HUD Archives: INDEPENDENT REPORT HAILS HUD'S TURNAROUND

HUD No. 00-332
Further Information:	For Release
(202) 708-0685	Monday
Or contact your local HUD office	November 20, 2000

INDEPENDENT REPORT HAILS HUD'S TURNAROUND

WASHINGTON - The Department of Housing and Urban Development, once marked for elimination as the epitome of inefficient and bureaucratic government, has accomplished in three years an ambitious set of management reforms aimed at transforming itself into a customer-focused, performance-oriented organization, according to a new report by an independent firm specializing in management reinvention efforts.

Vice President Al Gore, the leader of government reinvention, in a letter to Secretary Andrew Cuomo recognized HUD's work to manifest a government that works better, costs less, and gets meaningful results for the American People. "I commend you and all of the hard working people at HUD as you continue down this road of reform and strive to create a Department that will be a model of reinvention in this new century," said the Vice President, "I extend my thanks to you and your outstanding team for the vision and energy that are working to transform HUD."

Under the leadership of Secretary Cuomo, who took the helm in 1997, HUD "has simultaneously pursued multiple far-reaching reforms that are radically transforming the way that the Department does business," the Public Strategies Group, Inc., of St. Paul, Minn., found in its assessment of the HUD 2020 management reform plan.

"Validation by David Osborne marks a critical achievement by HUD," Cuomo said. "We have taken an example of the worst in government and transformed it into an example of the best in government reinvention. We are proud that HUD is now as strong as it has ever been."

Osborne, president of the Public Strategies Group (PSG), is author of the book "Reinventing Government."

The report was a follow-up to the assessment PSG was asked to conduct in 1998 of the HUD 2020 plan and its potential to tackle of the myriad of management challenges facing the Department. PSG said these problems included inadequate and unreliable information about the quality and location of HUD-financed properties; inconsistent and ineffective enforcement policies; lack of useful performance information and accountability for results; lack of sensible and timely procurement practices; and fragmented financial systems and information.

Since then, PSG said, HUD "has accomplished many of the bold plans that it set out to achieve." The report's nine key findings are:

The pace and breadth of the HUD reform effort has been astonishing. Essentially every part of the organization has been significantly and positively impacted in some way.

HUD is providing local communities with a new model of customer service and creating powerful partnerships that bring together the assets of both the Department and communities to improve housing and economic opportunities.
HUD is restoring the public's trust in the Department's ability to effectively spend taxpayers dollars and carry out its mission with the minimum of fraud, waste and abuse.
HUD has completed its first-ever nationwide assessment of its multifamily inventory and is developing a new, post-bureaucratic approach for the inventory's management.
HUD's new Enforcement Center has made tremendous progress in restoring credibility to the Department's efforts to take action against property owners who violate laws and regulations.
HUD has streamlined its processing operations by consolidating these functions into centers.
HUD has made the application of innovative technology a centerpiece of its reform efforts.
HUD now has a multiyear vision and implementation plan for the modernization of its financial management system.
HUD has made major strides in significantly improving its procurement practices.

PSG said HUD was providing local communities with new, customer-oriented ways to deal with the Department and creating powerful partnerships that bring together the assets of both HUD and communities to improve housing and economic opportunities. It cited the Community Builders program for giving HUD customers whose needs reach across multiple program areas a single point of contact at the local level. By creating the service-oriented Community Builder function, the report added, HUD has freed up its Public Trust Officers to work exclusively on ensuring that federal funds are used in compliance with laws and regulations.

In other areas, PSG noted the new Real Estate Assessment Center (REAC) is using the information gathered from the assessment of the multifamily inventory to tailor the appropriate HUD regulatory response - rewards for high-performing properties, technical assistance for low-performing properties and referral to the Enforcement Center for flagrantly non-compliant properties.

By recovering $40 million in civil penalties and settlements from property owners in the past two years and by increasing suspensions and debarments of violators of HUD rules and regulations, the report said the Enforcement Center has made tremendous progress in restoring credibility to HUD's efforts to make non-compliance with HUD regulations consequential.

"Perhaps most importantly," the report said, "the Enforcement Center has pushed property owners to invest tens of millions of dollars to restore more than 50,000 housing units to decent, safe and sanitary conditions. Indeed, it has been so successful the Department of Agriculture has - with technical assistance from HUD staff - implemented a similar model in its agency."

PSG said HUD's four Homeownership Centers (HOCs), which focus on handling FHA endorsements, have shortened to an average of two to three days a process that just a few years ago took four to six weeks. The two Troubled Agency Recovery Centers (TARCs) assist failing public housing agencies correct major physical, financial and management deficiencies. The Section 8 Financial Management Center works to resolve funding discrepancies, ensure consistent application of regulations and procedures, reduce the incidence of missed payments and improve accountability for program dollars.

PSG submitted a list of recommendations for HUD to strengthen and sustain the reform effort. These included introducing more result- and customer-oriented performance measures; making performance information more meaningful to employees and stakeholders; sharing information on local field office goals with community partners; making REAC assessment data more accessible to filed offices; streamlining the appeals process; establishing separate budgets for both REAC and the Enforcement Center; and giving field offices the authority to make decisions.

PSG's assessment is the most recent independent review to take note of HUD's management reforms. Attached is a of other similar reviews and honors.

Also attached is a statement by the President released today in conjunction with the announcement of this report.

EXCERPTS OF INDEPENDENT REVIEWS OF HUD'S MANAGEMENT REFORMS

HUD's HOPE VI program was selected this year for the Innovations in American Government Award presented by Harvard University's John K. Kennedy School of Government, the third time in the past five years that a HUD program has been so honored.
A review by management consultants Booz-Allen & Hamilton concluded in March 1998 that HUD has made "significant progress towards achieving the many management reforms that are critical to making the Department function effectively."
Another outside review of HUD's reinvention performed by Pricewaterhouse Coopers LLP concluded in December 1998 that HUD's management reform plan is successfully moving forward on schedule. The review said that "implementation of the Community Builders, Enforcement Center, Procurement Reform, Real Estate Assessment Center, Storefronts, and Troubled Agency Recovery Center is well under way. Each project met all or substantially all of the critical milestones that HUD established for completion as of September 1."
A survey found in December 1998 that 70 percent of HUD employees believed the Department has made reinvention an important priority - the highest percentage of any of 22 federal agencies surveyed. The employee survey was performed by the National Partnership for Reinventing Government, which is headed by Vice President Al Gore. The Vice President said: "Through REGO (the reinventing government initiative) - and thanks to the extraordinary leadership of Secretary Andrew Cuomo - we turned HUD around."
A report in early 1999 by the General Accounting Office of Congress said: "HUD continues to make credible progress in overhauling its operations to correct its management deficiencies" and called Cuomo's management reform plan "a major contributor to this progress."
The HUD Office of Inspector General issued the first clean audit of HUD's financial statements in the Department's history in March 1999. This means that for the first time, the Department's financial statements are in complete compliance with all applicable federal requirements. While the audit also summarized many of the past criticisms that the Office of Inspector General has made of the Department, the Inspector General wrote that the audit "represents a considerable achievement for HUD, and it further reflects continuing improvements in HUD's commitment and ability to properly account for the funds entrusted to the Department."

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