HUD Testimony

Statement of Alphonso Jackson Deputy Secretary U.S. Department of Housing and Urban Development, before the United States Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Housing and Transportation

Chairman Reed, Ranking Minority Member Allard, and Subcommittee members, I thank you for the opportunity to appear before you today to discuss HUD's staffing, acquisition management, and information systems challenges. I am happy to provide you with an update of the substantial progress our Administration is making to address these challenges.

Under the leadership of Secretary Martinez, the first year of our new Administration was largely devoted to getting our management team in place, assessing HUD's management environment, and formulating viable strategies and plans to address the major management challenges and program risks still facing the Department. In formulating our strategies and plans, we strongly considered the input on HUD's management challenges and program risks from the U.S. General Accounting Office (GAO) and the HUD Office of Inspector General.

I believe our management team and the GAO share a common view that improvements to HUD's management of its human capital, acquisitions and information systems are essential to addressing HUD's remaining high-risk program areas -- the rental housing assistance and single family housing mortgage insurance program areas -- and to maintaining adequate controls over other program activities previously considered high-risk.

The inclusion of our management challenges and program risks in the President's Management Agenda is indicative of the importance placed on these issues. As part of GAO's Biennial Performance and Accountability and High Risk Series Review for 2003, HUD already has provided the GAO with several reports that highlight our progress in addressing our management challenges, including our implementation of the President's Management Agenda. We welcome the GAO's independent assessment, and I am confident that they will see that we are moving in the right direction to address our management challenges, reduce our program risk, and improve our program performance.

Human Capital Management

Human capital is HUD's most important asset. We have taken significant steps to enhance and better utilize our existing staff capacity, and to obtain, develop and maintain the staff capacity necessary to adequately support HUD's future program delivery.

Effective human capital management is the purview of all HUD managers and program areas. We view our human capital management challenges as consisting of:

1. the need for strategic Human Capital Planning to link and align our staffing with our mission, goals, and organizational objectives;
2. staff shortages and skills gaps as a result of downsizing initiatives during the 1990s;
3. a maturing workforce with about half of the workforce eligible for retirement over the next five years; and
4. the need for increased use of technology to support organizational improvements and accomplishment of goals and objectives.

To meet these challenges, we have taken or planned a number of significant actions.

Management and Staffing Realignments

The first issue I would like to address is the realignment of management and staffing that the Department already has undertaken.

HUD's June 1997 management reform plans were intended to realign the Department along functional lines, with the separation of outreach from program administration, and the placement of greater reliance on automated tools, processing centers and contracted services. These planned reforms were intended to enable the Department to better utilize a reduced staffing capacity to more efficiently and effectively deliver and oversee HUD's major program activities.

We found that the planned organizational and operational changes were implemented with varying degrees of success. Some of the intended organizational and process changes were never formally institutionalized with the need for delegations of authority and the issuance of current written policies and procedures to support staff training and ongoing operations. In addition, some of the 1997 organizational and staffing realignments have proven to be an ineffective use of HUD's human capital.

As a result, decisions were made and actions taken to pursue separate realignments of headquarters and field activities to better use our existing resources. At headquarters, we reduced the reporting relationships with the Secretary by 40 percent, including the following actions:

• The Departmental Enforcement Center (DEC) was placed under the direction of the General Counsel to consolidate our legal resources in support of a strong program enforcement effort. HUD's program enforcement efforts were previously under the Office of General Counsel prior to the creation of a separate DEC.
  
  
• The Real Estate Assessment Center (REAC) was placed under the direction of the Assistant Secretary for Public and Indian Housing (PIH), in order to improve REAC's working relationships with program staff and program partners and strengthen accountability for resource use and results.
  
  
• The Office of the Chief Procurement Officer (OCPO) and Office of the Chief Information Officer (OCIO) were placed under the direction of the Assistant Secretary for Administration/Chief Information Officer, to streamline HUD's organizational structure and improve service delivery to HUD's program and administrative components. The former CIO is now HUD's Chief Technology Officer.
  
  
• The Office of Field Policy and Management (FPM) was established as an independent office reporting to the Deputy Secretary, with responsibility for oversight of HUD's field management and assistance to program Assistant Secretaries in meeting program goals at the field office level.

Our field office realignment and redeployment efforts included the following:

• Substantial numbers of staff in the outreach function were redeployed to understaffed program delivery and oversight functions, where there is a critical need.
  
  
• New regional management positions were created to give HUD's field operations greater operational control over the administrative budget resources they need to pursue their operating and program goals, and to strengthen the local focus on workload management to meet national performance goals.
  
  
• All program decisions continue to be exercised by program directors and managers under the direction of their respective program Assistant Secretary.

We have formalized our realigned structure, with publication of delegations of authority in the Federal Register, and are providing current operating policies and procedures to support staff training and on-going operations. These adjustments to HUD's operating structure will enable us to more efficiently and effectively utilize our available resources to strengthen our program delivery and oversight.

Human Capital Strategic Management Plan

A Human Capital Strategic Management Plan was developed in February 2002 to provide an overall framework for our human capital activities. An important part of this plan is our Senior Executive Steering Committee, chaired by the Assistant Secretary for Administration, which is currently developing a five-year plan to focus on: 1) staffing requirements, 2) organizational de-layering, 3) supervisor to employee ratios, and 4) front-line service delivery. This committee also will make recommendations regarding the need for new or revised policy guidance to support the Department's new human capital strategies.

Staffing Needs and Allocation of Resources

HUD's past management of its human capital was hampered by the lack of a system or process for estimating and justifying its staffing resource needs, and allocating the staffing resources available. In 2001, HUD completed the implementation of a new Resource Estimation and Allocation Process (REAP), with input from all HUD managers. The REAP was developed in conjunction with the National Academy of Public Administration.

The baseline outputs of the REAP were used to assist in making decisions on redeploying HUD's existing staff resources to address priority program staffing needs in the field. The deployment of resources in the prior Administration left us understaffed to perform critical program delivery and oversight functions, while too many staff were devoted to outreach efforts. REAP was useful in helping to identify the critical staff shortages.

We are now in the process of completing the first quarterly validation of the REAP staffing estimates through an assessment of actual staff time reporting via the implementation of the companion process to the REAP, the Total Estimation and Allocation Mechanism (TEAM). REAP and TEAM information will help HUD's management determine our staffing level request to Congress as part of our FY 2004 budget.

Our Fiscal Year 2003 budget submission did not request the full staffing levels supported by the REAP for several reasons. First, we wanted to allow time for HUD managers to complete the initial TEAM validation process and to further analyze REAP and TEAM data. TEAM was not in place when the FY 2003 Budget was submitted to the Congress. It has since been completed and is operational. Second, although the REAP methodology supported a significant increase in staffing requirements (with a total level of 10,600 FTEs), it was not realistic to assume that the Department could implement that amount of an increase at the same time that the redeployment of existing staff was also taking place. Now that our redeployment of existing staff is completed, we have turned our attention to expediting our hiring and orientation processes to assure that we can fully utilize the staffing ceilings already approved by the Congress. This is the highest priority for our new Assistant Secretary for Administration and Director of Personnel, who were just recently added to our management team.

Succession Planning

HUD has developed a Departmental Succession Planning Strategy, which includes procedures for workforce analyses. As a part of the Department's succession planning strategy, we examined the top nineteen occupations in the department in relation to continued need and potential retirements over a 5-year period. An assessment was further conducted in relation to HUD's four core program disciplines -- in the Office of Housing, Office of Public and Indian Housing, Office of Community Planning and Development, and Office of Fair Housing and Equal Opportunity -- to assess the impact of potential losses over the 5-year period, and resulting skills imbalances. However, critical staffing needs exist throughout HUD programs and the focus will be on the entire Department. The Presidential Management Intern Program (PMI), the new HUD Intern Program, the Legal Honors Program, and the SES Candidate Development Program (SES CDP) are being utilized to establish a pipeline of well-qualified employees to meet staffing needs and anticipated skills shortages.

Training and Development

Training and development of HUD employees is a Departmental priority. The HUD Training Academy has been enhanced and energized to move forward with a new vision for the Department's training program, which is focused on investing in the power and potential of HUD employees. Agency specific technical training and career advancement training are readily available to all employees. Several other initiatives are in place to build a new HUD culture, focused on the value of training and continuous professional development. For example:

• the new "HUD Leadership and Management Curricula" was launched in April 2002, and features 38 courses, which provide a comprehensive training program for supervisors, managers, and executive leaders;
  
  
• the "Operation Brain Trust Initiative" was launched in December 2001 to utilize HUD's subject matter experts as "Professors" to develop the supervisors, managers, and professionals of tomorrow through the experience of HUD leaders today; and
  
  
• the "HUD Virtual University" is a new "e-learning" initiative that provides on demand training, 24 hours a day-7 days a week-365 days a year, with access to online technical coaches and experts for a curriculum that includes 1,600 web-based courses available at the desktop of every HUD employee.

HUD's Program Assistant Secretaries have also been focused on the provision of updated program handbooks, guidance and training for HUD monitoring staff and program intermediaries. These are further examples of our commitment to developing and maintaining a competent HUD work force and program delivery structure.

Technology Support

The Department is acquiring an integrated human resources and training system entitled HUD Integrated Human Resources and Training System (HIHRTS). HIHRTS replaces 17 existing systems and will support workforce planning, succession planning, forecasting, and identification of staff competencies.

Performance Management

HUD had already been recognized for its progress in linking and aligning its staffing with its mission, goals, and organizational objectives, and we have continued and enhanced that process. Those linkages are made in HUD's Budget Submissions and Annual Performance Plans. We further use a management planning process that links field office and headquarters operating goals and other performance goals with the Department's strategic goals and objectives under the Government Performance and Results Act. It is important that HUD managers and staff know their contributions to HUD's mission objectives, and are held accountable for that performance. We assess progress against our Management Plan goals quarterly, and annual accomplishments are factored into staff performance evaluations and awards.

Acquisitions Management

HUD is heavily reliant on contracted services in support of its current operations. HUD's contracted services go well beyond facilities maintenance and other routine services to many core program functions. Given the extent and significance of HUD's contracted services, HUD's acquisition management challenges consist of:

1. assuring our contract funding goes towards meeting our priority needs in a cost-effective manner;
2. committing sufficient business area expertise to develop adequate statements of work to govern contractor performance;
3. maintaining a sufficient procurement capacity to timely process quality procurement actions; and
4. providing adequate oversight of contractor compliance and performance.

Our actions to address these acquisition management challenges include the following:

• Contract Management Review Board - The Department has re-established a senior-level Contract Management Review Board (CMRB) to review and approve annual procurement plans for each HUD component, and to approve all contract actions over $500,000. The CMRB helps to assure that HUD's contract resources are used to address the Department's priority service needs. The CMRB also ensures the acquisition strategy is based on competition, is performance-based to the greatest extent practicable, and treats small businesses fairly and gives them a chance to compete.
  
  
• Integrated Program Teams - The Department is increasing the use of integrated program teams (IPTs) to improve the quality and timeliness of procurement actions. IPTs are groups of management, technical, and contracting experts assembled to accomplish a mission-critical procurement objective. HUD uses IPTs to plan the acquisition strategy, establish the contracting milestones, develop the statement of work, manage the contracting process through contract award, and monitor the contractor's performance.
  
  
• Performance-Based Contracts - One of the President's management objectives is to increase the use of performance-based service contracts to twenty percent of service contract awards in FY 2002. HUD is fostering a partnership between its contracting and program personnel to increase the use of performance-based service contracts, and is providing classroom and "just-in-time" training on the development of performance-based statements of work. In addition, the Department has established an IPT -- consisting of information technology (IT), program, and contracting staff -- to convert existing IT systems development and maintenance contracts to performance-based. These efforts are beginning to show results: as of June 30, 2002, sixteen percent of new service contracts were performance-based.
  
  
• Small Business Utilization - The Secretary and I recognize that small businesses are vitally important to job growth and the economic strength of the country. The Secretary has challenged HUD to award fifty percent of its contract dollars to small businesses. To achieve this demanding goal, the Department sponsors small business fairs and other outreach programs to publicize HUD's contracting and subcontracting opportunities. Through these and other efforts, the Department is well on its way to achieving this goal. As of June 30, forty-one percent of FY 2002 contract dollars have been awarded to small businesses, and I am particularly pleased that women-owned small businesses have accounted for twenty-one percent of the Department's total FY 2002 awards -- far surpassing the five percent goal established by Congress.
  
  
• Other Acquisition Improvement Efforts - HUD has hired a new Chief Procurement Officer to lead our acquisition improvement efforts. We have also approved a fifty percent increase in staff resources devoted to contract award and administration and increased training and development of the acquisition workforce as required by the Clinger-Cohen Act.

These changes are collectively expected to improve customer service and contractor performance and reduce the Department's overall cost of operation.

Information Systems Management

Adequate automated information systems are essential to the effective administration of HUD's large, diverse and complex program universe. However, we recognize that HUD has antiquated systems that are poorly integrated, inefficient and inadequate for meeting many essential program management information needs. Most of HUD's systems support is provided through contracted services.

HUD's major information systems challenges are to:

1. properly prioritize Information Technology (IT) capital investments to meet HUD's most critical business needs;
2. adequately plan systems development to assure effective systems integration and operation;
3. provide sufficient business area support for systems development efforts;
4. improve contractor performance and HUD's systems project management; and
5. maintain a secure systems environment.

Our efforts to address these challenges include the following:

IT Capital Investment Planning

We have continued to refine and institutionalize HUD's IT Investment Management (ITIM) Process. Efforts were taken to seamlessly integrate HUD's ITIM, or IT capital planning process, with HUD's Enterprise Architecture (EA) and e-Government directives from the Office of Management and Budget, to better assure efficient resource use and effective business results. The IT capital planning process was enhanced to incorporate an EA assessment of proposed projects during the selection of IT projects for upcoming fiscal years. The scoring of initiatives is linked to HUD's e-Government Strategic Plan, the President's Management Agenda, material weakness and high-risk issues, and other Departmental priorities.

HUD is also pursuing a performance-based, outcome-oriented infrastructure contract called HUD IT Services (HITS) that is expected to provide improved services and innovative solutions. Award is currently scheduled for November 2002. The selected HITS vendor will partner with HUD to specify, design, acquire, maintain and support the IT infrastructure, ensuring that enterprise architecture considerations, standards and policies are followed.

Enterprise Architecture

HUD's Enterprise Architecture (EA) initiative is designed to provide Department-wide documentation of HUD's current business and technology systems architecture baseline, as a basis for both better managing HUD's current information systems and better meeting future information systems needs. HUD recently completed a refreshment of the baseline EA in the Enterprise Architecture Management System. The EA team is completing work on the significant Single Family Housing segment of the target architecture for future systems development in this high-risk program area.

Project Management

We have taken actions to improve IT systems project management and correct past problems of projects not being completed on time, cost overruns, and unlimited project scope. Through the IT capital planning process, HUD conducts quarterly control reviews of every IT project, requiring projects with significant cost or schedule variances to develop recovery plans to get back on track. HUD also provided IT Investment and Project Management training to over 100 IT project managers and plans to offer this training as an online course later this year. HUD instituted project management reviews at the highest levels to focus executive attention on projects needing direction. As previously discussed, IPTs or Integrated Procurement Teams were created to manage and implement the transition of IT support contracts to performance-based contracts.

Systems Security

We established HUD's Enterprise Security Program to provide protection for HUD's critical infrastructure, both physical and information systems. This entails developing and implementing effective security procedures, security awareness and training, disaster recovery/contingency planning, and monitoring compliance and effectiveness of security procedures, policies and standards. Significant accomplishments have been made. The HUD Office of Inspector General's audit of HUD's FY 2001 consolidated financial statements recognized both substantial control improvements in HUD's mainframe-computing environment, and considerable strides to improve software configuration management for both mainframe and LAN-based client/server applications. OCIO is responding to the Government Information Security Reform Act through security self assessments, developing and reporting on an overall HUD security plan, and providing a strategic Five-Year Plan for Security.

As you can see, our efforts to meet HUD's human capital, acquisitions, and systems challenges have been extensive. Our efforts to better manage our staffing, acquisitions and information systems have a direct relationship to the excellent progress we are making in addressing HUD's two remaining high-risk program areas - our rental housing assistance and single family housing mortgage insurance program areas. We welcome the pending independent assessment of our progress through the GAO's biennial government-wide review of major management challenges and high-risk programs.

That concludes my testimony. I look forward to working with you to address the continuing management challenges facing HUD, and I thank you for your on-going support of the Department.