HUD Management: Actions Needed to Improve Acquisition Management 
(15-NOV-02, GAO-03-157).					 
                                                                 
In the 1990s the Department of Housing and Urban Development	 
(HUD) dramatically downsized its staff, however, its mission did 
not decrease. As a consequence, HUD relies more heavily on	 
private contractors, and needs to hold its contractors		 
accountable for results. GAO was asked to determine if HUD has	 
processes and practices in place to effectively oversee 	 
contractors, strategically manages its acquisition workforce, and
has management information systems that support its acquisition  
workforce.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-157 					        
    ACCNO:   A05532						        
  TITLE:     HUD Management: Actions Needed to Improve Acquisition    
Management							 
     DATE:   11/15/2002 
  SUBJECT:   Accountability					 
	     Contract oversight 				 
	     Management information systems			 
	     Federal procurement				 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-03-157

Report to Congressional Requesters

United States General Accounting Office

GAO

November 2002 HUD MANAGEMENT Actions Needed to Improve Acquisition
Management

GAO- 03- 157

Why GAO Did This Study

In the 1990s the Department of Housing and Urban Development (HUD)
dramatically downsized its staff, however, its mission did not decrease.
As a consequence, HUD relies more heavily on private contractors, and
needs to hold its contractors accountable for results. GAO was asked to
determine if HUD has processes and practices in place to effectively
oversee contractors, strategically manages its acquisition workforce, and
has management information systems that support its acquisition workforce.

November 2002 HUD MANAGEMENT Actions Needed to Improve Acquisition
Management

www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 157. To view the full report,
including the scope and methodology, click on the link above. For more
information, contact Stanley J. Czerwinski (202) 512- 5535.

Highlights of GAO- 03- 157, a report to the Senate Committee on Banking,
Housing and Urban Affairs and Subcommittee on Housing and Transportation

What GAO Recommends

GAO makes several recommendations regarding HUD*s management of its
acquisitions. For example, (1) HUD staff should systematically use
contract monitoring plans as well as a risk- based approach to monitoring,
(2) HUD should address workload disparities among its acquisition
workforce and ensure that appropriate training is provided, and (3) HUD
should improve the usefulness of its contracting information system by
providing training to staff.

United States General Accounting Office

What GAO Found

HUD*s contracting has increased significantly in recent years. Although
HUD has taken actions to improve its acquisition management-- such as
instituting full- time contract monitoring positions and improving its
contracting information system-- weaknesses remain that limit HUD*s
ability to identify and correct contractor performance problems, assure
that it is receiving the services for which it pays, and hold contractors
accountable for results.

* HUD, in particular, its multifamily housing program, does not employ
processes and practices that could facilitate effective

monitoring. For example, HUD*s monitoring process does not consistently
include the use of contract monitoring plans or riskbased strategies, or
the tracking of contractor performance.

* HUD has not ensured that individuals responsible for managing and
monitoring contracts have the appropriate workload, skills, and

training that would enable them to effectively perform their jobs. For
example, according to HUD*s records, over half of the staff who are
directly responsible for monitoring contractor performance have not
received required acquisition training.

* HUD*s management information systems do not adequately support its
acquisition workforce in their efforts to manage and monitor

contracts. Specifically, key information in HUD*s contracting system is
not reliable and HUD*s financial systems do not readily provide complete
and consistent contracting obligation and expenditure data.

HUD paid $227,500 for 15,000 square feet of sidewalk repairs at five
buildings; however, GAO determined that only about one- third of the work
HUD paid for was performed. Therefore, it appeared that HUD improperly
paid its contractor $164, 000. One of the buildings is shown above. Only
the lighter shaded section of the sidewalk was replaced and not the entire
sidewalk as was listed on the paid invoices.

Source: GAO photograph of HUD property.

G A O Accountability Integrity Reliability

Highlights

Page i GAO- 03- 157 HUD Management Letter 1

Results in Brief 3 Background 6 HUD Has Increased Contracting Activities
and Taken Steps to

Improve Acquisition Management 12 HUD Does Not Employ Certain Processes
and Practices that

Would Facilitate Effective Contractor Monitoring 15 HUD Does Not
Strategically Manage Its Acquisition Workforce 23 Weaknesses in
Programmatic and Financial Management

Information Systems 26 Conclusions 31 Recommendations for Executive Action
32 Agency Comments 32

Appendix I Scope and Methodology 35

Appendix II Sampling Methodology for GAO Survey of HUD*s Acquisition
Management Reforms 39

Objectives 39 Scope and Methodology 39 Study Population 39 Sample Design
39 Estimates 40 Sampling Error 40 Nonsampling Error 41 Survey Development
41 Survey Administration 41

Appendix III Analysis of the HUD Procurement System (HPS) Identified
Discrepancies in HUD*s Contracting Data 43

Appendix IV HUD*s Financial Management Information Systems that Contain
Contracting Obligation and Expenditure Information 45 Contents

Page ii GAO- 03- 157 HUD Management Appendix V Comments from the
Department of Housing and Urban

Development 46 GAO Comments 56

Appendix VI GAO Contacts and Staff Acknowledgments 59 GAO Contacts 59
Acknowledgments 59

Tables

Table 1: Contract Obligation Data from HUD*s Programmatic and Financial
Management Information Systems for Fiscal Years 1999 and 2000 29 Table 2:
Description of Sample 40

Figures

Figure 1: HUD Contracting Dollars by Category of Service for Fiscal Year
2000 7 Figure 2: HUD Contracting Obligations for Fiscal Years 1995 to

2000 in 2001 Constant Dollars 12 Figure 3: Sidewalk Repairs at HUD
Property 22

Page iii GAO- 03- 157 HUD Management Abbreviations

CO Contracting Officer CCARS Cash Control Accounting Report System CS
Contract Specialist CSMS/ PMS Comprehensive Servicing and Monitoring

System/ Property Management System FAR Federal Acquisition Regulation FCO
Field Contracting Operations FHA Federal Housing Administration FPDC
Federal Procurement Data Center GAO General Accounting Office GNMA
Government National Mortgage Association GTM Government Technical Monitor
GTR Government Technical Representative HOC Homeownership Center HPS HUD
Procurement System HUD Department of Housing and Urban Development HUDAR
HUD*s Acquisition Regulation HUDCAPS HUD*s Central Accounting and Program
System LOCCS Line of Control and Credit System NAPA National Academy of
Public Administration OIG Office of the Inspector General OCPO Office of
the Chief Procurement Officer OFPP Office of Federal Procurement Policy
PAS Program Accounting System REAP Resource Estimation and Allocation
Project REO Real Estate Owned SAMS Single Family Acquired Asset Management
System

Page 1 GAO- 03- 157 HUD Management

November 15, 2002 The Honorable Paul S. Sarbanes Chairman Committee on
Banking, Housing, and Urban Affairs United States Senate

The Honorable Jack Reed Chairman Subcommittee on Housing and
Transportation Committee on Banking, Housing, and Urban Affairs United
States Senate

The Honorable Wayne Allard Ranking Minority Member Subcommittee on Housing
and Transportation Committee on Banking, Housing, and Urban Affairs United
States Senate

The Department of Housing and Urban Development (HUD) assists millions of
Americans through programs that help to encourage home ownership, house
the poor, and promote economic development. To accomplish its mission, HUD
relies on the integrity of thousands of third parties* such as private
lenders, contractors, nonprofit organizations, and local governments. As
HUD dramatically downsized its staff in the 1990s* from about 13,500
people to around 9,000 today* the scope of its mission and the needs of
the people it serves did not decrease. As a consequence, HUD came to rely
more and more on private contractors to help carry out its mission. These
contractors deliver programs and perform many functions that used to be
done by HUD*s staff, including those in its mortgage insurance and rental
assistance program areas* areas we have found to be at high risk for
fraud, waste, abuse, and mismanagement. 1 To guard against fraud, waste,
abuse, and mismanagement, HUD needs effective oversight processes and
staff with the right skills and training who are equipped with the right
tools and information to ensure the

1 U. S. General Accounting Office, Major Management Challenges and Program
Risks: Department of Housing and Urban Development, GAO- 01- 248
(Washington, D. C.: Jan. 1, 2001).

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 03- 157 HUD Management

fulfillment of HUD*s mission and to protect the integrity of and
accountability over its programs.

You asked us to study HUD*s acquisition management as part of your broad
request for a series of our reports on HUD management issues. 2 In this
report we discuss the challenges HUD faces in overseeing its contractors,
focusing specifically on (1) trends in HUD*s contracting activity and
efforts to improve its acquisition management; (2) whether HUD has
effective processes and practices to effectively manage and monitor
contracts; (3) whether HUD ensures that its acquisition workforce has the
appropriate workload, skills, and training to manage and monitor
contracts; and (4) whether HUD*s programmatic and financial management
information systems support the acquisition workforce in managing and
monitoring contracts.

To assess HUD*s oversight of its contracts, we reviewed HUD*s contracting
policies and procedures. We focused on contracts in the Office of
Multifamily Housing because, among other things, in fiscal year 2001,
Multifamily Housing processed the second highest number of purchase orders
and contracts that obligated funds* about 25 percent of these
transactions. In a related assignment, we also reviewed fiscal year 2001
disbursements under multifamily housing*s property disposition contracts
using an automated approach to identify unusual transactions and payment
patterns. 3 To assess the workload, skills, and training of the
acquisition workforce, we conducted a survey of HUD*s acquisition
workforce and obtained information on training and certification of the
acquisition workforce, both in the Office of the Chief Procurement Officer
(OCPO) and at the program level. To determine whether HUD*s programmatic
and financial management systems support contract oversight, we analyzed
contracting data from the various systems that record contracting
transactions.

2 In response to this request, we have also issued reports on HUD*s
information technology acquisition efforts, the status of HUD management
reforms, and HUD*s human capital planning. U. S. General Accounting
Office, HUD Information Systems: Immature Software Acquisition Capability
Increases Project Risks, GAO- 01- 962 (Washington, D. C.: Sept. 14, 2001).
U. S. General Accounting Office, HUD Management: Progress Made on
Management Reforms, but Challenges Remain, GAO- 02- 45 (Washington, D. C.:
Oct. 31, 2001). U. S. General Accounting Office, HUD Human Capital
Management: Comprehensive Strategic Workforce Planning Needed, GAO- 02-
839 (Washington, D. C.: July 24, 2002).

3 U. S. General Accounting Office, Financial Management: Strategies to
Address Improper Payments at HUD, Education, and Other Federal Agencies,
GAO- 03- 167T (Washington, D. C.: Oct. 3, 2002).

Page 3 GAO- 03- 157 HUD Management

HUD contracting has increased significantly in recent years and the
department has taken corrective actions to improve its acquisition
management. According to HUD, its commitments for contract work increased
by about 62 percent between fiscal years 1997 and 2000, from about $786
million to almost $1.3 billion (in 2001 constant dollars). Much of this
increase in contracting activity is attributed to the decline in the
number of HUD staff and the need to contract for activities previously
done by HUD employees and new functions, such as the physical building
inspections of public housing and multifamily projects that were initiated
under recent management reform. HUD expects contracting to increase,
partially due to a presidential initiative to increase competition between
the public and private sectors for work currently done by federal
employees. In response to criticisms of past contracting practices, HUD
undertook corrective actions to improve acquisition management. These
included instituting full- time technical positions at the program level
with responsibility for monitoring contractor performance, a certification
training program for HUD staff filling those positions, and a contracting
information system to improve consolidation of contracting data and its
integration with HUD*s financial systems. HUD also hired a chief
procurement officer and created a Contract Management Review Board to
improve contract administration and procurement planning. While HUD has
taken actions to improve its acquisition management, it still faces
significant challenges monitoring contractor performance, managing its
acquisition workforce, and ensuring the quality of data in its
programmatic and financial management systems.

The department, in particular its multifamily housing program, does not
employ certain processes and practices that could facilitate effective
monitoring and ensure contractors* accountability. 4 HUD*s monitoring of
its contractors is not systematic and is largely remote. HUD*s monitoring
process does not consistently include the use of contract monitoring plans
or risk- based strategies, or the tracking of contractor performance*
which would be helpful in the administration of such plans and strategies.
According to our survey, only 23 percent of HUD staff responsible for
contract monitoring use a contract administration plan, which the Office
of Federal Procurement Policy (OFPP) describes as essential for good

4 We have defined monitoring as an internal control function that is
performed continually and is ingrained in the agency*s operations. It
includes regular management and supervisory activities, comparisons,
reconciliations and other actions people take in performing their duties.
U. S. General Accounting Office, Standards for Internal Control in the
Federal Government, GAO/ AIMD- 00- 21. 3.1 (Washington, D. C.: November
1999). Results in Brief

Page 4 GAO- 03- 157 HUD Management

contract administration. HUD*s monitoring of contractors consists mainly
of reviews of progress reports and invoices, telephone calls, and emails.
When on- site visits are conducted, they are often not conducted as
intended, per HUD guidance, and HUD staff are limited in their ability to
follow up on identified problems. 5 In the absence of a systematic
approach to oversight and adequate on- site monitoring, the department*s
ability to identify and correct contractor performance problems and hold
contractors accountable is reduced. The resulting vulnerability limits
HUD*s ability to assure itself that it is receiving the services for which
it pays. In October 2002, we testified that a related review of improper
payments at HUD identified several examples of contractor performance
problems that illustrate the problems that can occur as a result of these
vulnerabilities. 6 In one case, HUD paid five invoices totaling $227,500
for 15,000 square feet of concrete to be replaced when only about one
third of that amount was actually replaced. In another case, HUD paid for
apartment renovations that were not done. These examples demonstrate the
need for HUD to adopt more effective monitoring procedures.

In addition, HUD has not taken steps to ensure that individuals
responsible for managing and monitoring contracts have the appropriate
workload, skills, and training that would enable them to effectively
perform their jobs. For example, while a recent resource allocation study
identified workload disparities within HUD*s primary contracting office,
HUD has not yet addressed the issues raised in that study. While HUD has
undertaken an organizationwide workforce planning effort, 7 HUD has not
assessed the skills and capabilities of its acquisition workforce to
ensure that it has the skills to manage and monitor the contracts for
which they are responsible. In addition, according to HUD*s records, over
half of the staff who are directly responsible for monitoring contractor
performance have not received required acquisition training. HUD*s
procurement office management was not aware that the staff were serving in
that capacity without the required training.

5 HUD*s Multifamily handbook indicates that quarterly inspections are to
occur, but the specific sections in the handbook that are to discuss those
inspections have not yet been developed and are currently blank.

6 GAO- 03- 167T. 7 In July 2002, we reported that HUD has undertaken some
workforce planning and has determined how many staff it needs to meet its
current workload, but it does not have a comprehensive strategic workforce
plan to guide its recruiting, hiring, and other key human capital efforts.
GAO- 02- 839.

Page 5 GAO- 03- 157 HUD Management

HUD*s programmatic and financial management information systems do not
readily provide accurate and consistent data that supports its acquisition
workforce in their efforts to manage and monitor contracts. The
department*s centralized contracting system does not contain reliable
information on the number of active contracts, the expected cost of the
contracts, or the types of goods and services acquired. In addition, HUD*s
financial management information systems do not readily provide complete
and consistent obligation and expenditure information for HUD*s overall
contracting activities or for individual contracts. Five months after our
request, HUD was unable to provide spending information on 33 contracts.
To compensate for weaknesses in formal information systems, HUD staff
overseeing contracts have developed informal or *cuff* systems* personal
spreadsheets to fulfill their job responsibilities. While helping staff
perform their jobs, these informal systems are not subject to HUD*s
policies, procedures, or internal controls to ensure that the information
maintained in them* and used by HUD*s acquisition workforce to manage and
monitor individual contracts* is accurate. In addition, the programmatic
and financial management information systems do not provide HUD managers
accurate and timely information needed to oversee the department*s
contracting activities, make informed decisions about the use of HUD*s
resources, and ensure accountability in the department*s programs.

HUD has already taken some actions to improve its acquisition management.
Many of the deficiencies we identified, particularly related to HUD*s
human capital management and programmatic and financial information
systems, are long- standing and will likely require years to resolve.
However, HUD can take immediate steps to address certain acquisition
management deficiencies. In fact, many of the tools that would help HUD
address these deficiencies already exist, through HUD and federal
acquisition initiatives. This report makes recommendations that HUD use
some of these tools, which would lead to more systematic contract
monitoring, address planning and training requirements for its acquisition
workforce, and take steps to improve the accuracy and utility of its
centralized contracting management information system.

We provided a draft of this report to HUD for its review and comment. HUD
agreed that it faces significant long- standing challenges in monitoring
the performance of its contractors, managing its acquisition workforce,
and addressing weaknesses in its information systems. HUD stated that it
is taking actions to address our recommendations. For example, to improve
contract oversight and monitoring, HUD will require each of its program
organizations to review its policies and procedures to ensure that

Page 6 GAO- 03- 157 HUD Management

they are clear, consistent, and risk- based. The department also stated
that it plans to take action to improve management of its acquisition
workforce and address weaknesses in its information systems.

While HUD agreed with our recommendations, HUD said it believes that its
acquisition workforce is receiving required training because (1) it has
developed acquisition training for Government Technical Representatives
(GTR) in accordance with federal requirements and (2) Government Technical
Monitors (GTM) do not require the same level of training as GTRs and are
provided acquisition training appropriate to their duties when needed. 8
We agree that the department has developed an acquisition training program
for GTRs in response to federal requirements. However, we found that a
significant portion of the department*s GTRs have not had this training,
and HUD did not disagree with our finding. Furthermore, while we agree
that GTMs may not require the same level of training as GTRs, HUD policies
permit the duties and responsibilities of GTRs to be delegated to GTMs;
and its draft Acquisition Career Management Plan* which establishes
training requirements for HUD*s acquisition workforce* states that the GTR
training requirements also apply to GTMs. Therefore, we remain concerned
that, according to HUD*s records, 93 percent of HUD*s GTMs have not
received any specialized acquisition training. We are, however, encouraged
by HUD*s comment that it will continue to assess the training needed for
GTMs to more effectively monitor contractor performance. The full text of
HUD*s comments and our response appear in appendix V.

HUD encourages homeownership by providing mortgage insurance for single
family housing and makes rental housing more affordable for about 4.8
million low- income households by insuring loans to construct or
rehabilitate multifamily rental housing and by assisting such households
with their rent payments. In addition, it has helped to revitalize over
4,000

8 The GTR at HUD is the equivalent of a Contracting Officer Technical
Representative at other agencies, and acts as the Contracting Officer*s
representative in all matters concerning the technical (i. e., not
contractual) aspects of a contract. The GTR is often the department*s
primary point of contact with a contractor; is responsible for giving
contractors technical advice and guidance related to the work required by
the contract, and is also the principal judge of contractor performance,
including the quality and timeliness of work and products, and when
appropriate, the contractor*s ability to control costs of performance. HUD
uses GTMs to assist the GTRs, but does not equate them to the contracting
officer technical representatives or contracting officer representatives
specified in the FAR. Background

Page 7 GAO- 03- 157 HUD Management

localities through community development programs. To accomplish these
diverse missions, HUD relies on third parties, including contractors, to
administer many of its programs. As shown in figure 1, according to data
HUD reported to the Federal Procurement Data Center (FPDC), for fiscal
year 2000, HUD obligated the bulk of its contracting dollars* over 96
percent* in three categories of contracting: automated data processing and
telecommunications services for about $254 million; operation of
government- owned facilities for about $195 million for one of its
multifamily contractors; and over $600 million for professional,
administration, and management support services contracts, such as real
estate brokerage services, technical assistance, and other services.

Figure 1: HUD Contracting Dollars by Category of Service for Fiscal Year
2000

According to HUD data, about $640 million of the $1.2 billion contract
obligations for fiscal year 2000 are for Office of Housing contracts; much
of this contracting was for services HUD needs to manage its foreclosed
single- family and multifamily housing inventory, which HUD acquires when
borrowers default on mortgages insured by the Federal Housing
Administration (FHA). According to HUD*s fiscal year 2001 annual
performance report, the Secretary holds single- family property with a
value of about $2.4 billion and multifamily property with a value of about

Page 8 GAO- 03- 157 HUD Management

$750 million as of September 30, 2001. 9 In its single- family program,
HUD contracts for management and marketing contractors who are responsible
for securing, maintaining, and selling the houses that HUD acquires when
the owners default on their loans. HUD also contracts for property
management services, such as on- site management, rent collection, and
maintenance, for multifamily properties it acquires through foreclosure.
HUD*s two largest multifamily property management contractors have an
obligated value of about $650 million over 5 years.

Contracting is conducted in HUD*s Office of the Chief Procurement Officer
(OCPO) in Washington D. C., or by one of HUD*s three Field Contracting
Operations (FCO) offices located in Philadelphia, Pennsylvania; Atlanta,
Georgia; and Denver, Colorado. OCPO contracts for information technology
and other services in support of HUD headquarters. FCO offices primarily
contract for services related to the business operations of HUD*s field
offices and specialized centers. For example, contracting officers in one
FCO assist HUD*s two Multifamily Property Disposition Centers (located in
Atlanta, Georgia, and Ft. Worth, Texas) in contracting for and overseeing
the property management contractors that are responsible for the day- to-
day management of foreclosed multifamily properties.

HUD*s Office of Multifamily Housing field offices and two Property
Disposition Centers are responsible for the oversight of various programs
to provide affordable multifamily housing. The largest multifamily
contracts in the field are for the Property Disposition Centers, which are
responsible for management of foreclosed multifamily properties. HUD*s
multifamily housing field offices* comprising 18 hub offices and their
associated 33 program centers* also contract for inspections of the
construction of multifamily properties built under its FHA- insured and
assisted multifamily housing programs, which are for the construction of
housing for the elderly and disabled. 10 Multifamily Housing has four
fulltime GTRs located in Atlanta and Ft. Worth who are responsible for
monitoring most field multifamily contracts; two GTRs are assigned to the

9 U. S. Department of Housing and Urban Development, FY 2001 Performance
and Accountability Report.

10 FHA insures private lenders against losses on mortgages that finance
multifamily projects to develop affordable housing. The Section 202/ 811
Supportive Housing for the Elderly and Persons with Disabilities programs
provide grants for long- term supportive housing for the elderly and
disabled.

Page 9 GAO- 03- 157 HUD Management

Property Disposition Centers and two are responsible for the construction
inspection contracts. Most of the field contracts are also assigned at
least one GTMs, who is designated to assist, on a part- time basis, the
GTRs on the day- to- day technical oversight of the contractors*
performance.

Various federal laws, regulations, and policies govern contracting
operations and procedures. The Federal Acquisition Regulation (FAR)
establishes uniform policies and procedures for acquisitions by all
executive agencies. The FAR establishes procedures for all aspects of the
contracting process, from solicitation to post award monitoring, including
responsibilities of the various members of the acquisition team such as
the contracting officer. Also in 1974, the Office of Federal Procurement
Policy (OFPP) Act created OFPP within the Office of Management and Budget
to provide, among other things, governmentwide policies for agencies in
procurement matters. OFPP*s Guide to Best Practices for Contract
Administration recommends the use of a contract administration plan for
good contract administration. According to the guide, this plan should
specify the performance outputs and describe the methodology used to
conduct inspections of those outputs.

HUD supplements the FAR through its own regulations called HUD*s
Acquisition Regulation (HUDAR) and its Procurement Policies and Procedures
Handbook. The handbook specifies various monitoring tools that the GTR may
use to monitor contractor performance, such as a quality assurance plan, a
contractor*s work plan and schedule of performance, or progress reports.
The purpose of the monitoring is to ensure that (1) the contractor
performs the services and/ or delivers the products of the type and
quality that the contract requires, (2) performance is along the most
efficient lines of effort, (3) performance and deliverables are timely,
(4) performance is within the total estimated cost, and (5) HUD will be
able to properly intervene when performance is deficient. For example,
according to the handbook, often the best way for a GTR to determine the
quality of the contractor*s performance is through an actual inspection of
work or products. Inspections may be routine, unannounced, or a
combination of the two, and the contract should specify any requirement
for routine inspections, such as the frequency and dates, or other
occurrences that would trigger an inspection. The handbook does not
establish specific monitoring requirements, such as timetables for review
or numbers of site visits; however, some of the policies established by
individual program offices do include such requirements. For example, the
Office of Multifamily Housing*s Standard Operating Procedures No. 5
requires that HUD staff visit construction sites at least twice during
construction to verify the performance of the

Page 10 GAO- 03- 157 HUD Management

inspection contractor who is responsible for inspecting actual
construction of the project.

The Clinger- Cohen Act of 1996 requires executive agencies, through
consultations with OFPP, to establish education, training, and experience
requirements for acquisition workforces at civilian agencies. Under
implementing guidance issued by OFPP, an agency*s acquisition workforce*
including its contracting officers, contract specialists, purchasing
agents, contracting officer representatives, and contracting officer
technical representatives* must meet an established set of contracting
competencies. 11 In addition, OFPP has identified specific training
requirements for personnel in the contracting and purchasing occupation
series. OFPP further required that agencies have policies and procedures
that specify career paths and mandatory training requirements for
acquisition positions and that agencies collect and maintain standardized
information on the training of its acquisition workforce. 12

A strong internal control system provides the framework for accomplishing
management objectives, accurate financial reporting, and compliance with
laws and regulations. Effective internal controls, including monitoring,
serve as checks and balances against undesired actions, thereby providing
reasonable assurance that resources are effectively managed and accounted
for. A lack of effective internal controls puts an entity at risk of
fraud, waste, abuse, and mismanagement. Monitoring is a particularly
critical management control tool for HUD because its housing programs rely
extensively on various third parties, such as contractors, to achieve
HUD*s goals. For many years, HUD has been the subject of criticism for
management and oversight weaknesses that have made its programs vulnerable
to fraud, waste, abuse, and mismanagement. In January 2001, we recognized
the credible progress that HUD had made in improving its management and
operations, and we reduced the number of HUD program areas deemed to be
high risk to two of its major program areas* single family mortgage
insurance and rental housing assistance. These program areas include the
single family and

11 Contracting officers have the authority to bind the government legally
by signing a contract. Contract specialists generally assist contracting
officers. Purchasing agents commonly issue delivery orders against
established contracts.

12 To assist in meeting this requirement governmentwide, the Federal
Acquisition Institute is scheduled to implement the Acquisition Career
Management Information System in October 2002. This system is Web- based
and will collect standardized information on the acquisition workforce for
all civilian agencies.

Page 11 GAO- 03- 157 HUD Management

multifamily property disposition activities cited earlier and comprise
about two- thirds of HUD*s budget.

We, HUD*s Office of Inspector General (OIG), and the National Academy of
Public Administration (NAPA) have reported on weaknesses in HUD*s contract
administration and monitoring of contractors* performance over several
years. For example, starting in 1998, we reported on the performance of
HUD*s single- family contractors* that HUD did not have an adequate system
in place to assess its field offices* oversight of real estate asset
management contractors. In three offices that we reviewed, none of the
offices adequately performed all of the functions needed to ensure that
the contractors met their contractual obligation to maintain and protect
HUD- owned properties. HUD*s OIG completed a comprehensive review of HUD*s
contracting operations in 1997 and found that a lack of adequate planning,
needs assessment, good initial planning, monitoring, and cost control on
several multimillion dollar contracts left HUD vulnerable to waste and
abuse. The OIG found contract monitoring to be very lax throughout the
program areas. The GTRs and GTMs had a poor understanding of their roles
and responsibilities, allowing HUD to be overbilled, improperly
authorizing contract tasks, accepting less than complete contract work
without financial credits or adjustments, and could not document whether
certain tasks were completed. In a followup review in 1999, the OIG
reported that HUD*s reforms had laid the groundwork for an effective
acquisition process; however, they concluded that HUD*s contracting
attitudes and practices had not changed significantly. In May 1997, NAPA,
reported that HUD*s procurement process took too long; FHA*s oversight of
contracted services was inadequate; and FHA sometimes used contracting
techniques that limited competition. 13 In 1999, NAPA issued its final
report on the results of their study and noted that HUD had made progress
toward improving its procurement processes. 14

13 National Academy of Public Administration, A Preliminary Review of
Federal Housing Administration Acquisition Activities (Washington, D. C.:
May 1997). 14 National Academy of Public Administration, HUD Procurement
Reform: Substantial Progress Underway (Washington, D. C.: April 1999).

Page 12 GAO- 03- 157 HUD Management

HUD*s contracting obligations have been on an upward trend in recent
years; HUD reports that its contracting obligations increased from about
$786 million in fiscal year 1997 to almost $1.3 billion in fiscal year
2000 (in 2001 constant dollars), or about a 62 percent increase within 5
years. 15 Much of this increase in contracting activity is compensating
for staff reductions in the early 1990*s from about 13,500 to about 9,000
by March 1998 and the need to contract out for activities previously done
by HUD employees, and for new functions, such as the physical building
inspections of public housing and multifamily insured projects, initiated
under recent management reforms. Figure 2 shows the change in HUD*s
contracting dollars from fiscal year 1995 through fiscal year 2000 (in
2001 constant dollars).

Figure 2: HUD Contracting Obligations for Fiscal Years 1995 to 2000 in
2001 Constant Dollars

Notes: HUD reports that the contracting data are derived from various
procurement and financial reporting systems.

Source: HUD data.

15 HUD obligated about $960 million in fiscal year 2001. According to HUD
officials, some decisions regarding planned contracts were delayed as a
result of the change in administration, resulting in a decrease in
obligations for 2001. HUD Has Increased

Contracting Activities and Taken Steps to Improve Acquisition Management

Page 13 GAO- 03- 157 HUD Management

With recent management reform initiatives, HUD now contracts out for many
activities formerly done by HUD employees, as well as for new functions.
For example, HUD*s Homeownership Centers (HOC) hired contractors to review
single- family loan files and issue mortgage insurance. HUD staff, which
formerly performed these functions, then became contract monitors. HOCs
also contracted out for a new type of contractor to manage and market
acquired single- family properties. They also awarded other contracts to
inspect 10 percent of the properties handled by each of the management and
marketing contractors and review 10 percent of the management and
marketing contractors* property case files each month. HUD*s Office of
Multifamily Housing contracted out work previously done by HUD employees
that included inspections of repairs and inspections during construction
of insured and assisted multifamily properties.

The department expects its reliance on contracting to continue on an
upward trend. Although HUD*s Deputy Secretary has expressed an interest in
possibly returning some of this contract work to HUD employees, the
President*s fiscal year 2003 budget proposed that federal agencies make at
least 5 percent of the full- time equivalent positions that are determined
to be commercial activities subject to competition between public and
private sectors in fiscal year 2002 and an additional 10 percent in fiscal
year 2003. HUD*s fiscal year 2003 budget set a goal of opening 290
additional HUD positions to competition in fiscal year 2003 and an
additional 580 positions in fiscal year 2004. HUD is also planning to
renew some of its major contracts in the near future that involve
substantial financial commitments over an extended period of time. HUD*s
fiscal year 2002 procurement forecast includes plans to award new
contracts for its major multifamily property management activities, with
an expected cost of $800 million over 5 years. HUD also plans to award its
new information technology systems contract that is expected to cost about
$2 billion over 10 years.

Page 14 GAO- 03- 157 HUD Management

In response to weaknesses in its contracting administration and monitoring
reported by us, HUD*s Office of Inspector General and NAPA, HUD undertook
a number of corrective actions to improve its acquisition management in
recent years. 16 For example, HUD instituted full- time GTR positions in
its program offices to assist in contract administration. HUD also created
a GTR certification program in 1998 to establish standard training
requirements for HUD staff who serve as GTRs and to provide them with an
understanding of the federal contracting process as implemented at HUD. In
addition to classroom training, HUD has also developed on- line GTR
training to supplement the classroom training.

In 1997, HUD created a centralized management information system, called
the HUD Procurement System (HPS), to assist in managing its contracts. HUD
upgraded the system in fiscal year 1998 to consolidate and combine
headquarters and field contracting data and to improve integration with
HUD*s financial systems. As a result, for the first time HUD had one
source for contracting data. In 1999, the HUD Office of Inspector General
recognized that HUD had shown substantial strides in automating the
department*s procurement data and establishing the necessary financial
linkages to integrate HPS with HUD*s core accounting system. 17

HUD also hired a Chief Procurement Officer and created a Contract
Management Review Board in 1998 to improve contract administration and
procurement planning. The Contract Management Review Board reviews all
contracts over $500,000 to provide a departmentwide planning perspective.
In addition, HUD has increased its training budget for those in
acquisition positions (i. e., $66,871 in fiscal year 2000 to $163,537 in
fiscal year 2002).

16 U. S. General Accounting Office, Single- Family Housing: Stronger
Measures Needed to Encourage Better Performance by Management and
Marketing Contractors,

GAO/ RCED- 00- 117 (Washington, D. C.: May 12, 2000). U. S. General
Accounting Office, HUD Management: Contracting Issues Need Continued
Attention, GAO/ T- RCED- 98- 222 (Washington, D. C.: June 5, 1998). U. S.
Department of Housing and Urban Development, Office of Inspector General,
HUD Contracting Activity, 97- PH- 163- 0001 (Washington, D. C.: Sept. 30,
1997). National Academy of Public Administration, HUD Procurement Reform:
Substantial Progress Underway (Washington, D. C.: April 1999).

17 U. S. Department of Housing and Urban Development, Office of Inspector
General, Followup Review of HUD Contracting, 99- PH- 163- 0002
(Washington, D. C.: Sept. 30, 1999). HUD Has Taken Several

Steps to Improve Acquisition Management

Page 15 GAO- 03- 157 HUD Management

In addition, HUD has implemented a compliance and monitoring initiative in
order to assist staff in prioritizing their responsibilities and directing
their resources. This initiative, although not specifically targeted to
contract monitoring, emphasizes the importance of risk- based approaches
to monitoring. HUD reported that over 1,200 staff were trained through
fiscal year 2001, and the department*s fiscal year 2003 annual performance
plan anticipates increasing the number of trained staff to more than
2,000.

Despite the improvements HUD has undertaken, we have continued to identify
deficiencies in HUD*s acquisition management. For example, in October
2001, we reported that HUD relied on contracting to address staffing
shortfalls rather than assessing whether contracting was a better or more
effective solution and problems continued in HUD*s oversight of its
contractors. We concluded that HUD*s acquisition management was one of the
significant challenges facing HUD in its attempts to sustain the progress
of its management reform and move toward its goal of becoming a high-
performing organization. 18 Our current work has found that specific
deficiencies remain in HUD*s oversight of contracts, management of the
acquisition workforce, and the reliability and availability of data needed
to manage contract operations.

Holding contractors accountable for results requires processes and
procedures to facilitate effective monitoring. HUD, and in particular the
multifamily housing program, does not employ certain processes and
practices that would aid in oversight of its contractors. HUD does not use
a systematic approach for monitoring its contractors, which would include
the use of monitoring plans or a risk- based strategy, that would help to
guide its monitoring. And the monitoring that occurs is generally remote;
consisting mainly of reviews of progress reports and invoices, telephone
calls, and emails. Without a systematic approach to oversight and adequate
on- site monitoring the department*s ability to identify and correct
contractor performance problems and hold contractors accountable for
results is reduced. The resulting vulnerability limits HUD*s ability to
assure itself that it is receiving the services for which it pays.

18 GAO- 02- 45. HUD Does Not

Employ Certain Processes and Practices that Would Facilitate Effective
Contractor Monitoring

Page 16 GAO- 03- 157 HUD Management

HUD does not employ a systematic process for monitoring its contractors
that consistently uses plans and risk- based strategies needed to guide
its monitoring; nor does HUD track contractor performance needed for such
plans and strategies. HUD*s Procurement Policies and Procedures Handbook
provides a framework for the monitoring of contractors and establishes
various monitoring tools that GTRs should use to ensure that contractors
are held accountable for results, including a contract administration
plan, a quality assurance plan, and a contractor*s work plan and schedule
of performance. However, our review of 43 active contracts out of 49
contracts administered by HUD*s Office of Multifamily Housing found that
the GTRs on 30 of these contracts* 70 percent* did not make use of any of
these plans. Among these plans, OFPP*s Guide to Best Practices for
Contract Administration describes a contract administration plan as
essential for good contract administration. According to OFPP, this plan
must specify the performance outputs and describe the methodology used to
conduct inspections of those outputs. According to our survey, only 23
percent of HUD*s GTRs use contract administration plans and 32 percent
reported that they had never heard of such a plan. In 1999, HUD*s
Inspector General found that HUD*s various offices did not consistently
develop and implement formal contract monitoring plans and recommended
that HUD develop and disseminate a model comprehensive contract-
monitoring plan for HUD- wide GTR use. 19 In our review of active
multifamily housing contracts, we found that although HUD reported to the
Inspector General it had implemented this recommendation, there was no
evidence of such a model comprehensive contract- monitoring plan in use by
Multifamily Housing.

In addition to its limited use of monitoring plans, HUD has not
effectively incorporated a risk- based approach into its process for
overseeing contractors. 20 In recent years, HUD has emphasized developing
risk- based approaches to managing and monitoring its programs, including
establishing a Risk Management Division within the Office of the Chief
Financial Officer, and developing a training program and desk guide to
help staff understand and prioritize their monitoring responsibilities.
However, we found little evidence that the concept of risk- based

19 Department of Housing and Urban Development, Office of Inspector
General, Follow- up Review of HUD Contracting, 99- PH- 163- 0002
(Washington D. C.: Sept. 30, 1999). 20 We have defined risk assessment as
the identification and analysis of relevant risk associated with achieving
the objectives and forming a basis for determining how risks should be
managed. GAO/ AIMD- 00- 21. 3.1. HUD*s Monitoring of

Contractors Is Not Systematic

Page 17 GAO- 03- 157 HUD Management

management is used in HUD*s oversight of its contracts. Our past work
found that HUD*s efforts to perform risk- based monitoring and performance
evaluations on its single family property disposition contractors met with
limited results* some field offices did not perform required assessments
while, others did not perform them as often as required. 21

Our more recent work in HUD*s multifamily program found little evidence
that the concept of risk management or risk- based monitoring has been
applied to contract oversight. Acquisition workforce staff said they were
unaware of any requirements to apply a risk- based methodology to their
monitoring efforts, and we saw no evidence of any formal risk assessments
in our review of the Multifamily program*s 43 active contract files. While
staff indicated that a risk- based approach would be useful, they
generally told us that monitoring is conducted based on the availability
of travel funds and location of staff, or after a significant contractor
performance problem has been identified.

A key component to developing effective monitoring plans and incorporating
risk- based approaches to monitoring is tracking past and current
contractor performance; however, we found little evidence that HUD tracks
contractor performance systematically. The HUD Procurement System (HPS)
allows its acquisition workforce across HUD*s programs to track contract
milestones and deliverable dates, as well as document and record
contractor performance information* information that could aid in the
contract monitoring process. However, we found that these data fields are
often not used. The scheduled deliverable date data field was left blank
35 percent of the time, and the contractor performance data field was
incomplete in 73 percent of contracts that are inactive and closed. The
Deputy Secretary directed that effective January 2000 contractor products
and performance would be tracked in HPS, initially for all new contracts
over $1 million.

Contractor oversight problems in HUD*s multifamily housing programs are
further compounded by the lack of clearly defined GTR and GTM roles. For
example, in the Multifamily Property Disposition Centers, GTR and GTM
roles and responsibilities are not defined consistent with HUD*s policy,
possibly resulting in gaps in the monitoring process. HUD*s

Procurement Policies and Procedures Handbook states that *a GTR or 21 GAO/
RCED- 00- 117.

Page 18 GAO- 03- 157 HUD Management

GTM may not provide any direction to the contractor in those areas of
responsibility assigned to another GTR or GTM,* so as to avoid providing
potentially conflicting guidance. However, the Multifamily Property
Disposition Centers modified their contracts to change any place where the
term *GTR* is used to the term *GTR/ GTM* instead. The effect of this
change is that the GTRs and GTMs would have the same responsibilities,
which is what the guidance sought to avoid so that conflicting
instructions could not be given to the contractors. The roles are further
complicated by a decision the Property Disposition Centers made to name
managers as GTMs on the two property management contracts, in one case
assigning the Center Director as a GTM. HUD*s handbook states that the GTR
is responsible for monitoring GTM activities. By designating managers as
GTMs, HUD has created a situation in which the property management GTRs
are essentially overseeing the work of their supervisor or of someone in a
management position, in a reporting line above them.

As noted above, HUD is attempting to improve its oversight and monitoring
of contractors. For example, Multifamily Housing implemented a structure
in which four full- time GTRs will provide oversight for procurement
actions of more than $100,000 in the field. The Property Disposition
Center has also developed GTR and GTM protocols for the various types of
services for which it contracts out, in an attempt to more clearly define
the roles and responsibilities of these positions. However, Multifamily*s
GTR program is still in transition and not all the roles and
responsibilities have been clearly delineated.

The monitoring that occurs in HUD*s multifamily housing program is
generally remote. In our past work in other program areas, we have noted
that without adequate on- site inspections, HUD could not be assured that
it was receiving the services for which it had paid. 22

The GTRs and GTMs in Multifamily Housing who are responsible for oversight
of HUD*s property disposition activities report being unable to make
regular visits. HUD*s oversight and monitoring of contractors consists
mainly of reviews by HUD staff of progress reports and invoices prepared
by the contractors, as well as email correspondence and

22 U. S. General Accounting Office, Single- Family Housing: Improvements
Needed in HUD*s Oversight of Property Management Contractors, GAO/ RCED-
98- 65 (Washington, D. C.: Mar. 27, 1998). HUD*s Monitoring of

Contractors Is Generally Remote

Page 19 GAO- 03- 157 HUD Management

telephone conversations between HUD staff and contractors. Site visits to
multifamily properties to oversee contractor activities do not occur on a
routine basis, particularly for the two largest multifamily housing
program contracts, which constitute a total value of almost $650 million
in obligations over 5 years for the management of HUD*s inventory of
foreclosed multifamily properties. Although HUD*s multifamily property
disposition handbook calls for GTRs or GTMs to conduct quarterly on- site
physical inspections of the properties, the specific guidance related to
that requirement has not yet been developed.

Site visits do not routinely occur largely because the properties in HUD*s
property disposition inventory are located throughout the country, while
the GTRs and GTMs responsible for the oversight of these properties are
located in Atlanta, Georgia, and Ft. Worth, Texas, with the exception of
one GTM located in New York City, New York. A consistent theme among the
GTRs and GTMs we interviewed is that they believe that in order to
effectively do their jobs, they should probably be conducting a greater
number of on- site visits, but they lack the time and resources that would
allow them to do so. Some noted that the failure to visit the properties
stems from the workload* the GTM*s are assigned multiple properties under
the property management contracts that are usually not in good condition
and are located in different parts of the country* and that it is
difficult to keep up with everything that needs to be done. Restraints on
travel funds were often cited as the reason for not making visits.

The property disposition center staff are not the only multifamily housing
staff experiencing difficulties making on- site visits to assess
contractor performance. HUD also contracts with inspectors who monitor
construction of HUD- assisted and insured multifamily projects throughout
the phases of construction and during the 1 year warranty period after
completion of construction. 23 HUD*s construction inspection guidance
requires that HUD employees make at least two site visits during
construction to assess the performance of the construction inspectors.
However, GTMs for these contracts also report being unable to make site
visits, due to other job responsibilities and because the projects are
dispersed over a wide geographic area and HUD lacks the necessary travel

23 According to HUD*s annual performance report, FHA endorsed over 700
multifamily loans during fiscal year 2001 and completed initial approvals
for 301 new assisted properties, all of which will require inspections.

Page 20 GAO- 03- 157 HUD Management

funds. 24 GTMs for these inspection contracts told us that they primarily
rely on reviews of reports from the contractors to assess the contractors*
performance.

To address its inability to do more on- site monitoring, the multifamily
housing program uses another inspection contractor to visit selected
properties and perform property management reviews of some properties
managed by the two property management contractors. However, according to
data maintained by HUD, this inspection contractor made 31 visits to 26
properties for the Atlanta Property Disposition Center since 1997,
although the property management contractor managed over 100 properties
during that period. The inspection contractor was not used at all by the
Ft. Worth Property Disposition Center for the almost 150 properties in its
inventory. We also found that in those cases where the inspection
contractor identified a problem, HUD does not routinely follow up on those
deficiencies to make certain the problems have been resolved. Instead, the
multifamily housing program staff accepted correspondence from the
property management contractors as evidence that deficiencies were
resolved. According to staff, HUD does not routinely follow up because of
limited resources. HUD will sometimes make a site visit to verify that the
problems have been resolved, but field staff told us that there normally
are not enough travel funds to make a special follow- up visit.

Weaknesses in HUD*s monitoring processes limit the department*s ability to
identify and correct contractor performance problems, hold contractors
accountable, and assure itself that it is receiving the services for which
it pays.

We have reported that HUD has experienced similar difficulties monitoring
the contractors that are responsible for managing and disposing of its
foreclosed single- family properties for several years. In 1998, we
reported that although HUD*s single- family guidance establishes

24 The GTMs for these contracts are also responsible for oversight of
HUD*s Multifamily Accelerated Processing (MAP) program. We recently
reported that the field office workloads for this program often exceeded
HUD*s standard; one of the offices we visited in our contracting review
had more than doubled the standard cases for the MAP program. U. S.
General Accounting Office, Multifamily Housing: Improvements Needed in
HUD*s Oversight of Lenders that Underwrite FHA- Insured Loans, GAO- 02-
680 (Washington, D. C.: July 19, 2002). Weaknesses in Monitoring

Limit HUD*s Ability to Prevent Contractor Fraud, Waste, or Abuse

Page 21 GAO- 03- 157 HUD Management

various methods for monitoring the performance of its single- family real
estate asset management contractors, such as conducting monthly on- site
property inspections, these methods were not consistently used in a way
that would assure HUD that contractors were meeting their contractual
obligations. 25 Without adequate on- site inspection, HUD could not be
assured that it was receiving the services for which it had paid. We found
similar conditions in May 2000 when we reviewed the new marketing and
management contractors HUD acquired to replace the earlier contractors,
and in July 2001, we found that HUD*s oversight of these contractors
remained inadequate 26 As recently as February 2002, in audits of HUD*s
consolidated financial statements, the independent auditor identified
HUD*s monitoring of its single- family property inventory as a significant
internal control deficiency. The auditors recommended that HUD, among
other things, (1) improve monitoring by enhancing comprehensive oversight
tools and management reporting and (2) use risk- based strategies in the
oversight process.

In our October 2002 testimony before the House Government Reform and
Operations Committee, Subcommittee on Governmental Efficiency, Financial
Management and Intergovernmental Relations, we reported improper payments
identified during the review of the $214 million in disbursements made
under HUD*s multifamily property management contracts. 27 As we reported,
one of HUD*s multifamily property management contractors bypassed HUD*s
controls on numerous occasions by (1) alleging that construction
renovations were emergencies, thus not requiring multiple bids or HUD pre-
approval, and (2) splitting renovations into multiple projects to stay
below the $50,000 threshold of HUD required approval. Over 18 months HUD
authorized and paid for approximately $10 million of renovations, of which
each invoice was for less than $50,000, at two properties. HUD did not
verify that any of the construction renovations were actually performed or
determine whether the emergency expenditures constituted such a
classification.

25 GAO/ RCED- 98- 65. 26 U. S. General Accounting Office, Single- Family
Housing: Stronger Measures Needed to Encourage Better Performance by
Management and Marketing Contractors, GAO- 00- 117 (Washington, D. C.: May
12, 2000); U. S. General Accounting Office, Single- Family Housing: Better
Strategic Human Capital Management Needed at HUD*s Homeownership Centers,

GAO- 01- 590 (Washington, D. C.: July 26, 2001). 27 GAO- 03- 167T.

Page 22 GAO- 03- 157 HUD Management

As we testified, our review of these payments indicates that HUD paid 5
invoices totaling $227,500 for emergency replacement of 15, 000 square
feet of concrete in front of 5 buildings; however, we visited the site and
determined that only about one- third of the work HUD paid for was
actually performed. As a result, more than $164,000 of the $227,500 billed
and paid for *emergency* installation of concrete sidewalk appeared to be
improperly paid. As an example, figure 3 illustrates that only portions,
the lighter shaded section, of the sidewalk were replaced in front of one
of the buildings and not the entire sidewalk as was listed on the paid
invoices.

Figure 3: Sidewalk Repairs at HUD Property

Source: GAO photograph of HUD property.

At this same property, we found instances where HUD paid construction
companies for certain apartment renovations, deemed *emergency repairs,*
that were not made. Three of the 10 tenants that we interviewed told us
that some work listed on the invoice that the property management firm
submitted was not performed at their homes. For instance, while one
invoice indicated that the apartment floor and closet doors had been
replaced at a cost of $10,400, the tenant stated that the floors and doors
were never replaced.

On several other occasions, HUD paid the same amount to perform *emergency
renovations* of apartments of varying sizes. For example,

Page 23 GAO- 03- 157 HUD Management

HUD paid three identical $32,100 invoices for the emergency renovation of
a one bedroom (600 square feet), a two bedroom (800 square feet), and a
three bedroom (1,000 square feet) apartment. All three invoices listed
identical work performed in each unit. For example, each invoice listed a
$4,500 cabinet fee, yet the one bedroom unit had five fewer cabinets than
the three bedroom unit. We, and the independent construction firm we
hired, questioned the validity of the same charge for units of varying
sizes and the likelihood of numerous apartments being in identical
condition and in need of the same extensive renovations.

These cases are now being investigated by the HUD Inspector General and
our Office of Special Investigations. The potential for these and other
types of problems would be reduced with improved monitoring and oversight.

Holding contractors accountable requires the appropriate number of people
in the right positions with the right skills and training. HUD does not
strategically manage its acquisition workforce to ensure that individuals
have the appropriate workload, skills, and training that allows them to
effectively perform their jobs. 28 Specifically, HUD has not yet addressed
workload issues, assessed the skills and capabilities of its acquisition
workforce, or provided required training to substantial numbers of its
acquisition workforce.

Although HUD identified workload disparities, the department has not yet
determined the appropriate workload allocation for its acquisition
workforce. To assist in the department*s efforts to address human capital
issues resulting from HUD*s diminishing staffing levels, HUD undertook a
Resource Estimation and Allocation Project (REAP) to determine current
workload levels agencywide. The resulting study determined that serious
staffing shortages exist within OCPO and recommended an additional 31
full- time equivalent positions for OCPO in headquarters and no change for

28 We have defined strategic human capital management as an effort that is
consistent with two key principles. First, people are assets whose value
can be enhanced through investment, while maximizing value and managing
risk. Second, an organization*s human capital approaches should be
designed, implemented, and assessed by the standard of how well they help
the organization achieve results and pursue its mission. U. S. General
Accounting Office, A Model of Strategic Human Capital Management, GAO- 02-
373SP (Washington, D. C.: Mar. 15, 2002). HUD Does Not

Strategically Manage Its Acquisition Workforce

Workload Issues Not Yet Addressed and Skills and Capabilities Not Yet
Assessed

Page 24 GAO- 03- 157 HUD Management

the field. The study recommended that headquarters staffing be increased
from the 54 full- time equivalent staff to 85 and that field staff remain
at 68 full- time equivalent staff. The study observed that the OCPO in
headquarters is *an organization in crisis,* and that the majority of
supervisors and contract specialists reported working a very high number
of uncompensated hours. HUD has taken steps to shift workload around to
address some disparities, but has not yet utilized the study results to
determine the appropriate allocation and workload levels of its
acquisition workforce. OCPO has shifted some activities to the field
contracting operations, such as closing out contracts, or assigned field
staff to details in headquarters to assist in addressing workload
distribution issues and keep field staff fully occupied.

Our survey results and other work also show that acquisition staff across
HUD perceive they have too much work to do. According to our survey, 55
percent of respondents overall said that their contracting workload has
increased over the past 2 years. Further, 31 percent of HUD*s acquisition
workforce who manage and monitor more than five contracts believe that the
number of contracts they monitor is *too many.* Finally, 18 percent of
HUD*s acquisition workforce reported that they spend *too little* time on
their contracting related responsibilities.

Although HUD has taken steps to identify the knowledge, skills, and
abilities needed by its acquisition workforce to do their work, HUD has
not assessed the skills and capabilities of its acquisition workforce* a
critical step in successful workforce management. We have identified an
agency*s development of a comprehensive strategic workforce plan that
includes both an analysis of the knowledge, skills, and abilities needed
by staff to do their work as well as the capabilities of its staff as a
crucial part of a strategic human capital management approach. 29 HUD has
taken some steps toward that goal by drafting an Acquisition Career
Management Plan that discusses the knowledge, skills and abilities needed
by staff; however, HUD has not yet specifically assessed the skills and
capabilities of its acquisition workforce. 30 Consequently, HUD is not as
prepared as it could be to address the human capital challenges, such as
skill gap deficiencies, within its acquisition workforce. Further, the
ability for HUD management

29 U. S. General Accounting Office, Human Capital: A Self- Assessment
Checklist for Agency Leaders, GAO/ OCG- 00- 14G (Washington, D. C.: Sept.
2000). 30 HUD developed its Acquisition Management Career Plan to comply
with OFPP requirements that agencies have policies and procedures that
specify career paths and include certain mandatory training requirements
for its acquisition workforce.

Page 25 GAO- 03- 157 HUD Management

to make informed decisions, such as recruiting and hiring as well as
planning for training, is hampered.

Over half of HUD*s GTRs* who are directly responsible for monitoring
contractors* may not have received acquisition training required by the
Clinger- Cohen Act and OFPP. In response to the Clinger- Cohen Act of 1996
and OFPP policies that require specific training for GTRs, in 1998, HUD
developed and implemented a GTR training curriculum. During our review, we
identified 251 individuals serving as full or part- time GTRs on
contracts; however, according to HUD*s training records, 143 individuals
who have not taken HUD*s required GTR training are currently serving as
GTRs on contracts. OCPO management stated that they were not aware that
these individuals were serving in this capacity.

HUD*s acquisition workforce also includes about 495 individuals serving as
GTMs; according to HUD*s training records, only 7 percent of these
individuals* 35 out of 495* have received specialized acquisition
training. Although the Clinger- Cohen Act and OFPP policies do not
establish specific training requirements for GTMs and HUD does not
explicitly require that GTMs receive acquisition training, HUD documents
indicate that providing acquisition training to GTMs is necessary and is
part of OCPO*s intent. Specifically, in discussing the roles and
responsibilities of GTMs, the department*s procurement handbook states,
*many of the duties of the GTR can be delegated to GTMs.* Further, HUD*s
draft Acquisition Career Management Plan indicates that it intends the
plan to apply to GTMs* it states *the term GTR shall include GTM.*
However, according to OCPO managers, HUD is not currently requiring GTMs
to fulfill any acquisition training requirements.

HUD does not accurately track the training of some of its acquisition
workforce and has not finalized its acquisition workforce career
management planning as required by OFPP. According to HUD*s centralized
training records maintained by OCPO, 89 percent of HUD*s contracting
officers, contract specialists, procurement analysts, and purchasing
agents do not meet federal training requirements. 31 In response to our
observations, the OCPO Director of Policy and Field Operations said that
while it is likely that some of these individuals do not meet the

31 At HUD, procurement analysts perform a variety of administrative
functions for OCPO, such as managing training. Many of HUD*s Acquisition

Workforce Not Receiving Required Training

Page 26 GAO- 03- 157 HUD Management

training requirements, it is probable that many of the individuals have
met the training requirements. The director offered the following reasons.
For example, the centralized information system maintained by OCPO has not
been updated, partly because HUD is waiting for a new governmentwide
system to be completed that will track such information. Further, the
training requirements were mandated after some staff had been in an
acquisition position for a number of years and therefore have not taken
the training because they possess necessary skills. As a result of our
review, HUD will institute a training waiver to capture this scenario.
Also, HUD has not finalized its draft Acquisition Career Management Plan
that specifies career paths and mandatory training for acquisition
positions and shows how HUD*s training courses correlate with those
required by OFPP. 32 This plan has been in draft form since June 2000.
Further, the draft plan does not meet OFPP requirements because it does
not specify training requirements for purchasing agents. As a result of
our review, HUD officials told us they intend to revise their draft plan
to reflect OFPP requirements.

Holding contractors accountable requires tools and information to ensure
that HUD staff can monitor contracts and that HUD management can oversee
departmentwide contracting activities. HUD*s centralized contract
management information system and several financial management information
systems lack complete, consistent, and accurate information* thus, these
systems do not adequately support the department*s efforts to manage and
monitor contracts. For example, the centralized contracting system does
not contain reliable information on the number of active contracts, the
expected cost of the contracts, or the types of goods and services
acquired. To compensate for the lack of information, HUD staff have
developed informal spreadsheet systems to fulfill their job
responsibilities. The systems deficiencies also mean that HUD managers
lack reliable information needed to oversee contracting activities, make
informed decisions about the use of resources, and ensure accountability
in the department*s programs.

32 Office of Federal Procurement Policy Letter No. 97- 01, Procurement
System Education, Training and Experience Requirements for Acquisition
Personnel, September 12, 1997. Weaknesses in

Programmatic and Financial Management Information Systems

Page 27 GAO- 03- 157 HUD Management

To improve its ability to manage and oversee contracts, HUD implemented a
contracting management information system* the HUD Procurement System
(HPS)* to track and manage both field and headquarters contracts. 33 HUD
uses HPS to (1) monitor workload levels of contracting officers and
contract specialists; (2) track events throughout the life of a contract*
such as the award, obligation of funds, contract modification, milestones,
contractor performance, and close out; (3) identify outstanding
procurement requests; and (4) report to the Federal Procurement Data
Center (FPDC) to comply with federal reporting requirements so that the
Office of Management and Budget (OMB) and the General Services
Administration (GSA) can manage contracting governmentwide* for example,
establishing contracting goals for federal agencies. In addition, a
significant number of HUD*s acquisition workforce, such as contract
specialists and GTRs, also use HPS to manage and monitor contracts.

However, the data in HPS are not reliable* that is, the data are not
consistent, complete, or accurate. We found that

 Over a quarter of those contracts shown as currently active had dates in
a date completion field, which would indicate that the contract had
expired, making it difficult for HUD to identify the active contracts it
is managing. 34 For example, when we asked for a list of active
multifamily contracts, HUD had to call various field offices and GTRs to
compile the complete list of multifamily contracts.  HPS showed that for
4 percent of HUD*s active contracts, HUD has

obligated a total of $197 million more than the stated total value of the
contracts because HPS contains errors in the contract value fields.
Because HPS is a programmatic information system, this discrepancy does
not necessarily mean that HUD has or will spend more than planned for the
contracts, but indicates that HUD does not readily know the correct
obligated amounts or total value of its contracts.  The types of goods or
services HUD contracts for is not readily apparent

because HPS contains three separate data fields to capture the type of 33
HPS also tracks Purchase Orders, Interagency Agreements, and Grants;
however, this discussion is limited to contracts and purchase orders. 34
Active contracts may be shown in HPS as *active: awarded,* *active:
expired,* or *active: closed out,* depending on where they are in the
contract lifecycle. Our discussion of active contracts includes only those
contracts that are shown as *active: awarded,* meaning that the contract
is shown as being an actively managed contract. HUD*s Centralized

Contracting Information System Does Not Provide Reliable Information on
Contract Activities

Page 28 GAO- 03- 157 HUD Management

good or service being provided and none of them are utilized in such a way
to provide a picture of the good and services HUD purchases. One field is
used only by field office staff; another contains narrative descriptions
of services but no standard terminology is specified; and the third field
uses governmentwide codes for external reporting, rather than HUD-
specific codes. (See app. III for a more detailed illustration of
discrepancies identified in HPS.)

According to HUD officials, the inconsistencies in HPS are due to data
entry problems, misunderstandings among staff about what data to record
and how to record it, and limited verification procedures. For example,
staff inconsistently record data on multi- year contracts with *base* and
*option* years. HUD currently has limited verification procedures in place
to ensure that HPS data are reliable. According to the HPS administrator,
OCPO staff are not required to routinely verify the accuracy of the data
they are responsible for maintaining in HPS.

HUD*s program offices also record contracting obligation and expenditure
information in various financial management information systems. However,
these systems do not readily provide consistent and complete information
for either HUD*s overall contracting activity or individual contracts.
Concerns about the effectiveness of HUD*s programmatic and financial
management information systems are not new. We have reported that HUD
lacks the programmatic and financial management information systems
necessary to ensure accountability over its programs since 1984. The lack
of readily available, consistent, and complete contracting information is
one example of these concerns with HUD*s programmatic and financial
management information systems.

To obtain aggregate information on HUD*s contract obligations and
expenditures, HUD managers must manually query several financial
management systems. However, according to a HUD official, these ad hoc
queries are only useful in identifying transactions that *look like*
contracts. These queries do not reliably produce obligation and
expenditure data on all HUD*s contracting activity and also include
obligation and expenditure data for activities other than contracts. After
attempting to obtain data for us over a period of about 5 months, HUD was
able to provide only partial data. HUD officials provided multiple reasons
for this, including that several of HUD*s financial management information
HUD*s Financial

Management Information Systems Do Not Readily Provide Contracting
Obligation and Expenditure Data

Page 29 GAO- 03- 157 HUD Management

systems do not track obligation data and HUD does not have ready access to
some FHA data for fiscal years 1998 and 1999 because FHA no longer uses
the systems. 35 As a result, HUD*s different information systems provide
widely different pictures of HUD*s contracting activity. Specifically, as
shown in table 1, the aggregate obligation data from HUD*s financial
management systems were not consistent with the data HUD reported from in
its centralized contracting management information system, HPS (discussed
further in page 27). (See app. IV for a listing and brief description of
the various financial systems that maintain contracting information.)

Table 1: Contract Obligation Data from HUD*s Programmatic and Financial
Management Information Systems for Fiscal Years 1999 and 2000

HUD Procurement System HUD*s financial

management information systems

Fiscal year 1999 $1.1 billion $485 million Fiscal year 2000 $1.2 billion
$924 million

Total $2.3 billion $1.409 billion

Source: HUD data as shown.

After over 5 months of working on our request, HUD was also unable to
provide us obligation and expenditure data on 33 of 115 individual
contracts, and what it could provide was often not consistent with data
maintained in HPS. 36 We requested data on two groups of HUD contracts;
for one we judgmentally selected 66 active contracts from all HUD program
offices and for the second we used all 49 active multifamily contracts
with an obligated value over $100,000. HUD staff cited several reasons why
they could not identify data on specific contracts, including the fact
that HUD tracks some obligation and expenditure information using the
contractor*s Tax Identification Number. As a result, when HUD

35 To be compliant with the core financial systems requirements
established by the Joint Financial Management Improvement Program (JFMIP),
and therefore be in substantial compliance with the Federal Financial
Managers Improvement Act (FFMIA) of 1996, financial systems must track
obligation data. In its audits of HUD*s consolidated financial statements,
the Inspector General reports a material weakness that *HUD*s financial
systems are not compliant with federal financial standards.* HUD reports
17 of its 57 financial management systems do not materially conform to the
requirements of FMFIA and OMB Circular A- 127, including several of the
systems used for this analysis.

36 Of these 33 contracts, 29 were from the multifamily analysis and 4 were
from the HUDwide analysis.

Page 30 GAO- 03- 157 HUD Management

has multiple contracts with one contractor, it often cannot separate
obligations and expenditures by individual contract.

Of the 82 contracts for which HUD was able to provide information on
contract obligations and expenditures, the obligation information in the
financial management systems was consistent with HPS for only 37. 37 Some
of the inconsistencies included cases where the amount shown in the
financial systems as spent on the contract exceeded the amount shown in
HPS that was obligated for the contract. In the HUD- wide group, for
example, the expenditure information in the financial management systems
exceeded the obligation amount shown in HPS for 13 of the contracts,
indicating that HUD paid a total of $59 million more than what HPS
recorded was obligated. For the multifamily contracts, 3 of the 49
contracts had obligated amounts in the financial management systems that
exceeded that shown in HPS with a total difference of $1.4 million.

As a result of the systems limitations, HUD*s acquisition workforce do not
have basic information about the contracts for which they are responsible
readily available to them. This is particularly significant because, as
previously discussed, HUD relies extensively on remote monitoring
strategies, which would be most effective with readily available and
reliable contract information. In the absence of such data, HUD*s
acquisition workforce have developed informal or *cuff* systems* personal
spreadsheets to track, manage, and monitor contracts. While helping staff
perform their jobs, these informal systems are not subject to HUD*s
policies, procedures, or internal controls to ensure that the information
maintained in them* and used by HUD*s acquisition workforce to manage and
monitor individual contracts* is accurate. Further, the use of informal
spreadsheets indicates that duplicate data collection efforts may be
occurring (e. g., some data maintained in the spreadsheets are identical
to data maintained in HPS), which in an environment of decreasing
resources and increasing workload is not an efficient use of resources.
Since the spreadsheets are maintained and used by individuals, this
information is not readily accessible by HUD management to support their
oversight responsibilities. Finally, since HPS data are not reliable and
the accuracy of the data maintained in the personal spreadsheets is not
known, HUD does not have a dependable

37 Of these 37, 31 were from the HUD- wide analysis and 6 were from the
multifamily analysis. System Limitations Impede

Efforts of HUD*s Acquisition Workforce and HUD Management

Page 31 GAO- 03- 157 HUD Management

*early warning system* to alert staff to contracts with high- risk
characteristics. As a result, HUD*s ability to ensure that its contract
resources are protected from waste, fraud, abuse, and mismanagement is
reduced.

HUD*s programmatic and financial management information systems also do
not provide managers with accurate and timely information needed to
effectively manage and monitor the department*s programs. HUD cannot
readily obtain complete aggregate contracting obligation and expenditure
information from the department*s financial systems to oversee the
agency*s activities, make informed decisions about the best use of HUD*s
resources, and ensure accountability on an ongoing basis. Because HPS does
not contain reliable data, HUD management cannot readily obtain accurate
information on HUD*s contracting activity to report contracting
information, assist in making management decisions, and ensure the proper
stewardship of public resources. Without reliable data on the number of
active contracts, management cannot accurately analyze HPS for trends,
which would assist in assessing and/ or realigning staff workload, or
making decisions about what activities to contract and or retain. Finally,
because the department uses HPS to report acquisition data to FPDC to
comply with federal contract activity reporting requirements, HUD*s
submissions to FPDC are inaccurate.

Ensuring that HUD*s mission is accomplished and its contractors are held
accountable requires (1) processes and practices that effectively monitor
contractors* performance; (2) an acquisition workforce with the right
workload, training, and tools to carry out its mission; and (3) effective
programmatic and financial management information systems. HUD has already
taken steps toward improving its acquisition management; however,
weaknesses remain in HUD*s monitoring processes, management of its
acquisition workforce, and programmatic and financial management systems
that support its contracting. Many of the tools that would help improve
how HUD monitors its contractors already exist, either through plans and
strategies HUD already developed or through OFPP guidance. Using these
tools and employing a systematic, risk- based approach to contractor
oversight would allow HUD to target its scarce resources to areas posing
the greatest risk and to identify potential problems, such as those we
have identified in this report, before they become more serious.

In large measure, the challenges HUD faces in relation to its acquisition
workforce and contracting information systems are symptomatic of the
Conclusions

Page 32 GAO- 03- 157 HUD Management

larger challenges the department faces to strategically manage its human
capital and to improve its programmatic and financial management systems.
Both are complex, long- standing management challenges that we have
identified in our high- risk work that will be addressed on a
departmentwide basis over a period of many years. Nevertheless, to improve
its management of acquisitions, HUD can take shorter term and more
immediate actions to maximize the effectiveness of the department*s
acquisition workforce by completing existing career planning and training
activities. It could also enhance the information and tools available to
that workforce by improving the accuracy and utility of its centralized
contracting management information system.

To address weaknesses we identified, we recommend that the Secretary of
HUD

 Implement a more systematic approach to HUD contract oversight that (1)
uses monitoring/ contract administration plans; (2) uses a risk- based
approach for monitoring to assist in identifying those areas where HUD has
the greatest vulnerabilities to fraud, waste, abuse, and mismanagement;
and (3) tracks contractor performance.  Clarify the roles and
responsibilities of the multifamily housing GTRs and

GTMs, including the need to (1) clearly define reporting lines and (2)
reduce overlap of responsibilities consistent with HUD guidance.  Improve
management of HUD*s acquisition workforce by (1) addressing

workload disparities, (2) finalizing and implementing the Acquisition
Management Career Plan, (3) assessing the skills and capabilities of the
existing acquisition workforce, and (4) ensuring that appropriate training
is provided to staff with contract oversight responsibilities and that
staff meet federal training requirements.  Improve the usefulness of
HUD*s centralized contracting management

information system by (1) providing training to staff on the definitions
of data intended to be captured; (2) providing training to program office
staff on the functions, such as tracking milestones, deliverables and
contractor performance, of the system, and (3) developing and implementing
verification procedures.

We provided a draft of this report to HUD for its review and comment. HUD
agreed that it faces significant long- standing challenges in monitoring
the performance of its contractors, managing its acquisition workforce,
and addressing weaknesses in its information systems. HUD stated that it
is taking actions to address our recommendations. For example, according
to HUD, the department is requiring each program organization
Recommendations for

Executive Action Agency Comments

Page 33 GAO- 03- 157 HUD Management

to review its contracting oversight and monitoring polices and procedures
to ensure that they are clear, consistent, and risk based. To strengthen
oversight of the mulitfamily program*s property management contractors,
HUD stated that when the multifamily property management contracts are
renewed and awarded again in 2003, HUD plans to strengthen their oversight
requirements. For example, the contractors will be required to provide a
quality control plan to, among other things, monitor the work assignments
of employees and subcontractors.

The department also stated that it is taking action to improve management
of its acquisition workforce and address weaknesses in its information
systems. HUD stated that it expects to finalize its Acquisition Career
Management Plan during 2003, and is clarifying the roles,
responsibilities, and reporting lines of GTRs and GTMs in the multifamily
program. For example, HUD said that it would ensure that staff are not
overseeing the work of a supervisor or management personnel. HUD also said
that it agreed with our findings and recommendations concerning its
centralized contracting management information system, and would implement
our recommendations to improve its usefulness by revising its training to
provide better definitions of data to be captured and more emphasis on the
system*s functions.

While HUD agreed with our recommendations, HUD said it believes that its
acquisition workforce is receiving required training because (1) it has
developed acquisition training for GTRs in accordance with federal
requirements and (2) GTMs do not require the same level of training as
GTRs and are provided acquisition training appropriate to their duties
when needed. We recognize that the Clinger Cohen Act does not establish a
specific training curriculum for GTRs; however, the act requires executive
agencies, through consultations with OFPP, to establish training
requirements for positions in their acquisition workforces and HUD has
defined its acquisition workforce to include both GTRs and GTMs. We agree
that the department has developed an acquisition training program for GTRs
in response to federal requirements. However, we found that a significant
portion of the department*s GTRs have not had this training, and HUD did
not disagree with our finding. Furthermore, while we agree that GTMs may
not require the same level of training as GTRs, HUD policies permit the
duties and responsibilities of GTRs to be delegated to GTMs; and its draft
Acquisition Career Management Plan* which establishes training
requirements for HUD*s acquisition workforce* states that the GTR training
requirements also apply to GTMs. Therefore, we remain concerned that,
according to HUD*s records, 93 percent of HUD*s GTMs have not received any
specialized acquisition training and we did

Page 34 GAO- 03- 157 HUD Management

not change the report in response to this comment. We are, however,
encouraged by HUD*s comment that it will continue to assess the training
needed for GTMs to more effectively monitor contractor performance.

HUD also provided technical comments, which we have incorporated as
appropriate. The full text of HUD*s comments and our response appear in
appendix V.

We are sending copies of this report to other interested congressional
committees and the Secretary of Housing and Urban Development. We will
also make copies available to others upon request. In addition, the report
will be available at no charge on the GAO Web site at http:// www. gao.
gov.

If you or your staffs have any questions about this report or need
additional information, please contact me or Steve Cohen at 202- 512-
2834. Major contributors to this report are listed in appendix VI.

Stanley J. Czerwinski Director, Physical Infrastructure

Appendix I: Scope and Methodology Page 35 GAO- 03- 157 HUD Management

To determine whether HUD has the processes in place to facilitate managing
and monitoring its contractors, and the extent to which HUD monitors its
contractors to ensure that they are held accountable for results, we
focused on HUD*s policies, procedures, and data related to activities
after a contract is awarded to a successful bidder. We first reviewed
HUD*s guidance for managing and monitoring its contracts, including HUD-
wide guidance, as well as that for the Office of Multifamily Housing. We
also interviewed HUD officials at the Office of Chief Procurement Officer,
Office of Administration, Office of Housing, Office of Public and Indian
Housing, Community Planning and Development, and Fair Housing and Equal
Opportunity to obtain information on their oversight and management of
contracts. We also interviewed officials at HUD*s Atlanta, Philadelphia,
Denver, and Ft. Worth Field Contracting Operations (FCO) to obtain an
understanding of their oversight of the contract process and relationship
with the multifamily program operations in their jurisdiction.

To identify potentially improper payments made by HUD, we used computer
analysis and data mining techniques to identify unusual transactions and
payment patterns in the department*s fiscal year 2001 disbursement data.
We focused our review on the $214 million of payments made for the goods
and services at HUD*s multifamily properties during fiscal year 2001. 1

To obtain a more detailed understanding of the practices associated with
monitoring and oversight of contracts, we selected contracts in the Office
of Multifamily Housing to review. We selected Multifamily Housing
contracts because (1) of the contracting dollars associated with
multifamily housing activity; (2) of the value of the inventory, insurance
and grants associated with HUD*s multifamily programs; and (3) we recently
completed reviews that addressed acquisition issues in HUD*s single-
family housing program and systems acquisition and development efforts.
The Office of Multifamily Housing contracts for services associated with
HUD*s multifamily insurance program, as well as management of those
properties that HUD acquires when owners default on insured mortgages. We
reviewed the GTR files for 43 of the 49 active multifamily housing program
contracts over $100,000, and then conducted

1 U. S. General Accounting Office, Financial Management: Strategies to
Address Improper Payments at HUD, Education, and Other Federal Agencies,
GAO- 03- 167T (Washington, D. C.: Oct. 3, 2002). Appendix I: Scope and
Methodology

Appendix I: Scope and Methodology Page 36 GAO- 03- 157 HUD Management

structured interviews with the 17 GTRs responsible for administering these
contracts. 2 These contracts included both headquarters and
fieldadministered contracts. For the 43 GTR files, we obtained and
reviewed documentation that described the extent to which the GTRs are
able to monitor HUD contractors. The structured interviews focused on (1)
the processes HUD has in place to facilitate managing and monitoring its
contractors, (2) the extent to which the GTRs monitor the contractors, (3)
the types of information and data systems used by the GTRs to help them
manage and monitor the contractors, and (4) the types of
contractingrelated training the GTRs have received. We also interviewed
selected government technical monitors.

To supplement our work in the multifamily program and obtain information
from a cross- section of HUD*s acquisition workforce, we also conducted a
telephone survey to gather information on HUD*s contracting activities.
Our objectives were to obtain information on workload, the availability
and perceived usefulness of training, the extent to which programmatic and
financial management information systems support contract oversight, and
oversight methods. We completed 185 interviews with randomly selected
employees who were currently working in acquisition positions. In the
survey, we asked questions about the training HUD provides its acquisition
workforce, the opinions of the acquisition workforce of the data systems
they use, and HUD*s monitoring of contractor performance. (See app. II for
the survey scope and methodology.)

To assess HUD*s management of its acquisition workforce and compliance
with federal procurement requirements and policies, we reviewed related
federal laws and policies, including the Clinger- Cohen Act and OFPP
Policy Letters 92- 3 and 97- 01. Further, we asked HUD for the
department*s definition of its acquisition workforce and asked the
department to identify the names of staff meeting that definition. HUD
defined its acquisition workforce to include those staff serving as GTMs.
Since HUD did not centrally maintain a listing of staff currently serving
as GTRs and GTMs in the program offices, we contacted each program office
and requested that they identify staff currently serving in that capacity.
Using the definition of acquisition workforce that HUD provided and the
lists of

2 We did not review 6 of the 49 multifamily housing program GTR files
because of constraints resulting from HUD*s ongoing transfer of its
multifamily housing program field contracts to two locations, and the fact
that these 6 contracts, which were not located at the offices to which we
did travel, were similar in nature to the contracts we did review.

Appendix I: Scope and Methodology Page 37 GAO- 03- 157 HUD Management

staff provided by program offices, HUD*s acquisition workforce totals 833
people. Additionally, we requested data on HUD*s training records for
contracting officers, contract specialists, purchasing agents, and GTRs;
HUD provided a spreadsheet that contained summary information. We then
compared HUD*s training records to OFPP training requirements to determine
whether HUD*s acquisition workforce is meeting federal training
requirements. We also reviewed HUD*s training requirements and policies as
well as the GTR training manual.

To obtain information on the adequacy of the data systems that support
HUD*s acquisition workforce, we obtained and analyzed data from several of
HUD*s programmatic and financial management information systems. We
obtained data from HUD*s centralized system, the HUD Procurement System
(HPS). Our analysis of HPS was two- fold. First, we performed reliability
assessments on several data fields for all contracts that were identified
as *active/ awarded,* that is, currently active contracts. The data fields
we analyzed were as follows: contract value, obligated amount, contract
status, completion date, last completion date, and type of service.
Second, we identified two groups of active contracts and purchase orders
and downloaded the total dollar amounts obligated for these procurements
from HPS. The first group was a judgmentally selected sample of 66
contracts and purchase orders from various HUD program offices. 3 The
second group was all active contracts in HUD*s multifamily housing program
with an obligated value over $100,000 as of March 2002. We also obtained
obligation and expenditure data from numerous HUD financial management
systems for these contracts and purchase orders. (See app. IV for a
description of these systems.) We then compared HPS data on those
contracts and purchase orders to the data maintained in HUD financial
management information systems. We requested aggregate data on HUD*s
contract obligations and expenditures. We also obtained data from the
Federal Procurement Data Center (FPDC) to which HUD

3 This sample, although it contains procurements from numerous program
offices, is not representative of HUD*s contracting actions as a whole and
we did not extrapolate our findings HUD- wide.

Appendix I: Scope and Methodology Page 38 GAO- 03- 157 HUD Management

reports detailed information on its contracting activity over $25,000 in
accordance with federal requirements.

Appendix II: Sampling Methodology for GAO Survey of HUD*s Acquisition
Management Reforms

Page 39 GAO- 03- 157 HUD Management

Our primary objectives in the survey were to (1) assess the acquisition
workforce workload, (2) assess the availability of training and the
perceived usefulness of the training that the staff receive, (3) determine
the extent to which HUD*s data systems are used to support its contract
management and monitoring, and (4) determine the ways in which the
acquisition workforce monitor HUD*s contractors.

To attain our objective, we surveyed a statistically representative sample
of HUD*s acquisition workforce. We developed and administered a survey
designed to estimate characteristics of HUD*s acquisition workforce
relating to contract monitoring, training and workload issues, and data
systems. The survey was administered from April to June 2002 by trained
GAO employees to a stratified sample of 250 HUD acquisition workforce
employees through telephone interviews that were entered into a computer-
assisted data collection instrument. Our work was conducted in accordance
with generally accepted government auditing standards.

The study population for this survey consisted of 833 employees in HUD*s
acquisition workforce as of March 2002. We developed a list of acquisition
workforce employees based on data from two sources. The first source used
was the training records compiled by HUD*s OCPO, the office responsible
for providing the training required for acquisition workforce employees.
In further audit work with HUD program offices that have contracts, we
discovered that this list was not complete. We then supplemented the OCPO
list by contacting 15 program offices to identify the number of
acquisition workforce staff in each office, and the positions that those
individuals hold.

When we administered the survey, we found that not all of the employees we
identified in our study population were in HUD*s acquisition workforce at
the time of contact. Respondents who were no longer members of the
acquisition workforce were *out of scope,* and were excluded from the
analysis.

The sample design for this study is a single- stage stratified sample of
acquisition workforce employees in the study population. The strata were
based on reported job position categories, based on the list we compiled
from program office records. Of the total sample of 250, we received 185
completed responses from employees who were in the acquisition workforce
at the time of the survey (in scope). We obtained sufficient Appendix II:
Sampling Methodology for GAO

Survey of HUD*s Acquisition Management Reforms

Objectives Scope and Methodology

Study Population Sample Design

Appendix II: Sampling Methodology for GAO Survey of HUD*s Acquisition
Management Reforms

Page 40 GAO- 03- 157 HUD Management

information for an additional 28 employees to determine that they were not
in the acquisition workforce at the time of the survey (out of scope). The
remaining 37 cases could not be contacted or refused to participate. These
results are summarized by sampling stratum in table 2.

Overall, we obtained a response rate of 85 percent, and of those
respondents, all estimates are based only upon the in scope respondents
(in the acquisition workforce).

Table 2: Description of Sample Stratum

Population size a

Sample size Respondents b In scope

respondents c Response

rate (%) d

(1) Contracting Officers 33 25 20 19 80 (2) Contract Specialists 50 34 30
29 88 (3) Government Technical Monitors (GTM) 500 82 67 55 82 (4)
Government Technical Representatives (GTR) 187 65 57 47 88 (5) Both GTR
and GTM 69 42 37 34 88 (6) Purchasing Agents 2 2 2 1 100

Total 841 250 213 185 85

a Based upon GAO compilation of HUD office records. b Total number of
questionnaires for which at least some sample data were obtained. c *In-
scope* responses exclude respondents misidentified as part of the
acquisition workforce, and those respondents who were away on extended
leave at the time of the survey. d This is the ratio of the respondents to
the sample size for each stratum.

Source: GAO.

All estimates produced in this report are for a target population defined
as HUD*s acquisition workforce during the study period. Estimates were
determined by weighting the survey responses to account for the effective
sampling rate in each stratum. The weights reflect both the initial
sampling rate and the response rate for each stratum.

Because we surveyed a sample of HUD*s acquisition workforce, our results
are estimates of actual acquisition workforce characteristics and thus are
subject to sampling errors that are associated with samples of this size
and type. Our confidence in the precision of the results from this sample
is expressed in 95 percent confidence intervals. The 95 percent confidence
intervals are expected to include the actual results for 95 Estimates

Sampling Error

Appendix II: Sampling Methodology for GAO Survey of HUD*s Acquisition
Management Reforms

Page 41 GAO- 03- 157 HUD Management

percent of the samples of this type. We calculated confidence intervals
for our study results using methods that are appropriate for a stratified
probability sample. For the percentages presented in this report, we are
95- percent confident that the results we would have obtained if we had
studied the entire study population are within +/- 10 or fewer percentage
points of our results, unless otherwise noted. For example, our survey
estimates that 54.5 percent of the acquisition workforce believes that
their contracting workload has increased over the past 2 years. The 95
percent confidence interval for this estimate would be no wider than +/-
10 percent, or from 44.5 percent to 64.5 percent.

In addition to these sampling errors, the practical difficulties in
conducting surveys of this type may introduce other types of errors,
commonly referred to as nonsampling errors. For example, questions may be
misinterpreted, the respondents* answers may differ from those of people
who did not respond, or errors could be made in keying questionnaires. We
took several steps to reduce such errors.

Data were collected using computer- assisted telephone interviewing, and
the GAO staff who administered the survey over the telephone attended a
training session to familiarize them with the use of the computer-
assisted survey instrument. In addition, computer analyses were performed
to identify inconsistencies and other indicators of errors, and a second
independent analyst reviewed all computer programs.

We identified areas to cover in the survey based on the congressional
request and initial interviews with top- level HUD managers and staff.

The survey was pretested at HUD headquarters, through a simulated
telephone interview. A GAO analyst administered the survey to two members
of HUD*s acquisition workforce over the telephone from an offsite
location, while another GAO analyst observed the HUD employee onsite. The
HUD employees were debriefed after the pretest, and the audit team was
able to make appropriate changes to the questionnaire prior to
implementation. The final survey contained 165 questions.

A team of 30 GAO staff conducted the survey in April, May, and early June
of 2002, through a computer- assisted telephone survey, the results of
which were entered simultaneously in our computer- assisted data
collection instrument. We called all initial nonrespondents at least three
times in order to encourage a high response rate. Nonsampling Error

Survey Development Survey Administration

Appendix II: Sampling Methodology for GAO Survey of HUD*s Acquisition
Management Reforms

Page 42 GAO- 03- 157 HUD Management

We performed our work between February and June 2002 in accordance with
generally accepted government auditing standards.

Appendix III: Analysis of the HUD Procurement System (HPS) Identified
Discrepancies in HUD*s Contracting Data

Page 43 GAO- 03- 157 HUD Management

Reliability problems identified with HPS data elements Examples

Obligated amount is greater than the overall value of the contract A
portion of HUD*s active contracts contain a total obligated amount that is
greater than

the contract total value amount.

 The two relevant data fields in HPS are *total value amount* and *total
obligated amount.*

 The total value amount data field represents the total value of the
contract

 The total obligated amount represents the total amount of funds that
have been obligated to date.

 According to the HPS administrator, the figure in the total value amount
field should be greater than or equal to the figure in the total obligated
amount data field; as funds should not be obligated in excess of the value
of the contract.

 According to HPS, 4 percent of HUD*s active contracts contain a total
obligated amount that is greater than the overall contract total value
amount, which means that according to HPS, HUD has obligated $197 million
in excess of the contracts* value. Overall value of the contract and
obligated amount is greater than the Indefinite delivery Indefinite
quantity (IDIQ) Maximum

About a quarter of HUD*s active IDIQ contracts contain inconsistent data
within three HPS data fields; according to HPS, HUD has obligated about
$14 million in excess of the maximum associated with the contract.

 The three relevant data fields in HPS are *total value amount,* *total
obligated amount,* and *IDIQ Max.*

 The total value amount data field represents the total value of the
contract.

 The total obligated amount represents the total amount of funds that
have been obligated to date.

 The IDIQ Max identifies the maximum dollar amount for the contract;
specifically, according to the HPS administrator, the IDIQ Max represents
a ceiling and therefore the contract total value amount and total
obligated amount should not exceed the IDIQ Max.

 According to the HPS administrator, the figure in the IDIQ maximum field
should be greater than or equal to the total contract value and the total
obligated amount data fields.

 According to HPS

 24 percent of active awarded IDIQ contracts have a total obligated
amount that exceeds the IDIQ maximum.

 28 percent of active awarded IDIQ contracts have a total value amount
that exceeds the IDIQ maximum. Status of contract not consistent with date
information and significant number of data fields blank

About a quarter of all active awarded contracts contain inconsistent
contract status and date information, and some date fields are blank.

 The three relevant data fields in HPS are *status,* *completion date,*
and *last completion date.*

 The status represents the current status of the contract (e. g., pre-
award, active: awarded, and inactive: closed- out).

 The completion date tracks the completion date by which the contractor
will deliver product( s) and /or service( s).

 The last completion date indicates the very end of the contract,
including option periods.

 According to the HPS administrator

 All of these data fields should be populated.

 If a contract has a status of active: awarded, then the last completion
date should be in the future.

 The completion date should be prior to or equal to the last completion
date.

 According to HPS

 For 27 percent of contracts identified as active: awarded, the last
completion dates are in the past.

Appendix III: Analysis of the HUD Procurement System (HPS) Identified
Discrepancies in HUD*s Contracting Data

Appendix III: Analysis of the HUD Procurement System (HPS) Identified
Discrepancies in HUD*s Contracting Data

Page 44 GAO- 03- 157 HUD Management

Reliability problems identified with HPS data elements Examples

 For 21 percent of the contracts identified as active awarded, the
completion date is after the last completion date.

 For 17 percent of the contracts identified as active awarded, the last
completion date data field is blank. Service Type data fields not Complete
or not Consistent The data does not readily lend itself for analysis
because the data is not complete or

consistent. HPS contains three separate data field to capture the *type of
good or service* being provided by the contractor.

 The three relevant data fields in HPS are the *type of service,*
*deliverable description,* and *product service code.*

 The type of service field is populated by HUD field staff when they
select the appropriate description from a drop down menu.

 The deliverable description data field is populated by all HUD staff
when they are entering information on individual deliverables.

 The product service code field is populated by all HUD staff. The codes
are based on the Federal Procurement Data System*s (FPDS) codebook.

 According to the HPS administrator, HUD conducts analysis on the type of
service and deliverable description data fields.

 According to HPS

 The type of service data fields are blank for about a third of the
active awarded contracts because only field staff are required to complete
this field.

 The deliverable description data field contains narrative entries
generated by HUD staff who do not use standard terminology to describe the
service being purchase.

Source: GAO analysis of HUD data.

Appendix IV: HUD*s Financial Management Information Systems that Contain
Contracting Obligation and Expenditure Information

Page 45 GAO- 03- 157 HUD Management

Financial system Description

HUD*s Central Accounting and Program System (HUDCAPS) HUDCAPS is the
department*s General Ledger and Funds Control System, and it

serves as a focal point for integrating other HUD financial systems. The
Chief Financial Officer sponsors the system. All HUD offices use HUDCAPS
to control and manage administrative and program budgets. For example,
since fiscal year 2000, the obligations and expenditures for all of FHA*s
administrative contracts (i. e., headquarters and field) are processed
from the HUDCAPS system. Program Accounting System & Line of Control and
Credit System (PAS & LOCCS)

PAS & LOCCS are two financial systems that are integrated. PAS is the
projectlevel funds control system and is used to record, control, and
report on the commitment, obligation, and expenditure of funds. LOCCS is
the payment control system that is used by those requesting payments.
Together, PAS& LOCCS is an accounting system that tracks the reservation,
obligation, and expenditure of funds, and it is the department*s primary
disbursement and cash management system for the majority of HUD programs.
For example, obligations and expenditures associated with the Office of
Public and Indian Housing*s (PIH) contracts are tracked in these systems.
Further, prior to fiscal year 2000, LOCCS was the financial system that
maintained information on FHA*s administrative contracts in the field. The
Chief Financial Officer sponsors this system. Single Family Acquired Asset
Management System (SAMS)

SAMS tracks information on single- family properties that HUD acquires due
to foreclosure; the system tracks the property from acquisition to sale
and the system is used to manage the properties. For example, this system
tracks the expenditures that are associated with contracts for services
provided by closing agents; this system does not track obligations. Cash
Control Accounting Report System (CCARS) CCARS tracks and disburses funds
received by FHA, from the Department of the

Treasury, to various internal FHA offices. These funds are received
electronically and are downloaded into the CCARS database daily. Prior to
FY 2000, CCARS maintained obligation and expenditure information on FHA*s
administrative contracts in headquarters. Comprehensive Servicing and
Monitoring System/ Property Management System (CSMS/ PMS)

CSMS/ PMS tracks HUD- held Multifamily properties and certain HUD- held
defaulted notes, which are in mortgagee- in- possession (MIP) status. a
CSMS/ PMS performs several management and accounting functions for these
properties (e. g., property management, tax servicing, tenant leases,
accounts receivable, accounts payable and disbursements processing,
financial accounting, and management reports). A HUD contractor maintains
CSMS/ PMS. Macola Macola is Ginnie Mae*s financial system. The system is
commercial off- the- shelf

software and tracks obligations and expenditures of funds. a An MIP case
occurs when HUD takes over property management responsibilities from the

mortgagor, but the loan has not yet gone into foreclosure. Source: HUD
data.

Appendix IV: HUD*s Financial Management Information Systems that Contain
Contracting Obligation and Expenditure Information

Appendix V: Comments from the Department of Housing and Urban Development

Page 46 GAO- 03- 157 HUD Management

Appendix V: Comments from the Department of Housing and Urban Development

Note: GAO comments supplementing those in the report text appear at the
end of this appendix.

Appendix V: Comments from the Department of Housing and Urban Development

Page 47 GAO- 03- 157 HUD Management

Appendix V: Comments from the Department of Housing and Urban Development

Page 48 GAO- 03- 157 HUD Management

See comment 2. See comment 1.

Appendix V: Comments from the Department of Housing and Urban Development

Page 49 GAO- 03- 157 HUD Management

See comment 4. See comment 3.

Appendix V: Comments from the Department of Housing and Urban Development

Page 50 GAO- 03- 157 HUD Management

See comment 5.

Appendix V: Comments from the Department of Housing and Urban Development

Page 51 GAO- 03- 157 HUD Management

Appendix V: Comments from the Department of Housing and Urban Development

Page 52 GAO- 03- 157 HUD Management

See comment 6.

Appendix V: Comments from the Department of Housing and Urban Development

Page 53 GAO- 03- 157 HUD Management

Appendix V: Comments from the Department of Housing and Urban Development

Page 54 GAO- 03- 157 HUD Management

See comment 8. See comment 7.

Appendix V: Comments from the Department of Housing and Urban Development

Page 55 GAO- 03- 157 HUD Management

See comment 8. See comment 8.

See comment 8.

Appendix V: Comments from the Department of Housing and Urban Development

Page 56 GAO- 03- 157 HUD Management

The following are GAO*s comments to HUD*s letter dated October 23, 2002.

1. HUD has defined its acquisition workforce to include contract officers,
contracting specialists, purchasing agents, GTRs, and GTMs. Therefore, our
report recommends that HUD assess the skills and capabilities of its
existing acquisition workforce, not simply the contract officers and
contracting specialists in the 1102 series.

2. We believe that the report accurately and properly distinguishes the
different acquisition positions at HUD-- including GTRs, GTMs, and various
OCPO staff-- and accurately reflects the federal training requirements
associated with these positions. Specifically, the ClingerCohen Act
mandates that executive agencies, through consultations with OFPP,
establish specific education, training, and experience requirements for
acquisition workforces. Under implementing guidance issued by OFPP, an
agency*s acquisition workforce* including its contracting officers,
contract specialists, purchasing agents, contracting officer
representatives, and contracting officer technical representatives, which
HUD calls GTRs* must meet an established set of contracting competencies.
HUD has developed a GTR training program in response to federal
requirements; however, we found that a significant portion of staff
serving in this capacity have not received this training. In addition, HUD
has identified GTMs as part of its acquisition workforce and HUD*s
policies permit the duties and responsibilities of GTRs to be delegated to
GTMs; and its draft Acquisition Career Management Plan* which establishes
training requirements for HUD*s acquisition workforce* states that the GTR
training requirements also apply to GTMs. Therefore, we remain concerned
that, according to HUD*s records, a significant portion of the
department*s GTRs have not received training and that 93 percent of GTMs
have not received any specialized acquisition training.

3. We agree that GTMs may not require the same level of training as GTRs;
however, HUD policies and handbooks indicate that providing acquisition
training to GTMs is necessary and is part of its intent. And therefore, as
discussed in comment 2, we remain concerned that, according to HUD*s
records, 93 percent of GTMs have not received any specialized acquisition
training. We revised the report to reflect the increases in HUD*s training
budgets discussed in its response. GAO Comments

Appendix V: Comments from the Department of Housing and Urban Development

Page 57 GAO- 03- 157 HUD Management

4. As discussed in comment 2, we recognize that HUD is providing required
training to some members of its acquisition workforce and we are
encouraged by HUD*s plans to assess the training needed for GTRs and GTMs
to more effectively monitor contractor performance. However, we remain
concerned that not all components of HUD*s acquisition workforce are
receiving the required training and, based on the reasons discussed in
comment 2, we made no changes to our conclusions or recommendations.

5. We recognize that HUD has multiple information systems that are used to
manage and monitor the department*s contracting activities and that some
might be better suited to track the deliverables of specific types of
contracts than others. However, we found that HUD staff were not utilizing
HPS to its fullest potential, including its ability to track deliverables.
We clarified the wording in our report to make clear that we are not
suggesting that HPS be used to track specific deliverables for all HUD
contracts.

6. HUD*s emphasis on reviewing subcontractor work would not necessarily
identify the improper payments we found. The improprieties occurred, in
part, because the vendors split the work into multiple invoices to fall
below HUD*s established threshold of review and subcontractor
requirements. HUD*s plan to review the property management subcontracting
file documentation and on- site invoices to assure that work orders were
not deliberately split to avoid competition and/ or HUD approval is a step
to assist in catching such irregularities; however, we believe that part
of developing a risk- based approach and monitoring contractor performance
is to include monitoring those disbursements made by the property
management contractors that are under the dollar threshold for individual
anomalies and unusual disbursement patterns to identify potentially
improper billing practices.

7. The review of improper payments that HUD refers to was part of a
separate congressional request to review disbursement processes that are
particularly susceptible to improper payments and determine whether
improper payments occurred. Based on our review of the multifamily
disbursements, it was evident that the existing internal controls would
not prevent and detect improper payments in the normal course of business.
Consequently, a random sample approach was unnecessary, and we used our
data mining approach to search for and identify irregularities that
indicated the existence of possible improper payments. While the annual
financial statement audit is

Appendix V: Comments from the Department of Housing and Urban Development

Page 58 GAO- 03- 157 HUD Management

designed to broadly assess internal controls, the auditors would not
necessarily focus their work on payments not expected to have a material
impact on the financial statements. Our improper payments review was not
limited by such constraints and therefore, could be a much more detailed
analysis of the areas that we determined to be particularly susceptible to
improper payments.

8. We modified the report to reflect these clarifications.

Appendix VI: GAO Contacts and Staff Acknowledgments

Page 59 GAO- 03- 157 HUD Management

Stanley J Czerwinski, (202) 512- 5535 Steve Cohen, (202) 512- 2834

In addition to those named above Amy Bevan, Dan Blair, J Bryant, Anne
Cangi, Bonnie Derby, Eric Diamant, Colin Fallon, Evan Gilman, Barbara
Johnson, Irvin McMasters, Andy O*Connell, Mark Ramage, and Nico Sloss made
key contributions to this report. Appendix VI: GAO Contacts and Staff

Acknowledgments GAO Contacts Acknowledgments

(541009)

The General Accounting Office, the investigative arm of Congress, exists
to support Congress in meeting its constitutional responsibilities and to
help improve the performance and accountability of the federal government
for the American people. GAO examines the use of public funds; evaluates
federal programs and policies; and provides analyses, recommendations, and
other assistance to help Congress make informed oversight, policy, and
funding decisions. GAO*s commitment to good government is reflected in its
core values of accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no cost
is through the Internet. GAO*s Web site (www. gao. gov) contains abstracts
and fulltext files of current reports and testimony and an expanding
archive of older products. The Web site features a search engine to help
you locate documents using key words and phrases. You can print these
documents in their entirety, including charts and other graphics.

Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as *Today*s Reports,* on its
Web site daily. The list contains links to the full- text document files.
To have GAO e- mail this list to you every afternoon, go to www. gao. gov
and select *Subscribe to daily E- mail alert for newly released products*
under the GAO Reports heading.

The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent of
Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
copies mailed to a single address are discounted 25 percent. Orders should
be sent to:

U. S. General Accounting Office 441 G Street NW, Room LM Washington, D. C.
20548

To order by Phone: Voice: (202) 512- 6000 TDD: (202) 512- 2537 Fax: (202)
512- 6061

Contact: Web site: www. gao. gov/ fraudnet/ fraudnet. htm E- mail:
fraudnet@ gao. gov Automated answering system: (800) 424- 5454 or (202)
512- 7470

Jeff Nelligan, managing director, NelliganJ@ gao. gov (202) 512- 4800 U.
S. General Accounting Office, 441 G Street NW, Room 7149 Washington, D. C.
20548 GAO*s Mission

Obtaining Copies of GAO Reports and Testimony

Order by Mail or Phone To Report Fraud, Waste, and Abuse in Federal
Programs

Public Affairs
*** End of document. ***