year 2011 

Expenditure Plan Satisfies Statutory Conditions, GAO-12-654 (Washington, D.C.: May 24, 

2012); and Information Technology: HUD’s Expenditure Plan Satisfied Statutory 

Conditions; Sustained Controls and Modernization Approach Needed, GAO-14-283 

(Washington, D.C.: Feb. 12, 2014).

41See Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. No. 113-

235, 128 Stat. 2747 (2014).
Page 24 GAO-16-497 HUD Management

oversee modernization efforts.42 Developing plans that define the scope, 

implementation strategy, and schedule is essential to successful 

modernization, as are results-oriented goals and measures to provide the 

information needed for effective management and oversight. However, 

we observed that the 2013 expenditure plan did not discuss the scope, 

implementation strategy, or schedule for efforts beyond fiscal year 2013 

and therefore had limited value as an oversight tool.43 We also found that 

the plan did not articulate HUD’s overall approach for completing the 

priority modernization efforts or provide related outcome-based goals and 

measures. On the basis of key practices for organizational transformation 

and IT investment management identified in our previous reports, we 

recommended that HUD define the scope, implementation strategy, and 

schedule of its overall modernization approach, with related goals and 

measures for effectively overseeing the effort.44 In August 2015, the 

Comptroller General designated this recommendation as being among 

the highest priorities for implementation.45 As of April 2016, HUD had not 

yet completed actions to address our recommendation to define an 

overall approach to effectively plan and oversee its modernization efforts.

HUD has not always followed proven effective planning and program 

management practices for some of its recent acquisition improvement 

initiatives. These initiatives include professionalizing the contracting 

 42See 40 U.S.C. §§ 11303, 11313; 5 U.S.C. §306; 31 U.S.C. §§1115, 1116. Also see 

GAO, Office of Personnel Management: Retirement Modernization Planning and 

Management Shortcomings Need to Be Addressed, GAO-09-529 (Washington, D.C.: Apr. 

21, 2009 and OPM Retirement Modernization: Progress Has Been Hindered by 

Longstanding Information Technology Management Weaknesses, GAO-12-430T 

(Washington, D.C.: Feb. 1, 2012).

43GAO-14-283.

44GAO, Organizational Transformation: A Framework for Assessing and Improving 

Enterprise Architecture Management, Version 2.0, GAO-10-846G (Washington, D.C.: Aug. 

5, 2010) and Information Technology Investment Management: A Framework for 

Assessing and Improving Process Maturity, GAO-04-394G (Washington, D.C.: Mar. 1, 

2004). 

45As part of an effort to call attention to unimplemented recommendations that we believe 

warrant priority attention, in August 2015 the Comptroller General sent a letter to the HUD 

Secretary identifying 18 recommendations as being among the highest priorities for 

implementation. The recommendations related to four key areas: (1) management and 

financial condition of FHA, (2) housing assistance, (3) assistance to address 

homelessness, and (4) IT management.

Acquisition Management
Page 25 GAO-16-497 HUD Management

officer representative position (that is, making the role a full-time position 

rather than the collateral duties of individuals holding other positions), 

developing program and project managers, reorganizing OCPO, and 

improving acquisition policies and the quality of documents outlining 

contract requirements. In February 2016, OIG found that a number of 

initiatives were not supported by detailed plans or fully implemented.46

OIG cited staff turnover and changing priorities for improving the 

acquisition function as contributing factors. HUD agreed with the 

assessment that staff turnover was a significant concern, noting in its 

response to OIG that, on average, about 20 percent of OCPO’s staff 

departed each year. In addition, HUD concurred with OIG’s 

recommendation that OCPO, HUD leadership, and program offices reach 

agreement on the focus and priorities for improving acquisitions. 

Furthermore, OIG stated that OCPO should implement and follow a 

systematic program management plan for its improvement initiatives and 

recommended that OCPO incorporate successful acquisition practices, 

including the development and implementation of a communications 

strategy, an acquisition human capital plan, and a training strategy, into 

its acquisition improvement strategy. HUD concurred with the 

recommendation and noted that some steps were already underway to 

implement it.

Across HUD management functions, we identified two types of issues 

related to agency governance. First, some of HUD’s policies and 

procedures were outdated or incomplete. Second, recent changes in 

reporting relationships could limit direct communication.

HUD has struggled to maintain up-to-date and complete policies and 

procedures across its management functions, and gaps in its policies 

have adversely affected the performance of these functions. Internal 

control standards require that management implement control activities 

through policies.47 Periodically reviewing policies, procedures, and related 

control activities for continued relevance and effectiveness in achieving 

 46Department of Housing and Urban Development, Office of Inspector General, 

Comprehensive Strategy Needed to Address HUD Acquisition Challenges, Audit Report 

No. 2015-OE-0004 (Washington, D.C.: Feb. 2, 2016). 

47GAO-14-704G.

Governance Weaknesses 

Exist in Some HUD 

Policies and Reporting 

Relationships

Some Policies and Procedures 

Were Outdated or Incomplete
Page 26 GAO-16-497 HUD Management

objectives and addressing related risks can help agencies meet this 

requirement. HUD has struggled to maintain up-to-date policies and 

procedures because it does not have effective controls, such as a 

systematic process and schedule, to help ensure that they are reviewed, 

revised, and updated in a timely manner. According to HUD officials, staff 

and senior leadership turnover and resource limitations also have 

hindered efforts to review and revise its policies. A lack of complete and 

up-to-date policies and procedures increases the risk of ineffective and 

inconsistent performance of management duties and noncompliance with 

laws and regulations. And while HUD has taken some steps to review and 

update policies, as outlined below, some deficiencies remain.

Information Technology Management

HUD has made progress in adopting a number of needed IT policies and 

procedures in recent years. However, as we found in previously issued 

work, HUD does not yet have complete and current IT policies and 

procedures. According to HUD officials, frequent turnover in the HUD 

Chief Information Officer (CIO) position has contributed to governance 

challenges in IT management, including the establishment of policies and 

procedures.48 For instance, in December 2014 we found that HUD had 

developed 8 of 11 key policies for its IT framework, which was 

established by the department to integrate IT strategy development, 

enterprise architecture, IT capital planning and investment management, 

project management, and investment performance measurement.49 But 

three key policies—for performance, privacy, and risk management—had 

not yet been developed. We recommended that HUD fully establish and 

maintain a complete set of IT framework policies, identify time frames for 

establishing policies planned but not yet developed, and update key 

documents to reflect changes made to established practices. HUD agreed 

 48High turnover in the CIO position has been a long-standing challenge at HUD. In 2011, 

we identified the department as having the highest CIO turnover among federal 

agencies—with eight officials serving in the position between 2004 and 2011. See GAO, 

Federal Chief Information Officers: Opportunities Exist to Improve Role in Information 

Technology Management, GAO-11-634 (Washington, D.C.: Sept. 15, 2011). Since July 

2013, three more officials have filled the role of HUD CIO, two of whom acted in the 

position until a permanent official was put in place in June 2014. 

49GAO-15-56. See appendix VII for additional information about the extent to which HUD 

met key IT governance practices.
Page 27 GAO-16-497 HUD Management

with our recommendations. OCIO officials have stated that HUD planned 

to develop a strategy for updating its comprehensive IT framework and 

keeping the policies current but has yet to do so. HUD indicated it 

planned to have all IT framework policies updated and in place by the 

third quarter of 2016.

We also found in December 2014 that HUD lacked fully developed 

selection processes to help ensure consistent application of selection 

criteria, adequate documentation of the entire selection process, and 

robust processes for monitoring the progress of IT investments and 

evaluating their performance against expected outcomes.50 We 

recommended that HUD fully establish an IT investment selection 

process that included key elements and a well-defined process 

incorporating key practices for overseeing investments. HUD agreed with 

our recommendations and had taken steps to implement them but had yet 

not completed needed actions as of April 2016.

We previously found that although HUD had developed parts of policies 

and procedures to guide its response to cybersecurity incidents, such as 

procedures for containing incidents and providing training to incident 

response personnel, its efforts were not comprehensive or fully consistent 

with federal requirements.51 We recommended that HUD finalize policies 

for incident response that include requirements for prioritizing the severity 

ratings of incidents and establish measures of performance and revise 

procedures for incident response to prioritize the handling of incidents by 

impact. HUD agreed with these recommendations and in 2015 finalized 

incident response policies that included requirements for prioritizing the 

severity ratings of incidents and establishing performance measures. In 

addition, HUD revised its procedures for incident response to prioritize the 

handling of incidents by impact.

We also identified examples of procedures that HUD has adopted but not 

yet fully implemented and that were needed to fill gaps in its IT 

framework. For example, work remained to be done on implementing 

effective processes and procedures for project management and IT 

 50GAO-15-56.

51GAO, Information Security: Agencies Need to Improve Cyber Incident Response 

Practices, GAO-14-354 (Washington, D.C.: Apr. 30, 2014).
Page 28 GAO-16-497 HUD Management

governance. In 2011, HUD developed a project planning and 

management framework to provide standards and guidance for managing 

a project’s life cycle in accordance with leading practices. However, in 

2013 we found that HUD had not fully implemented and applied the 

project planning and management framework for its FHA Transformation 

Initiative and Next Generation Management System.52 Specifically, while 

HUD had developed project management documentation such as 

charters and requirements management plans, none of these documents 

included all of the key details that could facilitate effective management of 

its projects. For instance, they did not contain full descriptions of the work 

necessary to complete the projects, cost and schedule baselines, or 

prioritized requirements. More complete documentation and plans could 

help ensure progress on modernization initiatives, especially during 

periods of leadership and staff changes. Among other things, we 

recommended that HUD establish a plan of action that identified specific 

time frames for correcting project management deficiencies for both its 

ongoing and planned projects. In August 2015, we designated this 

recommendation as a high priority for implementation. HUD did not 

concur with the entirety of the recommendation and described activities 

that it planned to undertake to address a number of the deficiencies cited. 

Additionally, HUD told us OCIO had begun holding weekly project 

management meetings during the second quarter of fiscal year 2016 to 

review schedule, cost, and risk elements of each IT development project 

currently underway. However, our recommendation had not been fully 

implemented as of April 2016, and our ongoing review of HUD’s financial 

management system modernization efforts provided evidence that the 

project management weaknesses we previously identified have not yet 

been fully addressed.

 52GAO-13-455. The FHA Transformation Initiative was intended to improve FHA’s 

management of insurance programs through the development and implementation of a 

modern financial services IT environment that is expected to improve loan endorsement 

processes, collateral risk capabilities, and fraud prevention. This environment is expected 

to provide case management for the life cycle of a loan and capture data from the loan 

origination and underwriting processes. The Next Generation Management System was 

intended to provide an integrated system with a seamless view of financial and program 

data that had been warehoused in disparate data sources and a new set of monitoring, 

oversight, and software tools directed at ensuring that funds are used to assist affordable 

housing participants and reduce improper payment errors.
Page 29 GAO-16-497 HUD Management

Moreover, in December 2014 we found that HUD lacked the operational 

executive-level investment board prescribed in the IT governance policy 

HUD implemented in July 2011. As a result, we recommended that the 

department ensure that the executive-level investment review board meet 

as outlined in its charter, document criteria for use by the other boards, 

and distribute its decisions to appropriate stakeholders. In May 2016, 

HUD had completed steps to revise charters for the executive-level 

investment review board and related committees to help ensure that the 

charters aligned with HUD’s current processes but had not yet finalized 

them.

Financial Management

HUD’s lack of up-to-date and complete financial management policies 

and procedures contributed to deficiencies identified in the annual audits 

of HUD’s financial statements. For the last 3 years, HUD has not received 

a clean audit opinion on its consolidated financial statements.53 In its 

fiscal year 2014 and 2015 financial statement audit reports, OIG was 

unable to render an audit opinion because of improper budgetary 

accounting related to CPD grants, improper accounting for HUD’s assets, 

unvalidated grant accrual estimates, and a disclaimer of opinion issued 

 53According to the American Institute of Certified Public Accountants’ Forming an Opinion 

and Reporting on Financial Statements (AU-C Section 700), effective for audits of financial 

statements for periods ending on or after December 15, 2012, an unmodified opinion 

states that the financial statements are presented fairly, in all material respects, in 

accordance with the applicable accounting principles. For periods ending before 

December 15, 2012, an unmodified opinion was known as an unqualified opinion. For the 

purposes of this report, we use the term “clean opinion” to refer to either an unmodified 

opinion or an unqualified opinion. A qualified opinion, in relation to the financial 

statements, states that certain reported balances cannot be audited, that the financial 

statements contain a material departure from generally accepted accounting principles, or 

both. A disclaimer of opinion states that the auditor does not express an opinion on 

whether the financial statements are free of significant errors and comply with applicable 

accounting principles because of—among other things—the lack of supporting documents 

or restrictions imposed by management that significantly limit the scope of the audit. HUD 

received a clean audit opinion on its consolidated financial statements for 13 consecutive 

years before receiving a qualified opinion in fiscal year 2013. In 2013, OIG also withdrew 

its previously reported unqualified opinion on HUD’s fiscal year 2012 consolidated 

financial statements and replaced it with a qualified opinion due to improper budgetary 

accounting and a lack of accounting for cash management and restated the fiscal year 

2012 financial statements to correct material errors. See Department of Housing and 

Urban Development, Agency Financial Report Fiscal Year 2013 (Washington, D.C.: Dec. 

16, 2013).
Page 30 GAO-16-497 HUD Management

on Ginnie Mae’s stand-alone financial statements.54 In addition, in the 

fiscal year 2015 audit of HUD’s consolidated financial statements, OIG 

reported on nine material weaknesses (up from eight in the prior year’s 

consolidated financial statements audit), eight significant deficiencies (the 

same as in fiscal year 2014), and six instances of noncompliance with 

laws and regulations (up from five the prior year).55

According to OIG, HUD’s financial management handbooks were often 

outdated and incomplete.56 In 2013, OIG noted that OCFO had attempted 

to implement accounting policies and procedures through memorandums. 

But this method does not provide easily accessible guidance and 

reference for staff and is not a permanent source of financial 

management standard operating policies. A number of control 

deficiencies, which are reflected in the material misstatements and 

noncompliance with laws and regulations documented in HUD’s annual 

financial statement audits, can be linked in part to incomplete or outdated 

policies and procedures. For example, in the 2015 financial statements 

 54Prior to fiscal year 2014, an independent public accountant audited Ginnie Mae’s standalone financial statements. For fiscal year 2013, the independent public accountant 

identified a significant deficiency in internal control related to inaccurate accounting by 

Ginnie Mae’s largest master subservicer but gave Ginnie Mae an unqualified audit 

opinion. In 2014 OIG began performing this audit in order to conduct a more in-depth 

review. OIG subsequently determined that it was unable to obtain sufficient, appropriate 

evidence to support asset amounts reported in Ginnie Mae’s financial statements that 

came from the master subservicer. According to OIG, this was one of the scope limitations 

in its audit work that contributed to the disclaimer of opinion on the fiscal year 2014 

financial statements. In addition, OIG notified the independent public accountant that 

audited Ginnie Mae’s fiscal year 2013 financial statements of material misstatements in 

the financial statements that it had identified. The independent public accountant withdrew 

its opinion on the fiscal year 2013 financial statements because the opinion could no 

longer be relied upon.

55Department of Housing and Urban Development, Office of Inspector General, Fiscal 

Years 2015 and 2014 (Restated) U.S. Department of Housing and Urban Development 

Consolidated Financial Statements Audit, Audit Report No. 2016-FO-0004 (Washington, 

D.C.: Nov. 23, 2015). 

56Since 2013, OIG has identified financial management governance more broadly as an 

ongoing challenge in its annual report on management and performance challenges facing 

HUD. See Department of Housing and Urban Development, Agency Financial Report 

Fiscal Year 2013. In addition, OIG has highlighted governance issues in the annual 

financial statement audits. See, for example, Department of Housing and Urban 

Development, Office of Inspector General, Audit Report No. 2016-FO-0004. We discuss 

these reports in greater detail in appendix VI.
Page 31 GAO-16-497 HUD Management

audit, OIG noted that Ginnie Mae’s governance deficiencies included a 

failure to establish adequate and appropriate accounting policies and 

procedures.57 Similarly, a deficiency in HUD’s administrative control of 

funds was caused in part by a lack of policies and procedures, according 

to OIG.

Since 2013, OIG has noted that OCFO lacked a position or division to 

monitor the issuance of accounting standards and policies to determine 

their effect on HUD and to interpret program office policies to determine 

whether they comply with federal generally accepted accounting 

principles and other financial management regulations. In addition, in 

2015 OIG stated that OCFO’s significant staff turnover was contributing to 

challenges associated with HUD’s financial management policies and 

procedures.

HUD has taken a number of steps in response to OIG’s findings. In 

October 2015 HUD officials told us that OCFO had hired two individuals 

to work on developing and updating financial management policies. In 

general, they said that they planned to look broadly across existing policy 

documents to identify ways to streamline and clarify policies rather than 

simply filling gaps. For example, they planned to consolidate funds control 

policies for different offices into one newly rewritten funds control 

handbook, supplemented by program-specific guidance where needed. 

These efforts are ongoing, and officials told us they expected these 

actions to be completed by September 2016. In addition, in April 2016 

HUD officials indicated that OCFO’s Financial Policies and Procedures 

Division had been tasked with monitoring the issuance of accounting 

standards and policies to determine their effect on HUD and to interpret 

program office policies.

Furthermore, to assist the agency in improving its oversight and financial 

management governance, HUD contracted with the National Academy of 

Public Administration (NAPA) in the fall of 2014 to conduct an 

organizational assessment of its agency-wide financial management. The 

study panel issued a report in March 2015 reiterating that HUD must have 

comprehensive documentation of its financial policies and processes to 

 57Department of Housing and Urban Development, Office of Inspector General, Audit 

Report No. 2016-FO-0004.
Page 32 GAO-16-497 HUD Management

guide staff performing finance and accounting functions across the 

agency.58 The panel noted that HUD’s need for comprehensive process 

documentation would take on even greater importance as financial 

processes changed with its transfer of financial management functions to 

ARC. According to NAPA, agencies that have undergone similar 

transitions to shared service providers emphasized the importance of 

having comprehensive process documentation in place that shows how 

financial transactions are to be executed and recorded. HUD responded 

to NAPA’s report by issuing new financial management guidance in 

September 2015 to begin aligning policies and procedures with the new 

processes being implemented as part of the transition to ARC. 

Specifically, HUD issued Transitional Budget Execution Standard 

Operating Procedures that describe how to record and manage budgetary 

resources across all appropriations using shared services provided by 

ARC, including roles and responsibilities. In addition, in March 2016 HUD 

officials indicated that the department was working to revise all financial 

management policies to accommodate changes as a result of 

transitioning to ARC and planned to complete these revisions by January 

2017.

Human Capital Management

For a number of years, HUD did not have policies, procedures, and 

oversight during the hiring process to help ensure that employees were 

effectively vetted before they were hired, resulting in a number of poor 

hiring decisions. In 2015, HUD’s Inspector General testified that his office 

identified weaknesses within HUD’s personnel security and suitability 

program in 2013, including a lack of policies and procedures for 

personnel adjudication.59 These findings followed the discovery that HUD 

had hired an employee shortly after the individual was criminally charged 

by federal indictment with mortgage fraud. In another case, HUD hired an 

individual in 2011 who had prior arrests and convictions for theft, larceny, 

armed robbery, check deception, and receiving stolen property. He was 

convicted in 2014 of stealing $843,000 from the government by diverting 

 58Panel of the National Academy of Public Administration, Department of Housing and 

Urban Development Office of the Chief Financial Officer Organizational Assessment, a 

report prepared for the Department of Housing and Urban Development (Washington, 

D.C.: Mar. 19, 2015).

59Montoya testimony, Feb. 4, 2015.
Page 33 GAO-16-497 HUD Management

sales proceeds of HUD-owned properties to his own bank accounts while 

employed in HUD’s Office of Loan Guarantee for Native American 

programs. Additionally, in 2012 OPM identified weaknesses in other 

human capital practices at HUD. For example, while assessing HUD’s 

practices for examining job applicants, OPM identified seven illegal 

appointments in its review of 19 files processed from January 1, 2008, 

through December 31, 2011, as well as major competency gaps among 

HUD’s human capital specialists.60

Subsequently, HUD drafted a National Security and Suitability Policy 

Handbook, which HUD expected to be implemented by the end of fiscal 

year 2016. In addition, HUD provided staff with a Desk Reference of 

instructions for processing applicant security packages and in October 

2015 issued a procedural manual for determining the suitability of 

contract employees. OCHCO also included revisions to a number of other 

human capital handbooks, along with quarterly milestones, in its 

operations plan for fiscal years 2016–2018. To address some of the 

weaknesses in its other human capital practices, HUD contracted out a 

number of human capital functions to ARC beginning in fiscal year 

2013.61 A recent evaluation by HUD of work completed by ARC revealed 

that delegated examining operations supported the accomplishment of 

HUD’s mission, were generally conducted in accordance with applicable 

laws and regulations, and did not identify any illegal or erroneous 

appointments.

Acquisition Management

From 2009 to 2015, HUD did not update its acquisition handbook despite 

issuing numerous acquisition instructions and other guidance documents 

 60Office of Personnel Management, U.S. Department of Housing and Urban Development

Human Capital Management Evaluation Report Quarter 3-FY 2012 (Washington, D.C.: 

June 11, 2012).

61Before securing the contractor, HUD worked with OPM to improve the agency’s 

processes and overcome its deficiencies. Services under the contract include, among 

other things, job classification, staff acquisition, personnel security, and help desk and 

reporting service. According to the officials, ARC personnel provide support to HUD by 

reviewing completed background investigations for all new federal hires. However, HUD 

maintains authority and delegation over the functions and work performed by ARC and is 

solely accountable for the administration of the personnel security program. Under its 

current process, HUD makes the final determinations of suitability.
Page 34 GAO-16-497 HUD Management

during that time. The lack of updated and consolidated guidance likely 

contributed to inconsistent interpretation and application of acquisition 

policies. OCPO officials said that the 2009 revision to the handbook also 

had not included all of the guidance that had been issued up to that point.

As an example, in a 2010 report, NAPA found that the content of OCPO’s 

policies and guidance was generally sound but that numerous contract 

specialists and program staff were unaware of the breadth of the 

guidance available or found it difficult to navigate. NAPA also identified 

inconsistencies in HUD’s acquisition management. Some program 

customers reported receiving widely divergent levels of services from 

different staff within the OCPO headquarters division assigned to support 

them. Additionally, NAPA cited variation in the interpretation and 

implementation of policies among contracting officers and contract 

specialists within the same division, raising a broader concern of 

variations that were likely occurring among divisions within OCPO. To 

address this concern, OCPO officials told us that in recent years they had 

developed a number of mandatory templates—more than 60 of which 

they provided to us to review—for different aspects of the acquisition 

process to reduce variation in policy implementation.

In addition, OCPO’s annual assessments of the acquisition function 

documented significant weaknesses in following HUD acquisition policies 

that were identified during reviews of contract files. The two most recent 

assessments, which covered acquisition actions from fiscal years 2013 

and 2014, identified inadequate documentation related to contract 

modifications as the most common issue. OCPO officials developed 

corrective action plans to address these and other issues, and told us that 

they also provided training directly to the staff who made errors to help 

ensure the mistakes were corrected quickly.

In 2015 and 2016, OCPO staff completed an update to the acquisition 

handbook that incorporated policies and guidance that had been issued 

and aligned the handbook with the Federal Acquisition Regulation. OCPO 

officials anticipated that the updated acquisition handbook would be 

implemented in May 2016.
Page 35 GAO-16-497 HUD Management

In addition to challenges with outdated or incomplete policies and 

procedures, HUD’s recently adopted governance structure could limit 

direct communication between senior officials on IT and acquisition 

matters. HUD created a Chief Operations Officer position in 2015 after 

recognizing the need to devote senior-level attention to various 

management functions and to enhance coordination and oversight.62

Specifically, in a May 2015 notice in the Federal Register, HUD’s Deputy 

Secretary delegated to the Chief Operations Officer management and 

supervisory authority for the offices of the Chief Information Officer, Chief 

Human Capital Officer, Chief Procurement Officer, and Chief 

Administrative Officer (see fig. 1).63

The Paperwork Reduction Act, as amended, requires the Chief 

Information Officer to report directly to the agency head, which helps to 

ensure high visibility and support for far-reaching information 

management initiatives.64 Under HUD’s current structure, the Chief 

Information Officer reports to the Chief Operations Officer rather than the 

agency head. HUD officials said that the Chief Information Officer met 

regularly with the Deputy Secretary and had the ability to discuss any 

issues that might arise. Additionally, officials in HUD’s Office of General 

Counsel said that because the Secretary delegated full concurrent 

authority to the Deputy Secretary, meetings between the Deputy 

Secretary and the Chief Information Officer satisfied the statutory 

requirement for a direct reporting relationship between the Chief 

Information Officer and the agency head.65

 62HUD had previously created a Chief Operating Officer position in 2009 to provide 

leadership for HUD’s management functions after acknowledging that its 

compartmentalized organizational structure and lack of integration had resulted in turf 

struggles instead of collaborative decision making. However, GPRAMA effectively 

abolished the position at HUD by designating the deputy head of each agency (in HUD’s 

case, the Deputy Secretary) as the Chief Operating Officer (Pub. L. No. 111–352, § 8, 124 

Stat. 3878 (2011)) (codified at 31 U.S.C. § 1123).

63Delegation of Authority to the Chief Operations Officer, 80 Fed. Reg. 26,946 (May 11, 

2015).

6444 U.S.C. § 3506(a)(2)(A).

65Delegation of Concurrent Authority to the Deputy Secretary, 77 Fed. Reg. 66,864 (Nov. 

7, 2012).

Changes in Reporting 

Relationships Could Limit 

Direct Communication
Page 36 GAO-16-497 HUD Management

We have previously noted that some degree of flexibility in Chief 

Information Officers’ reporting relationships may be appropriate as long 

as their effectiveness is not impeded.66 In both 2004 and 2011, we found 

that a number of agencies did not comply with the statutory provision 

specifying this reporting relationship and that current and former Chief 

Information Officers had mixed views on whether a direct reporting 

relationship with the agency head was important.67 In 2004, we suggested 

that Congress consider the results of our review in assessing whether the 

existing statutory requirements concerning the responsibilities of the Chief 

Information Officer and reporting to the agency heads reflected the most 

effective assignment of information and technology management 

responsibilities and reporting relationships. Congress has yet to act on 

this matter. In 2011, we recommended that OMB issue additional 

guidance to agencies requiring that Chief Information Officers’ authorities 

and responsibilities, as defined by law and by OMB, be fully implemented, 

taking into account the issues raised in our report.

OMB generally agreed with our recommendation and issued guidance in 

June 2015 that provided a “common baseline” (framework) to implement 

roles and responsibilities of Chief Information Officers and other senior 

agency officials involved in IT management.68 The guidance recognized 

that some agencies had implemented alternative reporting arrangements 

to the one specified in the Paperwork Reduction Act, as amended. But it 

also stressed the importance of Chief Information Officers having direct 

access to the agency head (which OMB defined as the Secretary or the 

Deputy Secretary acting on the Secretary’s behalf) in those cases. 

Furthermore, federal internal control standards state that management 

should internally communicate the necessary quality information to 

achieve the entity’s objectives.69 Establishing reporting lines can help 

ensure that this internal communication occurs. However, the baseline

 66GAO, Federal Chief Information Officers: Opportunities Exist to Improve Role in 

Information Technology Management, GAO-11-634 (Washington, D.C.: Sept. 15, 2011).

67GAO, Federal Chief Information Officers: Responsibilities, Reporting Relationships, 

Tenure, and Challenges, GAO-04-823 (Washington, D.C.: July 21, 2004) and 

GAO-11-634.

68Office of Management and Budget, Management and Oversight of Federal Information 

Technology, OMB Memorandum M-15-14 (Washington, D.C.: June 10, 2015).

69GAO-14-704G.
Page 37 GAO-16-497 HUD Management

assessment HUD prepared in response to the guidance did not address 

whether HUD’s Chief Information Officer had direct access to the agency 

head.70 Also, HUD has not formalized lines of communication to help 

ensure the Chief Information Officer’s continued access to the agency 

head, consistent with OMB guidance and internal control standards.

Additionally, under the Services Acquisition Reform Act of 2003, the 

agency’s designated Senior Procurement Executive is to report directly to 

the designated Chief Acquisition Officer without intervening authority.71 At 

HUD, the Senior Procurement Executive is the Chief Procurement Officer, 

and the Deputy Secretary serves as the Chief Acquisition Officer.72

Congress established these positions with a specific reporting relationship 

to help ensure that the agency’s management of acquisition activities 

achieved its mission. Under the governance structure HUD adopted in 

May 2015, the Chief Procurement Officer reports to the Chief Operations 

Officer rather than the Deputy Secretary. According to HUD, the Chief 

Operations Officer is a member of the Office of the Deputy Secretary, and 

therefore reporting to the Chief Operations Officer is functionally the 

equivalent of reporting to the Deputy Secretary. HUD officials also said 

that the Chief Procurement Officer met regularly with the Deputy 

Secretary and had the ability to discuss any issues that might arise.

HUD’s annual reviews of its acquisition function provide an opportunity to 

examine the lines of communication between the Chief Procurement 

Officer and the Deputy Secretary under HUD’s revised governance 

 70The OMB memorandum required agencies to conduct a self-assessment against the 

common baseline and develop a plan for ensuring implementation of all common baseline 

responsibilities.

7141 U.S.C. § 1702. The Services Acquisition Reform Act of 2003 requires 16 federal 

civilian agencies, including HUD, to establish the position of a Chief Acquisition Officer to 

advise and assist agency leadership to help ensure that the management of its acquisition 

activities helps achieve the agency’s mission. The act requires Chief Acquisition Officers 

to be noncareer employees; have acquisition management as their primary duty; and have 

the agency’s Senior Procurement Executive report directly to them without intervening 

authority, or serve as both the Chief Acquisition Officer and the Senior Procurement 

Executive. See appendix VIII for additional information on organizational alignment and

leadership in HUD’s acquisition function.

72Designations of Chief Acquisition Officer and Senior Procurement Executive, 78 Fed. 

Reg. 46,240 (July 30, 2013).
Page 38 GAO-16-497 HUD Management

structure.73 In September 2005, we issued a framework to enable highlevel, qualitative assessments of the strengths and weaknesses of the 

acquisition function at federal agencies.74 In May 2008, OMB issued 

guidelines based on our framework that provide a template for agencies 

to use in conducting required annual reviews of their acquisition functions, 

including an assessment of organizational alignment and leadership.75

The guidelines state that the assessment should consider recent changes 

within the agency that affect the acquisition function and require 

adaptation. As of May 2016, HUD had not yet completed the annual 

review covering fiscal year 2015, the year in which the Chief Operations 

Officer position was created. HUD officials said they expected to finish the 

review later in 2016 and that they planned to consider the recent changes 

in reporting relationships when assessing organizational alignment and 

leadership issues.

HUD uses a risk-based approach for overseeing its programs but has not 

formally designated entities to lead fraud risk management efforts. In 

addition, while HUD has adopted several practices to enhance its 

program evaluations, it has not established formal policies to help ensure 

the quality and consistency of its program evaluations.

 73As previously discussed, federal internal control standards state that management 

should internally communicate the necessary quality information to achieve the entity’s 

objectives. Establishing reporting lines can help ensure that this internal communication 

occurs. See GAO-14-704G.

74GAO, Framework for Assessing the Acquisition Function at Federal Agencies, 

GAO-05-218G (Washington, D.C.: Sept. 1, 2005).

75Office of Management and Budget, Office of Federal Procurement Policy, Conducting 

Acquisition Assessments under OMB Circular A-123 (Washington, D.C.: May 21, 2008).

HUD Has Not 

Formalized Key 

Practices to Address 

Program Oversight 

and Evaluation 

Challenges
Page 39 GAO-16-497 HUD Management

HUD has adopted a risk-based approach to overseeing and monitoring its 

programs that helps address oversight challenges and identify potential 

fraud. HUD’s oversight challenges include the number and variety of 

intermediaries it uses to implement programs and the complexity, scale, 

and discretionary nature of its programs. HUD program offices use tens of 

thousands of intermediaries to help administer programs, ranging from 

state and local government agencies to lenders to nonprofit 

organizations, as shown in figure 4. HUD programs are also often 

complex—for instance, the tenant income calculation for the Office of 

Public and Indian Housing’s (PIH) rental assistance programs includes 

dozens of mandated income exclusions and deductions. Although HUD 

has developed tools to assist PHAs with the calculations, numerous 

errors occur each year that result in improper payments totaling hundreds 

of millions of dollars. And HUD programs can be large. HUD manages a 

nearly $1.3 trillion portfolio of insured mortgages through FHA’s mortgage 

insurance programs, which insure private lenders against losses on 

millions of mortgages. Further, some HUD programs give intermediaries 

discretion in how they spend their funds. For example, CPD manages 

CDBG, which allows states and communities wide discretion in how they 

distribute the funds for eligible projects. The range of eligible activities 

that can be funded makes oversight difficult. Combined with finite 

resources for monitoring activities, these challenges strain HUD’s ability 

to effectively oversee its programs.

Figure 4: Department of Housing and Urban Development Intermediaries

In addition, HUD officials identified various examples of major fraud risks 

facing their program areas. For example, CPD officials cited the risk of 

HUD Uses a Risk-Based 

Approach to Oversight but 

Has Not Formally 

Designated Entities to 

Manage Fraud Risk
Page 40 GAO-16-497 HUD Management

theft and embezzlement, ineligible beneficiaries, and payment of 

questionable costs within CPD grant programs. PIH officials noted the 

risks of PHA officials diverting contracts to entities in which they had a 

personal interest and of PHA staff diverting housing assistance payments 

to personal accounts, among other things. FHA officials indicated that 

risks within its mortgage insurance programs included fraudulent property 

appraisals and gifts from prohibited sources to cover borrowers’ down 

payments.76

HUD’s risk-based approach to monitoring its programs is based on 

agency-wide policies that define monitoring responsibilities and provide 

guidance on the risk assessment methodology.77 The Departmental 

Management Control Program Handbook provides an overview of riskbased monitoring, with the overall objective of allocating a larger share of 

monitoring resources to those program functions that pose the highest 

risk and are the most susceptible to fraud, waste, and mismanagement. 

The major steps for implementing risk-based monitoring include

• identifying program missions, goals, risks, and monitoring objectives 

to determine what needs to be monitored;

• developing methods to rate participants, programs, and functions 

based on risk, including assessing the agency’s exposure to fraud, 

waste, and mismanagement;

• developing and communicating strategies and plans for oversight of 

identified risks;

 76According to HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook, in 

order for funds to be considered a gift that is an acceptable source of borrower funds for 

an FHA-insured mortgage, there must be no expected or implied repayment of the funds 

to the donor by the borrower. In addition, the gift donor may not be a person or entity with 

an interest in the sale of the property, such as the seller, the real estate agent or broker, 

the builder, or an associated entity.

77To meet the requirements of the Federal Managers’ Financial Integrity Act of 1982 and 

OMB circulars, HUD established a system of management controls and set forth these 

policies in Handbook 1840.1, Departmental Management Control Program. The purpose 

of the Management Control Program is to protect against fraud, waste, abuse, and 

mismanagement in HUD’s programs, among other things. Chapter 2 provides guidance 

for defining risk and determining how susceptible HUD programs are to fraud, waste, 

abuse, and mismanagement.
Page 41 GAO-16-497 HUD Management

• selecting programs or program participants for monitoring within 

available resources, based on monitoring objectives and risk profiles 

established by program areas;

• identifying instances that require follow-up corrective actions; and

• documenting the process and recording the rationale for choosing 

participants.

The HUD Monitoring Desk Guide augments the Departmental 

Management Control Handbook. In an effort to bring consistency to all 

HUD monitoring processes, it describes the process for conducting risk 

assessments and developing a local monitoring strategy.

HUD’s program offices have created specific risk-based monitoring 

strategies for their respective programs. In addition, HUD officials said 

that each office had requirements for officials and intermediaries to report 

fraudulent activity and help manage fraud risks within the execution of 

their existing program activities. For example:

• CPD developed a quantitative approach for rating and ranking 

grantees and their programs in order to identify those grantees that 

posed the greatest risk to the integrity of CPD’s programs and better 

ensure that the greatest share of limited monitoring resources were 

used to manage that risk. CPD issues a biennial notice outlining the 

risk analyses to be conducted for each of the next 2 years, providing 

field staff with a consistent methodology and procedures to apply 

across grantees.78 Specifically, CPD evaluators are to rate and rank 

grantees by four risk factors—(1) grant management, (2) financial 

management, (3) services and satisfaction, and (4) physical condition 

of properties—and document the results in CPD’s grants 

management system. Management representatives conduct quality 

control reviews and certify the results, which provide the basis for 

developing the office work plan and individual grantee monitoring 

strategies. These strategies include identifying which grantees and 

 78The notice covering fiscal years 2015 and 2016 contained an updated methodology 

developed by CPD’s grants management process working group. The revisions were 

designed to reduce the number of subfactors evaluated, minimize definitional differences 

among the programs, and use, to the greatest extent feasible, subfactors that could be 

populated using data from existing IT systems available to CPD.
Page 42 GAO-16-497 HUD Management

specific programs are to be monitored and the method and type of 

monitoring (on-site or remote, in-depth or limited) that is to be used.79

• PIH established a Risk Division within the Real Estate Assessment 

Center in 2014 to manage risk for the office, according to HUD 

officials. The division’s responsibilities include coordinating annual risk 

assessments of PIH offices, performing targeted risk assessments, 

and exploring teaming with OIG to quantify risk associated with 

programs susceptible to fraud and abuse. In 2013, the Real Estate 

Assessment Center developed a new national risk assessment tool 

for designating the risk level of PHAs in management, financial, 

physical, and governance categories. PIH’s Office of Field Operations, 

whose 650 staff monitor about 4,000 PHAs, performs these risk 

assessments quarterly using a standard protocol that employs 

structured qualitative and quantitative analysis of the entities’ physical 

and financial condition, management capacity, and governance.80 The

assessments help PIH target its oversight and monitoring efforts to 

those PHAs that are most at risk of becoming “troubled” agencies.81

 79A 2009 study undertaken by PD&R concluded that the risk analysis process for CDBG 

and HOME accurately identified risk. See Department of Housing and Urban 

Development, Office of Policy Development and Research, Risk-Based Monitoring of CPD 

Formula Grants (December 2009). However, in a report on the Neighborhood Stabilization 

Program, OIG found that CPD did not ensure that its process for selecting grantees for 

monitoring identified those grantees and activities that represented the greatest risk to the 

program for fraud and waste, among other things. As a result, CPD did not ensure that it 

identified those grantees with developers that may have incurred questionable project 

costs. See Department of Housing and Urban Development, Office of Inspector General, 

CPD Did Not Monitor NSP Grantees’ Payments of Developer Fees to Developers, Audit 

Report No. 2014-LA-0002 (Los Angeles, Calif.: Mar. 10, 2014).

80To develop the risk assessment protocol, a team comprised of officials from three HUD 

regions reviewed prior risk assessments as well as national and regional priorities. 

Common risks from prior risk assessments were identified and incorporated into the 

current risk assessment. In addition, brainstorming sessions with agency groups, including 

a national risk team, local subject-matter experts, and program staff, identified additional 

areas of risk.

81PHAs that perform poorly on either of two other HUD assessments—the Public Housing 

Assessment System and the Section Eight Management Assessment Program—may be 

designated as “troubled,” triggering enhanced oversight from HUD. The Public Housing 

Assessment System evaluates the overall condition of PHAs and measures their 

performance in several areas, including physical condition, financial condition, and 

management operations. The Section Eight Management Assessment Program measures 

the performance of PHAs that administer the voucher program. The national risk 

assessment tool combines data from these systems with other information PIH collects. 
Page 43 GAO-16-497 HUD Management

The Office of Field Operations also issues an annual memorandum 

outlining monitoring priorities for the year. PIH officials said that they 

considered fraud risks during the annual enterprise risk management 

assessments with each of the PIH offices. In addition, in the process 

of reviewing PHA financial statements, the officials stated that their 

systems incorporate checks that may alert officials to financial fraud, 

errors, or anomalies. The officials also noted that the national risk 

assessment tool incorporates metrics for PHAs’ costs, liquidity, and 

cash trends that can help staff identify potential fraud risks.

• FHA monitors lenders and appraisers (among others) for compliance 

with mortgage underwriting and collateral requirements. In prior work, 

we found that FHA made changes in 2010 and 2011 to several 

processes intended to help ensure that lenders and appraisers follow 

its policies and procedures. For example, FHA enhanced the criteria it 

uses to select loans for post-endorsement technical reviews.82

Specifically, it considered high-risk loan or borrower characteristics, 

such as certain types of refinanced loans and loans to borrowers with 

low credit scores. In addition, FHA increased the number of risk 

factors used to select lenders and appraisers for review.83 For 

lenders, the risk factors include loan volume, product type, process 

(direct endorsement or lender insurance), performance, and peer 

group performance. When targeting appraisers for review, FHA has 

considered factors such as the appraiser’s volume and past 

sanctions, as well as the type of property being appraised. 

In 2015 FHA refined its risk-based monitoring processes by 

developing a Single Family Loan Quality Assessment Methodology to 

be used for loan file reviews. The new methodology aims to capture 

greater detail on the fundamental issues that affect a loan’s quality so 

that defects are identified and analyzed based on their severity. In 

addition, FHA’s Office of Risk Management and Regulatory Affairs 

works collaboratively with other offices and divisions to monitor risks 

including fraud risks, according to officials. HUD officials said that 

quality assurance divisions in FHA field offices conduct loan 

 82Post-endorsement technical reviews are a primary lender oversight function that 

evaluate the underwriting quality of a selection of individual loans already insured by FHA. 

Reviewers assess the quality of the mortgage credit evaluation of the borrower and the 

valuation of the mortgaged property.

83GAO, Federal Housing Administration: Improvements Needed in Risk Assessment and 

Human Capital Management, GAO-12-15 (Washington, D.C.: Nov. 7, 2011).
Page 44 GAO-16-497 HUD Management

monitoring reviews in an effort to discover deficiencies related to 

origination, underwriting, or servicing policy requirements. The Credit 

Watch termination enforcement tool sanctions lenders that 

demonstrate potentially abusive lending practices.84

• FHEO officials establish monitoring levels for Fair Housing Initiatives 

Program grants each fiscal year, taking into account the availability of 

FHEO resources. The criteria include factors such as the grant award 

amount, financial and project management, and technical expertise. 

Officials also conduct an annual risk assessment as another criterion 

for determining whether to conduct remote reviews or onsite 

monitoring. During these assessments, grantees are evaluated on 12 

risk profile factors, including whether the grantee has open audit 

findings, persistent performance problems, or existing financial 

problems, among others. The Award and Administration Guide (found 

in the guidance for the program’s application and award policies and 

procedures) governs these grant monitoring strategies.

Despite the efforts of HUD program offices to address various risks 

through monitoring, we and OIG have identified a number of HUD 

oversight challenges and weaknesses in recent years, as shown in the 

following examples:

• In 2012, we highlighted concerns that we and others had about HUD’s 

capacity to effectively oversee PHAs participating in the Moving to 

Work (MTW) demonstration program, which provides participating 

PHAs with the flexibility to design and test innovative strategies for 

providing and administering housing assistance.85 In light of 

Congress’s recent decision to expand MTW by 100 PHAs, addressing 

these concerns is even more critical.

 84Under Credit Watch, FHA considers terminating a lender’s authority to originate loans in 

a specific geographic area if a lender’s branch office default and claim rates exceed the 

average local HUD field office default and claim rates by 200 percent and also exceed the 

national average. If a lender has more than one branch office facing a Credit Watch 

termination action in a particular period, FHA can decide to evaluate the overall 

performance of the lender in the field office jurisdiction and, if it is unacceptable, terminate 

a lender’s ability to originate and underwrite loans in the entire jurisdiction.

85GAO, Moving to Work Demonstration: Opportunities Exist to Improve Information and 

Monitoring, GAO-12-490 (Washington, D.C.: Apr. 19, 2012).
Page 45 GAO-16-497 HUD Management

• In 2013, we found that HUD did not routinely determine and report on 

grantee compliance with statutory limits on the use of CDBG funds for 

administrative purposes.86

• In 2014, OIG concluded that HUD’s process for monitoring PHAs’

projects for demolishing or otherwise disposing of public housing units 

was not adequate to ensure that data on public housing inventory 

were accurate.87

• In 2015, OIG found that HUD’s Office of Single Family Housing did 

not have effective controls to prevent borrower violations of HUD’s 

reverse mortgage program residency requirements that involved 

concurrently receiving HUD rental assistance.88

Furthermore, instances of fraud, waste, and abuse that have been 

uncovered in recent years have highlighted oversight weaknesses. For 

example, investigations into FHA-insured loans identified a high 

 86GAO, Community Development Block Grants: Reporting on Compliance with Limit on 

Funds Used for Administration Can Be Improved, GAO-13-247 (Washington, D.C.: Mar. 

21, 2013). We recommended that HUD develop a process for generating annual reports 

on compliance across the program, including making any requisite changes to its IT 

system to better ensure that the agency had complete and analyzable data to support 

such reporting. HUD neither agreed nor disagreed with the recommendation and had not 

implemented it as of May 2016. HUD officials said they that lacked funding to upgrade 

their IT system to produce these reports.

87Department of Housing and Urban Development, Office of Inspector General, HUD’s 

Monitoring of Public Housing Demolition and Disposition Projects Was Not Always 

Adequate to Ensure Data in IMS/PIC Was Accurate, Audit Report No. 2014-NY-0002 

(New York, N.Y.: June 11, 2014). The report pointed to a lack of standardized field office 

procedures, inadequate guidance to PHA officials, and HUD’s failure to correct PHAreported inventory errors in a timely manner. As a result, 8 of the 14 PHAs reviewed 

received funding to which they were not entitled. OIG made eight recommendations to 

HUD to address the issues identified. OIG indicated that all of these recommendations 

were implemented in 2015.

88Department of Housing and Urban Development, Office of Inspector General, HUD 

Policies Did Not Always Ensure That HECM Borrowers Complied With Residency 

Requirements, Audit Report No. 2015-PH-0004 (Philadelphia, Pa.: Aug. 21, 2015). A 

reverse mortgage is a loan that converts the borrower’s home equity into payments from a 

lender and typically does not require any repayments as long as the borrower continues to 

live in the home. Available to homeowners aged 62 and older, most of these loans are 

made under HUD’s Home Equity Conversion Mortgage program. HUD insures the 

mortgages, which are made by private lenders, and oversees agencies that provide 

mandatory counseling to prospective borrowers. OIG made three recommendations to 

HUD to address the issues identified. OIG indicated that HUD’s target for completing 

actions to implement the recommendations was December 2016.
Page 46 GAO-16-497 HUD Management

percentage of loans that should not have been insured because of 

underwriting deficiencies. In fiscal years 2012 through 2015, the federal 

government reached civil settlements regarding FHA loan underwriting 

totaling $3.5 billion for alleged violations of the False Claims Act and 

other statutes. In addition, OIG investigations recovered millions of dollars 

of fraudulent payments, including instances in which a CDBG contractor 

obtained reimbursement for noncovered expenses and multifamily 

property owners used government funds for personal expenses. OIG also 

found weaknesses in HUD’s rental housing assistance program 

monitoring—for example, PHAs that accumulated excess funds from 

MTW and improper payments that made PIH programs susceptible to 

fraud, waste, and abuse.89

HUD has not designated an entity or entities to oversee fraud risk 

management activities—a leading practice for managing fraud risks. Our 

Framework for Managing Fraud Risks in Federal Programs identified 

creating a structure with a dedicated entity or entities to lead fraud risk 

management activities as a recommended leading practice.90 The 

Framework recommends that the antifraud entity

• understand the agency and its operations, as well as the fraud risks 

and controls throughout the agency;

• have defined responsibilities and the necessary authority across the 

agency;

• have a direct reporting line to senior-level managers within the 

agency; and

• be located within the agency and not in the agency’s OIG, so the latter 

can retain its independence to serve its oversight role.

The framework provides managers with flexibility in deciding whether to 

carry out this and other aspects of fraud risk management at the program 

 89Department of Housing and Urban Development, Office of Inspector General, Audit 

Report No. 2015-FO-0002. Improper payments have consistently been a governmentwide issue despite efforts to reduce them and identify root causes including fraud. While 

any fraud involving a federal payment is considered an improper payment, not every 

improper payment constitutes fraud. For additional information on HUD’s efforts to reduce 

improper payments in the context of financial management, see appendix VI.

90GAO-15-593SP. 
Page 47 GAO-16-497 HUD Management

or agency level. Although entities across the agency perform a number of 

fraud risk management activities (as previously noted), no divisions or 

offices have been formally tasked with leading fraud risk management 

efforts within the program offices. For example, PIH’s Risk Division has a 

number of responsibilities that are broadly consistent with an entity tasked 

with managing fraud risks, but its charter and standard operating 

procedures do not indicate that it has a formal role in managing fraud 

risks.

In addition, HUD has not designated a fraud risk management entity at 

the agency level. For instance, HUD has not yet established a formal 

enterprise risk management office or function to lead fraud risk 

management activities agency-wide.91 Other offices within the agency 

with explicit responsibilities related to addressing fraud and fraud risks 

have also not been formally tasked with leading fraud risk management 

activities. These offices include OCFO, which is responsible for providing 

guidance to program offices on front-end risk assessments designed to 

identify and analyze risks, including the potential for fraud, waste, abuse, 

and mismanagement. Also included is the Departmental Enforcement 

Center, which focuses on eliminating fraud, waste, and abuse by program 

recipients who are in violation of statutes or other program requirements. 

HUD has indicated that it does not have teams or officials formally 

dedicated to managing fraud risks because it seeks to manage these 

risks within the execution of existing program activities. Without 

identifying dedicated teams or entities to lead antifraud initiatives, HUD 

may not be designing and overseeing fraud risk management activities as 

effectively as possible.

 91According to OMB, enterprise risk management is an agency-wide approach to 

addressing the full spectrum of an organization’s risks by understanding the combined 

effects of risks as an interrelated portfolio, rather than only addressing risks within silos. In 

a February 2016 report, OIG noted that establishing enterprise risk management at HUD 

would improve controls over critical risks, support allocation of resources, and reduce 

financial management problems and failures. See Department of Housing and Urban 

Development, Office of Inspector General, Risk Based Enforcement Could Improve 

Program Effectiveness, 2014-OE-0002 (Washington, D.C.: Feb. 12, 2016).
Page 48 GAO-16-497 HUD Management

HUD has implemented a number of practices to enhance program 

evaluation within the agency.92 These include developing a strategic plan 

for its research projects and establishing research partnerships, as 

follows.

• Evaluation plan. According to American Evaluation Association 

(AEA) guidance, each federal agency should require its major 

programs to prepare evaluation plans that, among other things, take 

into account ongoing program development and management and are 

developed in consultation with diverse program stakeholders.93 In 

addition, we, along with OMB and AEA, have noted that developing 

an evaluation agenda is important for helping ensure that an agency’s 

often scarce research and evaluation resources are targeted to the 

most important issues and can shape budget and policy priorities and 

management practices.94 HUD developed such a document—the 

Research Roadmap—to guide its evaluation and research efforts.95

Published in July 2013 by PD&R, the Research Roadmap is a 5-year 

plan that details priority research projects to be funded and initiated 

for fiscal years 2014 through 2018. These projects, which cover 

multiple programs, are organized into four categories that align with 

the programmatic goals established in HUD’s agency-wide strategic 

plan. PD&R identified the projects through consultation and 

 92Program evaluations are systematic studies that use research methods to address 

specific questions about program performance. Program evaluation typically assesses the 

achievement of a program’s objectives and other aspects of performance in the context in 

which the program operates. In particular, evaluations can be designed to isolate the 

causal effects of programs from other external economic or environmental conditions in 

order to assess a program’s effectiveness. See GAO, Program Evaluation: Some 

Agencies Reported that Networking, Hiring, and Involving Program Staff Help Build 

Capacity, GAO-15-25 (Washington, D.C.: Nov. 13, 2014). 

93American Evaluation Association, An Evaluation Roadmap. 

94GAO, Program Evaluation: Experienced Agencies Follow a Similar Model for Prioritizing 

Research, GAO-11-176 (Washington, D.C.: Jan. 14, 2011); Office of Management and 

Budget, Evaluating Programs for Efficacy and Cost-Efficiency, M-10-32 (Washington, 

D.C.: July 29, 2010); American Evaluation Association, An Evaluation Roadmap.

95HUD’s Research Roadmap was developed in response to a 2008 evaluation of the 

agency’s program evaluation function by the National Research Council. Among other 

things, the National Research Council found that HUD’s agenda-setting process for 

research had become too insular and focused on the short term. See National Research 

Council, Rebuilding the Research Capacity at HUD (Washington, D.C.: The National 

Academies Press, 2008). 

HUD Has Taken Steps to

Enhance Program 

Evaluation but Lacks 

Policies to Help Ensure 

Evaluation Quality and 

Consistency
Page 49 GAO-16-497 HUD Management

deliberation with HUD senior leadership and staff, stakeholder 

organizations, and industry partners.96 PD&R officials said that they 

were working on a new Research Roadmap and planned to complete 

a comprehensive revision of it every 3 to 5 years.

• Research partnerships. According to AEA guidance, federal 

agencies should ensure that the required diversity of disciplines,

including the necessary expertise in the subject area being evaluated, 

is appropriately represented in internal and independent evaluation 

teams.97 HUD created the Research Partnership Initiative to help 

provide greater flexibility in addressing important policy questions and 

to better use external expertise in evaluating local innovations and 

program effectiveness.98 Through this initiative, HUD enters into 

noncompetitive cooperative agreements with partners to complete 

research projects that help inform its policies and programs. These 

partnerships also create leverage for federal investments by requiring 

a 50 percent cost share from philanthropic organizations, other 

governmental agencies, or a combination of these entities.

• Research dissemination. AEA guidance states that evaluations of 

promising and effective program practices should be systematically 

and broadly disseminated to potential beneficiaries and to potential 

evaluation users.99 Evaluation data and methods should also (to the 

extent feasible and with sufficient privacy protections) be made 

available to professionals and to the public to enable secondary 

analysis and assure transparency. PD&R has taken steps to expand 

its outreach and dissemination efforts.100 For example, during fiscal 

years 2013 and 2014 PD&R substantially redesigned the web pages 

 96For example, PD&R met with members of Congress, officials from GAO and OMB, 

federal sister agencies, and numerous research, practitioner, and advocacy organizations 

to gather relevant feedback. PD&R received over 950 comments from stakeholders during 

the development process. 

97American Evaluation Association, An Evaluation Roadmap.

98HUD created this initiative under the authority of the Consolidated and Further 

Continuing Appropriations Act of 2012. Pub. L. No. 112-55, 125 Stat. 552, 690 (2011).

99American Evaluation Association, An Evaluation Roadmap.

100PD&R’s research and communication are transmitted through the HUDUser.org 

website. According to PD&R, HUDUser.org is updated regularly with the latest publication 

and data releases. PD&R also indicated that it uses social media, expert panels, 

periodicals, and awards to meet its outreach and dissemination goals. 
Page 50 GAO-16-497 HUD Management

that disseminate one of HUD’s major surveys and reports, according 

to PD&R. In addition, PD&R noted that it released two new mobile 

applications and expanded its social media presence. PD&R also 

indicated that it coordinated with housing, planning, and community 

development bloggers to leverage content from its website on external 

blogs.

HUD has established policies to guide some of its evaluation processes 

but lacks documented policies to help ensure the quality and consistency 

of its program evaluations.101 According to AEA guidance, each federal 

agency should publish policies and procedures and adopt quality 

standards to guide evaluations within its purview.102 Such policies and 

procedures should identify, among other things, the criteria and 

administrative steps for

• selecting evaluation approaches and methods to use;

• consulting subject-matter experts;

• ensuring evaluation product quality;

• ensuring independence of the evaluation function;

• using an appropriate mix of staff and outside consultants and 

contractors;

• focusing evaluation designs and contracts appropriately; and

• promoting the professional development of evaluation staff.

Further, federal internal control standards require agencies to design 

control activities to achieve objectives and respond to risks. Such 

activities may include, among others, clearly documenting internal 

controls in management directives, establishing administrative policies, 

and maintaining operating manuals that are readily available for 

examination.103

 101For example, PD&R’s guide for report publication provides HUD staff and contractors 

with information on publication standards and guidelines. The guide goes through a typical 

report section by section, providing explanations and tips. See Department of Housing and 

Urban Development, Office of Policy Development and Research, Research Utilization 

Division, Guidelines for Preparing a Report for Publication (May 2014). 

102American Evaluation Association, An Evaluation Roadmap.

103GAO-14-704G.
Page 51 GAO-16-497 HUD Management

HUD officials stated that they ensured the quality of program evaluations 

through a process that included convening expert panels. According to 

PD&R officials, the office first convenes experts as a precursor to scoping 

an evaluation or research project, an activity that is helpful in raising 

questions about the work to be completed. PD&R officials said expert 

panels are also formed after the work has been scoped to help review the 

design of the study and the data collection plans. The panels consist of 

groups of practitioners who have experience working on housing issues 

and are selected by PD&R, at times with the assistance of program 

offices, or based on suggestions by the contractor conducting the work. 

PD&R officials also stated that they captured some evaluation 

requirements in the statements of work provided to contractors.

However, HUD has not developed agency-wide, written policies for its 

program evaluations, and the criteria HUD uses to select the expert 

panels and review the quality of program evaluations are not 

documented. HUD officials told us they had not considered developing an 

evaluation policy because the evaluation principles they used were 

ingrained in PD&R’s culture. However, organizational cultures can 

change as long-term employees leave or retire and new employees come 

in. Without documented program evaluation policies, PD&R lacks 

assurance that current practices to ensure quality and consistency in 

evaluations will be continued. In addition, PD&R staff may not have clear 

direction on how to ensure evaluation quality or how to determine which 

evaluation approaches and methods to use. Further, not having a single 

consolidated document increases the potential for inconsistent application 

of policies and requirements.

In addition to lacking documented evaluation policies, HUD faces other 

evaluation challenges, including challenges related to collecting and 

analyzing some program data. According to HUD officials, for example, 

the frequency of obtaining and analyzing data sets is a challenge in 

achieving HUD’s strategic goals. This challenge is particularly apparent in 

homelessness efforts, for which HUD has limited data outside the annual 

point-in-time count. Our past reports have also found that HUD has not 

consistently collected the data needed to track progress toward its goals 

and evaluate the effect of its programs and has also missed opportunities 

to better analyze program data it does collect, as outlined in the following 

examples. To help address some of its data challenges, HUD has taken 

steps to begin implementing our recommendations and identify and 

collect data needed to assess some of its programs.
Page 52 GAO-16-497 HUD Management

• Block grant programs. In a May 2012 report, we found that HUD 

faced several challenges in evaluating the effect of the CDBG and 

HOME programs.104 First, HUD officials stated that the mix of eligible 

activities that grantees implemented could vary greatly. Second, 

neither program requires grantees to target the use of funds in a 

specific geographic area. According to HUD officials and researchers 

we spoke with for that report, the diversity of activities and lack of 

statutory targeting requirements made it difficult to collect information 

to assess the overall effect of the programs. Further, officials noted 

that to study neighborhood effects, an evaluation would have to 

compare neighborhoods where program investments had been made 

with those without such investments.105 We spoke with HUD officials 

in August 2015 to determine whether these evaluation challenges 

continued to exist. According to HUD officials, the mix of eligible 

activities that grantees implement continues to present a challenge in 

evaluating CDBG and HOME as a whole.

• Moving to Work (MTW) demonstration. In an April 2012 report, we 

found that HUD could take additional steps to assess and understand 

outcomes for MTW.106 We identified several challenges that hindered 

efforts to evaluate the program, including the way it was initially 

designed and the resulting lack of standard performance data as well 

as the lack of performance indicators for the MTW program as a 

whole. Federal internal control standards state that good guidance is 

a key component of a strong internal control framework, require the 

establishment of performance indicators, and emphasize the need for 

federal agencies to have control activities in place to help ensure that 

 104GAO, HUD Has Identified Performance Measures for Its Block Grant Programs, but 

Information on Impact is Limited, GAO-12-575R (Washington, D.C.: May 15, 2012). We 

did not make any recommendations in this report.

105Our previous work has also identified difficulties in evaluating the impact of block grant 

programs that do not represent a uniform package of activities or desired outcomes 

across the country, as well as the common problem of attributing differences in 

communities’ outcomes to the effect of a program in the absence of controls for (or without 

being able to rule out) other explanations. See GAO, Designing Evaluations: 2012 

Revision (Supersedes PEMD-10.1.4), GAO-12-208G (Washington, D.C.: Jan. 31, 2012).

106GAO-12-490. As previously noted, MTW is a demonstration program intended to give 

participating public housing agencies the flexibility to design and test innovative strategies 

for providing and administering housing assistance.
Page 53 GAO-16-497 HUD Management

program participants report information accurately.107 We 

recommended, among other things, that HUD (1) improve its 

guidance to MTW agencies on providing performance information in 

their annual reports by requiring that such information be quantifiable 

and outcome-oriented to the extent possible; (2) develop and 

implement a plan for quantitatively assessing the effectiveness of 

similar activities and the program as a whole; (3) establish 

performance indicators for the MTW program as whole; and (4) 

implement control activities designed to verify the accuracy of a 

sample of the performance information that MTW agencies self-report. 

HUD generally or in part agreed with three of these recommendations 

but disagreed with the recommendation that it create overall 

performance indicators. In May 2013, HUD revised its reporting 

requirements for public housing agencies participating in MTW. HUD 

now requires them to report quantifiable and outcome-oriented 

information on MTW activities. HUD has also developed standard 

metrics for the MTW program that may allow HUD to calculate 

quantitative results and assess whether the result for the program as 

a whole has been positive, neutral, or negative. These and other 

actions fully addressed the recommendations.

• Foreclosure mitigation programs. In a June 2012 report, we found 

that FHA did not (1) collect key information on borrowers, such as 

borrower income and expenses at the time of foreclosure mitigation 

action or (2) analyze the performance of loss mitigation activities by 

loan and borrower characteristics.108 For this reason, FHA had a 

limited understanding of the ultimate costs of its loss mitigation 

programs. As a result, its loss mitigation activities may not have been 

effectively balancing the trade-offs between assisting borrowers to 

keep their homes and helping ensure the lowest cost to taxpayers. 

 107GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 

(Washington, D.C.: November 1999). These internal control standards were in effect at 

the time of our report. Revised internal control standards went into effect October 1, 2015. 

See GAO-14-704G.

108GAO, Foreclosure Mitigation: Agencies Could Improve Effectiveness of Federal Efforts 

with Additional Data Collection and Analysis, GAO-12-296 (Washington, D.C.: June 28, 

2012). FHA’s loss mitigation activities are a prescribed set of options that allow lenders to 

effectively work with delinquent FHA borrowers to find solutions to avoid foreclosure. 

Some of these options include long-term special forbearance, mortgage modification, and 

partial claim (an option exclusive to HUD that allows the agency to make a no-interest 

loan to a borrower in an amount sufficient to reinstate the mortgage).
Page 54 GAO-16-497 HUD Management

According to OMB guidance, loss mitigation actions should be used 

only if the borrower is likely to repay and the actions are less 

expensive than the cost of default or foreclosure.109 We 

recommended that FHA conduct periodic analyses of the 

effectiveness and the long-term costs and benefits of its loss 

mitigation strategies and actions and use the results of these analyses 

to reevaluate its loss mitigation approach and to provide additional 

guidance to servicers on effectively targeting foreclosure mitigation 

actions. In August 2015, we designated this recommendation as a 

high priority for implementation. FHA agreed with the recommendation 

and has begun to evaluate the effectiveness of changes it made in 

November 2012 to its loss mitigation efforts. These changes revised 

the type of mitigation actions lenders could take and the manner in 

which they were offered. For example, FHA has produced quarterly 

reports that examine redefault rates by type of loss mitigation 

assistance. In addition, HUD indicated that it had commissioned the 

Urban Institute to conduct a comprehensive assessment of FHA’s loss 

mitigation program that is scheduled to be completed by the first 

quarter of fiscal year 2017. We will continue monitoring HUD’s efforts 

to address our recommendation.

• Self-sufficiency programs. In a July 2013 report, we found that HUD 

lacked a strategy for using collected data to expand what was known 

about outcomes in four self-sufficiency programs.110 We concluded 

that using such data could help HUD identify PHAs from which it could 

 109Office of Management and Budget, Federal Credit, OMB Circular No. A-11, Part 5 

(Washington, D.C.: November 2011). Although OMB subsequently updated this guidance, 

we refer to the 2011 guidance because it was in effect at the time of our prior report.

110GAO, Rental Housing Assistance: HUD Data on Self-Sufficiency Programs Should Be 

Improved, GAO-13-581 (Washington, D.C.: July 9, 2013). Specifically, HUD had 

performed limited analysis of the data related to self-sufficiency outcomes for the Housing 

Choice Voucher Family Self-Sufficiency and Public Housing Family Self-Sufficiency 

programs. In fiscal year 2014, Congress combined funding for both programs into one 

program serving both populations. The combined Family Self-Sufficiency program enables 

eligible families to increase their earned income and reduce their dependency on welfare 

assistance and rental subsidies. HUD had also not analyzed similar data reported for its 

Resident Opportunity and Self-Sufficiency Service Coordinators and Moving to Work 

programs. The former provides funding to hire service coordinators to assess the needs of 

public housing residents and coordinate available resources in the community to meet 

those needs. The latter provides PHAs the opportunity to design and test innovative and 

locally designed strategies that use federal dollars more efficiently, help residents find 

employment and become self-sufficient, and increase housing choices for low-income 

families. 
Page 55 GAO-16-497 HUD Management

draw lessons to help improve HUD management of the programs as 

well as PHA management of activities related to self-sufficiency. 

Federal internal control standards and GPRAMA emphasize the need 

for reliable information that can be used to manage programs and 

improve congressional decision making.111 We recommended that 

HUD develop and implement (1) a process to better ensure that 

Family Self-Sufficiency participant data were complete; (2) a process 

to ensure that PHAs that were awarded Resident Opportunity and 

Self-Sufficiency Service Coordinators grants annually reported 

required participation and outcome data; (3) a strategy for regularly 

analyzing Family Self-Sufficiency participation and outcome data; and 

(4) a strategy for regularly analyzing Service Coordinator program 

participation and outcome data.112 HUD agreed with three of the 

recommendations but disagreed that it should analyze data for the 

Service Coordinator program. HUD addressed two of these 

recommendations and has taken actions to begin implementing the 

other two. Specifically, in October 2015 HUD provided documentation 

for its strategy to analyze Family Self-Sufficiency data. Additionally, in 

January 2016 HUD provided a copy of a study it commissioned to 

identify potential strategies for improving Family Self-Sufficiency 

participation data. Further, in May 2016 HUD issued a notice to PHAs 

that administer Family Self-Sufficiency programs that provided 

guidance on how to improve the accuracy of the information submitted 

into HUD’s information system, including guidance on how to 

overcome data submission challenges. We will continue monitoring 

HUD’s efforts to fully address the two remaining recommendations 

that had not been implemented as of June 2016.

• Indian housing. In a 2010 report, we found that HUD did not collect 

information on grantees’ housing-related infrastructure needs for the 

 111GAO/AIMD-00-21.3.1 and Pub. L. No. 111-352, 124 Stat. 3866 (2011). These internal 

control standards were in effect at the time of our report. Revised internal control 

standards went into effect October 1, 2015. See GAO-14-704G.

112In August 2015, the Comptroller General designated the first, third, and fourth 

recommendations from this report as being among the highest priorities for 

implementation.
Page 56 GAO-16-497 HUD Management

Indian Housing Block Grant program.113 We recommended that in its 

revision of the Indian Housing Plan/Annual Performance Report form 

for the grant program, HUD ensure that the form capture data on 

tribes’ infrastructure-related needs. HUD agreed with our 

recommendation. In 2012, HUD implemented a new form that 

captures information on Indian tribes’ infrastructure-related needs for 

the Indian Housing Block Grant program, addressing the 

recommendation. The form now clearly lists “infrastructure to support 

housing” among grantees’ potential housing needs and allows 

grantees to indicate infrastructure among their existing housing 

needs.

HUD is also engaging in broader efforts to improve data quality and 

reporting across the agency through, for example, HUD’s Data Stewards 

Advisory Group and data sharing with other agencies. Chaired by PD&R, 

the Data Stewards Advisory Group’s goals include assisting in the 

development and application of data management principles, standards, 

and practices to help support HUD’s mission and coordinating all of 

HUD’s systems to improve data quality. According to PD&R officials, the 

group is currently working on developing a common set of business rules 

for all the systems to ensure that each system produces the same 

numbers. PD&R is also engaging in efforts to match data between HUD’s 

administrative systems and those of other agencies to further support 

several analyses described in the Research Roadmap. Two efforts 

currently under way involve matching administrative data on HUDassisted renters with health-related data in order to inform both HUD’s 

efforts to use housing as a platform to improve quality of life and the 

national policy priority of containing healthcare costs while improving 

outcomes.

According to HUD officials we spoke with, limited resources also present 

challenges to program evaluation. According to PD&R officials, for 

example, the biggest challenge PD&R faces is funding. Officials told us 

that the amount of funding PD&R had received over the last several years 

had fluctuated significantly, making it difficult for the office to effectively 

 113GAO, Native American Housing: Tribes Generally view Block Grant Program as 

Effective, but Tracking of Infrastructure Plans and Investments Needs Improvement, 

GAO-10-326 (Washington, D.C.: Feb. 25, 2010). The Indian Housing Block Grant 

Program is a formula grant that provides a range of affordable housing activities on Indian 

reservations and Indian areas.
Page 57 GAO-16-497 HUD Management

plan for and launch big impact studies.114 Staffing is another challenge. 

For example, CPD officials stated that they did not have the resources to 

conduct program evaluations. Office of Housing officials also stated that 

resource constraints, specifically in the areas of technology, data, and 

staffing, posed challenges to conducting program evaluations.

Other challenges include conducting evaluations at a time when the 

impact can be measured and addressing obstacles that arise during the 

course of an evaluation. For example, HUD commissioned an evaluation 

of the Neighborhood Stabilization Program in 2011, during the third year 

of the program, and found no detectable effect on housing prices and 

other housing outcomes in the surrounding neighborhoods.115 According 

to CPD officials, the evaluation may have been conducted too early to 

discern the program’s long-term impact.116 However, officials stated that 

because the evaluation funding had to be expended by a certain date, 

HUD could not push the evaluation to a later time. In addition to timing 

challenges, PD&R officials we spoke with stated that they faced a number 

of practical challenges with each study, including finding study 

participants. For example, in its research on Indian housing PD&R 

learned from experience that it needed to obtain the support of tribal 

councils to secure study participants from tribal communities.

To help address some of its challenges with resources, PD&R has begun 

participating in research partnerships. As previously discussed, these 

partnerships support research projects that help inform HUD programs 

and policies and are conducted using a 50 percent match of funds from 

 114For example, in fiscal year 2010, PD&R received about $72 million in research, 

evaluation, and demonstration funds in addition to its core funding. But in subsequent 

years, funding for research and demonstrations fell to about $16 million in fiscal year 2011 

and below $4 million in fiscal year 2015.

115Abt Associates and University of Southern California, The Evaluation of the 

Neighborhood Stabilization Program (March 2015). The Neighborhood Stabilization 

Program provides grants to states and local governments to help reduce the number of 

foreclosed and abandoned properties and restore depressed local housing markets.

116As noted in the Neighborhood Stabilization Program evaluation, the outcomes 

described in the study were measured when nearly 27 percent of the property investments 

were not complete or had just been completed. The effects of these properties on nearby 

housing values were unlikely to be captured by the study if (1) there was a lag between 

the completion of investments and the effects on housing values or (2) the effects were 

triggered by the completion of the investment activities. 
Page 58 GAO-16-497 HUD Management

an external source. To help address some of its practical challenges, 

such as finding study participants, PD&R officials told us they had taken 

steps to obtain local support by hiring local people to help conduct 

studies. PD&R officials also stated that they had reached out to other 

federal agencies to develop communities of practice and to leverage what 

each agency had learned while conducting evaluations.

Each year HUD helps millions of households obtain safe, decent, and 

affordable housing and supports efforts to build and strengthen 

communities. To efficiently and effectively carry out its mission, HUD 

must continue to address challenges in its management functions and 

program areas. HUD’s past remedial actions and initiatives—for example, 

in human capital management, IT management, and acquisition 

management—were not always effective in large part because they were 

not sustained. Like other federal agencies, HUD has experienced 

significant turnover in senior positions and has limited resources. While 

these factors have complicated some of HUD’s management 

improvements efforts, increased focus on integrating requirements and 

key practices into regular operations could help HUD improve its planning 

and governance and effectively execute management functions during 

periods of turnover, transition, and budgetary constraints.

Weaknesses in HUD’s planning and governance increase the risk of 

ineffective and inconsistent performance of management duties. By filling 

gaps in its plans for managing agency performance, including its strategic 

plan, HUD would provide greater assurance that its activities were aligned 

with broader federal efforts. Making additional efforts to solicit 

congressional and stakeholder input as required by GPRAMA would 

provide HUD with an important opportunity to learn about the concerns of 

congressional stakeholders and external groups that could affect plan 

implementation. Also, HUD could better demonstrate that it had 

effectively planned how it would achieve its goals by providing complete 

information on the reasons performance goals were not met and how they 

would be met in the future. Furthermore, assessing and updating its 

human capital planning documents, including the human capital strategic 

plan, the strategic workforce plan, and succession plan, on a regular 

basis to keep them current, as required by federal regulation, would help 

HUD ensure that it was using current analysis and had a strategic vision 

for managing its workforce.

In addition, taking action to improve governance would strengthen HUD’s 

management functions. Internal control activities, such as establishing 

Conclusions
Page 59 GAO-16-497 HUD Management

policies and procedures and maintaining them through periodic updates, 

are essential mechanisms to help ensure that management’s directives 

are carried out. While HUD’s recent efforts to revise and update existing 

policies and procedures that govern its management operations are 

important, it is also necessary for HUD to institutionalize effective 

processes to help ensure that plans, policies, and procedures are 

periodically reviewed, revised, and updated in a timely manner. 

Establishing such processes would help HUD hold managers accountable 

for keeping policy and procedural documents up to date, which in turn 

would provide staff with clear guidance for delivering services across 

management functions and program areas. In addition, formalizing lines 

of communication among senior officials would help ensure reporting 

lines are consistent with OMB guidance and internal control standards.

Finally, limitations in aspects of HUD’s program oversight and evaluation 

efforts echo those in its management functions. Preventing fraud, waste, 

and abuse and understanding program impacts are important elements of 

fiscal stewardship. Leading practices indicate that designating an entity or 

entities to manage fraud risk and establishing policies for evaluations 

could strengthen the governance and execution of the program oversight 

and evaluation functions. Specifically, a designated entity or entities 

tasked specifically with managing fraud risks would help HUD ensure the 

visibility and accountability of its antifraud function. Similarly, developing a 

documented policy for its program evaluations would help HUD ensure 

consistent application of policies and requirements key to producing 

quality evaluations.

In order to more fully implement key practices and meet requirements and 

to better institutionalize standards and practices, the Secretary of HUD 

should take the following eight actions:

• clearly link HUD’s strategic goals and objectives with federal priority 

goals in the next annual performance plan;

• describe the reasons that goals were not met and HUD’s plans for 

achieving them in the next annual performance report;

• establish procedures and time frames for conducting outreach with 

Congress and stakeholders to help ensure that the strategic plan 

meets statutory requirements;

• establish a process and schedule for regularly reviewing, revising, and 

updating HUD’s human capital strategic plan, strategic workforce 

plan, and succession plan;

Recommendations for 

Executive Action
Page 60 GAO-16-497 HUD Management

• establish a process and schedule for reviewing and updating policies 

and procedures to help ensure that policies and procedures for key 

management functions remain current and complete;

• formalize lines of communication between the Chief Information 

Officer and the agency head, consistent with OMB guidance and 

internal control standards;

• designate entities within the program offices or an entity with agencywide responsibilities for overseeing fraud risk management activities; 

and

• develop written policies for conducting program evaluations.

We provided a draft of this report to HUD for review and comment. We 

received written comments from HUD, which are reprinted in appendix IX. 

In its letter, HUD agreed with our recommendations and committed to 

doing a better job of institutionalizing management improvements. HUD 

highlighted a number of efforts under way—many of which we discussed 

in our draft report—to improve operational performance by investing in 

people, improving processes, and developing and improving systems. 

HUD also outlined several actions it planned to take or had taken in 

response to the recommendations in our draft report. For example, 

consistent with our recommendation to establish a fraud risk management 

entity, HUD stated that the Deputy Secretary had recently designated the 

Departmental Enforcement Center as that entity. Concerning our 

recommendations to review and update plans, policies, and procedures, 

HUD noted that it would be maintaining an internal management calendar 

and schedule for this purpose. Furthermore, consistent with our 

recommendations for improving performance planning and management, 

HUD said that its next annual performance plan and report would address 

gaps we identified and that it was taking steps to improve its processes 

for collecting and documenting feedback from congressional committees 

on its strategic plan. When HUD provides documentation of these actions 

we will review the information to determine whether our recommendations 

have been fully implemented.

Finally, HUD said it endeavored to implement recommendations from our 

prior reports, with a particular focus on those the Comptroller General has 

designated as being among the highest priority for implementation. We 

will continue to coordinate with HUD to determine whether actions to 

implement them have been completed.

Agency Comments 
Page 61 GAO-16-497 HUD Management

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to HUD and 

appropriate congressional committees. This report also will be available 

at no charge on our website at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact 

me at (202) 512-8678 or garciadiazd@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix X.

Daniel Garcia-Diaz

Director, Financial Markets 

 and Community Investment
Appendix I: Objectives, Scope, and 

Methodology

Page 62 GAO-16-497 HUD Management

This report examines the U.S. Department of Housing and Urban 

Development’s (HUD) efforts to (1) meet federal requirements and 

implement key practices for management functions, including 

performance planning and reporting and human capital, financial, 

acquisition, and information technology (IT) management; and (2) 

oversee and evaluate programs.

For the background, we reviewed HUD’s organizational structure, 

including the six program offices that manage the bulk of the agency’s 

programs and the administrative offices that support agency-wide 

management functions. We also reviewed the agency’s field office 

structure and reporting relationships. In addition, we reviewed 

documentation on HUD’s two recent organizational streamlining initiatives 

and interviewed officials about the nature of these efforts. The two 

streamlining initiatives relate to HUD’s field office structure. During the 

course of our work, we became aware of allegations of misconduct 

related to a possible reorganization of one office that had been referred to 

HUD’s Office of Inspector General for investigation.1 These issues and 

plans and analysis for future reorganization proposals were outside the 

scope of our work.

To address our objectives, we reviewed relevant federal laws and 

regulations and interviewed senior HUD officials and the president of 

HUD’s union council. We interviewed headquarters officials within the 

following HUD offices to obtain information on pertinent policies, plans, 

and practices: Administration, Chief Financial Officer, Chief Human 

Capital Officer, Chief Procurement Officer, Community Planning and 

Development, Fair Housing and Equal Opportunity, Field Policy and 

Management, General Counsel, Housing, Policy Development and 

Research, Strategic Planning and Management, Departmental 

Enforcement Center, Government National Mortgage Association, and 

Public and Indian Housing. Additionally, we interviewed two former HUD 

secretaries to obtain historical perspective on HUD’s management 

challenges. We also reviewed our prior reports, HUD Office of Inspector 

General (OIG) reports, and reports by other organizations such as the 

 1

In 2014, several officials in HUD’s Office of Housing made allegations linking a possible 

reorganization of parts of that office to potential acquisition, ethics, and other violations. In 

June 2015, HUD’s Inspector General was requested by three members of Congress to 

review HUD’s handling of the allegations.

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 63 GAO-16-497 HUD Management

National Academy of Public Administration and the National Research 

Council.2 Among the OIG reports we reviewed were the annual reports for 

fiscal years 2002 through 2016 on performance and management 

challenges facing HUD. Finally, we reviewed information from GAO’s 

system for tracking agency recommendations to determine which 

recommendations made to HUD in fiscal years 2012 through 2015 had 

not been fully implemented.

To examine HUD’s efforts to meet federal requirements and implement 

key practices for its management functions, we assessed HUD’s plans, 

policies, and practices for those functions using the Standards for Internal 

Control in the Federal Government, Office of Management and Budget 

(OMB) guidelines, and criteria that GAO developed in prior work.3 We 

identified key requirements and practices from these criteria and 

assessed the extent to which HUD met each requirement or followed 

each practice using three categories. “Met” or “following” indicates that, in 

our judgment, HUD met or mostly met all aspects of the requirement or 

was following or mostly following all aspects of the practice. “Partially 

met” or “partially following” indicates that HUD met or was following some 

but not all or most aspects of the requirement or practice. “Not met” or 

“not following” indicates that HUD did not meet or was not following any 

aspects of the requirement or practice. Specifically, one GAO analyst 

reviewed HUD’s policies and practices and made the initial assessment. 

A second analyst then verified these steps to ensure consistent results. In 

addition, subject-matter experts reviewed the assessments and provided 

additional input. The specific information we reviewed for each 

management area was as follows:

• For performance planning and reporting, including HUD’s strategic 

planning efforts, we reviewed various HUD documents—including its 

strategic plans for fiscal years 2010 through 2015 and 2014 through 

2018, its annual performance plan for fiscal year 2017, and its annual 

 2

The National Academy of Public Administration is an independent, nonpartisan 

organization chartered by Congress to help federal, state, and local governments improve 

the management and administration of government agencies. The National Research 

Council is the principal operating agency of the National Academy of Sciences and the 

National Academy of Engineering.

3

GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014).
Appendix I: Objectives, Scope, and 

Methodology

Page 64 GAO-16-497 HUD Management

performance report for fiscal year 2015—and compared them and 

HUD’s planning and reporting practices with requirements in the 

Government Performance and Results Act of 1993 (GPRA), as 

updated by the GPRA Modernization Act of 2010 (GPRAMA).4

Specifically, we first identified GPRA and GPRAMA requirements 

related to the elements that must be included in a federal agency’s 

strategic plan, such as a mission statement and goals and objectives, 

and requirements related to the strategic planning process, such as 

obtaining stakeholder input. We then reviewed HUD’s strategic plan to 

determine whether it included the required elements and interviewed 

HUD officials to determine the process and practices HUD used to 

develop the strategic plan. We also assessed the extent to which 

HUD followed federal requirements in developing its combined fiscal 

year 2017 annual performance plan and 2015 annual performance 

report.5 We identified federal requirements by reviewing GPRA as 

updated by GPRAMA and selecting those requirements that applied 

to an agency’s annual performance plan and performance report. To 

determine the extent to which HUD complied with GPRAMA’s 

performance planning and reporting requirements, we analyzed 

HUD’s annual performance plan and annual performance report and 

interviewed HUD officials about their planning and reporting practices. 

Details about these requirements and our assessment are in appendix 

IV.

• For human capital management, we reviewed regulations published 

by the Office of Personnel Management (OPM) and relevant HUD 

documentation, including HUD’s current human capital plans, 

employee engagement plans from fiscal year 2015, and human 

capital policies and procedures in effect in fiscal years 2015 and 2016. 

In addition, we interviewed HUD officials to determine HUD’s 

workforce planning and training practices. We then compared HUD’s 

human capital plans and practices related to workforce planning, 

succession planning, and training with key principles identified in our 

 4

Pub. L. No. 103-62, 107 Stat. 285 (1993) and Pub. L. No. 111-352, 124 Stat. 3866 

(2011).

5

According to OMB guidance, agencies are strongly encouraged to consolidate the annual 

performance plan and the annual performance report. HUD combined its 2017 plan and 

2015 report into one document.
Appendix I: Objectives, Scope, and 

Methodology

Page 65 GAO-16-497 HUD Management

previous work.6 These principles are described in detail in appendix V. 

We also reviewed a 2012 evaluation report by OPM of HUD’s human 

capital management.7 Finally, we reviewed HUD’s 2011 through 2015 

Federal Employee Viewpoint Survey results on employee 

engagement and training.8 To assess the reliability of the survey data, 

we reviewed the methodology used to conduct the survey and the 

employee response rate. We determined that the data we used were 

sufficiently reliable for purposes of describing employees’

engagement and perspectives on the training HUD offered.

• For financial management, we reviewed HUD’s financial statement 

audits for fiscal years 2004 to 2015. We also interviewed OIG officials 

who oversaw the financial statement audits about their findings and 

recommendations to HUD. We did not independently assess the 

findings in these financial statement audits and internal control 

reviews. We assessed HUD’s financial management practices as 

described in the financial statement audits and OIG major 

management challenges reports against key practices for financial 

 6

See GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C.: Dec. 11, 2003); Human Capital: Insights for U.S. Agencies 

from Other Countries’ Succession Planning and Management Initiatives, GAO-03-914 

(Washington, D.C.: Sept. 15, 2003); and Human Capital: A Guide for Assessing Strategic 

Training and Development Efforts in the Federal Government, GAO-04-546G 

(Washington, D.C.: March 2004). We developed the key principles for workforce planning 

by synthesizing information from meetings with organizations with government-wide 

responsibilities for or expertise in workforce planning; our own guidance, reports, and 

testimonies on federal agencies’ workforce planning and human capital management 

efforts; leading human capital periodicals; and our own experiences in human capital 

management. We developed the key principles for succession planning through 

discussions with officials from central human capital agencies, national audit offices, and 

agencies in Australia, Canada, New Zealand, and the United Kingdom, and a screening 

survey sent to senior human capital officials at selected agencies. We developed the key 

principles for training through consultations with government officials and experts in the 

private sector, academia, and nonprofit organizations; examinations of laws and 

regulations related to training and development in the federal government; and reviews of 

the sizeable body of literature on training and development issues, including our previous 

reports on a range of human capital topics.

7

Office of Personnel Management, U.S. Department of Housing and Urban Development

Human Capital Management Evaluation Report, Quarter 3 - FY 2012 (June 2012).

8

The Federal Employee Viewpoint Survey is an annual survey administered by OPM, and 

the response rate for HUD in 2014 was 51.5 percent and in 2015 was 73.5 percent.
Appendix I: Objectives, Scope, and 

Methodology

Page 66 GAO-16-497 HUD Management

management drawn from prior GAO work and OMB guidance.9 The 

specific practices are described in appendix VI.

• For acquisition management, we assessed HUD acquisition policies 

and annual reviews against OMB requirements and leading practices 

from our prior work.10 These practices are described in appendix VIII. 

Specifically, we reviewed internal annual assessments of HUD’s 

acquisition function covering procurement actions from fiscal years 

2012 to 2014 that were conducted using OMB Circular No. A-123 and 

acquisition instructions, templates, and best practice documents 

issued by the Office of the Chief Procurement Officer.

• For IT management, we examined information gathered in prior and 

ongoing work, as well as prior work by OIG and others. Specifically, 

we reviewed and analyzed documentation and interview responses 

obtained during our concurrent review of HUD’s financial 

management system modernization effort and efforts to follow up on 

open IT-related recommendations, as well as prior GAO reports on 

project planning practices and IT governance against key practices 

we identified in prior work.11 We also reviewed and summarized 

information from OIG’s 2015 annual assessment of HUD’s information 

security program against 10 federal requirements and 2014 

comprehensive review of HUD’s privacy program against seven 

categories of requirements and guidelines.

 9

GAO, Executive Guide: Creating Value Through World-class Financial Management, 

GAO/AIMD-00-134 (Washington, D.C.: April 2000); Office of Management and Budget, 

Management’s Responsibility for Internal Control, OMB Circular No. A-123 (Washington, 

D.C.: Dec. 21, 2004); Requirements for Effective Estimation and Remediation of Improper 

Payments, Appendix C to OMB Circular No. A-123 (Washington, D.C.: Oct. 20, 2014); 

Compliance with the Federal Financial Management Improvement Act of 1996, Appendix 

D to OMB Circular No. A-123 (Washington, D.C.: Sept. 20, 2013); and Financial Reporting 

Requirements, OMB Circular No. A-136 (Washington, D.C.: Sept. 18, 2014).

10See GAO, Framework for Assessing the Acquisition Function At Federal Agencies, 

GAO-05-218G (Washington, D.C.: September 2005). We developed this framework by 

consulting with federal government and industry experts in the areas of human capital, 

information management, financial management, and acquisition practices, as well as 

drawing on decades of experience within GAO in reviewing these areas.

11We plan to issue the report on HUD’s new financial management system in July 2016. 

See also GAO, Information Technology: HUD Needs to Improve Key Project Management 

Practices for Its Modernization Efforts, GAO-13-455 (Washington, D.C.: June 12, 2013) 

and Information Technology: HUD Can Take Additional Actions to Improve Its 

Governance, GAO-15-56 (Washington, D.C.: Dec. 10, 2014).
Appendix I: Objectives, Scope, and 

Methodology

Page 67 GAO-16-497 HUD Management

To assess HUD’s efforts to oversee its programs, we reviewed HUD’s 

policies and procedures for monitoring its programs, including the 

Departmental Management Control Program Handbook, Monitoring Desk 

Guide, and program-specific guidebooks. Specifically, we reviewed the 

processes HUD used for risk-based monitoring and for implementing 

fraud risk management. We also interviewed external HUD stakeholders, 

including representatives from public housing, community development, 

and mortgage industry associations about HUD’s monitoring, oversight, 

and evaluation efforts. We compared HUD’s efforts with leading practices 

outlined in our framework for managing fraud risks.12

To assess HUD’s efforts to evaluate its programs and measure 

outcomes, we reviewed related HUD policies and procedures and HUD’s 

strategic plan for research and evaluations and assessed them against 

federal internal control standards and American Evaluation Association 

guidance.13 We also reviewed examples of completed evaluations from 

2014 and 2015 for additional context.

We conducted this performance audit from November 2014 through July

2016 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

 12See GAO, A Framework for Managing Fraud Risks in Federal Programs, 

GAO-15-593SP (Washington, D.C.: July 28, 2015). To develop this framework, we 

solicited a wide range of views in developing leading practices and ensuring their 

applicability to the federal government. This process included interactions with selected 

federal agency program officials, Offices of Inspector General, the World Bank, the 

Organisation for Economic Co-operation and Development, as well as antifraud experts 

from state and local governments, private companies, other national audit institutions, and

nongovernmental organizations.

13See American Evaluation Association, An Evaluation Roadmap for a More Effective 

Government (October 2013). The American Evaluation Association (AEA) is an 

international professional association of evaluators devoted to the application and 

exploration of program evaluation, personnel evaluation, technology, and many other 

forms of evaluation. AEA has approximately 7,000 members representing all 50 states in 

the United States as well as over 60 foreign countries. AEA has published guides for the 

individual evaluator’s practice and for developing and implementing U.S. government 

evaluation programs.
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 68 GAO-16-497 HUD Management

From fiscal year 2001 through fiscal year 2015, we made nearly 400 

recommendations to the Department of Housing and Urban Development 

(HUD), of which 77 percent have been implemented. HUD implemented 

90 percent of the recommendations we made in fiscal years 2001 through 

2011 and continues to make progress in implementing recommendations 

we made in subsequent fiscal years (see fig. 5).

Figure 5: Status of GAO Recommendations to the Department of Housing and 

Urban Development (HUD) Overall and by Fiscal Year, as of June 2016

As of June 2016, 58 percent (63 of 108) of the recommendations that we 

made to HUD in fiscal years 2012 through 2015 had not yet been fully 

implemented (see table 1). HUD has efforts in process to address a 

number of these recommendations, including several for which GAO staff 

are currently reviewing documentation provided by HUD to assess 

whether they have been fully implemented. As part of an effort to call 

attention to unimplemented recommendations that we believe warrant 

priority attention, in August 2015 the Comptroller General sent a letter to 

the HUD Secretary identifying 18 recommendations as being among the 

highest priorities for implementation. The recommendations related to 

four key areas: (1) management and financial condition of the Federal 

Appendix II: Open GAO Recommendations 

to the Department of Housing and Urban 

Development
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 69 GAO-16-497 HUD Management

Housing Administration, (2) housing assistance, (3) assistance to address 

homelessness, and (4) information technology (IT) management. 

Addressing these recommendations could yield significant improvements 

in the department’s operations. As of June 2016, HUD had fully 

addressed 9 priority recommendations and provided documentation to us, 

which is currently under review, to demonstrate another 4 priority 

recommendations had been implemented. HUD also continued to make 

progress on implementing the other 5 priority recommendations.

Table 1: Open and In-Process GAO Recommendations to the Department of Housing and Urban Development (HUD) from 

Fiscal Years 2012 through 2015 by Program Office, Including Recommendations Designated as High Priority for 

Implementation by the Comptroller General, as of June 2016

Report number Report title Recommendation 

High 

priority

Office of Housing

GAO-12-296 Foreclosure Mitigation: 

Agencies Could Improve 

Effectiveness of Federal 

Efforts with Additional Data 

Collection and Analysis

To more fully understand the strengths and risks posed by foreclosure 

mitigation actions and protect taxpayers from absorbing avoidable 

losses to the maximum extent possible, the Federal Housing 

Administration (FHA) should conduct periodic analyses of the 

effectiveness and the long-term costs and benefits of its loss mitigation 

strategies and actions. These analyses should consider (1) the 

redefault rates associated with each type of home retention action and 

(2) the impact that loan and borrower characteristics have on the 

performance of different home retention actions. FHA should use the 

results from these analyses to reevaluate its loss mitigation approach 

and provide additional guidance to servicers to effectively target 

foreclosure mitigation actions. If FHA does not maintain data needed to 

consider this information, it should require servicers to provide them.

✔

GAO-12-554 Housing Assistance: 

Opportunities Exist to Increase 

Collaboration and Consider 

Consolidation

To build on task force and working group efforts already underway to 

coordinate, consolidate, or improve housing programs, and help inform 

Congress’s decision-making process, the Secretaries or other 

designated officials of HUD, Treasury, U.S. Department of Agriculture, 

and the Department of Veterans Affairs should evaluate and report on 

the specific opportunities for consolidating similar housing programs, 

including those that would require statutory changes.

✔

GAO-13-52 Manufactured Housing 

Standards: Testing and 

Performance Evaluation Could 

Better Ensure Safe Indoor Air 

Quality

To better ensure that air ventilation systems in manufactured homes 

perform as specified and meet the HUD Code, HUD should develop an 

appropriate method to test and validate the performance of the 

ventilation system as part of the HUD certification process.

GAO-13-52 Manufactured Housing 

Standards: Testing and 

Performance Evaluation Could 

Better Ensure Safe Indoor Air 

Quality

To ensure that its specification for airflow continues to be appropriate, 

HUD should reassess the assumptions for the whole-house ventilation 

specification, working with the Manufactured Housing Consensus 

Committee, to determine the appropriate rates, taking into 

consideration current natural air infiltration, to achieve the whole-house 

ventilation performance, considering the expected impact such 

ventilation would have on indoor air quality.
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 70 GAO-16-497 HUD Management

Report number Report title Recommendation 

High 

priority

GAO-13-542 Federal Housing 

Administration: Improving 

Disposition and Oversight 

Practices May Increase 

Returns on Foreclosed 

Property Sales

To increase the potential for higher financial returns from FHA’s 

disposition of real estate-owned properties, the Secretary of HUD 

should direct the FHA Commissioner to identify and implement 

changes in current practices or requirements that could improve real 

estate-owned disposition outcomes, including requiring the use of 

multiple estimates of market value when determining initial list prices.

✔

GAO-13-542 Federal Housing 

Administration: Improving 

Disposition and Oversight 

Practices May Increase 

Returns on Foreclosed 

Property Sales

To increase the potential for higher financial returns from FHA’s 

disposition of real estate-owned properties, the Secretary of HUD 

should direct the FHA Commissioner to identify and implement 

changes in current practices or requirements that could improve real 

estate-owned disposition outcomes, including ensuring that the timing 

and amount of price reductions for its listed properties are made on the 

basis of an evaluation of market conditions rather than on standardized 

schedules.

✔

GAO-13-542 Federal Housing 

Administration: Improving 

Disposition and Oversight 

Practices May Increase 

Returns on Foreclosed 

Property Sales

To improve its oversight of the real estate-owned disposition program, 

the Secretary of HUD should direct the FHA Commissioner to 

implement controls to ensure that listing brokers are located within 

close enough proximity to their listed properties to effectively market 

real estate-owned properties.

GAO-13-542 Federal Housing 

Administration: Improving 

Disposition and Oversight 

Practices May Increase 

Returns on Foreclosed 

Property Sales

To improve its oversight of the real estate-owned disposition program, 

the Secretary of HUD should direct the FHA Commissioner to take 

steps to develop a legally acceptable means of assigning work to real 

estate-owned contractors that uses more frequent assessments of past 

performance.

GAO-13-542 Federal Housing 

Administration: Improving 

Disposition and Oversight 

Practices May Increase 

Returns on Foreclosed 

Property Sales

To improve its oversight of the real estate-owned disposition program, 

the Secretary of HUD should direct the FHA Commissioner to update 

its real estate-owned program disposition handbook, or equivalent 

document, to include a current and consolidated set of policies and 

procedures for managing and disposing of FHA’s real estate-owned 

properties.

GAO-13-722 FHA Mortgage Insurance: 

Applicability of Industry 

Requirements Is Limited, but 

Certain Features Could 

Enhance Oversight

To provide additional perspective on the Fund’s financial status, FHA 

should disclose estimates of the individual cash flows associated with 

the liability for loan guarantees (premiums, claims, and recoveries),

including their value for each year of the 30-year estimation period.

GAO-14-410 Manufactured Housing: Efforts 

Needed to Enhance Program 

Effectiveness and Ensure 

Funding Stability

To better ensure the viability and safety of manufactured housing 

produced in accordance with the HUD Code, the Secretary of HUD 

should strengthen the oversight of inspections and enforcementrelated activities by (1) consistently documenting actions taken to 

resolve recommendations from completed audits and the outcome of 

such actions, (2) completing a Transition Plan for the monitoring 

contractor activity, and (3) exploring the feasibility of developing a costeffective systematic process for collecting and evaluating information 

on the content of complaints.
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 71 GAO-16-497 HUD Management

Report number Report title Recommendation 

High 

priority

GAO-14-410 Manufactured Housing: Efforts 

Needed to Enhance Program 

Effectiveness and Ensure 

Funding Stability

To better ensure that Congress, stakeholders, and agencies have 

complete information about changing costs and whether a fee needs to 

be changed, HUD should assess the feasibility, including an analysis 

of the benefits and costs, of putting in place user fees for its dispute 

resolution and installation programs.

GAO-14-410 Manufactured Housing: Efforts 

Needed to Enhance Program 

Effectiveness and Ensure 

Funding Stability

To better ensure that Congress, stakeholders, and agencies have 

complete information about changing costs and whether a fee needs to 

be changed, HUD should complete the necessary rulemaking changes 

to allow the Office of Manufactured Housing Programs to adjust its 

label fees from the $39 per label toward levels up to the 

congressionally authorized level that better reflect the current levels of 

manufactured home production, while considering the impact that such 

fees may have on the industry; put in place a process for regular fee 

reviews to determine whether the fees currently being charged will 

allow the program to respond to spikes and surges in label fee revenue 

and to identify any factors that may drive label fee revenue instability; 

and identify any additional sources of funding that may mitigate initial 

revenue shortfalls and the program’s fixed and variable costs.

GAO-14-410 Manufactured Housing: Efforts 

Needed to Enhance Program 

Effectiveness and Ensure 

Funding Stability

To better ensure that Congress, stakeholders, and agencies have 

complete information about changing costs and whether a fee needs to 

be changed, HUD should establish the goals for use of reserves of the 

Manufactured Housing Fees Trust Fund, and the minimum and 

maximum thresholds for the reserves appropriate for meeting these 

goals.

GAO-14-410 Manufactured Housing: Efforts 

Needed to Enhance Program 

Effectiveness and Ensure 

Funding Stability

To better ensure the viability and safety of manufactured housing 

produced in accordance with the HUD Code, the Secretary of HUD 

should develop and implement a plan for updating construction and 

safety standards for manufactured homes on a timely, recurring basis 

to include: (1) addressing unresolved issues related to defining and 

developing sufficient economic analyses tied to proposed changes to 

the construction and safety standards; and (2) ensuring sufficient 

resources and capacity within HUD and the Manufactured Housing 

Consensus Committee and its administering organization; or if such a 

plan cannot be devised and implemented, identify and report to 

Congress on alternative methods of ensuring the quality, durability, 

safety, and affordability of manufactured homes, including the 

possibility of relying more extensively on existing industry standards.

GAO-14-410 Manufactured Housing: Efforts 

Needed to Enhance Program 

Effectiveness and Ensure 

Funding Stability

To better ensure the viability and safety of manufactured housing 

produced in accordance with the HUD Code, the Secretary of HUD 

should develop a plan to assess how FHA financing might further 

promote the affordability of manufactured homes and identify the 

potential for better securitization of manufactured housing financing.

Office of Public and Indian Housing

GAO-12-182 Homeless Women Veterans: 

Actions Needed to Ensure 

Safe and Appropriate Housing

In order to help achieve the goal of ending homelessness among 

veterans, the Secretaries of Veterans Affairs and HUD should 

collaborate to ensure appropriate data are collected on homeless 

women veterans, including those with children and those with 

disabilities, and use these data to strategically plan for services.a
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 72 GAO-16-497 HUD Management

Report number Report title Recommendation 

High 

priority

GAO-12-300 Housing Choice Vouchers: 

Options Exist to Increase 

Program Efficiencies

To help reduce voucher program costs or better ensure the efficient 

use of voucher program funds, the HUD Secretary should provide 

information to Congress on housing agencies’ estimated amount of 

excess subsidy reserves. In taking these steps, the Secretary should 

determine a level of subsidy reserves housing agencies should retain 

on an ongoing basis to effectively manage their voucher programs.

GAO-12-300 Housing Choice Vouchers: 

Options Exist to Increase 

Program Efficiencies

To help reduce voucher program costs or better ensure the efficient 

use of voucher program funds, the HUD Secretary should provide 

information to Congress on its criteria for how it will redistribute excess 

reserves among housing agencies so that they can serve more 

households. In taking these steps, the Secretary should determine a 

level of subsidy reserves housing agencies should retain on an 

ongoing basis to effectively manage their voucher programs.

GAO-12-819 Entrepreneurial Assistance: 

Opportunities Exist to Improve 

Programs’ Collaboration, 

Data-Tracking, and 

Performance Management

The Secretary of HUD should conduct more program evaluations to 

better understand why programs have not met performance goals and 

their overall effectiveness.

GAO-12-819 Entrepreneurial Assistance: 

Opportunities Exist to Improve 

Programs’ Collaboration, 

Data-Tracking, and 

Performance Management

The Secretary of HUD should consistently collect information that 

would enable them to track the specific type of assistance programs 

provide and the entrepreneurs they serve and use this information to 

help administer their programs.

GAO-12-819 Entrepreneurial Assistance: 

Opportunities Exist to Improve 

Programs’ Collaboration,

Data-Tracking, and 

Performance Management

The Director of the Office of Management and Budget (OMB), the 

Secretaries of the Departments of Agriculture, Commerce, and HUD, 

and the Administrator of the Small Business Administration should 

work together to identify opportunities to enhance collaboration among 

programs, both within and across agencies.

GAO-13-581 Rental Housing Assistance: 

HUD Data on Self-Sufficiency 

Programs Should Be Improved

To better inform Congress and improve what is known about residents’

participation in key grant programs designed to facilitate resident selfsufficiency, and their progress towards self-sufficiency, the Secretary 

of HUD should develop and implement a strategy for regularly 

analyzing participation and outcome data for the Resident Opportunity 

and Self-Sufficiency Service Coordinators program; such a strategy 

could include identification of public housing agencies (PHA) from 

which lessons could be learned and PHAs that may need assistance 

improving participation rates or outcomes.

✔

GAO-13-581 Rental Housing Assistance: 

HUD Data on Self-Sufficiency 

Programs Should Be Improved

To better inform Congress and improve what is known about residents’

participation in key grant programs designed to facilitate resident selfsufficiency, and their progress towards self-sufficiency, the Secretary 

of HUD should develop and implement a process to better ensure that 

PHAs awarded Resident Opportunity and Self-Sufficiency Service 

Coordinators grants annually report required participation and outcome 

data that are comparable among grant recipients; this process should 

include the issuance of program-specific reporting guidance.
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 73 GAO-16-497 HUD Management

Report number Report title Recommendation 

High 

priority

GAO-14-255 Native American Housing: 

Additional Actions Needed to 

Better Support Tribal Efforts

To increase consistency and reduce time and predevelopment cost for 

Native American Housing Assistance and Self Determination Act of 

1996 grant recipients, an interagency effort similar to that of the federal 

infrastructure task force but specific to tribal housing should be initiated 

with participants from the Indian Health Service, HUD, Department of 

the Interior, and the U.S. Department of Agriculture to develop and 

implement a coordinated environmental review process for all agencies 

overseeing tribal housing development. In addition, the agencies 

should determine if it would be appropriate to designate a lead agency 

in this effort.

Office of Community Planning and Development

GAO-13-247 Community Development 

Block Grants: Reporting on 

Compliance with Limit on 

Funds Used for Administration 

Can Be Improved

In order to demonstrate compliance across the program with the 

statutory limit on funds that can be used for administration, the 

Secretary of HUD should direct the Assistant Secretary for Community 

Planning and Development to develop a process for generating annual 

reports on compliance across the program, including making any 

requisite changes to the Integrated Disbursement and Information 

System to better ensure that the agency has complete and analyzable 

data to support such reporting.

GAO-14-739 Federal Real Property: More 

Useful Information to 

Providers Could Improve the 

Homeless Assistance Program

HUD, the General Services Administration, the Department of Health 

and Human Services, and the United States Interagency Council on 

Homelessness should work together to address the challenges that 

homeless assistance providers face with the Title V homeless 

assistance program by (1) identifying what kinds of properties are most 

practical for homeless assistance, and (2) developing a web-based 

source of information on the program for homeless assistance 

providers.

GAO-14-739 Federal Real Property: More 

Useful Information to 

Providers Could Improve the 

Homeless Assistance Program

To improve HUD’s database on Title V homeless assistance 

properties, HUD should modify its existing database or create an 

electronic, searchable database to meet reporting needs to the extent 

that the benefits outweigh the costs.

GAO-15-209 Disaster Relief: Agencies 

Need to Improve Policies and 

Procedures for Estimating 

Improper Payments

To help reduce the risk that improper payment estimates related to 

Disaster Relief Appropriations Act, 2013 funding developed and 

reported by selected agencies may not be accurate or reliable, and to 

help ensure that HUD produces reliable estimates of its improper 

payments associated with this funding, the Secretary of HUD should 

direct appropriate officials to revise its policies and procedures for 

estimating improper payments by (1) requiring payments to federal 

employees to be included in populations for testing as required by the 

Improper Payments Information Act of 2002, as amended, and (2) 

including steps to assess the completeness of the population of 

transactions used for selecting the samples to be tested.
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 74 GAO-16-497 HUD Management

Report number Report title Recommendation 

High 

priority

GAO-15-274 Military Base Realignments 

and Closures: Process for 

Reusing Property for 

Homeless Assistance Needs 

Improvements

To assist homeless assistance providers and local redevelopment 

authorities in completing the steps of the base realignment and closure 

homeless assistance process within required time frames, to provide 

additional information to reduce unfulfilled expectations about the 

decisions made in executing the homeless assistance agreements, 

and to promote a greater dissemination of this information, the 

Secretaries of HUD and Defense, for each of the following four 

elements, should update the base realignment and closure homeless 

assistance regulations; establish information-sharing mechanisms, 

such as a website or informational pamphlets; or develop templates to 

include guidance for legally binding agreements and clarification on the 

implications of unsigned agreements.

GAO-15-274 Military Base Realignments 

and Closures: Process for 

Reusing Property for 

Homeless Assistance Needs

Improvements

To assist homeless assistance providers and local redevelopment 

authorities in completing the steps of the base realignment and closure 

homeless assistance process within required time frames, to provide 

additional information to reduce unfulfilled expectations about the 

decisions made in executing the homeless assistance agreements, 

and to promote a greater dissemination of this information, the 

Secretaries of HUD and Defense, for each of the following four 

elements, should update the base realignment and closure homeless 

assistance regulations; establish information-sharing mechanisms, 

such as a website or informational pamphlets; or develop templates to 

include information for homeless assistance providers to use for 

preparing their notices of interest.

GAO-15-274 Military Base Realignments 

and Closures: Process for 

Reusing Property for 

Homeless Assistance Needs 

Improvements

To assist homeless assistance providers and local redevelopment 

authorities in completing the steps of the base realignment and closure 

homeless assistance process within required time frames, to provide 

additional information to reduce unfulfilled expectations about the 

decisions made in executing the homeless assistance agreements, 

and to promote a greater dissemination of this information, the 

Secretaries of HUD and Defense, for each of the following four 

elements, should update the base realignment and closure homeless 

assistance regulations; establish information-sharing mechanisms, 

such as a website or informational pamphlets; or develop templates to 

include specific guidance that clearly identifies the information that 

should be provided to homeless assistance providers during tours of 

on-base property, such as the condition of the property.
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 75 GAO-16-497 HUD Management

Report number Report title Recommendation 

High 

priority

GAO-15-274 Military Base Realignments 

and Closures: Process for 

Reusing Property for 

Homeless Assistance Needs 

Improvements

To assist homeless assistance providers and local redevelopment 

authorities in completing the steps of the base realignment and closure 

homeless assistance process within required time frames, to provide 

additional information to reduce unfulfilled expectations about the 

decisions made in executing the homeless assistance agreements, 

and to promote a greater dissemination of this information, the 

Secretaries of HUD and Defense, for each of the following four 

elements, should update the base realignment and closure homeless 

assistance regulations; establish information-sharing mechanisms, 

such as a website or informational pamphlets; or develop templates to 

include specific information on legal alternatives to providing on-base 

property, including acceptable alternative options such as financial 

assistance or off-base property in lieu of on-base property, information 

about rules of sale for on-base property conveyed to homeless 

assistance providers, and under what circumstances it is permissible to 

sell property for affordable housing alongside the no-cost homeless 

assistance conveyance.

GAO-15-274 Military Base Realignments 

and Closures: Process for 

Reusing Property for 

Homeless Assistance Needs 

Improvements

To help determine the effectiveness of base realignment and closure 

homeless assistance conveyances, the Secretaries of HUD and 

Defense should update the base realignment and closure homeless 

assistance regulations to require that conveyance statuses be tracked. 

These regulatory updates could include requiring DOD to track and 

share disposal actions with HUD and requiring HUD to track the status 

following disposal, such as type of assistance received by providers 

and potential withdrawals by providers.

GAO-15-274 Military Base Realignments 

and Closures: Process for 

Reusing Property for 

Homeless Assistance Needs 

Improvements

To help improve the timeliness of the HUD review process, the 

Secretary of HUD should develop options to address the use of staff 

resources dedicated to the reviews of bases during a base realignment 

and closure round, such as assigning temporary headquarters staff or 

utilizing current field HUD staff.

GAO-15-298 Persons with HIV: Funding 

Formula for Housing 

Assistance Could Be Better 

Targeted, and Performance 

Data Could Be Improved

To help ensure that HUD is using grantee performance data to identify 

and address any irregularities or issues in grantee reporting, the 

Secretary of HUD should direct the Assistant Secretary for Community 

Planning and Development to develop and implement a specific 

process to make comparisons between the unmet housing need data 

submitted by individual grantees from year to year, including a process 

to follow up with grantees when significant changes are identified.

GAO-15-298 Persons with HIV: Funding 

Formula for Housing 

Assistance Could Be Better 

Targeted, and Performance 

Data Could Be Improved

To improve information on the unmet housing needs of persons with 

human immunodeficiency virus and follow through on its efforts to 

develop a standard methodology, the Secretary of HUD should direct 

the Assistant Secretary for Community Planning and Development to 

require grantees to use comparable methodologies to analyze HUD’s 

recommended data sources on unmet housing need.

Office of the Chief Human Capital Officer

GAO-13-282 Housing and Urban 

Development: Strategic 

Human Capital and Workforce 

Planning Should be an 

Ongoing Priority

To improve the human capital planning, workforce planning, and 

resource management processes at HUD, the Secretary of HUD 

should collect data that are used for decision-making, thus creating 

incentives for staff to report accurate data for the resource 

management system.
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 76 GAO-16-497 HUD Management

Report number Report title Recommendation 

High 

priority

GAO-13-282 Housing and Urban 

Development: Strategic 

Human Capital and Workforce 

Planning Should be an 

Ongoing Priority

To improve the quality of HUD’s congressional budget justification, the 

Secretary of HUD should consult with users of the congressional 

budget justification, such as congressional decision makers, to 

determine what additional information about resource decisions should 

be presented, and how, in its congressional budget justification.

Office of the Chief Information Officer

GAO-13-455 Information Technology: HUD 

Needs to Improve Key Project 

Management Practices for Its 

Modernization Efforts

To ensure that HUD effectively and efficiently manages its 

modernization efforts aimed at improving its information technology 

(IT) environment to support mission needs, the Secretary of HUD 

should direct the Deputy Secretary to establish a plan of action that 

identifies specific time frames for correcting the deficiencies highlighted 

in this report for both its ongoing projects, as applicable, and its 

planned projects, to include (1) developing charters that define what 

constitutes project success and establish accountability, (2) finalizing 

deliverable-oriented work breakdown structures and associated 

dictionaries that define the detailed work needed to accomplish project 

objectives, (3) completing comprehensive project management plans 

that reflect cost and schedule baselines and fully incorporate 

subsidiary management plans, (4) establishing requirements 

management plans that include prioritization methods to be applied 

and metrics for determining how products address requirements, (5) 

completing matrixes to include requirements traceability from mission 

needs through implementation, and (6) establishing strategies to guide 

how acquisitions are managed in accordance with other processes and 

that performance metrics are established.a

✔

GAO-13-455 Information Technology: HUD 

Needs to Improve Key Project 

Management Practices for Its 

Modernization Efforts

To improve development and use of the department’s project 

management framework, the Secretary should direct the Chief 

Information Officer to ensure that revisions to the framework 

incorporate specific information to address the areas of deficiency in 

project planning, requirements management, and acquisition planning 

identified in this report.a

GAO-13-455 Information Technology: HUD 

Needs to Improve Key Project 

Management Practices for Its 

Modernization Efforts

To improve development and use of the department’s project 

management framework, the Secretary should direct the Customer 

Care Committee to review the role and responsibilities of the Technical 

Review Subcommittee and ensure that the department’s governance 

structure operates as intended and adequately oversees the 

management of all of its modernization efforts.a

GAO-13-455 Information Technology: HUD 

Needs to Improve Key Project 

Management Practices for Its 

Modernization Efforts

To improve development and use of the department’s project 

management framework, the Secretary should direct the FHA 

Transformation and Next Generation Management System steering 

committees to ensure that project management expertise needed to 

apply the guidance outlined in the framework is provided to execute 

and manage their respective projects.a

GAO-14-65 Information Technology: 

Additional OMB and Agency 

Actions Are Needed to 

Achieve Portfolio Savings

To improve the department’s implementation of PortfolioStat, in future 

reporting to OMB, the Secretary of HUD should direct the Chief 

Information Officer to fully describe the following PortfolioStat action 

plan element: establish criteria for identifying wasteful, low-value, or 

duplicative investments.a
Appendix II: Open GAO Recommendations to

the Department of Housing and Urban 

Development

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Report number Report title Recommendation 

High 

priority

GAO-14-65 Information Technology: 

Additional OMB and Agency 

Actions Are Needed to 

Achieve Portfolio Savings

To improve the department’s implementation of PortfolioStat, the 

Secretary of HUD should direct the Chief Information Officer to develop 

a complete commodity IT baseline.a

GAO-14-65 Information Technology: 

Additional OMB and Agency 

Actions Are Needed to 

Achieve Portfolio Savings

To improve the department’s implementation of PortfolioStat, the 

Secretary of HUD should direct the Chief Information Officer to report 

on the department’s progress in consolidating the Human Resources 

End-to-End Performance Management Module to a shared service as 

part of the OMB integrated data collection quarterly reporting until 

completed.a

GAO-14-283 Information Technology: 

HUD’s Expenditure Plan 

Satisfied Statutory Conditions; 

Sustained Controls and 

Modernization Approach 

Needed

To ensure effective management and modernization of HUD’s IT 

environment, the Secretary of HUD should direct the department’s 

Chief Information Officer to define the scope, implementation strategy, 

and schedule of its overall modernization approach, with related goals 

and measures for effectively overseeing the effort.a

✔

GAO-14-283 Information Technology: 

HUD’s Expenditure Plan 

Satisfied Statutory Conditions; 

Sustained Controls and 

Modernization Approach 

Needed

To ensure effective management and modernization of HUD’s IT 

environment, the Secretary of HUD should direct the department’s 

Chief Information Officer to establish a means for evaluating progress 

toward institutionalizing management controls and commit to time lines 

for activities and next steps.a

GAO-14-354 Information Security: Agencies 

Need to Improve Cyber 

Incident Response Practices

To improve the effectiveness of cyber incident response activities, the 

Secretary of HUD should develop a departmentwide incident response 

plan that includes, among other elements, senior management’s 

approval, and metrics for measuring the incident response capability 

and its effectiveness.a

✔

GAO-14-413 Federal Software Licenses: 

Better Management Needed to 

Achieve Significant Savings 

Government-Wide

To ensure the effective management of software licenses, the 

Secretary of HUD should analyze agency-wide software license data, 

such as costs, benefits, usage, and trending data, to identify 

opportunities to reduce costs and better inform investment decision 

making.a

GAO-14-413 Federal Software Licenses: 

Better Management Needed to 

Achieve Significant Savings 

Government-Wide

To ensure the effective management of software licenses, the 

Secretary of HUD should develop an agency-wide comprehensive 

policy for the management of software licenses that addresses the 

weaknesses we identified.a

GAO-14-413 Federal Software Licenses:

Better Management Needed to 

Achieve Significant Savings 

Government-Wide

To ensure the effective management of software licenses, the 

Secretary of HUD should provide software license management 

training to appropriate agency personnel addressing contract terms 

and conditions, negotiations, laws and regulations, acquisition, security 

planning, and configuration management.a

GAO-14-413 Federal Software Licenses: 

Better Management Needed to 

Achieve Significant Savings 

Government-Wide

To ensure the effective management of software licenses, the 

Secretary of HUD should regularly track and maintain a 

comprehensive inventory of software licenses using automated tools 

and metrics.a
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 78 GAO-16-497 HUD Management

Report number Report title Recommendation 

High 

priority

GAO-15-56 Information Technology: HUD 

Can Take Additional Actions to 

Improve Its Governance

To ensure that HUD fully implements and sustains effective IT 

governance practices, the Secretary of HUD should direct the Deputy 

Secretary and the department’s Chief Information Officer to place a 

high priority and ensure that the executive-level investment review 

board meets as outlined in its charter, documents criteria for use by the 

other boards, and distributes its decisions to appropriate stakeholders.a

GAO-15-56 Information Technology: HUD 

Can Take Additional Actions to 

Improve Its Governance

To ensure that HUD fully implements and sustains effective IT 

governance practices, the Secretary of HUD should direct the Deputy 

Secretary and the department’s Chief Information Officer to place a 

high priority and fully establish a well-defined process that incorporates 

key practices for overseeing investments, including (1) monitoring 

actual project performance against expected outcomes for project cost, 

schedule, benefit, and risk; (2) establishing and documenting cost-, 

schedule-, and performance-based thresholds for triggering remedial 

actions or elevating project review to higher-level investment boards; 

and (3) conducting post-implementation reviews to evaluate results of 

projects after they are completed.a

GAO-15-56 Information Technology: HUD 

Can Take Additional Actions to 

Improve Its Governance

To ensure that HUD fully implements and sustains effective IT 

governance practices, the Secretary of HUD should direct the Deputy 

Secretary and the department’s Chief Information Officer to place a 

high priority and fully establish an IT investment selection process that 

includes (1) articulating how reviews of project proposals are to be 

conducted; (2) planning how data (including cost estimates) are to be 

developed and verified and validated; (3) establishing criteria for how 

cost, schedule, and project risk are to be analyzed; (4) developing 

procedures for how proposed projects are to be compared to one 

another in terms of investment size (cost), project longevity (schedule), 

technical difficulty, project risk, and cost-benefit analysis; and (5) 

ensuring that final selection decisions made by senior decision makers 

and governance boards are supported by analysis, consider 

predefined quantitative measures, and are consistently documented.a

GAO-15-56 Information Technology: HUD 

Can Take Additional Actions to 

Improve Its Governance

To ensure that HUD fully implements and sustains effective IT 

governance practices, the Secretary of HUD should direct the Deputy 

Secretary and the department’s Chief Information Officer to place a 

high priority and fully establish and maintain a complete set of 

governance policies, establish time frames for establishing policies 

planned but not yet developed, and update key governance 

documents to reflect changes made to established practices.a

GAO-15-56 Information Technology: HUD 

Can Take Additional Actions to 

Improve Its Governance

To establish an enterprise-wide view of cost savings and operational 

efficiencies generated by investments and governance processes, the 

Secretary of HUD should direct the Deputy Secretary and Chief 

Information Officer to place a higher priority on identifying governancerelated cost savings and efficiencies and establish and institutionalize 

a process for identifying and tracking comprehensive, high-quality data 

on savings and efficiencies resulting from IT investments and the IT 

governance process.a

✔
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 79 GAO-16-497 HUD Management

Report number Report title Recommendation 

High 

priority

GAO-15-617 Information Technology 

Reform: Billions of Dollars in 

Savings Have Been Realized, 

but Agencies Need to 

Complete Reinvestment Plans

To improve the department’s IT savings reinvestment plans, the 

Secretary of HUD should direct the Chief Information Officer to ensure 

that the department’s integrated data collection submission to OMB 

includes, for all reported initiatives, complete plans to reinvest any 

resulting cost savings and avoidances from OMB-directed IT reformrelated efforts.

Office of the Chief Procurement Officer

GAO-14-126 Strategic Sourcing: Selected 

Agencies Should Develop 

Performance Measures on 

Inclusion of Small Businesses 

and OMB Should Improve 

Monitoring

Consistent with OMB guidance and to track the effect of strategic 

sourcing on small businesses, the Secretary of HUD should collect 

baseline data and establish performance measures on the inclusion of 

small businesses in strategic sourcing initiatives.

Office of Policy Development and Research

GAO-15-185 Mortgage Reforms: Actions 

Needed to Help Assess 

Effects of New Regulations

To enhance the effectiveness of its preparations for conducting a 

retrospective review of its qualified mortgage regulations, HUD should 

develop a plan that identifies the metrics, baselines, and analytical 

methods to be used. Furthermore, to account for and help mitigate the 

limitations of existing data and the uncertain availability of enhanced 

datasets, HUD should include in its plan alternate metrics, baselines, 

and analytical methods that could be used data were to remain 

unavailable.

GAO-15-185 Mortgage Reforms: Actions 

Needed to Help Assess 

Effects of New Regulations

To enhance the effectiveness of their preparations for conducting a 

retrospective review of the qualified residential mortgage regulations, 

the agencies responsible for the regulations—Federal Deposit 

Insurance Corporation, Federal Housing Finance Agency, Board of 

Governors of the Federal Reserve System, HUD, Office of the 

Comptroller of the Currency, and Securities and Exchange 

Commission—should develop a plan that identifies the metrics, 

baselines, and analytical methods to be used and specify the roles and 

responsibilities of each agency in the review process. Furthermore, to 

account for and help mitigate limitations of existing data and the 

uncertain availability of enhanced datasets, the six agencies should 

include in their plan alternate metrics, baselines, and analytical 

methods that could be used if data were to remain unavailable.

GAO-15-645 Affordable Rental Housing: 

Assistance Is Provided by 

Federal, State, and Local 

Programs, but There Is 

Incomplete Information on 

Collective Performance

To build upon HUD and the Rental Policy Working Group’s efforts to 

improve coordination of rental assistance, the Secretary of HUD, in 

consultation with the Rental Policy Working Group, should work with 

states and localities to develop an approach for compiling and 

reporting on the collective performance of federal, state, and local 

rental assistance programs. Such an effort may begin with one or more 

pilots to test approaches before they are considered for wider 

application.
Appendix II: Open GAO Recommendations to 

the Department of Housing and Urban 

Development

Page 80 GAO-16-497 HUD Management

Report number Report title Recommendation 

High 

priority

Multiple Offices

GAO-12-79 Green Building: Federal 

Initiatives for the Nonfederal

Sector Could Benefit from 

More Interagency 

Collaboration

To help assess the results of investments in individual federal 

initiatives to foster green building in the nonfederal sector, as well as 

their combined results, the Secretaries of Energy and of HUD should 

work with the Administrator of the Environmental Protection Agency in 

leading an effort with other agencies that are implementing green 

building initiatives to collaborate on identifying performance 

information, such as shared goals and common performance 

measures, for green building initiatives for the nonfederal sector. This 

effort should include, if necessary, an exploration of the need for 

additional legislative or executive authority, such as the authority to 

establish a coordinating entity (e.g., an interagency working group).

Source: GAO. | GAO-16-497

a

HUD has taken a number of actions to implement this recommendation, and we are currently 

reviewing and assessing additional documentation HUD provided to demonstrate this 

recommendation has been fully implemented.
Appendix III: Recent Changes to the 

Department of Housing and Urban 

Development’s Field Office Structure

Page 81 GAO-16-497 HUD Management

For many years, the Department of Housing and Urban Development 

(HUD) operated a network of 81 regional and field offices around the 

country. In April 1994, HUD began implementing a field office 

reorganization that involved changing the reporting structure for its field 

staff. Instead of having field staff report to senior officials within the 

regional and field structure, most field staff were incorporated into the 

reporting structures under each of the assistant secretaries in 

headquarters. The remaining staff were retained under the Office of Field 

Policy and Management to operate the regional and field offices and 

perform other functions. The late 1990s also brought other changes to the 

field office structures of particular program offices. For example, HUD 

consolidated most of its single-family housing operations from 81 field 

offices into four homeownership centers. However, HUD’s total number of 

regional and field offices agency-wide did not change.

In April 2013, as a result of staffing and expense pressures, HUD 

announced the Small Offices Project, a plan to close a number of small 

field offices. HUD used two criteria to select offices for closure, choosing 

to shutter only offices that did not manage HUD programs (such as 

offices with only Office of Field Policy and Management staff) and those 

in states where HUD had at least one other field office. Ultimately, HUD 

deemed 16 small offices nonessential and closed them, redeploying or 

buying out the employees. These offices were originally single-family 

housing loan processing sites that had become field offices after HUD 

consolidated the loan processing function into four homeownership 

centers in the 1990s.1 HUD initially anticipated realizing annual savings of 

$10.74 million, with a one-time implementation cost of $7.78 million. 

According to HUD estimates, HUD is actually realizing savings of $9 

million annually after one-time implementation costs of $5 million. HUD 

attributed the difference in anticipated annual savings to a lower-thanexpected number of staff who agreed to buyouts (voluntary separation 

incentive payments that totaled of up to $25,000, as outlined by OPM 

guidance). However, one-time implementation costs were lower than 

anticipated because HUD’s lease termination and relocation costs were 

smaller than projected. 

 1

The 16 offices were: Camden, NJ; Cincinnati, OH; Dallas, TX; Flint, MI; Grand Rapids, 

MI; Lubbock, TX; Shreveport, LA; Spokane, WA; Springfield, IL; Syracuse, NY; Orlando, 

FL; Tampa, FL; Fresno, CA; Sacramento, CA; San Diego, CA; and Tucson, AZ.

Appendix III: Recent Changes to the 

Department of Housing and Urban 

Development’s Field Office Structure

Background

Small Office Project
Appendix III: Recent Changes to the 

Department of Housing and Urban 

Development’s Field Office Structure

Page 82 GAO-16-497 HUD Management

Following the recession of 2007–2009, the Office of Multifamily Housing 

(MFH) faced an increase in business demand for its multifamily mortgage 

insurance programs, which insure mortgage loans to finance the 

construction, rehabilitation, or purchase of properties for rental or 

cooperative housing. For example, between 2008 and 2013 MFH-insured 

mortgage originations increased from $3 billion to nearly $18 billion. 

According to MFH officials, MFH had difficulty keeping up, and a long 

backlog of applications for insurance developed, resulting in application 

processing times that could exceed 200 days. To counter the delays, 

MFH undertook two process improvement efforts, and then began a 

multiyear process to streamline its organizational structure.

MFH’s process improvement efforts—referred to as “Breaking Ground”

and “Sustaining Our Investments”—sought to address inefficiencies in its 

production and asset management processes. According to HUD officials, 

both efforts included standardizing work where possible and incorporating 

Lean Six Sigma concepts.2

Specifically, Breaking Ground was an initiative which introduced process 

and management changes to its application-intake (production) process. 

Beginning in 2010, this initiative included rolling out new team 

management processes, such as milestone whiteboards, daily team 

meetings, and production dashboards. In addition, Breaking Ground 

introduced several operational changes to optimize processes and 

minimize redundancies, including rolling out an early warning system for 

applications deemed at-risk, and developing application staging areas. 

Field offices also introduced an underwriting review template to help 

strengthen risk management. According to HUD, Breaking Ground led to 

a 70 percent reduction in application backlogs, a 50 percent reduction in 

cycle times for two types of loans, and a 10 percent gain in reported 

employee morale across MFH offices. New production time frames 

targeted 30–90 days to process an application, depending on the 

application type.

 2

Lean Six Sigma is a data-driven approach based on the idea of eliminating defects and 

errors that contribute to losses of time, money, opportunities, or business.

Multifamily Housing 

Streamlining 

Initiatives

Process Improvements
Appendix III: Recent Changes to the 

Department of Housing and Urban 

Development’s Field Office Structure

Page 83 GAO-16-497 HUD Management

While Breaking Ground addressed the issues on the application intake 

side of MFH, Sustaining Our Investments targeted the asset management

side. Sustaining Our Investments was launched in 2011 and instituted 

more formal, risk-based processes and tools to help the asset 

management function manage MFH’s portfolio, according to HUD. This 

program included introducing milestone whiteboards, creating an 

institutionalized problem-solving system, and classifying assets as 

“troubled,” “potentially troubled,” and “not troubled.” According to HUD, 

Sustaining Our Investments also led to improvements. For example, HUD 

indicated that by fiscal year 2014, 100 percent of insured assets and 99 

percent of assisted assets had been classified by risk, providing FHA and 

MFH leadership with greater visibility into the health of the MFH portfolio.

According to HUD officials, these efforts addressed some process issues 

but also highlighted areas of weakness in the MFH operational model that 

could be addressed only through structural changes. For example, after 

the implementation of Breaking Ground and Sustaining Our Investments, 

there was still considerable variability in implementing the process 

improvements introduced by these initiatives across the more than 50 

field offices. Achieving further consistency in implementation would have 

required going to each office to identify the cause of the variation and 

fixing it, which HUD officials told us was very inefficient.

HUD decided to streamline the organizational structure of MFH and 

implement a number of other improvements through its Multifamily for 

Tomorrow Transformation initiative (MFT). Initially proposed in 2013, the 

planned organizational changes included consolidating 52 MFH offices 

across the country into 5 regional offices, with one or two satellite offices 

per region, for a total of 12 field offices. After consultations with Congress, 

MFH modified MFT to not include the consolidation of asset management 

staff located in 35 offices. Headquarters staff were also to be realigned 

into four offices (down from six):

• Production, which provides direction and oversight for FHA mortgage 

insurance loan originations;

• Asset Management and Portfolio Oversight, which is responsible for 

HUD’s portfolio of multifamily housing after the property has been 

developed;

• Recapitalization, which implements programs that help preserve the 

stock of affordable housing; and

Multifamily for Tomorrow 

Transformation
Appendix III: Recent Changes to the 

Department of Housing and Urban 

Development’s Field Office Structure

Page 84 GAO-16-497 HUD Management

• Field Operations, which oversees MFH field offices.

In addition, MFT involves transitioning to a single underwriter model for 

production, using an account executive model for asset management, 

and adopting national workload sharing. The single underwriter model 

involves one underwriter overseeing the review of an insurance 

application from beginning to end, drawing in technical experts such as 

construction analysts and appraisers as needed, and serving as the 

single point of contact for the lender. The account executive model aims 

to align staff expertise with the asset management portfolio by 

establishing three asset manager levels defined by the complexity and 

risk of the assets they manage. The aim of national workload sharing is to 

permit the distribution of production and asset management workload in 

offices experiencing spikes in volume to offices, teams, or individuals in 

other locations that have extra capacity.

MFH originally estimated that the total upfront cost of implementing MFT 

would be between $75 million and $80 million and would result in future 

savings of nearly $500 million over 10 years from reductions in salary and 

facilities expenses. The original proposal called for a reduction of more 

than 300 full-time equivalent positions (FTE), lowering MFH’s authorized 

staffing level from more than 1,500 FTE to less than 1,200 FTE. However, 

HUD’s agreement with Congress not to consolidate asset management 

staff resulted in fewer staff taking buyout offers, according to HUD 

officials. As a result, MFH revised its total estimated savings to around 

$350 million over 10 years.

MFT is being conducted in waves by region, with each wave lasting 6 to 8 

months. HUD began implementing the changes to its field structure in 

2014. As of April 2016, HUD had completed transformations in the 

southwest, midwest, and southeast regions. The northeast region was 

scheduled to be completed by June 2016, and the west region was 

scheduled to be completed by the end of fiscal year 2016. MFT generally 

has met all of its timelines. To provide training as part of MFT, MFH has 

designated 12 headquarters and field office subject-matter experts, or 

navigators, to be teachers and trainers. They train the staff in the new 

regional and satellite offices on MFH’s new operational model and 

processes in 8-week blocks.

As a result of the initiative, HUD aims to provide better customer service, 

increase employee engagement, improve risk management, and operate 

with greater efficiency. For example, MFH is tracking the time it takes to 

review and process insurance applications. MFH also has a new 
Appendix III: Recent Changes to the 

Department of Housing and Urban 

Development’s Field Office Structure

Page 85 GAO-16-497 HUD Management

system—the Asset Management Process System—that was recently 

adopted to track response times.
Appendix IV: Performance Planning and 

Reporting

Page 86 GAO-16-497 HUD Management

The Office of Strategic Planning and Management (OSPM) is responsible 

for the Department of Housing and Urban Development’s (HUD) overall 

performance management and leads the agency’s strategic planning 

efforts, tracks how HUD is performing against targets, and oversees the 

performance of HUD grant programs. The Government Performance and 

Results Act of 1993 (GPRA) established strategic planning, performance 

planning, and performance reporting as tools to use in communicating 

agencies’ progress in achieving their missions. The GPRA Modernization 

Act of 2010 (GPRAMA) updated GPRA by enhancing performance 

planning, management, and reporting tools that can help inform decision 

making at the congressional and executive branch levels. GPRAMA 

emphasizes cross-organizational collaboration to achieve shared goals, 

which can help address governance challenges related to fragmentation, 

overlap, and duplication.

We compared HUD’s performance management documents—its strategic 

plan, annual performance plan, and annual performance report—and key 

practices with GPRAMA requirements. We then assessed the extent to 

which HUD met each requirement, using three categories. “Met” indicates 

that, in our judgment, HUD met or mostly met all aspects of the 

requirement. “Partially met” indicates that HUD met some but not all or 

most aspects of the requirement. “Not met” indicates that HUD did not 

meet any aspects of the requirement.

GPRAMA requires federal agencies to prepare strategic plans and 

contains 14 requirements for the planning process and plan contents. 

Among other things, these requirements include the time by which the 

plan should be submitted, outreach to stakeholders, and incorporation of 

outcome-oriented goals. We reviewed HUD’s strategic plan for fiscal 

years 2014 through 2018 to determine whether it was consistent with 

GPRAMA requirements. We found that HUD’s strategic plan generally 

met many federal requirements but that some gaps remained (see table 

2).

Appendix IV: Performance Planning and 

Reporting

Background

Assessment of HUD’s 

Performance 

Planning and 

Reporting against 

Key Requirements

Strategic Planning
Appendix IV: Performance Planning and 

Reporting

Page 87 GAO-16-497 HUD Management

Table 2: Extent to Which the Department of Housing and Urban Development (HUD) Met Process and Content Requirements 

for Its Strategic Plan for Fiscal Years 2014–2018 

Requirements: Content

Extent HUD met 

requirement

Contains a comprehensive mission statement. ●

Contains strategic goals and objectives. ●

Describes how goals and objectives contribute to federal government priority goals. ○

Describes how goals and objectives will be achieved. ●

Describes how agency is working with other agencies to achieve goals and objectives. ●

Describes how goals and objectives incorporate views obtained from congressional consultations. ○

Describes how agency performance goals contribute to strategic goals and objectives, and how the goals of 

the performance plans will be used to measure progress towards strategic goals. ●

Identifies key external factors that could affect achievement of strategic goals and objectives. ●

Describes program evaluations used in establishing or revising general goals and objectives, and includes a 

schedule for future program evaluations. ●

Requirements: Process

Issued at least every 4 years, approximately 1 year after a presidential term begins. ◐

Covers at least a 4-year period. ●

Consult with and obtain majority and minority views from authorizing, appropriations, and oversight 

committees, at least every 2 years. ◐

Solicit and consider stakeholder input when developing or adjusting the strategic plan. ◐

Function and activities related to agency strategic planning performed by federal employees. ●

Legend: ● Met ◐ Partially met ○ Not met

Source: GAO analysis of the Government Performance and Results Act Modernization Act of 2010 and Office of Management and Budget guidance, HUD’s strategic plan for fiscal years 2014–2018, and 

interviews with HUD officials. | GAO-16-497

As noted, the strategic plan met many GPRAMA content and process 

requirements. For example, the strategic plan covered at least a 4-year 

period; contained a comprehensive mission statement and strategic goals 

and objectives; and described how the goals would be achieved, how 

HUD was working with other agencies to achieve its goals, and how 

program evaluations were used in establishing or revising goals and 

objectives. As shown in table 2, HUD did not fully meet two of the nine 

content requirements or three of the five process requirements for 

developing its strategic plan for fiscal years 2014–2018.

• Linking strategic goals and federal priority goals. The strategic 

plan did not contain a description of how goals and objectives 

contribute to federal government priority goals—called cross-agency 

priority (CAP) goals—which are intended to address challenges that 

span multiple federal agencies. HUD contributed to a number of CAP 

goals in fiscal year 2015. For example, quarterly progress updates for 

the customer service and infrastructure permitting modernization CAP 
Appendix IV: Performance Planning and 

Reporting

Page 88 GAO-16-497 HUD Management

goals explicitly listed HUD as a contributing agency, and another CAP 

goal progress update listed as contributors all Chief Financial Officers 

Act agencies, of which HUD is one.1 While the strategic plan provided 

a link to a federal government website (Performance.gov) that 

contains information on CAP goals, it did not contain a description of 

how HUD’s goals and objectives contribute to them.2 Nonetheless, 

HUD is required to describe how its goals and objectives contribute to 

the CAP goals in its strategic plan.

• Outreach to congressional and external stakeholders and 

incorporating views obtained from congressional consultations.

Two of the process requirements that HUD did not fully meet centered 

on soliciting input from Congress and external stakeholders. 

According to documentation provided by HUD, HUD officials met with 

congressional appropriations committee staff in December 2013 to 

discuss HUD’s draft strategic goals and objectives. HUD also 

provided comments submitted by individuals through an online tool 

and a summary of comments collected by field office staff from local 

stakeholders on the draft strategic plan. However, HUD officials could 

not recall and did not document meeting with authorizing and 

oversight committee staff to obtain input on the draft strategic plan 

and has not sought input from congressional stakeholders on its 

strategic goals and objectives in more than 2 years. Similarly, industry 

representatives told us that HUD’s engagement with them on its 

strategic plans had declined with each new plan or was not occurring. 

These process shortcomings have led to a content deficiency in that 

the strategic plan does not include a description of how the goals and 

objectives incorporated views obtained from congressional 

consultations as required.

 1

The customer service CAP goal aims to make it faster and easier for individuals and 

businesses to complete transactions and have a positive experience with government. 

The infrastructure permitting modernization CAP goal aims to modernize the federal 

permitting and review process for major infrastructure projects to reduce uncertainty for 

project applicants, reduce the aggregate time it takes to conduct reviews and make 

permitting decisions by half, and produce better environmental and community outcomes.

2

GPRAMA required OMB to establish a single, performance-related website by October 1, 

2012, that would provide program and performance information and would be accessible 

to members and committees of Congress and the public. First developed by OMB in 2010 

for executive branch use, Performance.gov was made available to the public in August 

2011. 
Appendix IV: Performance Planning and 

Reporting

Page 89 GAO-16-497 HUD Management

• Issuance. HUD issued the strategic plan in April 2014, about 2 

months after the February deadline, which HUD indicated was due to 

delayed reviews by internal leadership and OMB. HUD officials noted 

that their timeliness improved over the prior strategic plan, which was 

issued about 9 months after the deadline.

GPRAMA requires federal agencies to prepare annual performance plans 

and reports. Agencies prepare an annual performance plan to 

communicate the agency’s strategic objectives and performance goals 

with other elements of the agency budget request. The plan describes 

how the goals will be achieved, identifies priorities among the goals, and 

explains how the agency will monitor progress. An annual performance 

report provides information on the agency’s progress towards achieving 

the goals and objectives described in the agency’s strategic plan and 

annual performance plan, including progress on strategic objectives, 

performance goals, and agency priority goals. We reviewed HUD’s 

combined annual performance plan for fiscal year 2017 and annual 

performance report for fiscal year 2015 to determine whether they were 

consistent with GPRAMA requirements.3 We found that HUD’s plan and 

report met most federal requirements (see tables 3 and 4).

Table 3: Extent to Which the Department of Housing and Urban Development (HUD) Met Federal Requirements for its Fiscal 

Year 2017 Annual Performance Plan 

Requirements: contents of performance plan

Extent HUD met 

requirement

Establish performance goals. ●

Express goals in an objective, quantifiable, and measureable form. ●

Describe how performance goals contribute to goals and objectives in the agency’s strategic plan and federal 

government performance goals. ◐

Identify agency priority goals. ●

Describe how performance goals are to be achieved. ●

Establish a balanced set of performance indicators. ●

 3

According to OMB guidance, in order to reduce duplication and communicate plans in the 

context of historical trends, agencies are strongly encouraged to consolidate the annual 

performance plan with the annual performance report to deliver them concurrently with the 

Congressional Budget Justification and on Performance.gov by strategic objective. HUD 

consolidated its 2017 annual performance plan and 2015 annual performance report into 

one document.

Annual Performance 

Planning and Reporting
Appendix IV: Performance Planning and 

Reporting

Page 90 GAO-16-497 HUD Management

Requirements: contents of performance plan

Extent HUD met 

requirement

Provide a basis for comparing actual program results with established performance goals. ●

Describe how the agency will ensure the accuracy and reliability of data used to measure progress towards its 

performance goals. ●

Describe major management challenges the agency faces. ●

Identify low-priority program activities. ●

Requirements: performance planning process 

Issued no later than the first Monday in February of each year. ●

Made available online and notify President and Congress of its availability. ●

Drafted by federal employees. ●

Chief Human Capital officer must prepare section that describes human capital information and other resources 

and strategies required to meet performance goals. ●

Legend: ● Met ◐ Partially met ○ Not met

Source: GAO analysis of the Government Performance and Results Act Modernization Act of 2010 and Office of Management and Budget guidance, HUD’s fiscal year 2015 annual performance report 

and fiscal year 2017 annual performance plan, and interviews with HUD officials. | GAO-16-497

As shown in table 3, HUD’s fiscal year 2017 annual performance plan met 

all but one of the content requirements and all of the process 

requirements. For example, HUD’s plan identified agency priority goals 

and described how performance goals were to be achieved. In addition, 

HUD’s Office of Chief Human Capital officer developed a section of the 

plan describing HUD’s human capital management objective, including 

strategies to streamline the hiring process and enhance employee 

engagement, and HUD made its plan available online. However, HUD 

only partly met the requirement that it describe how its performance goals 

contribute to its strategic goals and objectives and federal performance 

goals. The plan described how HUD’s performance goals would help it 

monitor progress towards its strategic goals and objectives. But the plan 

did not contain a description of how HUD’s performance goals specifically 

contribute to federal goals. HUD officials stated that they did not include 

this information in the plan because OMB did not list HUD as a direct 

contributor to the CAP goals on Performance.gov. However, HUD is 

expressly listed as a contributing agency for the infrastructure permitting 

modernization and customer service CAP goals in quarterly progress 

updates, as noted previously.
Appendix IV: Performance Planning and 

Reporting

Page 91 GAO-16-497 HUD Management

Table 4: Extent to Which the Department of Housing and Urban Development (HUD) Met Federal Requirements for its Fiscal 

Year 2015 Annual Performance Report 

Requirements: contents of performance report

Extent HUD met 

requirement

Review success of achieving performance goals and include results for 5 preceding fiscal years. ●

Evaluate the performance plan for the current fiscal year relative to the performance achieved toward the 

performance goals during the period covered by the update. ●

Describe where a performance goal has not been met, why it was not met, and plans for achieving the goal. ◐

Describe the use and assess the effectiveness of any waivers for managerial accountability and flexibility. ●

Include a review of the performance goals and evaluation of the performance plan relative to the agency’s 

strategic human capital management. ●

Describe how the agency ensures the accuracy and reliability of the data used to measure progress towards its 

performance goals. ●

Include summary findings of those program evaluations completed during the period covered by the update. ●

Requirements: performance reporting process 

Issued no later than February 2016. ●

Made available online and to OMB. ●

Drafted by federal employees. ●

Legend: ● Met ◐ Partially met ○ Not met

Source: GAO analysis of the Government Performance and Results Act Modernization Act of 2010 and Office of Management and Budget guidance, HUD’s fiscal year 2015 annual performance report 

and fiscal year 2017 annual performance plan, and interviews with HUD officials. | GAO-16-497

HUD’s fiscal year 2015 annual performance report met all but one of the 

content requirements and all of the process requirements, as shown in 

table 4. For example, the report reviewed the extent to which HUD 

achieved its performance goals and described how the agency ensures 

the accuracy and reliability of the data used to measure progress towards 

its goals, as required by GPRAMA. It also summarized the findings of 

recently completed program evaluations. However, HUD only partly met 

the requirement that the report describe the reasons a performance goal 

was not met. HUD did not describe the reasons that some goals were not 

met or plans for achieving them. For example, HUD stated that it missed 

its target for the percentage of mortgage loans insured with a borrower 

credit score under 680, but did not describe the reasons this happened or 

how the target will be achieved in the future. HUD also stated that it 

missed its target for the number of clients counseled through its housing 

counseling program and provided reasons for the shortfall, but did not 

describe plans to achieve this goal in the future. According to OMB 

guidance, an agency that is not making sufficient progress in meeting a 

performance goal should briefly address the reasons the performance 

goal was not met and plans for meeting it. HUD officials stated that they 

attempted to comment on all areas where HUD did not meet its 
Appendix IV: Performance Planning and 

Reporting

Page 92 GAO-16-497 HUD Management

performance goals, but were unable to do so because of time constraints 

and reporting delays.

We also reviewed some of HUD’s other performance management efforts 

and found that the agency had taken steps to enhance its performance 

reviews and use of performance data, as the examples below show.

• Performance review meetings. GPRAMA requires that federal 

agencies review progress on agency priority goals at least once a 

quarter.4 Reviews must be conducted by top agency leaders, involve 

goal leaders and other contributors, and be used to identify at-risk 

goals and strategies to improve performance. To meet this 

requirement, HUD conducts regular data-driven performance reviews 

called HUDStat meetings.5 The meetings focus on quarterly progress 

toward achieving each of HUD’s priority goals. According to HUD 

officials, the HUD Secretary and senior leadership from throughout 

the agency, and sometimes partner agencies, attend these meetings 

to address challenges, review performance data and metrics, improve 

internal and external collaboration, and enhance performance.6

HUDStat meetings result in a specific set of action items for a given 

agency priority goal. HUD has also developed the HUDStat Business 

Intelligence tool to enhance the meeting process. The HUDStat 

Business Intelligence tool supports HUDStat meetings by providing an 

enterprise view of performance data by place, time, and program.

• Program office performance management efforts. GPRAMA aims 

to help ensure that agencies use performance information in decision 

 4

Pub. L. No. 111–352, § 6, 124 Stat. 3875 (2011) (codified at 31 U.S.C. § 1120).

5

In a 2011 report, we found that HUDStat was an integral part of a HUD initiative intended 

to improve the overall performance of the agency. GAO, Streamlining Government: Key 

Practices from Select Efficiency Initiatives Should Be Shared Governmentwide, 

GAO-11-908 (Washington, D.C.: Sept. 30, 2011). Additionally, in a 2015 report, we 

assessed the performance review practices at 23 agencies, including HUD, and found that 

HUD’s performance review meetings were consistent with GPRAMA requirements, OMB 

guidance, and leading practices. GAO, Managing for Results: Agencies Report Positive 

Effects of Data-Driven Reviews on Performance but Some Should Strengthen Practices, 

GAO-15-579 (Washington, D.C.: July 7, 2015).

6

For example, according to HUD officials, program staff members from both HUD and the 

Department of Veterans Affairs regularly participate in HUDStat meetings that focus on 

veterans’ homelessness. 

Performance Reviews and 

Data
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Reporting

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making and holds them accountable for achieving results and 

improving government performance. Additionally, as our prior work 

has shown, leading organizations use performance information to 

identify gaps in and enhance their performance and to improve 

organizational processes.7 To help manage program performance, 

HUD’s program offices have developed mechanisms to monitor officelevel performance metrics. For example, the Office of Housing uses 

mechanisms to evaluate progress across the office and within 

programs, including scorecards that track performance metrics. 

Similarly, the Office of Community Planning and Development (CPD) 

has its own datasets and processes in place to monitor performance. 

For example, CPD developed an automated template for grantees to 

use to report on their progress.

• Core performance reporting tool. Federal internal control standards 

state that agencies should identify and obtain relevant and needed 

data to monitor program goals.8 According to HUD officials, HUD is 

developing a new tool to collect performance data for its competitively 

funded grant programs. HUD has indicated that the tool is to capture 

data for 24 standardized performance measures through an online 

web portal in order to help HUD better assess program effectiveness 

and increase its ability to do extensive analysis, such as cross 

tabulation. HUD expects to fully implement the tool in fiscal year 2018.

 7

GAO, Managing for Results: Enhancing Agency Use of Performance Information for 

Management Decision Making, GAO-05-927 (Washington, D.C.: Sept. 9, 2005). 

8

GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014). 
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Within the Department of Housing and Urban Development (HUD), the 

Office of the Chief Human Capital Officer (OCHCO) is responsible for 

providing leadership and direction in the formulation of strategic human 

capital policies, programs, and systems to promote efficient and effective 

human capital management for the agency. Beginning in fiscal year 2013, 

HUD contracted out a number of human capital functions to the 

Department of the Treasury’s Administrative Resource Center. Services 

under the contract include job classification, staff acquisition, personnel 

security, and help desk services.

We and others have identified human capital management as a longstanding challenge for HUD. For example, we raised the issue in our 

1984 management review of HUD and cited it as a reason HUD was on 

our high-risk list from 1994 to 2007.1 In addition, for many years HUD’s 

Office of Inspector General (OIG) has identified HUD’s need for effective 

human capital strategies as a major challenge facing the agency. Further, 

in a June 2012 review, the Office of Personnel Management (OPM) 

determined that HUD did not meet 41 of 68 expected outcomes across 

the five Human Capital Assessment and Accountability Framework 

systems.2 OPM’s review attributed many of the problems to a lack of 

human capital accountability and insufficient strategic management of 

human capital.

 1

GAO maintains a program to focus attention on government operations that it identifies 

as high risk due to their greater vulnerabilities to fraud, waste, abuse, and 

mismanagement or the need for transformation to address economy, efficiency, or 

effectiveness challenges.

2

Office of Personnel Management, U.S. Department of Housing and Urban Development

Human Capital Management Evaluation Report Quarter 3-FY 2012 (Washington, D.C.: 

June 11, 2012). OPM developed the Human Capital Assessment and Accountability 

Framework to fulfill its mandate under the Chief Human Capital Officers Act of 2002. The 

five systems of the framework are strategic alignment; leadership and knowledge 

management; results-oriented performance culture; talent management; and 

accountability. 

Appendix V: Human Capital Planning

Background
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We compared HUD’s human capital plans related to workforce planning, 

succession planning, and training with key principles and practices 

identified in our previous work. We then assessed the extent to which 

HUD followed each key principle or practice, using three categories. 

“Following” indicates that, in our judgment, HUD was following or mostly 

following all aspects of the principle or practice. “Partially following”

indicates that HUD was following some but not all or most of the aspects 

of the principle or practice. “Not following” indicates that HUD was not 

following any aspects of the principle or practice.

In general, we found that HUD followed most of the key principles and 

practices we identified for human capital planning. HUD’s efforts in 

completing its human capital planning documents is a key step in 

identifying the agency’s workforce goals and determining the activities 

and initiatives needed to achieve these goals. However, for its human 

capital program to succeed, it will be important that HUD sustain these 

initiatives and carry out the activities outlined it its plans.

Workforce planning allows agency management to ensure that skill needs 

are continually assessed and that the organization is able to obtain and 

maintain a workforce with the skills necessary to achieve organizational 

goals. Although agencies may take various approaches to workforce 

planning, in a December 2003 report we identified key principles that 

should be addressed.3 In March 2013 we reported that changes in HUD 

leadership and priorities had sometimes disrupted efforts to update plans, 

but that HUD was moving forward with strategic human capital efforts 

after several years of delays.4 We recommended that HUD ensure that 

human capital and workforce plans clearly incorporate key principles, 

including promoting the alignment of human capital management 

 3

GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C.: Dec. 11, 2003). We developed the key principles for 

workforce planning by synthesizing information from meetings with organizations with 

government-wide responsibilities for or expertise in workforce planning; our own guidance, 

reports, and testimonies on federal agencies’ workforce planning and human capital 

management efforts; leading human capital periodicals; and our own experiences in 

human capital management.

4

GAO, Housing and Urban Development: Strategic Human Capital and Workforce 

Planning Should be an Ongoing Priority, GAO-13-282 (Washington, D.C.: Mar. 15, 2013). 

Assessment of HUD’s 

Human Capital 

Management against 

Key Principles and 

Practices

Strategic Workforce 

Planning
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Page 96 GAO-16-497 HUD Management

strategies with the agency’s mission, goals, and objectives; ensuring 

continuity of leadership; promoting a diverse, high-performing workforce; 

addressing competency gaps, particularly in mission-critical occupations; 

and monitoring and evaluating the results of its human capital 

management policies, programs, and activities. HUD incorporated these 

principles into the human capital and workforce plans it finalized in 2015.

We assessed HUD’s strategic workforce planning efforts as reflected in 

these plans against the key principles we identified in our December 2003 

report and found that HUD fully incorporated five of the six key principles 

and partially incorporated the remaining principle into its plan (see table 

5).

Table 5: Extent to Which the Department of Housing and Urban Development (HUD) Followed Key Principles and Practices in 

Developing the 2015–2018 Human Capital Strategic Plan and the 2015-2018 Strategic Workforce Plan

Principle or practice Extent HUD followed

Stakeholder involvement: Involves top management, employees, and other stakeholders in developing, 

communicating, and implementing the strategic workforce plan. ●

Workforce gap analysis: Determines the critical skills and competencies that will be needed to achieve the 

future programmatic results. ◐

Gap-closure strategies: Develops strategies tailored to address gaps and human capital conditions in 

critical skills and competencies that need attention. ●

Support capacity: Builds the capability needed to address administrative, educational, and other 

requirements important to supporting workforce strategies, such as providing guidance on the availability 

and use of human flexibilities. ●

Evaluation: Monitors and evaluates the agency’s progress toward its human capital goals and the 

contribution that human capital results have made toward achieving programmatic goals. ●

Legend: ● Followed ◐ Partially followed ○ Not followed

Source: GAO analysis of GAO-04-39, HUD documents, and interviews with HUD officials. | GAO-16-497

• Stakeholder involvement. HUD’s leadership, top management, and 

other stakeholders participated in its strategic workforce planning 

process. The department’s 2015–2018 Strategic Workforce Plan 

includes a chart listing key stakeholders and their roles in workforce 

planning. This list includes HUD’s Secretary, Deputy Secretary, and 

executive leadership, as well as OCHCO staff. Specifically, OCHCO 

leaders are tasked with developing, communicating, and 

implementing new, innovative human capital solutions.

• Workforce gap analysis. HUD conducted an agency-wide skills 

assessment and is conducting ongoing assessments to identify critical 

skill competencies and gaps among its employees. Specifically, in 

June 2014 a consulting firm completed a report for HUD that identified 

critical skill competencies and gaps for the agency. The assessment 
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also included recommendations for HUD on closing gaps. While the 

initial and ongoing assessments at HUD aim to address current gaps, 

HUD noted in its strategic workforce plan that it does not have a 

system in place to predict future critical skills and competency needs 

to achieve future results. However, according to HUD officials the 

agency implemented a workforce succession planning system in 

September 2015 that was intended to enhance HUD’s ability to 

predict skill and competency needs. HUD was piloting the system 

throughout fiscal year 2016 and began to conduct training.

• Gap-closure strategies. HUD’s strategic workforce plan identifies 

strategies based on assessments administered by HUD’s Learning, 

Enrichment, and Resource Network (LEARN) that are designed to 

address gaps in staffing and workforce skills and competencies.5

These strategies are (1) comprehensive leadership development 

through the implementation of a leadership development model and 

the development of a succession planning program, (2) competencybased human capital management through improvements to the 

recruitment and hiring processes and increased availability of 

competency-based development programs and tools, and (3) 

engaged performance culture through improved performance 

management processes and the availability of career development 

and work-life flexibilities.

• Support capacity. HUD uses human capital flexibilities as part of an 

overall human capital strategy to support its workforce, according to 

both the human capital strategic plan and the strategic workforce 

plan.6 According to HUD officials, the agency has solicited and 

incorporated input from internal and external stakeholders on its draft 

flexibilities-related policies and procedures. For example, the officials 

stated that they collaborated with subject-matter experts within the 

agency, reached out to OPM and other agencies, and obtained 

feedback from OCHCO managers. They also told us that they had 

taken several approaches to educate managers and employees on 

the availability and use of these flexibilities. Among other things, 

 5

LEARN is HUD’s learning organization whose primary directive has been to build a 

sustainable learning infrastructure and culture through the implementation of an 

enterprise-wide learning and development strategy.

6

Flexibilities include recruitment strategies to attract and retain qualified candidates as 

well as workforce flexibilities to support an engaged employee culture.
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OCHCO staff posted information about various policies on HUD’s 

intranet site, developed tip sheets, and met regularly with managers in 

program offices to offer retention strategies. Additionally, as a way to 

streamline and improve administrative processes for using flexibilities, 

HUD officials have conducted focus groups to discuss ways to 

improve the hiring process and have been annually revising the 

guidance on hiring. Finally, hiring managers receive training and 

information on prohibited practices and employees who apply for 

telework are required to take training.

• Evaluation. HUD’s 2015–2018 Human Capital Strategic Plan 

includes human capital strategic goals, objectives, and targets to 

address some critical human capital and programmatic challenges 

confronting the agency. The plan includes a template for establishing 

operational plans within OCHCO for addressing goals and priorities 

and calls for quarterly project reviews to assess progress. In addition, 

it outlines how the HR Stat process developed by OPM and the Office 

of Management and Budget (OMB) is to be incorporated into 

HUDStat, the department-wide quarterly review of HUD’s overall 

strategic goals and objectives.7 According to the plan, HUDStat is to 

serve as the forum for measuring and improving human capital 

performance as a means of enhancing HUD’s strategic goals and 

objectives.

Strategic succession planning is an integral part of human capital 

management and helps strengthen both current and future organizational 

capacity. In a 2003 report, we identified six key principles that could help 

federal agencies produce a strategic approach to their succession 

planning and management efforts (see table 6).8 We assessed HUD’s 

 7

HR Stat is an evaluation program developed by OPM and OMB that is designed to more 

effectively standardize the data points that are evaluated to assess the delivery of human 

capital services. It uses metrics to monitor key human capital initiatives such as 

recruitment, training, and succession planning in relation to organization performance. 

HUDStat meetings are quarterly data-driven performance reviews that HUD conducts to 

track its progress toward achieving each of HUD’s priority goals. 

8

GAO, Human Capital: Insights for U.S. Agencies from Other Countries’ Succession 

Planning and Management Initiatives, GAO-03-914 (Washington, D.C.: Sept. 15, 2003). 

We developed the key principles for succession planning through discussions with officials 

from central human capital agencies, national audit offices, and agencies in Australia, 

Canada, New Zealand, and the United Kingdom, and a screening survey sent to senior 

human capital officials at selected agencies.

Succession Planning
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2015 Strategic Human Capital Succession Plan and determined that HUD 

has incorporated the six principles into its plan, as table 6 shows.

Table 6: Extent to Which the Department of Housing and Urban Development (HUD) Followed Key Principles in Developing 

the 2015-2018 Succession Plan

Principle Extent HUD followed

Top leadership: Receives active support of agency top leadership. ●

Link to strategic planning: Links to strategic planning with a focus on current and future needs to meet the 

agency’s mission over the long term. ●

Identify talent from multiple organizational levels: Identifies high-performing employees from multiple 

organizational levels early in their careers and identify and develop knowledge and skills critical in the 

workplace. ●

Developmental assignments: Emphasizes developmental assignments for high-potential employees in

addition to formal training. ●

Human capital challenges: Addresses specific human capital challenges, such as diversity, leadership 

capacity, and retention. ●

Broaden transformation effort: Facilitates broader transformation efforts to support change. ●

Legend: ● Followed ◐ Partially followed ○ Not followed

Source: GAO analysis of GAO-03-914, HUD documents, and interviews with HUD officials. | GAO-16-497

• Top leadership. HUD’s succession plan indicates that the success of 

the plan depends on the personal involvement and commitment of 

HUD’s top leaders. The plan lists key stakeholders and their roles and 

responsibilities in succession planning, including HUD’s Secretary, 

Deputy Secretary, and executive leadership, as well as OCHCO staff. 

The Deputy Secretary is responsible for empowering staff to execute 

the succession planning process. Further, the plan outlines a number 

of strategies the agency intends to implement, including quarterly 

management and budget operations reviews conducted by the Deputy 

Secretary and program office leadership.

• Link to strategic planning. HUD’s succession plan discusses its 

relationship to HUD’s overall strategic plan and human capital 

strategic plan. In addition, it outlines the external and internal factors 

that influence HUD’s operational capacity. Workforce and succession 

planning, according to the plan, should assist in devising solutions to 

address demographic and human capital challenges. Further, HUD 

developed a workforce and succession planning guide and a 

succession planning IT solution for managers and leaders. According 

to the plan, the workforce and succession planning guide provides a 

methodology that links the workforce and succession planning 

process with the agency’s strategic direction and plan and with work 

activities required to carry out HUD’s long-term and short-term goals 

and objectives. This tool is expected to provide program managers 
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with the ability to review their mission-critical occupations and current 

staffing levels and skills and to determine future needs. In addition, 

the IT solution is designed to perform certain tasks, including 

searching for internal candidates with specific attributes, identifying 

overlooked employees, and defining development opportunities.

• Identify talent from multiple organizational levels. According to the 

succession plan, HUD has developed succession planning guidance 

that outlines seven steps for establishing talent pools for missioncritical leadership positions. These steps include identifying current 

and future mission-critical leadership positions and establishing a list 

of potential “leadership pool” members from eligible staff members 

within the organization. Furthermore, program offices are expected to 

develop action plans that identify two or three individuals who have or 

will have the skills and abilities necessary to assume future leadership 

positions. In connection with succession planning, LEARN developed 

and executed a leadership development model for the development of 

HUD’s leadership pipeline. LEARN plans to encourage leadership 

development among all employees—staff and individual project 

contributors, team leads, supervisors, managers, and executives. 

LEARN offers four development programs to identify and develop 

employees at varying organizational levels. For example, the 

Emerging Leaders Program targets high-performing employees at the 

GS-12 through GS-14 levels who are interested in broadening their 

knowledge and developing their leadership skills.9

• Developmental assignments. As outlined in the succession plan, 

HUD offers learning and development programs in addition to formal 

training. For instance, the agency developed a Rotational Assignment 

Program intended to provide current employees with opportunities for 

growth and development. This program is designed to teach 

employees more about other HUD programs and offices, increase 

their knowledge of the agency, and add to their skill set. The rotation 

must be developmental for the employee and lasts 30 to 120 days. 

HUD also provides a Fellows Training Program that is intended to 

provide guidance and development to Presidential Management 

Fellows.10 HUD uses this program to recruit and develop highly 

 9

GS refers to the General Schedule, which is the pay system that covers the majority of 

federal workers.

10The Presidential Management Fellows Program is a leadership development program at 

the entry level for candidates that have recently received their advanced degrees. 
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motivated and talented individuals for professional and administrative 

positions in the agency.

• Human capital challenges. HUD’s succession plan identifies several 

strategies to achieve a more diverse workforce, maintain its 

leadership capacity as senior executives retire, and increase the 

retention of high-potential staff. Through the use of special 

employment hiring authorities, HUD plans to cultivate an 

organizational workplace culture that supports greater diversity, 

inclusion, collaboration, and employee engagement in order to 

improve organizational performance. In the plan, HUD acknowledges 

that aligning succession-planning efforts with other programs such as 

diversity and performance management is critical to its success. 

HUD’s succession plan also identifies employees who are eligible to 

retire from critical positions in the agency. HUD structured its plan to 

encompass positions in the following target pools: HUD’s leadership 

pipeline, mission-critical occupations, and high-impact/high-risk 

positions. According to the succession plan, HUD’s senior executive 

service (SES) attrition seems to be primarily due to retirement. HUD 

data analysis indicates that SES retirement eligibility will increase 

from 30 percent in 2015 to 41 percent in fiscal year 2018. The plan 

outlines programs that HUD has implemented targeting leadership 

development. To help ensure that the agency has the needed 

flexibility to recruit and retain talented human capital, HUD has 

updated its recruitment and selection policies. According to the plan, 

one area of focus for HUD’s succession planning is to maximize the 

use of retention tools.

• Facilitate broader transformation efforts. HUD’s succession plan 

describes its SES Candidate Development Program as a competitive 

program designed to create pools of qualified candidates for SES 

positions. In addition, the program is intended to advance the goal of 

a “corporate SES,” a diverse corps of career executives who share a 

government-wide perspective. The plan states that these executives 

share values and a common identity that is expected to reach beyond 

their individual professions or agencies. Further, HUD anticipates that 

executives that participate in this program will be well positioned to 

lead change both within HUD and throughout the federal government.

Effective training and development programs are an integral part of a 

learning environment that can enhance an agency’s ability to attract and 

retain employees with the skills needed to achieve results. Training and 

development programs help an agency achieve its mission and meet its 

goals by improving individual and ultimately organizational performance. 

Training and Development 

Programs
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In a 2004 report, we identified four key principles that could help federal 

agencies produce a strategic approach to their training and development 

efforts.11

We determined that HUD fully incorporated two and partially incorporated 

two of these principles into its training and development program (see 

table 7).

Table 7: Extent to Which the Department of Housing and Urban Development (HUD) Was Following Key Principles for Training 

and Development Programs

Principle

Extent HUD 

follows

Planning: Develops a strategic approach that establishes priorities and leverages investments in training and 

development to achieve agency results. ●

Design and development: Identifies specific training and development initiatives that it will use, along with other 

strategies, to improve individual and agency performance. ●

Implementation: Ensures effective and efficient delivery of training and development opportunities in an environment 

that supports learning and change. ◐

Evaluation: Assesses the extent to which training and development efforts contribute to improved performance and 

results. ◐

Legend: ● Following ◐ Partially following ○ Not following

Source: GAO analysis of GAO-04-546G, HUD documents, and HUD officials. | GAO-16-497

HUD has developed a strategic approach to training by establishing 

agency-wide training goals and a strategy for developing its employees. 

Its 2015 departmental corporate learning plan outlines LEARN’s 

employee development strategy and training programs. HUD officials told 

us that the agency’s training goals included implementing its employee 

development strategy while linking the development strategy to the skills 

assessments, extending training to field staff through use of new 

technology such as video teleconferencing, and making tools to help in 

developing a career path available to at least 50 percent of the workforce. 

HUD’s learning plan indicated that HUD had established a process for 

 11GAO, Human Capital: A Guide for Assessing Strategic Training and Development 

Efforts in the Federal Government, GAO-04-546G (Washington, D.C.: March 2004). We 

developed the key principles for training through consultations with government officials 

and experts in the private sector, academia, and nonprofit organizations; examinations of 

laws and regulations related to training and development in the federal government; and 

reviews of the sizeable body of literature on training and development issues, including 

our previous reports on a range of human capital topics.

Planning
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identifying current skill gaps and training needs within its workforce. 

Specifically, HUD officials told us that the agency conducted skills 

assessments annually, alternating between supervisors and managers 

one year and nonsupervisory staff the next year. According to HUD 

officials, the training goals foster continual learning to meet the agency’s 

mission. The officials said that because more than half of HUD 

employees were in field offices, the agency focused on providing 

opportunities for them. Additionally, the learning plan established a goal 

of posting career paths for more than 50 percent of HUD’s workforce by 

the end of fiscal year 2015. HUD officials stated that they achieved the 

goal of developing career paths for 50 percent of its workforce at one 

point but that due to staff attrition, as of March 2016 the career paths they 

developed covered 45 percent of the workforce. Furthermore, the learning 

plan stated that senior leadership met to discuss a continuous learning 

approach and had recommended a mechanism for HUD to fund 

continuous learning.

HUD’s training program includes implementing several leadership training 

courses and launching a competency-based learning and development 

strategy to better ensure that training is connected to improving individual 

staff performance. For example, HUD has created a developmental tool, 

The Leadership Journey, which it states is available to all employees on 

the agency’s intranet site. Additionally, LEARN began developing career 

paths for the agency’s mission-critical occupations in fiscal year 2014. 

HUD also piloted a web-based tool that allows employees to complete a 

personal skills assessment to assist them in completing individual 

development plans.

Furthermore, LEARN has solicited training plans from HUD’s program 

offices (something it plans to do annually) to develop and track 

accountability measures. According to OCHCO officials, HUD is validating 

the information obtained from the program offices with information in the 

Learning Management System, which is used to track progress in 

achieving training goals. They noted that the agency’s training goals are 

linked to OCHCO’s human capital operational plans, which are used to 

track and monitor leadership and management results in achieving 

human capital program objectives, and the Human Capital Strategic Plan, 

which is aligned with HUD’s Strategic Plan. In fiscal years 2013 and 2014, 

HUD conducted a baseline skills assessment. The results of the agencywide skills assessment showed that HUD employees had significant skill 

gaps in cross-cutting competencies such as written communication. 

HUD’s learning plan outlines strategies and initiatives intended to 

Design and Development
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minimize skills gaps. It also indicated that HUD publishes job aids to 

assist managers and supervisors in promoting the career path tools.

HUD’s leaders and managers use various mechanisms to promote and 

deliver training and development opportunities to staff and identify areas 

for improvement. However, whether HUD’s actions have fostered an 

environment conducive to effective training and development is unclear. 

Agency officials told us that HUD leaders use town hall meetings and 

other events, including learning events, to communicate support for 

learning. HUD’s performance competencies state that managers are 

responsible for fostering professional development through training and 

on-the-job instructions. Additionally, the performance competencies cite 

“personal investment” as one of the five critical elements that should be 

included in performance plans for employees assessed under both the 

Performance Accountability and Communication System and the 

Employee Performance Planning and Evaluation System.12 HUD also 

encourages buy-in to training and development by encouraging the use of 

tools such as learning plans, tools to develop career paths, and access to 

the LEARN course catalog. To help deliver training to all staff, HUD 

implemented multiple approaches such as providing in-class instruction 

and distance learning through satellite broadcasts and web-based 

training. Finally, HUD officials told us that the agency used feedback to 

design its training program and gauge course performance.

However, HUD employees’ views on the effectiveness of HUD’s training 

and development are mixed. For example, results from HUD’s 2015 

Federal Employee Viewpoint Survey showed that fewer than half of 

employees felt that their training needs had been assessed.13 Specifically, 

in response to a question asking whether their training needs had been 

assessed, about 45 percent (2,414 employees) agreed or strongly 

 12According to HUD’s Human Capital Strategic Plan, the Performance Accountability and 

Communication System applies to nonexecutive managers and supervisors in General 

Schedule positions. The Employee Performance Planning and Evaluation System applies 

to nonsupervisory employees.

13The survey measures employees’ perceptions of whether and to what extent conditions 

characterizing successful organizations are present in their agencies. The survey results 

provide insight into the challenges agency leaders face in ensuring the federal 

government has an effective civilian workforce and how well they are responding to those 

challenges. 

Implementation
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agreed, 24 percent (1,241 employees) neither agreed nor disagreed, and 

31 percent (1,642 employees) disagreed or strongly disagreed.14 In 

addition, fewer than half of employees indicated that they were satisfied 

with the training they had received. Specifically, in response to a question 

asking whether they were satisfied with the training they had received for 

their present job, about 45 percent (2,393 employees) were satisfied or 

very satisfied, 26 percent (1,335 employees) were neither satisfied nor 

dissatisfied, and 29 percent (1,529 employees) were dissatisfied or very 

dissatisfied.15

A number of offices within HUD have indicated they are planning to take 

steps to better engage employees through enhanced training efforts. 

These efforts include making specific courses available to staff to improve 

key skills and subject-matter expertise, providing staff with opportunities 

to temporarily rotate through other positions and offices, connecting 

training opportunities with career paths, and encouraging staff and 

supervisors to use individual training and development plans.

HUD is adopting a multilevel approach to evaluating its training and 

development efforts but has not fully implemented its evaluation system. 

According to HUD officials, the agency relies on employee feedback and 

the annual skills assessments to determine the extent to which training 

and development efforts contribute to improved performance and results. 

For instance, the officials stated that LEARN solicited feedback from 

employees who took leadership development courses and used their 

feedback and various outcomes to gauge a course’s performance. 

According to HUD’s human capital strategic plan, the agency plans to 

continue using HUDStat as the forum for measuring and improving 

human capital performance as a means of enhancing the agency’s 

strategic goals and objectives.

In addition, LEARN has begun implementing a four-level training 

evaluation system, but these efforts are ongoing. In fiscal years 2013 and 

 14A total of 5,297 employees out of 5,404 who completed the survey responded to this 

question. The percentages reported from the survey results are weighted to represent 

HUD’s population. The number of responses is unweighted. 

15A total of 5,257 employees out of 5,404 who completed the survey responded to this 

question. 

Evaluation
Appendix V: Human Capital Planning

Page 106 GAO-16-497 HUD Management

2014, LEARN began evaluating the extent to which training courses met 

employees’ training needs at the end of each training session. During that 

period LEARN also piloted a second level of evaluations for performance 

management and communication training sessions that involved tests of 

employees’ knowledge of the material before and after the classes to 

assess learning. In fiscal year 2015, LEARN developed an instrument to 

pilot a third level of evaluation, which is intended to measure the extent to 

which the participants’ behavior changes as a result of the training 

session. This evaluation is to take place about 6 to 8 months after the 

course. According to agency officials, HUD is in the process of 

implementing an automated evaluation tool that they plan to fully integrate 

with the agency’s Learning Management System, which they expect to be 

functional by the end of June 2016. They noted that levels one through 

three of the evaluation system are a part of this tool.

Finally, the agency plans to measure the effect of the training program on 

program or organizational goals by looking at the return on investment of 

the training courses—typically 8 to 12 months after a course is complete. 

HUD also used Federal Employee Viewpoint Survey results to illustrate 

the effect LEARN is having on HUD’s workforce. For instance, HUD 

compared its fiscal year 2013 and 2014 survey results and found that the 

percentage of employees satisfied with the training they received had 

increased (from 36.1 percent to 40.4 percent). However, survey results 

relating to skill level improvement in the work unit and whether the 

workforce had the job-relevant knowledge and skills necessary to 

accomplish organizational goals did not increase. HUD interpreted these 

results to mean that greater focus is needed on how employees can apply 

the skills learned in training courses to their jobs.
Appendix VI: Financial Management

Page 107 GAO-16-497 HUD Management

The Department of Housing and Urban Development’s (HUD) Office of 

the Chief Financial Officer (OCFO) has responsibility for ensuring that the 

agency practices sound financial management and stewardship of public 

resources. The Chief Financial Officer advises the HUD Secretary and 

agency leadership on all aspects of financial management. OCFO 

establishes policies for the development, maintenance, and operation of 

financial systems and the evaluation of the agency’s financial 

management systems and internal control. OCFO is also responsible for 

the preparation, justification, monitoring, and execution of HUD’s annual 

budget. In addition, OCFO provides accounting and reporting services in 

support of the administrative and general program activities, prepares the 

agency’s annual consolidated financial statements, and implements the 

agency’s management control program, among other financial 

management activities.

HUD’s Office of Inspector General (OIG) has reported multiple 

weaknesses in HUD’s internal controls and noted that most of these 

weaknesses have been long-standing problems. Additionally, OIG has 

identified HUD’s financial management systems, compliance with the 

Improper Payments Elimination and Recovery Act of 2010 (IPERA), and 

financial management governance structure as major management and 

performance challenges.1 In addition to the issues associated with 

OCFO’s financial management governance, in fiscal years 2014 and 

2015 OIG identified significant financial governance issues within Ginnie 

Mae.

 1

Pub. L. No. 111-204, 124 Stat. 2224 (2010).

Appendix VI: Financial Management

Background
Appendix VI: Financial Management

Page 108 GAO-16-497 HUD Management

Internal control is an integral part of an organization’s management that 

should reach throughout all departments and programs as well as 

financial management reporting functions. We identified key practices 

from Office of Management and Budget (OMB) circulars and a 2000 GAO 

report that could help federal agencies maintain an effective internal 

control system.2 As shown in table 8, we assessed the extent to which 

HUD followed each practice using three categories. “Following” indicates 

that, in our judgment, HUD was following or mostly following all aspects of 

the practice. “Partially following” indicates that HUD was following some 

but not all or most aspects of the practice. “Not following” indicates that it 

was not following any aspects of the practice.

Table 8: Extent to Which the Department of Housing and Urban Development (HUD) Follows Key Practices for Financial 

Management, as of Fiscal Year 2015

Practice

Extent HUD 

follows

Financial statements: Prepares annual financial statements without significant manual workarounds and 

adjustments, ○

Audit opinion: Receives an unmodified (clean) audit opinion on its financial statements for at least 2 

consecutive years, ○

Report on internal controls: Annually obtains an auditor’s report on internal controls over financial reporting 

that contains no material weaknesses for at least 2 consecutive years, ○

Management assurance: Annually provides assurances that the agency’s internal controls over financial 

reporting are operating effectively, ○

Financial management systems: Has financial management systems that substantially comply with the 

Federal Financial Management Improvement Act (FFMIA), ○

Report on improper payments: Annually reports on the agency’s improper payments, ●

Compliance under Improper Payments Elimination and Recovery Act of 2010 (IPERA): Obtains Office of 

Inspector General’s (OIG) report on agency’s improper payment reporting that identifies no instances of 

noncompliance under IPERA requirements, ○

 2

Office of Management and Budget, Management’s Responsibility for Internal Control, 

OMB Circular No. A-123 (Washington, D.C.: Dec. 21, 2004); Requirements for Effective 

Estimation and Remediation of Improper Payments, Appendix C to OMB Circular No. A123 (Washington, D.C.: Oct. 20, 2014); Compliance with the Federal Financial 

Management Improvement Act of 1996, Appendix D to OMB Circular No. A-123

(Washington, D.C.: Sept. 20, 2013); Financial Reporting Requirements, OMB Circular No. 

A-136 (Washington, D.C.: Sept. 18, 2014); and GAO, Executive Guide: Creating Value 

Through World-class Financial Management, GAO/AIMD-00-134 (Washington, D.C.: April 

2000).

Assessment of HUD’s 

Financial 

Management against 

Key Practices
Appendix VI: Financial Management

Page 109 GAO-16-497 HUD Management

Practice

Extent HUD 

follows

Compliance: Operates in compliance with other financial laws and regulations (in addition to FFMIA and 

IPERA). ○

Legend: ● Following ◐ Partially following ○ Not following

Source: GAO analysis of Office of Management and Budget Circulars A-123 and A-136, GAO/AIMD-00-134, OIG reports, and HUD documents. | GAO-16-497

HUD routinely prepares agency-wide financial statements that are 

independently audited by the OIG.3 However, due to system limitations 

and weaknesses, HUD’s financial management systems required 

extensive manipulation and excessive manual processes for the agency 

to perform its required financial management functions. In addition, OIG 

reported that HUD made certain manual fiscal year-end adjustments 

based on self-reported data, not transactional data.

After receiving a clean opinion for 13 consecutive years, HUD received a 

qualified opinion in fiscal year 2013 and a disclaimer of opinion in fiscal 

years 2014 and 2015.4 OIG based its 2013 qualified opinion on 

weaknesses in HUD’s budgetary accounting for certain grants, which 

departed from generally accepted accounting principles (GAAP), and a 

lack of accounting for cash management. In 2013, OIG also withdrew its 

previously reported clean opinion on HUD’s fiscal year 2012 consolidated 

financial statements. It was replaced with a qualified opinion due to 

improper budgetary accounting and a lack of accounting for cash 

management, and the fiscal year 2012 financial statements were restated 

 3

We obtained HUD’s annual financial statement reports for fiscal years 2004 to 2015. We 

did not independently assess these audits. 

4

According to the American Institute of Certified Public Accountants’ Forming an Opinion 

and Reporting on Financial Statements (AU-C Section 700), effective for audits of financial 

statements for periods ending on or after December 15, 2012, an unmodified opinion 

states that the financial statements are presented fairly, in all material respects, in 

accordance with the applicable accounting principles. For periods ending before 

December 15, 2012, an unmodified opinion was known as an unqualified opinion. For the 

purposes of this report, we use the term “clean opinion” to refer to either an unmodified 

opinion or an unqualified opinion. A qualified opinion, in relation to the financial 

statements, states that certain reported balances cannot be audited, that the financial 

statements contain a material departure from generally accepted accounting principles, or 

both. A disclaimer of opinion states that the auditor does not express an opinion on 

whether the financial statements are free of significant errors and comply with applicable 

accounting principles because of—among other things—the lack of supporting documents 

or restrictions imposed by management that significantly limit the scope of the audit.

Financial Statements

Audit Opinion
Appendix VI: Financial Management

Page 110 GAO-16-497 HUD Management

to correct material errors.5 The 2014 and 2015 disclaimers of opinion 

stemmed from the material effect of HUD’s continued use of improper 

budgetary accounting, unvalidated grant accrual estimates, and OIG’s 

inability to express an opinion on the fairness of Ginnie Mae’s nonpooled 

loans (which contributed to disclaimers of opinion on Ginnie Mae’s 

standalone financial statements both years). Additionally, improper 

accounting for HUD’s assets also contributed to the 2015 disclaimer of 

opinion.6

Each year, OIG tests and reports on HUD’s internal controls over financial 

reporting. After 4 consecutive years finding no material weaknesses, OIG 

reported one material weakness in fiscal year 2012, four material 

weaknesses in fiscal year 2013, eight material weaknesses in fiscal year 

2014, and nine in fiscal year 2015 (see table 9).7 During 2014, HUD 

resolved one of the previously identified material weaknesses, and OIG 

identified five new material weaknesses.8 In 2015, HUD resolved two of 

 5

See Department of Housing and Urban Development, Agency Financial Report Fiscal 

Year 2013 (Washington, D.C.: Dec. 16, 2013). 

6

See Department of Housing and Urban Development, Office of Inspector General, Fiscal 

Years 2015 and 2014 (Restated) U.S. Department of Housing and Urban Development 

Consolidated Financial Statements Audit, Audit Report No. 2016-FO-0004 (Washington, 

D.C.: Nov. 23, 2015) and Audit of the U.S. Department of Housing and Urban 

Development’s Consolidated Financial Statements for Fiscal Years 2014 and 2013, Audit 

Report No. 2015-FO-0004 (Washington, D.C.: Mar. 6, 2015). 

7

See Department of Housing and Urban Development, Office of Inspector General, Audit 

Report No. 2016-FO-0004 and Audit Report No. 2015-FO-0004; and Department of 

Housing and Urban Development, Agency Financial Report Fiscal Year 2013. A material 

weakness is a deficiency or combination of deficiencies in internal control that presents a 

reasonable possibility that a material misstatement of the entity’s financial statements will 

not be prevented or detected and corrected on a timely basis. 

8

The material weakness identified in 2013 in HUD’s consolidated financial preparation and 

reporting, which related to Ginnie Mae, was resolved in 2014. 

Report on Internal Controls
Appendix VI: Financial Management

Page 111 GAO-16-497 HUD Management

the previously identified material weaknesses, but OIG identified three 

new ones.9

Table 9: Department of Housing and Urban Development’s (HUD) Material Weaknesses Identified by HUD’s Office of Inspector 

General, Fiscal Years 2012–2015 

2012 2013 2014 2015

Financial management system weaknesses ✔ ✔ ✔ ✔

Grant accounting method departure from generally accepted accounting 

principles due to the use of the first-in, first-out method ✔ ✔ ✔

Cash management – Office of Public and Indian Housing ✔ ✔

Presentation of balance sheet accounts – Ginnie Mae ✔

Unvalidated grant accrual estimates ✔ ✔

Claims notes and legal settlements receivable – Federal Housing 

Administration ✔

Asset balances for nonpooled loans – Ginnie Mae ✔ ✔

Internal controls over financial reporting – Ginnie Mae ✔ ✔

Financial management governance ✔ ✔

Improper accounting for HUD’s assets ✔

Mortgage-backed security liability for loss not reliable – Ginnie Mae ✔

Budgetary accounting data not auditable – Ginnie Mae ✔

Source: GAO analysis of Department of Housing and Urban Development Office of Inspector General documents. | GAO-16-497

HUD’s management annually assesses the effectiveness of its internal 

controls over financial reporting, as required by OMB. However, HUD was 

unable to provide assurance that its internal controls over financial 

reporting were operating effectively as of September 30, 2014, and 

September 30, 2015. In both years, HUD cited eight material weaknesses 

related to financial reporting, such as the use of a grant accounting 

method that departed from GAAP and unvalidated grant accrual 

estimates, as the reason it could not provide such assurance.

 9

The material weakness identified in 2013 relating to cash management was divided into 

two findings in 2015. HUD resolved the finding for noncompliance with the Treasury 

Financial Manual in 2015, while OIG combined the other finding with a new finding and 

merged them into a new material weakness—non-GAAP accounting for Office of Public 

and Indian Housing assets and liabilities. HUD also resolved the material weakness 

related to FHA’s not properly recognizing receivables related to promissory note and legal 

settlements. Ginnie Mae’s two new material weaknesses related to unreliable mortgagebacked security for loss and budgetary accounting data that were unauditable.

Management Assurance
Appendix VI: Financial Management

Page 112 GAO-16-497 HUD Management

For fiscal years 2013 through 2015, HUD acknowledged that its financial 

management systems were not substantially compliant with the Federal 

Financial Management Improvement Act (FFMIA), agreeing with OIG’s 

assessment.10 Since 1991, OIG has reported annually on HUD’s lack of 

an integrated financial system. In fiscal years 2014 and 2015, OIG noted 

a number of instances of FFMIA noncompliance within HUD’s financial 

management systems. OIG attributed HUD’s continued noncompliance to 

a reliance on financial management systems that had a number of 

limitations and information security weaknesses. Additionally, in 2014 

OIG reported FFMIA noncompliance in Ginnie Mae’s system. Ginnie Mae 

was unable to provide adequate support for $6.6 billion in loan asset 

balances due to limitations in its financial system. Manual procedures 

implemented to compensate for system weaknesses were insufficient to 

ensure the completeness and accuracy of these balances, resulting in 

noncompliance with federal financial management system requirements, 

an element of FFMIA.

Furthermore, in fiscal years 2012 and 2013 OIG noted that because of 

inherent system limitations and weaknesses the department was relying 

on excessive manipulation and manual processing of data. According to 

OIG, this situation could and did negatively affect management’s ability to 

perform required financial management functions and efficiently manage 

the agency’s financial operations. In 2012, HUD adopted a plan to 

address this deficiency by moving the agency to a new core financial 

system maintained by a shared service provider, the Department of the 

Treasury’s Administrative Resource Center (ARC). In October 2015, HUD 

began using ARC for certain core accounting capabilities; however the 

effect of these changes on the identified deficiency has not yet been 

determined.

 10FFMIA emphasizes the need for agencies to have systems that are able to generate 

reliable, useful, and timely information for decision-making purposes and to ensure 

accountability on an ongoing basis. FFMIA requires agencies to have financial 

management systems that substantially comply with the federal financial management 

systems requirements (which have been defined in Appendix D to OMB Circular No. A123), standards promulgated by the Federal Accounting Standards Advisory Board, and 

the U.S. Standard General Ledger at the transaction level. The Standard General Ledger 

provides a standard chart of accounts and standardized transactions that agencies are to 

use in all their financial systems.

Financial Management 

Systems
Appendix VI: Financial Management

Page 113 GAO-16-497 HUD Management

HUD reports annually the estimated improper payments for each program 

or activity it identifies as susceptible to significant improper payments, as 

well as actions taken to correct the cause of any improper payments. 

According to HUD’s annual reports, from fiscal year 2000 through fiscal 

year 2009, HUD reduced the estimated gross improper payments for its 

rental housing assistance programs from $3.43 billion in fiscal year 2000

to $925 million in fiscal year 2009 (73 percent). HUD attributed the 

agency’s success in reducing improper payments to HUD’s efforts to work 

with its housing industry partners through enhanced program guidance, 

training, oversight, enforcement, and the use of the Enterprise Income 

Verification system.11 Since fiscal year 2009, however, HUD has not 

reduced estimated improper payments (see fig. 6). In fact, in some years 

HUD saw an increase in estimated improper payments, although one 

official pointed out that the increases were not statistically significant.

 11HUD’s Enterprise Income Verification system makes integrated income data available 

from one source, via the Internet, for public housing agencies to use to improve income 

verification during required income reexaminations.

Report on Improper Payments
Appendix VI: Financial Management

Page 114 GAO-16-497 HUD Management

Figure 6: Estimated Improper Payment Amounts for Fiscal Years 2008 through 2014

OIG found that HUD’s fiscal year 2013, 2014, and 2015 reports on 

improper payments did not comply with requirements in IPERA. Under 

IPERA, OIG is required to annually review HUD’s compliance with IPERA 

requirements. For 2013, OIG reported that HUD did not comply with 

IPERA because, among other things, it did not meet its annual improper 

payment reduction target or accurately report on its corrective actions.12

Additionally, OIG noted that HUD’s supplemental measures and 

associated corrective actions did not sufficiently target the root causes of 

its improper payments, as required. OIG found HUD’s fiscal year 2014 

reporting to be noncompliant with IPERA requirements because HUD did 

 12Department of Housing and Urban Development, Office of Inspector General, HUD’s 

Fiscal Year 2013 Compliance With the Improper Payments Elimination and Recovery Act 

of 2010, Audit Report No. 2014-FO-0004 (Washington, D.C.: Apr. 15, 2014).

Compliance under IPERA
Appendix VI: Financial Management

Page 115 GAO-16-497 HUD Management

not adequately report on its supplemental measures and its risk 

assessment did not include a review of all relevant OIG audit reports.13 In 

addition, HUD’s noncompliance from fiscal year 2013 continued as 18 of 

21 recommendations from OIG’s prior review had not yet been 

implemented. For 2015, OIG determined that HUD again did not comply 

with IPERA because HUD failed to conduct an annual risk assessment in 

accordance with OMB guidance and did not meet its annual improper 

payment reduction target.14 OIG made 13 recommendations to help 

improve HUD’s compliance with IPERA while also noting that HUD had 

implemented 17 of the 27 recommendations from the 2013 and 2014 

reviews as of May 2016.

As part of the audit, OIG considers compliance with certain provisions of 

applicable laws and regulations. In fiscal year 2015, OIG reported six 

instances of noncompliance with laws and regulations. In addition to 

noncompliance with FFMIA and IPERA, which are discussed earlier, OIG 

identified noncompliance with the HOME Investment Partnerships Act; 

Department of the Treasury’s Financial Manual and 2 C.F.R. Part 200; 

and Debt Collection Improvement Act of 1996, as well as a potential 

violation of the Antideficiency Act.15 Noncompliance with FFMIA, IPERA, 

the Antideficiency Act, and the HOME Investment Partnerships Act also 

were reported in fiscal year 2014, along with noncompliance with the 

statutory requirement that FHA maintain a minimum capital ratio of 2 

percent for its primary insurance fund. FHA is to conduct an annual 

independent actuarial study to, among other things, calculate this ratio.16

In fiscal year 2015, HUD reported that for the first time since 2008, the 

capital ratio, at 2.07 percent, had reached the congressionally mandated 

threshold.

 13Department of Housing and Urban Development, Office of Inspector General, HUD Did 

Not Comply With IPERA Due to Significant Deficiencies in Its Reporting and Risk 

Assessment Processes, Audit Report No. 2015-FO-0005 (Washington, D.C.: May 15, 

2015).

14Department of Housing and Urban Development, Office of Inspector General, HUD Did 

Not Comply With IPERA, Audit Report No. 2016-FO-0005 (Washington, D.C.: May 13, 

2016).

15Pub. L. No. 111-204, 123 Stat. 2224 (2010); 2 C.F.R. § 200.305; Pub. L. No.104-134, 

110 Stat. 1321, 1321-358 (1996)

1612 U.S.C. § 1708(a)(4).

Compliance with Laws and 

Regulations
Appendix VI: Financial Management

Page 116 GAO-16-497 HUD Management

For many years HUD’s OIG reported that HUD faced a number of 

financial management challenges. In its three most recent reports on 

management and performance challenges facing HUD, OIG attributed 

several of HUD’s internal control deficiencies identified in the annual audit 

of HUD’s financial statements to weaknesses in HUD’s financial 

management governance structure. OIG also attributed several 

deficiencies to insufficient monitoring of financial management activities 

performed across the agency. For example, OIG stated that HUD’s 

financial management structure relied on the delegation of several key 

financial management functions to HUD’s program offices. Also, 

accounting procedures were often determined by program office 

preference without OCFO guidance and oversight or regard for 

accounting standards.

In addition to the issues associated with OCFO’s financial management 

governance, in 2015 OIG cited significant financial governance issues 

within Ginnie Mae. For example, OIG found that Ginnie Mae had failed to 

maintain a governance framework with appropriate policies, people, 

systems, and controls to ensure the reliability and integrity of Ginnie 

Mae’s financial and accounting information. As a result, OIG reported that 

Ginnie Mae’s inadequate financial management staff would face 

challenges in several areas. These included managing risks associated 

with (1) the handling of complex and changing financial management 

operations without appropriate accounting policies and procedures in 

place and (2) the monitoring of work performed by third-party service 

providers. OIG’s audit of Ginnie Mae’s fiscal year 2014 financial 

statements also found a number of problems in the oversight, 

management, and operation of Ginnie Mae’s OCFO. Specifically, Ginnie 

Mae left a number of critical financial management positions unfilled, 

weakening its organizational structure and creating a gap in its internal 

control system for monitoring a portfolio of more than $6 billion in 

nonperforming loans. In addition, Ginnie Mae failed to adequately identify, 

analyze, and respond to changes in the control environment and risks 

associated with the acquisition of a multibillion-dollar servicing portfolio 

and to adequately establish accounting policies, procedures, and systems 

to manage and control the accounting and processing of loans in its 

defaulted issuers’ portfolio.

In October 2014, to assist the agency in improving its oversight and 

financial management governance, HUD contracted with the National 

Academy of Public Administration to conduct an organizational 

assessment of its department-wide financial management and help HUD 

respond to the deficiencies OIG had identified. The study panel confirmed 

Additional Information 

on HUD’s Financial 

Management 

Governance Structure
Appendix VI: Financial Management

Page 117 GAO-16-497 HUD Management

that HUD’s financial structure was decentralized and that oversight of its 

financial management functions was insufficient. The panel 

recommended that HUD establish (1) an internal CFO Council to 

strengthen its financial management governance and (2) a financial 

control and analysis unit within OCFO to monitor financial data and 

controls across the agency. HUD reported that in 2015 the agency 

established quarterly management reviews, chaired by the Deputy 

Secretary, for each program and operational area. These reviews are 

intended to use data to drive management decision making and to better 

identify and manage risks. According to HUD, the reviews serve the same 

purpose as CFO councils do in other agencies and thus satisfy the study 

panel’s and others’ recommendations to establish a council.
Appendix VII: Information Technology 

Management

Page 118 GAO-16-497 HUD Management

Within the Department of Housing and Urban Development (HUD), the 

Chief Information Officer (CIO) is responsible for providing modern 

information technology (IT) that is secure, accessible, and cost-effective 

while meeting customer needs. The CIO is also responsible for advising 

the Secretary, Deputy Secretary, and other HUD senior managers on the 

strategic use of IT to support core business processes, achieve missioncritical goals, and ensure compliance with applicable regulatory 

requirements.

We have reported extensively on HUD’s IT challenges, and in particular, 

on its outdated financial management systems, for many years. In 

addition, HUD’s Office of Inspector General (OIG) has reported on the 

lack of integrated financial management systems since fiscal year 1991. 

Between 2010 and 2014, we identified challenges with HUD’s 

implementation of management controls and reviewed the department’s 

IT expenditure plans.1 More recently, OIG also identified information 

security as one of HUD’s major management challenges beginning in 

fiscal year 2014. We have also identified a number of challenges HUD 

faces as part of government-wide IT reviews.2

 1

GAO, Information Technology: HUD’s Expenditure Plan Satisfied Statutory Conditions; 

Sustained Controls and Modernization Approach Needed, GAO-14-283 (Washington, 

D.C.: Feb. 12, 2014); Information Technology: HUD’s Fiscal Year 2011 Expenditure Plan 

Satisfies Statutory Conditions, GAO-12-654 (Washington, D.C.: May 24, 2012); and 

Information Technology: HUD’s Expenditure Plan Satisfies Statutory Conditions, and 

Implementation of Management Controls Is Under Way, GAO-11-762 (Washington, D.C.: 

Sept. 7, 2011).

2

For example, see GAO, Information Technology Reform: Billions of Dollars in Savings 

Have Been Realized, but Agencies Need to Complete Reinvestment Plans, GAO-15-617 

(Washington, D.C.: Sept. 15, 2015); Federal Software Licenses: Better Management 

Needed to Achieve Significant Savings Government-Wide, GAO-14-413 (Washington, 

D.C.: May 22, 2014); and Information Technology: Additional OMB and Agency Actions 

Are Needed to Achieve Portfolio Savings, GAO-14-65 (Washington, D.C.: Nov. 6, 2013).

Appendix VII: Information Technology 

Management

Background
Appendix VII: Information Technology 

Management

Page 119 GAO-16-497 HUD Management

In December 2014, we found that HUD’s IT governance activities did not 

fully address key practices identified in our IT investment management 

guide.3 We developed the guide’s IT investment management framework 

to provide a method for evaluating and assessing how well an agency is 

selecting and managing its IT resources.4 The framework consists of five 

stages, each of which involves critical processes that must be 

implemented and institutionalized before the agency moves on to the next 

stage.5 These processes are further broken down into key practices that 

describe the types of activities that an organization should be performing 

to successfully implement the critical processes. Implementing the key 

practices for each stage’s critical processes will position organizations to 

move from managing individual projects to evaluating the effectiveness of 

the overall portfolio of investments.6 Our December 2014 report found 

that HUD had not fully addressed key practices for specific processes. As 

a result, HUD faced the risk that its governance decisions will not reflect 

the needs of the department and that it would be unable to realize 

 3

GAO, Information Technology: HUD Can Take Additional Actions to Improve Its 

Governance, GAO-15-56 (Washington, D.C.: Dec. 10, 2014).

4

GAO, Information Technology Investment Management: A Framework for Assessing and 

Improving Process Maturity, Version 1.1, GAO-04-394G (Washington, D.C.: Mar. 1, 2004).

5

The maturity stages are cumulative; that is, in order to attain a higher stage, an agency 

must institutionalize all of the critical processes at the lower stages, in addition to the 

higher stage critical processes. The first stage is the only stage without critical processes. 

It is characterized by ad hoc processes that are not yet developed enough to fully address 

critical processes.

6

An IT portfolio consists of the combination of all IT assets and investments owned or 

planned by an organization in order to achieve its strategic goals, objectives, and mission.

Assessment of HUD’s 

Information 

Technology 

Management against 

Key Requirements 

and Leading 

Practices

Information Technology 

Governance
Appendix VII: Information Technology 

Management

Page 120 GAO-16-497 HUD Management

planned improvements to its IT environment and systems. We 

summarized the findings from the 2014 report, which have not yet been 

fully addressed, on the extent to which HUD was following key practices 

for each critical process, using three categories (see table 10). 

“Following” indicates that, in our judgment, HUD was following or mostly 

following all key practices of the critical process. “Partially following”

indicates that HUD followed some but not all or most key practices of the 

critical process. “Not following” indicates that HUD did not incorporate any 

key practices of the critical process.

Table 10: Extent to which the Department of Housing and Urban Development’s (HUD) Information Technology Governance 

Was Following Key Practices for Foundational Processes from GAO’s Information Technology Investment Management 

Framework (GAO-04-394G)

Critical process

Extent HUD 

followed

Instituting the investment board: Organizations should establish one or more decision-making bodies or 

boards that operate according to documented guidance, policies, and procedures and that are focused on 

ensuring that investment decisions address stakeholder needs and are made in the best interest of the 

organization.

◐

Selecting an investment: Organizations should have a well-defined, disciplined process for selecting 

investments. Successful organizations identify, use, and store comprehensive data to support investment 

decision making. Reselecting ongoing projects is an important part of this critical process; if a project is not 

meeting established goals and objectives, the organization must make a decision on whether or not to 

continue to fund it. Transparency in the selection process can help create an environment that is objective, 

fair, and rational.

◐

Providing investment oversight: Organization should monitor projects against cost and schedule expectations 

as well as anticipated benefits and risk exposure. The boards should employ early warning systems that 

enable them to take corrective actions at the first sign of cost, schedule, and performance slippages. For an 

organization to establish control of projects, all expected and actual performance data (cost, schedule, 

benefits, risks, and system functionality) must be collected and distributed to appropriate boards.

◐

Legend: ● Following ◐ Partially following ○ Not following

Source: GAO-15-56 and GAO analysis of HUD documentation and interviews with HUD officials. | GAO-16-497

HUD’s Office of the CIO (OCIO) chartered four investment boards in 2011 

with defined authorities, roles and responsibilities, and operations for 

managing and selecting the department’s IT projects. Also during that 

year, the department issued an IT management framework that was 

intended to provide guidance to direct the investment boards in fulfilling 

their investment management responsibilities. However, the department 

had not ensured that its investment boards were fully operating according 

to their designated authority and responsibility. Specifically, HUD’s 

enterprise-wide investment board—the Executive Investment Board—had 

never met. In addition, the Executive Investment Board had not 

established key criteria for other active investment boards—the Customer 

Care Committee, Investment Review Subcommittee, and Technical 

Review Subcommittee—to use in identifying the IT projects that best 

Instituting the Investment 

Board
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Page 121 GAO-16-497 HUD Management

support HUD’s strategic goals and provide value to the department or that 

are underperforming and should be considered for termination. As a 

result, the other boards were prevented from fully operating in 

accordance with their assigned responsibilities. The active investment 

boards also are not fully adhering to the operating procedures outlined in 

their charters concerning meeting frequency and documentation 

requirements. In May 2016, HUD updated charters for its investment 

management boards and indicated revised charters would be finalized by 

the end of fiscal year 2016.

Moreover, HUD had not yet developed all of the policies that support its 

IT management framework. Of the 11 key policies that OCIO was to 

develop to influence and determine actions and decisions in IT 

management areas such as acquisitions, capital planning, and project 

planning, 3 policies—for performance, privacy, and risk management—

had not yet been developed. In May 2016, HUD confirmed that it had not 

yet developed the remaining 3 policies but indicated that it planned to 

have all policies updated and in place by July 2016. Additionally, the 

department’s IT management framework had not been updated to reflect 

significant changes to HUD’s project planning and management practices 

and Office of Management and Budget (OMB) requirements for

conducting reviews of projects.

We reported that HUD had established practices for identifying new IT 

proposals. OCIO had taken steps to identify new IT proposals by 

developing standardized templates for proposed IT projects. However, 

HUD had not yet fully addressed key practices for evaluating and 

prioritizing IT proposals, including documenting how data supporting 

proposed projects were to be developed, verified, and validated. 

Furthermore, while OCIO had established and used criteria to analyze 

proposed projects in terms of benefits, the criteria did not address how 

cost, schedule, or project risks were to be analyzed. Moreover, the extent 

to which IT proposals selected by senior decision makers were supported 

by key evaluation practices was unclear, and the decisions were not 

consistently documented. As of May 2016, HUD stated it had taken 

actions to improve its practices for selecting investments and that it 

intends to continue maturing these capabilities, including using an 

established tool for its annual budget formulation selection process and 

improving its integration of IT efforts.

In our report, we noted that since 2011 OCIO had been establishing 

elements of a process for managing individual projects after they were 

selected. Nonetheless, the office had not yet institutionalized all of the 

Selecting an Investment

Providing Investment Oversight
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established practices and in some cases had not established key 

practices. Specifically, the Investment Review Subcommittee was 

responsible, under its charter, for monitoring investment and portfolio 

performance and taking action to (1) terminate investments that 

consistently experience variances in cost or performance or (2) bring 

them back within acceptable cost or performance limits. However, the 

subcommittee had not yet fulfilled these responsibilities. In addition, OCIO 

had not consistently conducted post-implementation reviews to evaluate 

results of projects after they were completed. Although the office’s project 

planning and management process called for such reviews no later than 1 

year after system implementation, the office had not scheduled or 

conducted any such reviews until recently. In April 2016, a HUD official 

stated that HUD would be conducting a post-implementation review for its 

financial management modernization effort in November 2016.

OIG’s 2015 evaluation of HUD’s IT security program revealed continued 

and extensive noncompliance with federal information security 

requirements. Agencies are required to develop, document, and 

implement an information security program, and OMB and the 

Department of Homeland Security (DHS) have instructed agencies to 

report annually on a variety of metrics to gauge implementation of 

information security programs.7 Although HUD had improved its overall 

information security posture, it had major deficiencies in 4 of the 10 

requirements outlined in DHS reporting instructions for fiscal year 2015, 

as shown in table 11. OIG made 20 new recommendations to improve 

HUD’s IT security, and 54 recommendations from prior years’ evaluations 

remained not implemented at the time of OIG’s report.

 7

In 2010, an OMB memorandum assigned DHS primary responsibility for the operational 

aspects of cybersecurity, subject to OMB oversight. DHS has been responsible for 

assisting OMB in overseeing executive branch agencies’ compliance with federal 

information security requirements, overseeing cybersecurity operations, and providing 

related assistance. See OMB, Clarifying Cybersecurity Responsibilities and Activities of 

the Executive Office of the President and the Department of Homeland Security (DHS), 

OMB Memorandum M-10-28 (Washington, D.C.: July 6, 2010).

Information Security
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Table 11: Extent to Which the Department of Housing and Urban Development’s (HUD) Information Security Practices Met 

Federal Information Security Requirements in Fiscal Year 2015

Requirement

Extent HUD met 

requirement

Continuous monitoring: The organization maintains ongoing awareness of information security, vulnerabilities, and 

threats to support organizational risk management decisions. ○

Configuration management: The organization controls modifications to hardware, firmware, software, and 

documentation to protect the information system against improper modifications before, during, and after system 

implementation. ◐

Identity and access management: The organization properly and consistently identifies, authenticates, and 

authorizes individuals and provides appropriate access to resources. ●

Incident response and reporting: The organization has the capability and procedures to detect, report, and respond 

to security incidents systematically so that appropriate actions are taken. ◐

Risk management: The organization manages risks to organizational operations (including mission, functions, 

image, reputation), organizational assets, individuals, other organizations, and the nation, resulting from the 

operation of an information system, by: (1) conducting risk assessment; (2) implementing a risk mitigation strategy; 

and (3) employing techniques and procedures for the continuous monitoring of the security state of the information 

system. ○

Security training: The organization has policies, procedures, and capability to ensure that all individuals are 

appropriately trained to fulfill their security responsibilities before allowing them access to agency systems. ◐

Plan of action and milestones: The organization prepares plan of action and milestones reports that provide senior 

management, authorizing official and security personnel with information on the overall IT risks associated with 

program and system security weaknesses. ○

Remote access management: The organization provides its users with access to its nonpublic computing 

resources from external locations other than the organization’s facilities and has established security protection 

measures to ensure that only properly identified and authenticated users gain access and that the data crossing 

from a public network to HUD’s network are secure (encrypted). ◐

Contingency planning: The organization has policies and procedures designed to maintain or restore business 

operations, including computer operations, possibly at an alternate location, in the event of emergencies, system 

failures, or disasters. ◐

Contractor systems: The organization conducts contractor oversight procedures and provides security for the 

information systems that support the operations and assets of the agency, including those provided or managed by 

a contractor. ○

Legend: ● Met ◐ Partially met ○ Not met

Source: GAO analysis of Department of Housing and Urban Development, Office of Inspector General, HUD Fiscal Year 2015 FISMA Evaluation Report, 2015-OE-0001 (Washington, D.C.: Nov. 20, 

2015). | GAO-16-497

OIG determined that the contents of its report would not be appropriate 

for public disclosure. Therefore, we are not describing the specific 

findings from the report.
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In 2014, OIG’s evaluation of HUD’s privacy program determined that 

HUD’s executive leadership had not sufficiently prioritized and supported 

its privacy program.8 OIG assessed HUD’s practices against seven 

categories of requirements and guidelines drawn from, among others, the 

Privacy Act of 1974 as amended, OMB Circular No. A-130, the EGovernment Act of 2002, several OMB memorandums, and National 

Institute of Standards and Technology publications. HUD’s privacy 

practices did not meet six key requirements or guidelines and only 

partially met the other one, according to OIG. HUD had not established 

an effective or efficient program, had not mitigated risks associated with 

the extensive privacy data managed by the agency, and had not complied 

with many federal requirements. OIG made 34 recommendations to 

improve HUD’s privacy program in the areas of governance (4 

recommendations), inventory (4 recommendations), incident response (5 

recommendations), mandatory protection of personally identifiable 

information (13 recommendations), privacy training (5 recommendations), 

physical security (1 recommendation), and reporting (2 

recommendations).

However, OIG noted in its 2015 information security evaluation that HUD 

had initiated efforts to address some of these issues, including improving 

governance, reviewing its holdings of personally identifiable information, 

and deploying additional training.9 In February 2016, OIG informed us 

that HUD had made progress in meeting five of the requirements since 

the 2014 report, changing OIG’s assessment from “not met or following”

to “partially met or following.” As shown in table 12, HUD partially met or 

followed six requirements or guidelines, and did not meet one as of 

February 2016.

 8

Department of Housing and Urban Development, Office of Inspector General, Privacy 

Program Evaluation Report, 2014-ITED-0001 (Washington, D.C.: Apr. 30, 2014).

9

Department of Housing and Urban Development, Office of Inspector General, HUD Fiscal 

Year 2015 FISMA Evaluation Report, 2015-OE-0001 (Washington, D.C.: Nov. 20, 2015).

Privacy
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Table 12: Extent to Which the Department of Housing and Urban Development’s (HUD) Privacy Practices Met Federal 

Requirements and Followed Guidelines, as of February 2016

Requirement or guideline

Extent HUD met 

requirement or 

followed guideline

Governance: The organization has clearly established privacy policies, procedures, and accountability to 

successfully manage the risks to the agency. ◐

Inventory: The organization periodically reviews its holdings of personally identifiable information (PII), 

whether in electronic or nonelectronic form; ensures that PII within systems of records is maintained in a 

manner that is accurate, relevant, timely, and complete; and reduces PII holdings to the minimum necessary 

for the proper performance of agency functions. ◐

Incident response: The organization develops and implements a breach notification policy and process; 

establishes a core management group responsible for responding to the loss of personal information that 

poses the subsequent risk of identity theft; trains response team personnel on their incident reporting and 

handling responsibilities; and reports all suspected or confirmed breaches involving PII within 1 hour of 

discovery to the U.S. Computer Emergency Readiness Team. ◐

Mandatory protection of PII: The organization follows formal processes and standards for the proper 

treatment and handling of PII. ◐

Privacy training: The organization trains employees on their privacy and security responsibilities before 

permitting access to agency information and information systems and provides additional training 

commensurate with increased responsibilities or changes in duties. ◐

Physical security: The organization properly secures its data through the use of proper physical controls. ○

Reporting: The agency reports on the status of its privacy program both internally and externally. ◐

Legend: ● Met or following ◐ Partially met or following ○ Not met or following

Source: GAO analysis of Department of Housing and Urban Development, Office of Inspector General, Privacy Program Evaluation Report, 2014-ITED-0001 (Washington, D.C.: Apr. 30, 2014) and 

information from the Office of Inspector General. | GAO-16-497

OIG determined that the contents of its report would not be appropriate 

for public disclosure. Therefore, we are not describing the specific 

findings from the report.
Appendix VIII: Acquisition Management

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Within the Department of Housing and Urban Development (HUD), the 

Office of the Chief Procurement Officer (OCPO) is responsible for all 

matters related to HUD’s acquisition needs and activities. HUD 

acquisition activities are governed primarily by the Federal Acquisition 

Regulation and the HUD Acquisition Regulation, as well as by other 

guidance and policy documents issued by OCPO.

The National Academy of Public Administration (NAPA) issued a report in 

1999 outlining HUD’s progress in reforming its acquisition activities.1

NAPA noted that in previous years HUD had encountered a number of 

problems related to its acquisition operations. Internally, program office 

staff perceived HUD’s acquisition process to be too slow and 

unresponsive to program needs. Externally, Congress and others had 

criticized HUD’s acquisition operations for their vulnerability to fraud, 

waste, and abuse. During the course of NAPA’s review, which began in 

September 1997, NAPA began sharing with the department its 

observations and suggestions for improving HUD’s acquisition activities. 

NAPA reported that HUD officials moved quickly to adopt many of these 

suggestions, resulting in substantial progress being made. However, in 

January 2003, we designated acquisition management as a major 

management challenge for HUD because of the agency’s extensive and 

growing reliance on contractors and third parties and deficiencies in 

HUD’s (1) contractor monitoring and oversight, (2) management of the 

acquisitions workforce, and (3) information systems that supported 

acquisitions.2 In 2007, we reported that HUD had made progress in 

addressing the issues we had identified.

 1

National Academy of Public Administration, HUD Procurement Reform: Substantial 

Progress Underway, Summary Report (Washington, D.C.: April 1999).

2

GAO, Major Management Challenges and Program Risks: Department of Housing and 

Urban Development, GAO-03-103 (Washington, D.C.: January 2003).

Appendix VIII: Acquisition Management

Background
Appendix VIII: Acquisition Management

Page 127 GAO-16-497 HUD Management

In 2005, we issued a framework for assessing the acquisition function at 

federal agencies consisting of four interrelated cornerstones that our work 

had shown were essential to an efficient, effective, and accountable 

acquisition process: (1) organizational alignment and leadership, (2) 

policies and processes, (3) human capital, and (4) knowledge and 

information management.3 In addition, the Office of Federal Procurement 

Policy within the Office of Management and Budget (OMB) requires 

agencies to annually assess internal controls over acquisition activities 

and programs.4 We identified the cornerstones and the Office of Federal 

Procurement Policy’s requirement as five key principles or practices for 

acquisition management. We assessed the extent to which HUD followed 

each key principle or practice, using three assessment categories. 

“Following” indicates that, in our judgment, HUD was following or mostly 

following all aspects of the principle or practice. “Partially following”

indicates that HUD was following some but not all or most aspects of the 

principle or practice. “Not following” indicates that HUD was not following 

any aspects of the principle or practice. During the course of our review, 

we noted some gaps in HUD’s acquisition management practices when 

assessed against key principles and practices, as shown in table 13.

 3

GAO, Framework for Assessing the Acquisition Function At Federal Agencies, 

GAO-05-218G (Washington, D.C.: Sept. 1, 2005)

4

Office of Management and Budget, Office of Federal Procurement Policy, Conducting 

Acquisition Assessments under OMB Circular A-123 (Washington, D.C.: May 21, 2008).

Assessment of HUD’s 

Acquisition 

Management against 

Key Principles and 

Practices
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Page 128 GAO-16-497 HUD Management

Table 13: Extent to Which the Department of Housing and Urban Development (HUD) Was Following Key Principles and 

Practices for Acquisition Management

Principle or practice

Extent HUD 

followed

Organizational alignment and leadership: The acquisition function is appropriately placed in the agency, with 

stakeholders having clearly defined roles and responsibilities. ◐

Policies and processes: The agency has clear and transparent policies and processes that are implemented 

consistently. ●

Human capital: The agency values and invests in the acquisition workforce; strategically attracts, develops, and 

retains talent; and creates a results-oriented culture. ◐

Knowledge and information management: The agency obtains credible, reliable, and timely data to make acquisition 

decisions. ●

Annual assessment: The agency conducts annual acquisition assessments in accordance with Office of 

Management and Budget’s (OMB) Guidelines for Assessing the Acquisition Function. ●

Legend: ● Following ◐ Partially following ○ Not following

Source: GAO analysis of GAO-05-218G, OMB guidelines, HUD documentation, and interviews with HUD officials. | GAO-16-497

In general, HUD’s acquisition function is appropriately placed in the 

agency, with stakeholders having clearly defined roles and 

responsibilities. However, HUD’s recently adopted governance structure 

could limit direct communication between senior officials on acquisition 

matters. Specifically, the Services Acquisition Reform Act of 2003 

requires that the Senior Procurement Executive report directly to the 

Chief Acquisition Officer without intervening authority.5 The Secretary of 

HUD designated the Deputy Secretary as the Chief Acquisition Officer 

and the Chief Procurement Officer (CPO) as the Senior Procurement 

Executive in a Federal Register notice published on July 30, 2013.6

However, the CPO does not report directly to the Deputy Secretary, but 

rather reports to the Chief Operations Officer, who in turn reports to the 

Deputy Secretary. According to HUD, the Chief Operations Officer is a 

member of the Office of the Deputy Secretary, and therefore reporting to 

 5

41 U.S.C. § 1702. The Services Acquisition Reform Act of 2003 requires 16 federal 

civilian agencies, including HUD, to establish the position of a Chief Acquisition Officer to 

advise and assist agency leadership to help ensure that the agency’s mission is achieved 

through the management of its acquisition activities. The act requires that Chief 

Acquisition Officers be noncareer employees; have acquisition management as their 

primary duty; and have the agency’s Senior Procurement Executive report directly to them 

without intervening authority, or serve as both Chief Acquisition Officer and Senior 

Procurement Executive. 

6

78 Fed. Reg. 46,240 (July 30, 2013).

Organizational Alignment and 

Leadership
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the Chief Operations Officer is functionally the equivalent of reporting to 

the Deputy Secretary. HUD officials said that the CPO met regularly with 

the Deputy Secretary and had the ability to discuss any issues that might 

arise. Because the Secretary delegated full authority to the Deputy 

Secretary, officials in HUD’s Office of General Counsel said these 

meetings would satisfy the statutory requirements.7 HUD officials also 

said they planned to consider the recent changes in reporting 

relationships when assessing organizational alignment and leadership 

issues as part of the next annual review of the acquisition function.

Procurement responsibilities are spelled out in HUD’s procurement 

policies and procedures handbook. However, in a 2010 report prepared 

for HUD’s internal use, NAPA found that program offices were not held 

accountable for performance of acquisition-related responsibilities related 

to planning and defining requirements. OCPO officials told us that the 

primary reason for these deficiencies was the fact that the contracting 

officer’s representative duties were collateral duties at HUD.8 OCPO is 

working to professionalize the contracting officer’s representative role and 

has created a standard position description to manage agency contracts, 

according to OCPO officials. HUD delayed implementation of the new 

contracting officer’s representative role until fiscal year 2016 due to 

potential budget implications. Previously HUD had intended to have 

completed implementation by the end of fiscal year 2015.

From 2009 to 2015, HUD’s acquisition handbook was not updated, even 

though HUD had issued numerous acquisition instructions and other 

guidance documents. HUD officials said that the 2009 revision to the 

handbook did not include all of the guidance that had been issued at that 

time. In addition, in a 2010 report prepared for HUD’s internal use NAPA 

found that OCPO’s policies and guidance were generally sound and that 

the content that was available on the OCPO intranet was extensive and 

helpful. However, numerous contract specialists and program staff were 

unaware of the breadth of the guidance available or said that they found it 

difficult to navigate through the material, according to NAPA. In 2015 and 

 7

77 Fed. Reg. 66,864 (Nov. 7, 2012).

8

Contracting officers are authorized to enter into, administer, and/or terminate contracts. 

Contracting officer’s representatives assist the contracting officer in providing 

administration of contract actions and evaluating performance.

Policies and Processes
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Page 130 GAO-16-497 HUD Management

2016, OCPO staff completed an update to the acquisition handbook that 

incorporated policies and guidance that had been issued and aligned the 

handbook with the Federal Acquisition Regulation. OCPO officials 

anticipated that the updated acquisition handbook would be implemented 

in May 2016.

Also in 2010, NAPA found inconsistent interpretation and implementation 

of acquisition policies that affected client service. Some program clients 

reported receiving widely divergent levels of services from different staff 

within the OCPO headquarters division assigned to support them. NAPA 

cited a similar pattern regarding variations in interpretations and 

implementation of policies among contracting officers and contract 

specialists within the same division, raising a broader concern of 

variations that were likely occurring among divisions within OCPO. To 

address this concern, OCPO officials told us that in recent years they had 

developed a number of mandatory templates—more than 60 of which 

they provided to us to review—for different aspects of the acquisition 

process to reduce variations in the implementation of policies.

HUD has struggled to invest in the acquisition workforce and attract and 

retain talent but has taken steps to develop talent and create a resultsoriented culture. According to OCPO, several studies have been 

conducted to analyze workload data and staffing needs, but no budgets 

have been approved that allow HUD to properly staff the acquisition 

workforce. Staff turnover, caused in part by heavy workloads resulting 

from reduced budget authority, continues to be a critical challenge for 

HUD, according to OCPO.

OCPO has taken steps to develop talent in the acquisition workforce. The 

Chief Procurement Officer appointed an Acquisition Career Manager 

(ACM) and alternate ACMs to implement federal acquisition certification 

programs for contracting staff, program and project managers, and 

contracting officer’s representatives. According to OCPO, the ACM is 

responsible for all training and professional development for the 

acquisition workforce. The ACM coordinates professional development of 

the acquisition workforce with HUD’s Learning, Enrichment, and 

Resource Network (LEARN). The ACM and OCPO managers have 

identified staff skill gaps, and OCPO officials said they submit training 

requests to fill gaps. They also said employees prepare individual training 

action plans, which are used to develop cost estimates for training 

needed to close mission-critical performance gaps.

Human Capital
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In addition, OCPO has taken steps to create a results-oriented culture. 

According to OCPO officials, OCPO uses specific, measurable, 

attainable, realistic, and timely standards for its performance 

measurement efforts. In fiscal year 2012, HUD developed and 

implemented new performance standards to drive process improvement 

through human capital performance plans, which OCPO is using to 

improve the performance management and evaluations of staff and 

managers. These performance standards include specific performance 

metrics to help staff understand what they will be evaluated on and held 

accountable for performing. According to OCPO officials, OCPO staff 

members typically have lower ratings than other HUD components, 

negatively affecting morale. But the officials added that the performance 

evaluations also provide staff with the information they need in order to 

secure strong performance ratings.

We found that HUD generally obtained credible, reliable, and timely data 

to make acquisition decisions. HUD captures all data required by the 

Federal Procurement Data System-Next Generation.9 According to HUD 

officials, the CPO reviews and certifies the completeness of these 

procurement data records. In addition, the procurement management 

review team performed independent verification and validation of these 

data for fiscal years 2012 through 2014. The team reviewed a 

representative, random sample of purchase orders, modifications, task 

orders, and contracts from each of the OCPO offices. The review findings 

indicated that OCPO experienced an overall average accuracy rate of 96 

percent in fiscal year 2012, 95 percent in fiscal year 2013, and 95 percent 

in fiscal year 2014. The reviews found that all (100 percent) of the errors 

in the data system were attributed to the user.

In addition, HUD’s in-house procurement databases captured additional 

data used for tracking and reporting on HUD acquisitions. In fiscal year 

2014, OCPO officials said they began capturing information to measure 

the accuracy of program offices’ forecasts of their requirements (planned 

versus unplanned acquisitions and options) and their ability to execute 

 9

The Federal Procurement Data System-Next Generation provides information on 

government contracting actions, procurement trends, and achievement of socioeconomic 

goals, such as small business participation. The General Services Administration 

administers the system, and more than 60 government departments, agencies, and other 

entities submit contract data to it.

Knowledge and Information 

Management
Appendix VIII: Acquisition Management

Page 132 GAO-16-497 HUD Management

annual strategic acquisition plans. OCPO officials also told us they began 

reporting on the timeliness of customers’ release of requisitions to OCPO 

based upon the target requisition release date listed in each individual 

acquisition plan. Additionally, for requisitions released in a timely manner, 

OCPO began reporting on the extent to which OCPO completed award 

actions by the scheduled target award date. HUD uses a data warehouse 

for its data analysis and reporting efforts. In October 2015, HUD 

transitioned its procurement system to a shared service provider, but the 

shared service provider did not have the dashboard capabilities and other 

functionality that HUD’s data warehouse has. In order to continue using 

the data warehouse after the transition, the shared services provider 

agreed to create data extracts that can be loaded into the data 

warehouse.

However, our January 2014 report on strategic sourcing found that HUD 

generally did not have baseline data and performance measures to 

determine how small businesses were affected by strategic sourcing.10

Our review of documentation on agency-wide strategic sourcing initiatives 

at HUD and other agencies in 2014 showed that the agencies generally 

considered the inclusion of small businesses and small disadvantaged 

businesses. In general, agencies that included small businesses in their 

agency-wide strategic sourcing initiatives did so by using small business 

set-asides. OMB required HUD and other agencies to submit annual 

reports on the implementation of strategic sourcing from fiscal years 2005 

through 2007 and prepare information for acquisition status sessions from 

fiscal years 2010 through 2012. (No reporting was in place for fiscal years 

2008 or 2009.) However, virtually none of this information included 

baseline data or measures of the effect of strategic sourcing on small 

businesses. We recommended that HUD collect baseline data and 

establish performance measures on the inclusion of small businesses in 

strategic sourcing initiatives. HUD agreed but had not yet fully 

implemented these recommendations as of May 2016.

 10GAO, Strategic Sourcing: Selected Agencies Should Develop Performance Measures 

on Inclusion of Small Businesses and OMB Should Improve Monitoring, GAO-14-126 

(Washington, D.C.: Jan. 23, 2014). Strategic sourcing is a process that moves an 

organization away from numerous individual procurements for the same or similar 

products or services toward a broader aggregate approach. The benefits of strategic 

sourcing can include cost savings and less duplication of effort.
Appendix VIII: Acquisition Management

Page 133 GAO-16-497 HUD Management

OCPO has been conducting annual procurement management reviews 

since 2008, according to HUD officials. We reviewed the reports covering 

fiscal years 2012 through 2014, which generally followed the format 

contained in OMB guidelines. In addition, the reports included the results 

of case file reviews for different acquisition offices in headquarters and 

the field. OCPO reviewed each office once during the 2-year period. Each 

report included corrective action plans to address the results of the file 

reviews. We noted to OCPO officials that the reports for 2012 and 2013 

covered identical questions and asked how those questions had been 

selected and whether there was a process for reevaluating the choice of 

questions the review would include. OCPO officials told us that the 

questions used for the 2012 and 2013 reviews had been selected by the 

previous Assistant CPO and that there had been no reevaluation of the 

questions that they were aware of. However, they said that they had 

identified additional questions that were included in the 2014 review and 

were planning to establish a process for selecting questions to be 

included in the review each year.

Under the project-based rental assistance program, HUD enters into 

contracts with property owners to provide rental assistance to lowerincome tenants for a fixed period of time. In 1999, because of staffing 

constraints (primarily in HUD’s field offices) and the workload involved in 

renewing the increasing numbers of rental assistance contracts reaching 

the end of their initial terms, HUD began an initiative to contract out the 

oversight and administration of most of its project-based contracts. The 

entities that HUD hired—typically public housing agencies or state 

housing finance agencies—are responsible for conducting on-site 

management reviews of assisted properties; adjusting contract rents; 

reviewing, processing, and paying monthly vouchers submitted by 

owners; renewing contracts with property owners; and responding to 

health and safety issues at the properties. These performance-based 

contract administrators (PBCA) administer the majority of project-based 

contracts, and their activities are governed by annual contributions 

contracts. For fiscal year 2016, HUD received appropriations totaling 

$215 million for PBCAs.

In February 2011, HUD chose to recompete the annual contributions 

contracts and announced awards in July 2011. A number of unsuccessful 

Annual assessment

Information on the 

Procurement of 

Contract 

Administration 

Services for the 

Project-based Rental 

Assistance Program
Appendix VIII: Acquisition Management

Page 134 GAO-16-497 HUD Management

applicants filed protests of the awards with GAO, arguing that the annual 

contribution contracts were procurement contracts and that HUD had not 

complied with federal procurement laws.11 In response, HUD withdrew the 

awards, and we dismissed the protests as moot. In March 2012, HUD 

reissued its competition notice, characterizing the annual contribution 

contracts as cooperative agreements that were not subject to federal 

procurement law. A number of applicants who had been awarded 

contracts in 2011 (which had subsequently been cancelled) were 

excluded from applying under the March 2012 notice, and in May 2012 

these entities filed pre-award protests with us. In our August 2012 

decision, we sustained the protests, concluding that HUD was required to 

use a procurement instrument that resulted in a contract to obtain these 

services rather than a cooperative agreement.12

However, HUD disregarded our decision and moved forward with 

awarding the annual contribution contracts as cooperative agreements. A 

number of organizations again filed pre-award protests, this time with the 

Court of Federal Claims. The Court of Federal Claims ruled in HUD’s 

favor, and this decision was appealed to the U.S. Court of Appeals for the 

Federal Circuit. In March 2014, the Court of Appeals found that the 

annual contribution contracts were procurement contracts subject to 

federal procurement laws.13 The court directed HUD to acquire the 

contract administration services pursuant to federal procurement laws 

and regulations. In April 2015, the U.S. Supreme Court declined to hear 

HUD’s appeal.

In response, HUD informed us that it had hired a consultant in January 

2016 to assist HUD in analyzing best practices of current service 

providers, assessing opportunities to utilize existing commercial products 

and processes, and interviewing subject-matter experts both inside and 

outside of HUD to determine the optimal acquisition strategy to obtain 

 11GAO has jurisdiction under the Competition in Contracting Act of 1984 to review protests 

concerning alleged violations of procurement statutes or regulations by federal agencies in 

the award or proposed award of contracts for goods and services and solicitations leading 

to such awards. 31 U.S.C. §§ 3551(1), 3552; 4 C.F.R. § 21.2(a).

12Assisted Housing Services Corp., et al., B-406738, August 15, 2012.

13CMS Contract Management Services v. U.S., 745 F.3d 1379 (Fed. Cir. 2014), cert. 

denied, 135 S. Ct. 1842 (2015).
Appendix VIII: Acquisition Management

Page 135 GAO-16-497 HUD Management

contract administration services. HUD stated that its conservative 

estimate of when it would award the contracts was calendar year 2017. In 

the meantime, HUD has extended the current annual contributions 

contracts through June 2016 and plans to extend them further as 

necessary until the procurement process is complete.
Appendix IX: Comments from the Department 

of Housing and Urban Development

Page 136 GAO-16-497 HUD Management

Appendix IX: Comments from the 

Department of Housing and Urban 

Development
Appendix IX: Comments from the Department 

of Housing and Urban Development

Page 137 GAO-16-497 HUD Management
Appendix IX: Comments from the Department 

of Housing and Urban Development

Page 138 GAO-16-497 HUD Management
Appendix X: GAO Contact and Staff 

Acknowledgments

Page 139 GAO-16-497 HUD Management

Daniel Garcia-Diaz, (202) 512-8678 or garciadiazd@gao.gov

In addition to the contact named above, Steve Westley (Assistant 

Director), Don Brown (Analyst-in-Charge), Emily Chalmers (retired), 

Amanda C. Gill, Meredith Graves, Holly Hobbs, Yola Lewis, John 

McGrail, Erika Navarro, Jena Sinkfield, Kwame Som-Pimpong, and 

Teresa Yost made significant contributions to this report.

Appendix X: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(250803)
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