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Strategic Assessment of HUD 2020 Reforms--Executive Summary

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Over the past three years, the US Department of Housing and Urban Development (HUD) has pursued an ambitious set of management reforms aimed at transforming its once-antiquated bureaucracy into a customer-focused, performance-oriented organization.

These reforms - entitled HUD 2020 - are intended to rebuild and sustain the Department's capacity to fulfill its mission to "promote adequate and affordable housing, economic opportunity, and a suitable living environment free from discrimination."

In 1998, the Public Strategies Group (PSG) was asked to assess the HUD 2020 reform plan and its potential to tackle the myriad of management challenges facing HUD. These problems included:

  • inadequate and unreliable information about the quality and location of HUD-financed properties;
  • inconsistent and ineffective enforcement policies;
  • a lack of useful performance information and accountability for results;
  • a lack of sensible and timely procurement practices; and fragmented financial systems and information

After studying HUD's proposed reforms and its initial steps in launching HUD 2020, we declared it to be "a sound, well thought-out reform plan" and "one of the most ambitious, fundamental, and exciting reinvention plans in the recent history of the federal government."

This summer, HUD invited PSG back again, this time to assess the impact of the HUD 2020 reforms on customers, stakeholders, and employees and to identify opportunities for strengthening and sustaining the reform effort. As part of its work, PSG interviewed key HUD executives, reviewed strategic and operational documents, conducted site visits to six local field offices, and interviewed dozens of employees, external partners, and beneficiaries of HUD programs.

Key Findings of Positive Progress

  1. 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 has accomplished many of the bold plans that it set out to achieve under HUD 2020. A new system for independently assessing thousands of HUD-supported housing properties was designed and implemented in one year, where no such information existed before. A corps of several hundred Community Builders has been employed and almost a dozen new "storefront" offices built in an effort to radically change the "face of HUD" to communities. Key processing functions such as FHA mortgage endorsements have been centralized and automated in the interest of improving efficiencies and consistency. A dedicated Enforcement Center is sending a clear message that flagrant non-compliance with HUD regulations and attempts at defrauding the system will not be tolerated. The Department has developed a robust performance management system that aligns its strategic plan, annual performance plan, and business operating plans around HUD's six strategic goals. It has also integrated these performance objectives into the annual ratings of executives, managers, and supervisors. All of this (and much more) in three short years.

  1. HUD is providing local communities with a new model of customer service and creating powerful partnerships that bring together the assets of both HUD and communities to improve housing and economic opportunities.

Across the country, HUD is beginning to fundamentally change the ways that individuals, organizations, and communities access HUD resources. Community Builders give HUD customers whose needs reach across multiple program areas a single point of contact at the local level. In a dozen cities, HUD has created storefront offices that provide a more welcoming, user-friendly environment than traditional government offices. The Department has also deployed electronic touch-screen kiosks that enable citizens to walk up and obtain information on HUD services at their convenience.

  1. The Department is restoring the public's trust in HUD's ability to effectively spend taxpayer dollars and carry out its mission with the minimum of fraud, waste, and abuse.

By creating the service-oriented Community Builder function, HUD has freed up its Public Trust Officers to work exclusively on ensuring that Federal funds are used in compliance with laws and regulations. Public Trust Officers administer program grant competitions and oversee program operations. In addition, they are carrying out critical new initiatives designed to eliminate monitoring and oversight weaknesses.

  1. HUD has completed the first-ever nationwide assessment of its multifamily inventory and is developing a new, post-bureaucratic approach for the management of that inventory.

The new Real Estate Assessment Center (REAC) is using the information gathered from this assessment to motivate improved performance by property owners. Rather than using a traditional one-size-fits-all approach, HUD is tailoring its regulatory response based on a property's assessment score. The Department is rewarding high-performing properties by reducing the frequency of inspections, providing technical assistance to low-performing properties, and referring flagrantly non-compliant properties to the Department's new Enforcement Center. REAC has also taken the lead in introducing sound assessment practices in the public housing arena for the first time ever and in implementing a large-scale tenant income matching system to ensure that residents are receiving the proper rent subsidy based on their income.

  1. The Department's new Enforcement Center has made tremendous progress in restoring credibility to HUD's efforts to take action against property owners who violate laws and regulations.

The Enforcement Center has recovered $40 million in civil penalties and settlements from property owners in the past two years. It has also increased suspensions and debarments of individuals who have been found to be violating HUD rules and regulations. Perhaps most importantly, 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 that the Department of Agriculture has - with assistance from HUD staff - implemented a similar model in its agency.

  1. HUD has streamlined its processing operations by consolidating these functions into centers.

The Department's four Homeownership Centers focus on handling FHA endorsements and have succeeded in shortened a process that just a few years ago took 4 to 6 weeks into one that today is handled in an average of two to three days. HUD's two Troubled Agency Recovery Centers (TARCs) assist failing public housing agencies in correcting major physical, financial, and management deficiencies. The Section 8 Financial Management Center is working to resolve funding discrepancies, ensure consistent application of regulations and procedures, reduce the incidence of missed payments, and improve accountability for program dollars.

  1. HUD has made the application of innovative technology a centerpiece of its reform efforts.

The Department's web site has won numerous awards and accolades from its users and has become a pioneer among federal agencies in how to put useful information in the hands of customers and stakeholders. The Enforcement Center uses document imaging to make it possible to transmit important materials to workers in multiple locations. The Real Estate Assessment Center is placing handheld assessment devices in the hands of its inspectors. HUD has also adopted an IT capital planning process that has been recognized by OMB as a leader among federal agencies.

  1. The Department now has a multi-year vision and implementation plan for the modernization of its financial management system.

The myriad of problems that HUD historically faced in the area of financial management is legendary, including 89 separate non-integrated program-specific systems and the lack of a single HUD-wide general ledger. HUD has already begun to put its financial house in order as evidenced by its first-ever "clean" audit from the Inspector General on its FY1998 financial statements. Perhaps more importantly, the Department has designed a blueprint for the modernization of its financial management system. This plan has garnered support from both GAO and OMB, which will be critical to HUD's successful implementation of this effort.

  1. HUD has made major strides in significantly improving its procurement practices.
HUD has implemented critical components of a model procurement system. This includes the appointment of a Chief Procurement Officer, the creation of a Contract Management Review Board to review contracts over $1 million, certification and training of Government Technical Representatives (GTRs), and greater use of GSA schedule contracts.

In short, HUD has simultaneously pursued multiple far-reaching reforms that are radically transforming the way that the Department does business. As one person said to us, "we have ripped apart the fabric that was the old HUD and re-assembled it into a completely new and better piece of clothing." We couldn't agree more and, in keeping with the metaphor, we have offered some recommendations on how to reinforce the stitching so that HUD will continue to improve and build a garment that can adapt to the ever-changing demands of the communities it serves.

In our experience, public-sector reinvention on this scale takes at least 5 years before the systems, behavioral, and cultural changes yield dramatic improvements in performance throughout the organization. We are convinced that HUD has created a powerful and rock-solid foundation of reform. But, there are still critical refinements and adjustments that must be made to ensure the continual improvement and ultimate sustainability of these reforms. In our full report, we have presented our recommendations under each of the major components of HUD 2020. We have summarized and highlighted a few of them below.

Recommendations to Strengthen the Reform Effort

First, HUD should continue to invest in strengthening its performance management system. The Department has made tremendous strides in the past three years and has evolved its practices in very important ways. Because of that success, we believe that HUD is ready to take its performance management efforts to the next level. This would include creating explicit and measurable customer service standards and redress policies for both internal and external customers, introducing more outcome and customer-oriented measures into its business operating plans, creating greater accountability around its internal service agreements, and making performance information meaningful to employees and stakeholders through the use of electronic performance "dashboards."

Second, HUD should delegate greater authority and decisionmaking to the local field offices. We understand that HUD needed to centralize many decisions and resources to "get its house in order." The Department now has in place accountability systems that far exceed what it ever had before. Therefore, HUD should capture the return from this investment by now aligning comparable authority with the accountability that it has placed in the field. In particular, we recommend that HUD transfer additional control over local program decisions out of headquarters and into local field offices. In addition, HUD should explore ways to give field office managers greater authority over personnel decisions and budget resources.

Third, HUD should reinforce its existing efforts to include its external partners and customers in the continual redesign and refinement of HUD programs and systems. An excellent example of this has been the Department's involvement of the multifamily housing industry in the Multifamily Accelerated Processing (MAP) initiative. This recently launched program strives to make HUD's application process much timelier and less burdensome to prospective developers and lenders. We believe this kind of outreach needs to become even more of a habit at HUD in such areas as the development of new information systems, the grants application processes (especially for smaller grantees), and the creation of local field office goals and strategies.

Fourth, HUD should find new ways to promote meaningful dialogue with and among its workforce. For the last three years, HUD employees have made tremendous efforts and, in some cases, personal sacrifices to help make HUD 2020 a reality. Many are excited and inspired by the challenge of reinventing HUD. Many others are experiencing the fatigue and frustration that often accompany a massive change process like HUD 2020. These employees still believe in the HUD mission and many recognize that HUD needs to find new ways to deliver better results. They also want the opportunity to help in the creation of those strategies and to challenge them if they believe there is an approach that will improve the intended outcome. We believe that HUD should move expeditiously to create face-to-face dialogues across the organization to help channel all this energy into a more positive, collaborative focus on how to improve HUD's future.


In 1998, we produced six findings based on our review of HUD's management reform plan:

  • The greatest strength of HUD 2020 is that it achieves a mission clarity that many public organizations fail to achieve.
  • HUD 2020, when fully implemented, should provide dramatically better customer service.
  • HUD 2020, when implemented, should significantly enhance the agency's ability to protect the public trust.
  • HUD 2020 should, when fully implemented, fundamentally fix the Department's basic systems.
  • HUD 2020 has begun to foster a sense of innovation, entrepreneurship, and cutting-edge technology more characteristic of a private company than a public organization.
  • HUD 2020 as implemented can be a model for other agencies.

We believe that these findings remain relevant today and that HUD has made tremendous progress across the Department in making these plans a reality. HUD's charge now is to stay on the course set by HUD 2020 and continue to refine and improve its management plans to meet future challenges.

That is why we urge the Department to move forward expeditiously on our recommendations regarding how to strengthen and institutionalize these reforms. HUD should not let the inertia that typically accompanies a transition in administration slow down its reform efforts. We believe that a large percentage of these recommendations can be addressed in the next few months. We also believe that much of this requires managerial work rather than policy changes. We hope HUD does not let pass this excellent opportunity to solidify and enhance what it has already accomplished.

The need for HUD to be the kind of effective, customer-oriented, and performance-focused organization envisioned under HUD 2020 is even more pronounced today. Even as homeownership rates increase, the gap between the demand for and supply of affordable housing is still too wide. HUD employees should be proud of the work they have done to implement the HUD 2020 reforms in such a short period of time. They have helped turn HUD around from an organization that many believed could not be trusted with scarce tax dollars to one that has improved the results it delivers to citizens. Their continued energy, new ideas, and passion for HUD's mission will be critical as the Department pursues further refinements and adjustments to what is already an impressive list of accomplishments. Building on the progress made to date and the recommendations set forth in this report, HUD is well-positioned to deliver on the original promise of the agency in the 21st century.

Content Archived: January 20, 2009

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