We audited the U.S. Department of Housing and Urban Development’s (HUD) Office of Lead Hazard Control and Healthy Homes’ (OLHCHH) oversight of Lead-Based Paint Hazard Control (LBPHC) and Lead Hazard Reduction Demonstration (LHRD) grant programs.  These programs help reduce lead hazards in low-income households, particularly with young children.  Between fiscal years 2020 and 2022, OLHCHH awarded more than $353 million in competitive lead grants to 101 grantees as part of HUD’s efforts to address lead hazards in U.S. low-income households.  We conducted this audit due to concerns that grantees were not spending grant funds to assist in reducing lead in targeted households.  Our objective was to assess how HUD (1) evaluates grantees’ capacity to manage grant funds and (2) tracks and monitors grant performance.

HUD’s Office of Lead Hazard Control and Healthy Homes (OLHCHH) need to improve its oversight of competitive LBPHC and LHRD grants.  OLHCHH did not always (1) review grantees’ past performance when evaluating capacity to manage competitive lead grant funds, (2) designate poor performing grantees as ‘High Risk’ after two consecutive quarters of poor performance, and (3) provide timely reviews of quarterly performance reports.

Due to the pandemic’s impact on grantees, OLHCHH eased its application review criteria for evaluating grantees’ performance history and how grantees are designated as ‘High Risk’ performers.  OLHCHH believed that doing so would minimize any hindrance to grantees’ eligibility for competitive lead grants and avoid penalizing grantees still recovering from the pandemic’s impact.  In addition, OLHCHH contended with competing priorities such as reviewing grant applications and making grant awards, which delayed HUD’s reviews of grantees’ quarterly performance reports.  These oversight weaknesses did not allow for OLHCHH to hold grantees accountable and ensure agreed-upon performance benchmarks were met in reducing lead hazards in targeted U.S. households.  From our universe of 101 grantees awarded $353 million in lead grants, we sampled 17 grantees that were awarded $63.8 million.  Of the 17 sampled grantees, 11 of these grantees were awarded $44.9 million in lead grant funds that were not designated as ‘High Risk’.  As of August 2025, these 11 sampled grantees spent $13.5 million of the $44.9 million awarded funding in grants to provide lead hazard control services to U.S. households.  Two of these sampled grantees have expired grants in which they did not meet agreed-upon performance benchmarks by the respective end of their period of performance of June 30 and July 14, 2025.  This resulted in $3.8 million in unused competitive lead grant funds that expired instead of being used to provide lead hazard control services for at least 132 targeted households.

 We recommend that HUD (1) Provide support to show that the past performance history element was factored during the application review process, (2) improve how grantees are designated as ’High Risk’, (3) improve the timing of when reviewing grantees’ quarterly performance reports, (4) recapture $3,775,916 in undisbursed grant funds for the two grantees that were not designated ‘High Risk’ whose period of performance ended and, (5) take appropriate actions that may include recapturing other undisbursed grant funds that expired on or before December 31, 2025.