Develop an enterprise-wide IT modernization strategy that establishes a framework to align with the IT modernization roadmap.

Corrective Action Taken

HUD OCIO provided evidence of an IT Modernization Strategy with an established framework that aligns with the IT modernization roadmap. The strategy includes all of the requirements of the recommendation and is accessible to HUD employere's through OCIO’s internal website.

Obtain the proper approval and communicate the IT modernization strategy to all appropriate stakeholders, including HUD program offices.

We recommend that the Director of HUD’s Office of Community Planning and Development require the City to provide documentation, including but not limited to showing that it (1) notified and allowed a response from bidders regarding the bidding and scoring processes; and (2) awarded home repair master agreement contracts without restriction and were in line with the bid evaluation requirements, or provide a documented re-evaluation of the procurement showing that it provided the best advantage to it and HUD, thereby putting the remaining $9,736,636 award amount to better use.

We recommend that the Director of HUD’s Office of Community Planning and Development require the City to support $1,063,364 or repay its CDBG-DR program from non-Federal funds for payments made to one prequalified contractor under its home repair program without independent cost estimates and cost analyses.

We recommend that the Director of HUD’s Office of Community Planning and Development require the City to support $170,066 or repay its CDBG-DR program from non-Federal funds for payments made to the demolition contractor under its housing buyout program without independent cost estimates and cost analyses.

We recommend that the Director of HUD’s Office of Community Planning and Development require the City to support $27,250 or repay its CDBG-DR program from non-Federal funds for payments made to three appraisal contractors under its housing buyout program without cost analyses.

We recommend that the Director of HUD’s Office of Community Planning and Development require the City to develop and implement a HUD-approved written plan and checklists that will correct and prevent the deficiencies outlined in the finding.

We recommend that the Director of HUD’s Office of Community Planning and Development require the City to provide training to City staff to ensure that it understands and follows procurement requirements, such as performing independent cost estimates, cost analysis, scoring, including all contract provisions, ensuring that subrecipients understand and follow procurement requirements, and maintaining appropriate procurement documentation.

We recommend that the Director of HUD’s Office of Community Planning and Development require the City to Update its procurement policies and procedures to ensure compliance with disaster assistance program requirements

We recommend that the Director of HUD’s Office of Community Planning and Development require the City to ensure that monitoring includes a review of its subrecipients’ (1) policies and procedures to ensure that the policies and procedures are current and comply with HUD requirements, (2) documentation supporting cost reasonableness to ensure that the documentation is sufficient, and (3) training provided regarding procurement and other program requirements to ensure that trainings are adequate.

We recommend that the Director of the Office of Block Grant Assistance require the Texas GLO to provide its plan to continuously monitor Harris County’s pace and performance in its remaining Hurricane Harvey CDBG-DR program and take appropriate action to ensure that program goals are met. The plan should include a process for repurposing additional grant funds, if necessary, to avoid potential recapture due to Harris County’s inability to meet the expenditure deadline established under its subrecipient agreement with the Texas GLO, and to allow the Texas GLO to meet the expenditure deadline for its grant award.

We recommend that the Director of the Office of Block Grant Assistance require the Texas GLO to set performance and financial milestones, including approval of Harris County’s projects and obligation and expenditure of funds, for all programs and activities funded under the Harris County subrecipient agreement through the remainder of the contract and deadlines for Harris County to achieve those milestones. This would include the Texas GLO (1) providing its plan to continually assess whether Harris County is meeting the established milestones within the prescribed time period; (2) taking appropriate action as outlined in the subrecipient agreement for any missed deadlines; and (3) , if necessary, determining whether additional programs need to be combined or eliminated from the subrecipient agreement.

We recommend that the Director of the Office of Block Grant Assistance require the Texas GLO to provide evidence of subrecipient monitoring of Harris County’s capacity to manage its Hurricane Harvey grant funds to address duplicative, inefficient, and cost-prohibitive processes or positions. The evidence should include any corrective actions that have been imposed and Harris County’s response.

We recommend that the Director of the Office of Block Grant Assistance require the Texas GLO to ensure that Harris County obtains adequate training for its program staff and that the staff continuously demonstrates their understanding of and competence to operate Harris County’s programs within applicable requirements. This would include ensuring that Harris County takes appropriate steps to remedy situations where staff are not operating the program within applicable requirements.

We recommend that the Director of the Office of Block Grant Assistance require the Texas GLO to review Harris County’s Housing Reimbursement Program policies, including assistance prioritization, to ensure compliance with the Texas GLO’s action plan and amendments. This would include the Texas GLO analyzing the County’s project pipeline to determine whether changes are warranted to ensure that those most in need are prioritized to receive limited Federal assistance. The Texas GLO should provide HUD with an analysis of the County’s project pipeline within 90 days of its review to share the results and demonstrate compliance with its action plan.

For the MF-RAP, PIH-TRA, and CPD-HIM programs, ensure that the program's improper payments rate estimates adequately test for and include improper payments of Federal funding that are made by State, local, and other organizations administering these programs and adequately disclose any limitations imposed or encountered when reporting on improper payments, to a degree that fairly informs users of the respective reported information.

Status

This recommendation was closed by HUD. However, OIG continues to object to that closure and identifies this as a priority recommendation. After HUD closed this recommendation, it informed OIG that it would not be able to produce estimates of improper payments in these programs for FY 2023 and projected to the Office of Management and Budget that it may not be able to do so until FY 2027, dependent on funding.

For several years, we have reported that HUD was unable to test for improper payments in these programs because the Office of the Chief Financial Officer (OCFO) was unsuccessful in working with the Offices of Public and Indian Housing, Multifamily Housing Programs, and the Chief Information Officer to securely collect program files needed to test payments. This year, OCFO reported that HUD was again unable to complete improper payment testing because it was delayed in implementing a secure platform designed to collect supporting data and documentation and also because of limited staffing resources with technical knowledge of the payment cycles. The lack of proper planning and coordination from leadership in HUD’s program and support offices has prevented HUD from addressing the root causes behind the failure to comply with improper payment laws.

Due to this, HUD OIG issued a management alert to the HUD Deputy Secretary entitled "Action Is Needed From HUD Leadership To Resolve Systemic Challenges With Improper Payments", on January 23, 2024. In response to the Management Alert, the Deputy Secretary stated that she would provide a plan in 30 days. On April 10, 2024, the Chief Financial Officer, Assistant Secretary for Housing, and Principal Deputy Assistant Secretary for Public and Indian Housing (PIH) stated their respective executives have been working together to develop a plan to accelerate HUD’s ability to produce statistically valid estimates. With respect to project-based rental assistance (PBRA), HUD plans to use ongoing data collection for fiscal year (FY) 2023 tier 1 and tier 2 payments to develop a statistical estimate in FY 2024. With respect to PIH-TBRA, in lieu of pursuing an estimate for the FY 2024 reporting cycle, PIH will focus on “its existing efforts to enhance PIH [IT] systems”, which HUD considers to be a more strategic use of resources. It is not clear from HUD’s response what PIH will do differently than it already had planned prior to the management alert as HUD did not provide a detailed plan or timeline for OIG review. As of June 21, 2024, a detailed plan or timeline has not been provided.

Analysis

HUD has been challenged with developing a compliant sampling methodology that can test the full payment cycle and that can be executed within the required timeframes. HUD’s sampling methodology did not test the full payment cycle. Further, the associated sample testing and statistical estimation of improper payments could not be completed in time for the required annual reporting of improper payment estimates in the Agency Financial Report (AFR), normally issued in November. To fully address this recommendation, the sampling methodology should test the full payment cycle, and the associated sample testing and statistical estimation must be completed in time to be included in the AFR.

Implementation of this recommendation will result in HUD better safeguarding taxpayer dollars and decrease improper payments.

Develop and issue a departmentwide policy that notes that radon is a radioactive substance and outlines HUD's requirements to test for and mitigate excessive radon levels in accordance with 24 CFR 50.3(i)(1) and 58.5(i)(2)(i).

Develop and provide training for applicable program staff, grantees, and PHAs on radon testing and mitigation requirements.

Develop and implement an effective radon policy to ensure that CPD program activities comply with the departmentwide policy on radon testing and mitigation requirements.

Update the current Multifamily radon policy to ensure that program activities comply with the departmentwide policy on radon testing and mitigation requirements.