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entitled 'Information Technology: HUD's Expenditure Plan Satisfied 
Statutory Conditions; Sustained Controls and Modernization Approach 
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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

February 2014: 

Information Technology: 

HUD's Expenditure Plan Satisfied Statutory Conditions; Sustained 
Controls and Modernization Approach Needed: 

GAO-14-283: 

GAO Highlights: 

Highlights of GAO-14-283, a report to congressional committees. 

Why GAO Did This Study: 

HUD relies extensively on IT to administer its community and housing 
programs. However, because HUD's IT environment has not effectively 
supported these programs, the department has been working to modernize 
its infrastructure and systems and implement management controls to 
overcome shortcomings in its capabilities. To facilitate oversight of 
these efforts, Congress set limitations on HUD's modernization 
funding. Specifically, the fiscal year 2013 appropriations act carried 
forward requirements for HUD to submit an expenditure plan that 
satisfied two sets of statutory conditions and was reviewed by GAO 
before all of the agency's modernization funding could be released. 
For fiscal year 2013, HUD submitted a plan that sought to obligate 
$24.2 million for 16 projects. 

In reviewing the plan, GAO's objectives were to (1) determine whether 
the plan met statutory conditions and (2) provide any observations 
about the plan. To accomplish this, GAO analyzed the plan against the 
statutory conditions and compared its contents to HUD documentation, 
prior GAO reports, and best practices. 

What GAO Found: 

The Department of Housing and Urban Development's (HUD) fiscal year 
2013 information technology (IT) expenditure plan satisfied the two 
sets of statutory conditions contained in the appropriations act. 
Regarding the first set of conditions, the plan identified for each 
project the functional and performance capabilities to be delivered, 
mission benefits, life-cycle costs, and key milestones. For example, 
for the Federal Housing Administration Transformation's Portfolio 
Evaluation Tool project, the plan identified functional capabilities 
such as the ability to produce on-demand reports to assess financial 
impacts and risks. The plan also satisfied the second set of 
conditions by demonstrating that each project was in compliance with HUD
's enterprise architecture, was being managed in accordance with 
applicable life-cycle policies and guidance, conformed to capital 
planning and investment control requirements, and was supported by an 
adequately staffed project office. For instance, it included 
assessments demonstrating how projects conformed to requirements for 
planning and controlling investments. By satisfying these conditions, 
the plan should better inform the decision making of HUD's 
appropriations committees on current modernization projects. 

GAO made two observations regarding the fiscal year 2013 expenditure 
plan. First, the plan outlined IT management controls, but did not 
describe progress toward institutionalizing these controls. A federal 
agency's ability to successfully modernize its IT environment depends 
on implementing key controls for managing projects, which include 
enterprise architecture, project life-cycle management, and human 
capital planning. Further, establishing a means for evaluating 
progress in institutionalizing these controls can enable effective 
oversight. While the plan outlined management controls the department 
developed in 2010 and how they are to be used, it did not provide a 
means for evaluating progress by describing the extent to which the 
controls had been established or commit to time lines and activities 
needed to institutionalize them. Second, while the plan included 
details on individual projects, it did not describe HUD's overall 
approach for its modernization efforts. Effective modernization 
planning includes defining the scope of the effort, an implementation 
strategy, and a schedule, as well as establishing results-oriented 
goals and measures. For individual projects requesting fiscal year 
2013 funding, the plan included details regarding scope, strategy, and 
schedule. However, the plan lacked a similar discussion regarding the 
department's overall approach for modernization efforts. Specifically, 
the plan did not discuss the scope, implementation strategy, or 
schedule for HUD's modernization efforts or related projects beyond 
fiscal year 2013 funding. Further, the plan did not provide goals or 
measures for gauging the progress of the modernization efforts. 

HUD officials stated that they did not view the plan as a mechanism 
for evaluating progress; rather, they were focused on satisfying the 
statutory conditions and considered modernization priorities 
insignificantly changed. However, without a means to evaluate progress 
toward institutionalizing management controls and an articulated 
approach for its overall modernization efforts, the department may 
lack reasonable assurance that projects planned or under way will be 
completed successfully and its ability to effectively manage 
improvements to its current IT environment may be limited. 

What GAO Recommends: 

Given the importance of managing and modernizing HUD's IT environment, 
GAO is recommending that the Secretary of HUD direct the Chief 
Information Officer to (1) establish a means for evaluating progress 
toward institutionalizing management controls and (2) define its 
overall modernization approach to effectively oversee the efforts. In 
written comments on a draft of this report, HUD concurred with GAO's 
recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-14-283]. For more 
information, contact Valerie C. Melvin at (202) 512-6304 or 
melvinv@gao.gov. 

[End of section] 

Contents: 

Letter: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Briefing to Congressional Committees: 

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

Appendix III: GAO Contact and Staff Acknowledgments: 

Abbreviations: 

EA: enterprise architecture: 

FHA: Federal Housing Administration: 

HUD: Department of Housing and Urban Development: 

IT: information technology: 

OCIO: Office of the Chief Information Officer: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

February 12, 2014: 

The Honorable Patty Murray: 
Chairman: 
The Honorable Susan M. Collins: 
Ranking Member: 
Subcommittee on Transportation, Housing and Urban Development, and 
Related Agencies: 
Committee on Appropriations: 
United States Senate: 

The Honorable Tom Latham: 
Chairman: 
The Honorable Ed Pastor: 
Ranking Member: 
Subcommittee on Transportation, Housing and Urban Development, and 
Related Agencies: 
Committee on Appropriations: 
House of Representatives: 

The Department of Housing and Urban Development's (HUD) mission to 
create strong, sustainable, inclusive communities and quality, 
affordable homes for all has significantly evolved due to the economic 
and housing crisis. Legislation enacted over the past several years 
has given the department new responsibilities that have increased the 
need for greater system processing capabilities.[Footnote 1] 
Accordingly, in carrying out its mission, HUD has increased its 
reliance on information technology (IT). However, notwithstanding this 
heavy dependence on IT in administering community and housing 
programs, the department has reported that its systems are 
overlapping, duplicative, not integrated, necessitate manual 
workloads, and employ antiquated, costly-to-maintain technologies. 
Further, as we have previously reported, the department has long 
experienced shortcomings in its IT management capability.[Footnote 2] 

To address these challenges, in 2010 HUD began working to modernize 
and improve its IT environment and management capabilities. Toward 
this end, the department identified priority modernization efforts and 
used available funding to undertake associated projects aimed at 
replacing or modifying its infrastructure and systems.[Footnote 3] At 
the same time, the department began work to establish management 
controls in the areas of investment management, enterprise 
architecture (EA), strategic planning, life-cycle management, and 
human capital. 

In order to provide oversight and inform decision making, Congress set 
limitations on the funds made available for projects supporting HUD's 
modernization efforts. Specifically, through appropriations acts in 
fiscal years 2010 through 2013, the department was limited to 
obligating 25 to 35 percent of its IT modernization funding until the 
Secretary of HUD submitted to the Committees on Appropriations an 
expenditure plan that satisfied two sets of statutory conditions and 
was reviewed by GAO.[Footnote 4] To satisfy the first set of statutory 
conditions, the plan must identify for each project the functional and 
performance capabilities to be delivered, expected mission benefits, 
estimated life-cycle costs, and planned key milestones. For the second 
set of conditions, the plan must demonstrate that each project 
complies with the department's EA, is being managed in accordance with 
applicable life-cycle policies and guidance, conforms to capital 
planning and investment control requirements, and is supported by an 
adequately staffed project office. 

As we have previously reported,[Footnote 5] the department submitted 
expenditure plans for fiscal years 2010 and 2011 that satisfied the 
statutory conditions. For fiscal year 2012, the department reported 
that it did not obligate more than 25 percent of the appropriations 
made available to it for IT modernization and, thus, did not develop 
an expenditure plan. On August 15, 2013, HUD submitted its fiscal year 
2013 expenditure plan for IT development, modernization, and 
enhancement, which sought to obligate a total of $24.2 million for 16 
projects.[Footnote 6] 

Our objectives were to (1) determine whether HUD's fiscal year 2013 
expenditure plan met statutory conditions, and (2) provide any 
observations about the plan. On December 13, 2013, we provided your 
offices with briefing slides that outlined the results of our study. 
The purpose of this report is to provide the published briefing slides 
to you and to officially transmit our study results to the Secretary 
of Housing and Urban Development. The slides, which discuss our scope 
and methodology, are included in appendix I. 

We conducted this performance audit from August 2013 to February 2014 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

In summary, our review highlighted the following: 

* HUD's fiscal year 2013 expenditure plan satisfied the two sets of 
statutory conditions contained in the appropriations act.[Footnote 7] 
Specifically, for the first set of statutory conditions, the plan 
identified for each project the functional and performance 
capabilities to be delivered, expected mission benefits, estimated 
life-cycle costs, and planned key milestones. For example, with regard 
to the Federal Housing Administration Transformation's Portfolio 
Evaluation Tool project, the plan identified functional capabilities 
such as the ability to produce on-demand reports to assess financial 
impacts and risks. The plan also identified performance capabilities 
for this project, such as improving the processing time of current 
operations by 99.94 percent. 

For the second set of conditions, the plan demonstrated that each 
project was in compliance with the department's enterprise 
architecture, was being managed in accordance with applicable life-
cycle management policies and guidance, conformed to capital planning 
and investment control requirements, and was supported by an 
adequately staffed project office. For example, for the Next 
Generation Management System's Affordable Housing Life-cycle 
Information Center project, the plan included an assessment 
demonstrating the project's conformance with Office of Management and 
Budget and HUD requirements for planning and controlling investments. 

By satisfying these conditions, the plan should provide the 
department's appropriations committees with visibility into the 16 IT 
projects under way and, accordingly, help inform decisions related to 
the fiscal year 2013 funding requested. 

* We also made two observations about HUD's fiscal year 2013 
expenditure plan. 

First, the plan outlined IT management controls, but it did not 
describe progress toward institutionalizing these controls. A federal 
agency's ability to successfully modernize its IT environment depends 
on the implementation of key management controls embodied in statutory 
requirements, federal guidance, and best practices as repeatable 
processes. Further, establishing a means for committing to and 
evaluating progress in institutionalizing these controls can enable 
effective oversight. While HUD's plan outlined integrated management 
controls that the department developed in 2010 and discussed how the 
controls are used, it did not describe the extent to which controls 
had been established or commit to time lines for activities and next 
steps needed to fully implement and institutionalize the controls. For 
example, the plan described intended improvements to project 
management practices and included an associated time line for doing 
so; however, the time line was limited to activities intended to be 
accomplished prior to the August 2013 submission of the plan. Further, 
no information was provided in the plan regarding whether the outlined 
activities were completed or not. HUD officials, including the acting 
Chief Information Officer, stated that the department did not 
incorporate the status of institutionalizing the controls because they 
focused on satisfying the statutory conditions and did not view the 
plan as an oversight tool or mechanism for evaluating progress toward 
institutionalizing management controls. Until HUD establishes a means 
for evaluating progress toward institutionalizing management controls 
as repeatable processes and commits to time lines for activities and 
next steps, the department may lack reasonable assurance that 
modernization projects under way or planned will be completed 
successfully. 

Second, details on individual projects were included in the fiscal 
year 2013 plan, but an overall approach for modernization efforts was 
lacking. Effective modernization planning includes defining the scope 
of the effort, an implementation strategy, and a schedule, as well as 
establishing results-oriented goals and measures. For individual 
projects requesting fiscal year 2013 funding, the plan included 
details regarding their scope, strategy, and schedule. For instance, 
the plan noted that the HUD Enforcement Management System project is 
intended to integrate six disparate systems (scope) through the 
development of software modules (strategy) that will be implemented by 
August 2014 (schedule). Nonetheless, the plan did not discuss the 
department's overall approach (that is, scope, implementation 
strategy, or schedule) for completing its modernization priorities and 
related projects that may need funding beyond fiscal year 2013. For 
example, the plan stated that the Facilities Asset Management 
Enterprise System project requested partial funding in fiscal year 
2013 to enhance the legacy system and complete an alternative analysis 
for developing a new enterprise-wide system in the future. However, 
the plan did not state when additional funding would be needed for the 
new system or whether this project would be incorporated into the 
department's overall approach for modernizing its IT environment. 
Further, the plan did not include results-oriented goals or measures 
for gauging the progress of HUD's modernization efforts identified in 
prior expenditure plans. According to HUD officials, overall 
priorities for modernization have not significantly changed since the 
2011 plan, although new projects have been added that were different 
from those proposed and funded in prior years. Further, they stated 
that the department continues to be focused on simplifying its IT 
environment, reducing the costs of operating, and maintaining legacy 
costs. The officials acknowledged that the changes to the department's 
priorities and associated goals and measures were not included in the 
2013 plan, as was done in prior-year plans. Without articulating the 
scope, implementation strategy, and schedule for its overall approach 
to accomplishing modernization efforts, with related goals and 
measures for effective oversight, HUD's ability to effectively manage 
improvements to its current IT environment may be limited. 

Conclusions: 

HUD's fiscal year 2013 expenditure plan satisfied both sets of 
statutory conditions. As a result, the plan should provide HUD's 
appropriations committees with visibility into the 16 IT projects 
under way in order to inform decisions related to the fiscal year 2013 
funding requested. However, the plan is limited in its value as a tool 
for enabling effective oversight of the department's overall 
modernization effort. Specifically, while the department outlined IT 
management controls, the plan did not describe the extent to which 
progress toward establishing controls had been made or commit to time 
lines for activities and next steps needed to fully implement and 
institutionalize the controls. Further, while the plan discussed 
individual projects, it did not articulate the department's overall 
approach (including a defined scope, implementation strategy, or 
schedule) for completing the priority modernization efforts or provide 
related outcome-based goals and measures. Overall, the 2013 plan's 
deficiencies represent a step back from the department's previously 
submitted plans and limit its value as a tool for enabling effective 
oversight. 

Until HUD establishes a means for evaluating progress toward 
institutionalizing IT management controls and articulates an approach 
with related goals and measures for overseeing its overall 
modernization effort, the department may lack reasonable assurance 
that projects under way or planned will be completed successfully. In 
addition, its ability to effectively manage improvements to its 
current IT environment may be limited. 

Recommendations for Executive Action: 

To ensure effective management and modernization of HUD's IT 
environment, we recommend that the Secretary of Housing and Urban 
Development direct the department's Chief Information Officer to take 
the following two actions: 

* establish a means for evaluating progress toward institutionalizing 
management controls and commit to time lines for activities and next 
steps, and: 

* define the scope, implementation strategy, and schedule of its 
overall modernization approach, with related goals and measures for 
effectively overseeing the effort. 

Agency Comments: 

In written comments on a draft of this report (reprinted in appendix 
II), the department stated that it concurred with our recommendations 
and planned to provide a corrective action plan to address them. 

We are sending copies of this report to interested congressional 
committees. We are also sending copies to the Secretary of the 
Department of Housing and Urban Development and the Director of the 
Office of Management and Budget. In addition, the report is available 
at no charge on GAO's website at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions on matters discussed in this 
report, please contact me at (202) 512-6304 or melvinv@gao.gov. 
Contact points for our Offices of Congressional Relations and Public: 

Affairs may be found on the last page of this report. GAO staff who 
made significant contributions to this report are listed in appendix 
III. 

Signed by: 

Valerie C. Melvin: 
Director, Information Management and Technology Resources Issues: 

[End of section] 

Footnotes: 

[1] For example, the Housing and Economic Recovery Act of 2008, Pub. 
L. No. 110-289 § 2126, 122 Stat. 2654, 2840-41 (July 30, 2008). 

[2] GAO, Information Technology: HUD Needs to Improve Key Project 
Management Practices for Its Modernization Efforts, [hyperlink, 
http://www.gao.gov/products/GAO-13-455] (Washington, D.C.: June 12, 
2013); HUD Information Technology: More Work Remains to Implement 
Necessary Management Controls, [hyperlink, 
http://www.gao.gov/products/GAO-12-580T] (Washington, D.C.: Mar. 29, 
2012); Information Technology: HUD's Expenditure Plan Satisfies 
Statutory Conditions, and Implementation of Management Controls Is 
Under Way, [hyperlink, http://www.gao.gov/products/GAO-11-762] 
(Washington, D.C.: Sept. 7, 2011); Information Technology: HUD Needs 
to Better Define Commitments and Disclose Risks for Modernization 
Projects in Future Expenditure Plans, [hyperlink, 
http://www.gao.gov/products/GAO-11-72] (Washington, D.C.: Nov. 23, 
2010); and Information Technology: HUD Needs to Strengthen Its 
Capacity to Manage and Modernize Its Environment, [hyperlink, 
http://www.gao.gov/products/GAO-09-675] (Washington, D.C.: July 31, 
2009). 

[3] HUD identified seven priority modernization efforts in its fiscal 
year 2010 and 2011 expenditure plans: FHA Transformation, Homeless 
Emergency Assistance and Rapid Transition to Housing and eGrants 
Management Implementation, HUD Agency-Wide Place-Based Performance 
Management System, Human Resources End-to-End, HUD Integrated 
Acquisition Management System, New Core System, and Next Generation 
Management System. 

[4] The Consolidated Appropriations Act, 2010, Pub. L. No. 111-117 
(Dec. 16, 2009); Department of Defense and Full-Year Continuing 
Appropriations Act, 2011, Pub. L. No. 112-10, § 2259, 125 Stat. 38, 
197-98 (Apr. 15, 2011); Consolidated and Further Continuing 
Appropriations Act, 2012, Pub. L. No. 112-55 (Nov. 18, 2011); and 
Consolidated and Further Continuing Appropriations Act, 2013, Pub. L. 
No. 113-6 § 1101, 127 Stat. 198, 412-13 (Mar. 26, 2013). Pending the 
submission of an expenditure plan, the department was limited to 
obligating 25 percent of its modernization funding in fiscal year 
2010, 35 percent in fiscal year 2011, and 25 percent in fiscal years 
2012 and 2013. 

[5] GAO, Information Technology: HUD's Fiscal Year 2011 Expenditure 
Plan Satisfies Statutory Conditions, [hyperlink, 
http://www.gao.gov/products/GAO-12-654] (Washington, D.C.: May 24, 
2012), and [hyperlink, http://www.gao.gov/products/GAO-11-762]. 

[6] The projects are Development Application Processing, Facilities 
Asset Management Enterprise System, FHA Transformation's Lender 
Electronic Assessment Portal Loan Review System, FHA Transformation's 
Portfolio Evaluation Tool, HUD Enforcement Management System, 
Multifamily Delinquency & Default Reporting System, Legal Matter and 
Workload Management System, Next Generation Management System's 
Affordable Housing Data Architecture, Next Generation Management 
System's Affordable Housing Life-cycle Information Center, Next 
Generation Management System's Cash Management, Next Generation 
Management System's Integrated Budget Forecasting Model, Next 
Generation Management System's Portfolio and Risk Management Tool, New 
Core System, Physical Assessment Sub-System's Housing Choice Vouchers 
Physical Inspection Protocol, Physical Assessment Sub-System's Photo 
for Physical Inspections, and Tenant Rental Assistance Certification 
System Low Income Housing Tax Credit. 

[7] Pub. L. No. 113-6 § 1101, carrying forward the requirements of 
Pub. L. No. 112-55. 

Appendix I: Briefing to Congressional Committees: 

Information Technology: HUD's Fiscal Year 2013 Expenditure Plan 
Satisfied Statutory Conditions; Institutionalized Management Controls 
and Modernization Approach Needed: 

Briefing for Staff Members of the Subcommittees on Transportation, 
Housing and Urban Development, and Related Agencies: 

Senate and House Committees on Appropriations: 

December 13, 2013: 

Contents: 

Introduction; 
Objectives, Scope, and Methodology; 
Results in Brief; 
Background; 
Statutory Conditions; 
Observations; 
Conclusions; 
Recommendations for Executive Action; 
Agency Comments and Our Evaluation. 

[End of section] 

Introduction: 

The Department of Housing and Urban Development (HUD) relies 
extensively on information technology (IT) to support community and 
housing programs that involve the management of billions of dollars. 
While the role of IT is critical, the department has reported that its 
systems are overlapping, duplicative, not integrated, necessitate 
manual workloads, and employ antiquated, costly-to-maintain 
technologies. 

Since 2010, the department has been working to improve its IT 
environment and management capabilities. Specifically, with the use of 
modernization funding made available, the department has undertaken IT 
projects aimed at replacing or modifying its infrastructure and 
systems. Further, the department has been working to establish and 
implement certain management controls needed to help ensure that its 
efforts to modernize are successful. 

In order to facilitate oversight and inform decision making, Congress 
established limitations on funding for HUD's IT modernization projects 
through appropriations acts in fiscal years 2010 through 2013. 
[Footnote 1] Pursuant to these acts, before fully using available 
funds, the Secretary of HUD was required to submit to the Committees 
on Appropriations an expenditure plan that satisfied two sets of 
statutory conditions and was reviewed by GAO. 

Specifically, to satisfy the first set of conditions, the plan must 
identify for each project the functional and performance capabilities 
to be delivered, expected mission benefits, estimated life-cycle 
costs, and planned key milestones. For the second set of conditions, 
the plan must demonstrate that each project complies with the department
's enterprise architecture (EA), is being managed in accordance with 
applicable life-cycle policies and guidance, conforms to capital 
planning and investment control requirements, and is supported by an 
adequately staffed project office. 

As we have previously reported,[Footnote 2] the department submitted 
expenditure plans for fiscal years 2010 and 2011 that satisfied the 
statutory conditions. For fiscal year 2012, the department reported 
that it did not obligate more than 25 percent of the appropriations 
made available to it for IT modernization and thus did not develop an 
expenditure plan. For fiscal year 2013, HUD submitted an expenditure 
plan that sought to obligate $24.2 million across 16 modernization 
projects. 

Objectives, Scope, and Methodology: 

Our objectives for this review were to: 

* determine whether HUD's fiscal year 2013 expenditure plan meets 
statutory conditions and; 

* provide any observations about the plan. 

To accomplish the first objective, we analyzed the expenditure plan to 
determine whether it contained, for all 16 IT projects, information to 
address the two sets of statutory conditions as specified in the act. 
For both sets of conditions, we determined whether the expenditure 
plan satisfied or did not satisfy each condition. To have satisfied a 
given condition, the plan had to meet all elements of that condition. 
In making our determination, we limited our assessment to the contents 
of the plan and its supporting artifacts, because the act required 
that the plan itself contain information to address the statutory 
conditions. 

* For the first set of conditions, we reviewed the contents of the 
plan, including its supporting artifacts, to determine whether it 
identified, for each project, the functional and performance 
capabilities to be delivered, expected mission benefits, estimated 
life-cycle costs, and planned key milestones. To this end, we reviewed 
project summaries, charters, and associated artifacts to determine if 
the conditions were clearly addressed. Our review did not evaluate the 
extent to which the projects were achieving the established cost, 
schedule, and performance goals described in the plan. 

* For the second set of conditions, we evaluated the plan and 
supporting artifacts to determine whether it demonstrated, for each 
project, compliance with the department's EA, management in accordance 
with applicable life-cycle policies and guidance, conformance with 
capital planning and investment control requirements, and support by 
an adequately staffed project office. In particular, we reviewed EA 
assessments, life-cycle artifacts, capital planning meeting decisions, 
and staffing plans. Because HUD is working to establish and implement 
management controls, we evaluated these controls relative to the 
department's progress in implementing them. 

To accomplish the second objective, we developed observations about HUD'
s expenditure plan by analyzing the plan and comparing the details 
with relevant department-provided documentation on internal management 
controls, including previously submitted plans; prior GAO reports; and 
best practices. Specifically, we evaluated the contents of the plan to 
determine whether it included details regarding the status of 
implementing management controls and the department's overall 
direction to modernize its IT environment. Further, we interviewed 
relevant department and project officials to corroborate these 
observations. 

We determined that information provided by HUD, such as project 
charters and documentation of life-cycle control gate reviews, was 
sufficiently reliable for the purposes of our study. To arrive at this 
assessment, we conducted reliability testing by comparing key 
information across multiple documents to identify discrepancies, and 
by interviewing officials from the Office of the Chief Information 
Officer (OCIO). However, we did not test the quality of certain 
information, such as project cost estimates and key milestones. 

We conducted this performance audit from August 2013 to December 2013 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Results in Brief: 

HUD's fiscal year 2013 expenditure plan satisfied the two sets of 
statutory conditions contained in the appropriations act. The plan met 
these conditions by, for example, identifying expected mission 
benefits for each project included in the plan and demonstrating the 
projects' compliance with the department's enterprise architecture. By 
satisfying these conditions, the plan should better inform decision 
making by HUD's appropriations committees on current modernization 
projects. 

We have two observations about the fiscal year 2013 expenditure plan. 

First, the plan outlined IT management controls, but did not describe 
progress toward institutionalizing these controls. A federal agency's 
ability to modernize its existing IT environment greatly depends on 
the extent to which institutional management controls have been 
implemented as repeatable processes. Further, establishing a means for 
committing to and evaluating progress can enable effective oversight 
and accountability for management. HUD's plan outlined integrated 
management controls the department developed in 2010 and how the 
controls are used; however, it did not provide a means for evaluating 
progress by describing details regarding the extent to which controls 
had been established or commit to time lines for activities and next 
steps needed to fully implement and institutionalize the controls. For 
instance, improvements to project management practices were outlined 
with a time line, but were limited to activities intended to be 
accomplished prior to the August 2013 submission of the plan. No 
information was provided in the plan regarding whether the outlined 
activities were completed or not. 

Second, while the department included details on individual projects 
in the fiscal year 2013 plan, an overall approach for modernization 
efforts was lacking. Effective planning for modernization includes 
defining the scope, an implementation strategy, and a schedule, as 
well as establishing results-oriented goals and measures. For 
individual projects requesting fiscal year 2013 funding, the plan 
included details regarding their scope, strategy, and schedule, but 
lacked a similar discussion regarding the department's overall 
approach for priority modernization efforts or goals and measures to 
monitor progress. For example, the plan noted that the HUD Enforcement 
Management System project is intended to integrate six disparate 
systems (scope) through the development of software modules (strategy) 
that will be implemented by August 2014 (schedule). However, the plan 
did not discuss the department's scope, implementation strategy, or 
schedule for its modernization priorities or individual projects 
beyond fiscal year 2013 funding. For instance, it did not provide a 
strategy for 5 of the 16 individual projects that indicated future 
funding would be needed. Further, the plan did not provide goals or 
measures for gaging the progress for all of HUD's priority 
modernization efforts, as was discussed in prior plans. 

HUD officials, including the acting Chief Information Officer, 
acknowledged the 2013 plan did not describe the status of 
institutionalizing management controls or articulate the department's 
approach to modernization efforts. These officials stated that they 
did not view the plan as a mechanism for evaluating progress; rather, 
they were focused on satisfying the statutory conditions and 
considered modernization priorities insignificantly changed. 

Without a means to evaluate progress toward institutionalizing IT 
management controls and an articulated approach with related goals and 
measures for its overall modernization efforts, the department may 
lack reasonable assurance that projects planned or under way will be 
completed successfully, and its ability to effectively manage 
improvements to its current IT environment may be limited. 

Given the importance of managing and modernizing HUD's IT environment, 
we are recommending that the Secretary of HUD direct the Chief 
Information Officer to (1) establish a means for evaluating progress 
toward institutionalizing management controls and commit to time lines 
for activities and next steps, and (2) define the scope, 
implementation strategy, and schedule of its overall modernization 
approach with related goals and measures for effectively overseeing 
the effort. 

In commenting via e-mail on a draft of this briefing, HUD's Deputy 
Chief Information Officer for Customer Relationships and Performance 
Management stated that the department concurred with our 
recommendations and offered views on its intent to address them. 
Regarding the first recommendation, the official indicated that HUD 
intended to identify metrics and best practices for institutionalizing 
management controls. Further, while concurring with the second 
recommendation, the official commented that setting goals and plans 
for modernization efforts is contingent upon available funding. 

We support the department's interest in identifying metrics and best 
practices, and consider its intent to address our recommendation a 
step in that direction. Moreover, defining an overall approach for 
modernization efforts with associated goals and measures may increase 
the likelihood that, even when available funding is limited, 
improvements to the department's IT environment will be more 
effectively managed. Thus, we continue to emphasize the importance of 
HUD also implementing this second recommendation. 

In addition, HUD provided technical comments, which we incorporated as 
appropriate. 

Background: 

HUD's mission to create strong, sustainable, inclusive communities and 
quality, affordable homes for all has significantly evolved due to the 
economic and housing crisis. Legislation enacted over the past several 
years has given the department new responsibilities for, among other 
things, strengthening the housing market, which has increased the need 
for greater system processing capabilities. Accordingly, in carrying 
out its mission the department has increased its reliance on IT to 
support data collection and dissemination with internal and external 
stakeholders. 

IT plays a critical role in the ability of the department's business 
areas to perform functions such as providing housing and economic 
opportunities to low- and moderate-income people; regulating aspects 
of the housing industry and maintaining and expanding home ownership, 
rental housing, and health care opportunities; and guaranteeing 
investors' payments and interest by federally insured or guaranteed 
loans. In addition, supporting and administrative offices use IT to 
aid the business areas by providing key services for the quality and 
sustainment of mission areas. Supporting offices include, among 
others, the Office of Faith-Based and Neighborhood Partnerships and 
the Office of Healthy Homes and Lead Hazard Control, and 
administrative offices include the Office of the Chief Operating 
Officer and OCIO. 

A simplified view of the department's organizational structure is 
provided in figure 1. 

Figure 1: Simplified HUD Organizational Chart: 

[Refer to PDF for image: organizational chart] 

Top level: 
Secretary. 

Second level, reporting to Secretary: 
Deputy Secretary and Chief Operating Officer; 
* Chief Information Officer. 

Third level, reporting to Deputy Secretary and Chief Operating Officer: 
Public and Indian Housing; 
Fair Housing and Equal Opportunity; 
Community Planning and Development; 
Government National Mortgage Association; 
Housing. 

Source: GAO based on HUD data. 

[End of figure] 

Notwithstanding the heavy reliance on IT in administering community 
and housing programs, HUD has reported that its systems are 
overlapping, duplicative, not integrated, necessitate manual 
workloads, and employ antiquated, costly-to-maintain technologies. 
Further, as we and others have reported, the department has long 
experienced shortcomings in its IT management capability.[Footnote 3] 
For example, in a 2010 assessment HUD concluded that it lacked 
sufficient capability to execute basic management functions, which 
inhibited effective operations and the successful delivery of 
solutions.[Footnote 4] 

To address these challenges, in 2010 the department began to modernize 
and improve its IT environment. Toward this end, the OCIO and business 
areas identified seven priority modernization efforts aimed at 
transforming the department's infrastructure and systems.[Footnote 5] 
At the same time, OCIO began establishing management controls in the 
areas of investment management, EA, strategic planning, life-cycle 
management, and human capital. 

To facilitate oversight and inform decision making, Congress set 
limitations in the fiscal year 2010 through fiscal year 2013 
appropriations acts on the funds made available for projects 
supporting HUD's modernization efforts.[Footnote 6] Specifically, the 
department was limited to obligating 25 to 35 percent of its IT 
modernization funding until the Secretary submitted an expenditure 
plan that satisfied two sets of statutory conditions and was reviewed 
by GAO. These acts stated that the plan must meet the following two 
sets of conditions: 

(1) Identify for each project: 

* the functional and performance capabilities to be delivered, 

* expected mission benefits, 

* estimated life-cycle costs, and, 

* planned key milestones. 

(2) Demonstrate that each project: 

* is in compliance with the department's enterprise architecture, 

* is being managed in accordance with applicable life-cycle management 
policies and guidance, 

* conforms to capital planning and investment control requirements, 
and, 

* is supported by an adequately staffed project office. 

On August 15, 2013, HUD submitted its fiscal year 2013 expenditure 
plan for IT development, modernization, and enhancement, which seeks 
to obligate a total of $24.2 million for 16 projects. 

Table 1 summarizes the projects included in the plan and the 
associated requested funding. 

Table 1: Summary of Projects Contained in HUD's Fiscal Year 2013 IT 
Expenditure Plan, Submitted August 15, 2013: 

Project: Development Application Processing; 
Description: Enhance the legacy system by automating reporting 
functions designed to improve how the department tracks the 
distribution of lender risk for certain loans and by implementing 
codes for new mortgage insurance premium requirements; 
Fiscal year 2013 requested funds: $134,000. 

Project: Facilities Asset Management Enterprise System; 
Description: Conduct analysis to select a single enterprise solution 
that meets requirements for facilities asset management, such as 
personal property management, fleet management, real property 
management, and space management. Enhance the legacy system to meet 
immediate department needs until a new system is developed and 
implemented; 
Fiscal year 2013 requested funds: $693,606. 

Project: Federal Housing Administration Transformation: Lender 
Electronic Assessment Portal Loan Review System; 
Description: Reengineer business processes and capture detailed 
requirements designed to configure, test, and deploy capabilities 
which will support loan review processes; 
Fiscal year 2013 requested funds: $2,000,000. 

Project: Federal Housing Administration Transformation: Portfolio 
Evaluation Tool; 
Description: Implement a tool for web-based reporting and analytics 
capabilities, including self-service and ad hoc reporting of the 
mortgage portfolio; 
Fiscal year 2013 requested funds: $2,000,000 

Project: HUD Enforcement Management System; 
Description: Consolidate functionality from six disparate enforcement 
systems to provide cross-departmental reporting and data-sharing 
ability for the coordination of enforcement actions; 
Fiscal year 2013 requested funds: $3,169,000. 

Project: Multifamily Delinquency & Default Reporting System; 
Description: Enhance the existing system by providing a new online 
functionality for mortgage lenders/servicers to identify, designate, 
and report Federal Housing Administration-insured loans which may be 
delinquent and/or in default; 
Fiscal year 2013 requested funds: $22,094. 

Project: Legal Matter and Workload Management System; 
Description: Implement a software-as-a-service legal workload 
management platform designed to support staff in reviewing, 
processing, and documenting litigation, enforcement actions, 
legislative reviews, and budgetary actions in the Office of General 
Counsel; 
Fiscal year 2013 requested funds: $400,000. 

Project: Next Generation Management System: Affordable Housing Data 
Architecture; 
Description: Develop a data architecture foundation to enable the 
system to be extended to cover all public and affordable housing 
programs; 
Fiscal year 2013 requested funds: $680,000. 

Project: Next Generation Management System: Affordable Housing Life-
cycle Information Center; 
Description: Define initial requirements for future system development 
intended to replace the existing housing information center system; 
Fiscal year 2013 requested funds: $1,952,000. 

Project: Next Generation Management System: Cash Management; 
Description: Provide ad hoc analysis and reporting tools to support 
advancing funds to public housing authorities based on near real-time 
data, provide monthly budget reconciliations for the Housing Choice 
Voucher program, and establish an interface with the department's 
planned financial management system to disburse funds; 
Fiscal year 2013 requested funds: $688,000. 

Project: Next Generation Management System: Integrated Budget 
Forecasting Model; 
Description: Perform an analysis of the Section 8 contract funding 
process and recommend solutions for improving time lines and quality 
of services to public housing authorities and project owners; 
Fiscal year 2013 requested funds: $504,657. 

Project: Next Generation Management System: Portfolio and Risk 
Management Tool; 
Description: Aggregate information from different levels of analysis 
and across business areas to enable a single point of access for 
analysis of portfolio performance and risk; 
Fiscal year 2013 requested funds: $680,000. 

Project: New Core System; 
Description: Implement initial functionality for a consolidated 
enterprise financial system with a federal shared-service provider and 
replace legacy financial systems, including the department's 
centralized accounting and program system; 
Fiscal year 2013 requested funds: $8,883,017. 

Project: Physical Assessment Sub-System: Housing Choice Vouchers 
Physical Inspection Protocol; 
Description: Implement new business rules for inspection protocols and 
enhance the legacy system to support the recording and processing of 
inspection data; 
Fiscal year 2013 requested funds: $750,000. 

Project: Physical Assessment Sub-System: Photo for Physical 
Inspections; 
Description: Enhance the legacy system by adding functionality to 
support the digital capture and processing of photos from inspections 
as well as remote access for reviewing and reporting defects; 
Fiscal year 2013 requested funds: $1,200,000. 

Project: Tenant Rental Assistance Certification System Low Income 
Housing Tax Credit; 
Description: Enhance the existing system to meet statutory 
requirements for collecting tenant information established by the 
Housing and Economic Recovery Act of 2008 and close or reduce 
performance gaps in data collection for the low-income housing tax 
credit program; 
Fiscal year 2013 requested funds: $419,574. 

Total fiscal year 2013 requested funds: $24,175,948. 

Source: GAO analysis of HUD data. 

[End of table] 

In addition to our expenditure plan reviews, we have reported on the 
department's internal management controls. 

* In July 2009, we reported on the department's capacity to manage and 
modernize its IT environment and made recommendations aimed at 
addressing identified weaknesses.[Footnote 7] Since that time, HUD has 
taken actions and implemented our recommendations, resulting in the 
initial establishment of IT management controls, including EA and 
investment management. 

* In March 2012, we reported that HUD had made progress in addressing 
weaknesses by implementing management controls in the areas of 
strategic planning, investment management, human capital, and EA. 
[Footnote 8] At the same time, we noted that more actions were needed 
to help the department implement sound management controls and improve 
its IT management capabilities. For example, we reported that the 
department had developed a conceptual EA, but had not yet established 
a policy to guide architectural development, maintenance, and use. In 
response to our recommendation to develop a policy, the department 
reported in November 2013 that it had drafted a policy that is 
expected to be finalized by the end of the year. 

* In June 2013, we reported on HUD's project management and found that 
it had not yet fully implemented key practices.[Footnote 9] 
Specifically, while the department had established a project 
management framework, this framework had been inadequately applied. 
Accordingly, we made recommendations aimed at improving HUD's project 
management practices. In August 2013, the department provided a set of 
planned actions it expects to take toward addressing these 
recommendations by the end of June 2014. 

Statutory Conditions: 

HUD's Fiscal Year 2013 IT Expenditure Plan Satisfied Statutory 
Conditions: 

HUD's fiscal year 2013 expenditure plan satisfied the two sets of 
statutory conditions contained in the appropriations act. 

For the first set of statutory conditions, the plan identified for 
each project functional and performance capabilities to be delivered, 
expected mission benefits, estimated life-cycle costs, and planned key 
milestones. For example, for the FHA Transformation's Portfolio 
Evaluation Tool project, the plan identified functional capabilities 
such as the ability to produce on-demand reports to assess financial 
impacts and risks. For this project, the plan also identified 
performance capabilities such as improving the processing time of 
current operations by 99.94 percent. 

For the second set of conditions, the plan demonstrated that each 
project was in compliance with the department's enterprise 
architecture, was being managed in accordance with applicable life-
cycle management policies and guidance, conformed to capital planning 
and investment control requirements, and was supported by an 
adequately staffed project office. For example, the plan included for 
the Next Generation Management System's Affordable Housing Life-cycle 
Information Center project an assessment demonstrating its conformance 
with Office of Management and Budget and HUD requirements for 
selecting and controlling investments. 

By meeting these conditions, the plan should provide HUD's 
appropriations committees with visibility into the 16 IT projects 
under way in order to inform decisions related to fiscal year 2013 
funding requested. 

Tables 2 and 3 provide descriptions of the two sets of statutory 
conditions and our assessment of the department's plan against these 
conditions. 

Table 2: GAO Assessment of HUD's Expenditure Plan against the First 
Set of Statutory Conditions 

Description: Functional and performance capabilities: Information 
regarding system capabilities should be defined to a level that 
permits meaningful understanding of what the system is to do 
(functions) and how well the system is to perform these functions 
(performance). These capabilities should be defined to a level that 
permits meaningful understanding of what capabilities are to be 
delivered and measurement of progress in doing so; 
GAO assessment: Functional and performance capabilities to be 
delivered were identified for projects included in the expenditure 
plan. For example, for the FHA Transformation's Portfolio Evaluation 
Tool project, the plan identified functional capabilities such as the 
ability to produce on-demand reports to assess financial impacts and 
risks. For this project, the plan also identified performance 
capabilities such as improving processing time of current operations 
by 99.94 percent. Further, for the Legal Matter and Workload 
Management System project, the plan stated that one of the 
capabilities would be to allow Office of General Counsel management 
and staff to track attorney workload, as well as to document 
litigation, enforcement actions, legislative reviews, and budgetary 
actions. 

Description: Mission benefits: The benefits to accrue from a proposed 
system should be specific and measurable, and should be linked to 
specific capabilities; 
GAO assessment: The plan identified expected mission benefits to be 
realized for each project. For example, for the Next Generation 
Management System's Cash Management project, the plan specifically 
described measurable mission benefits, such as reducing the amount of 
excess housing assistance funds disbursed to less than 3 percent of 
total disbursements. Also, for the HUD Enforcement Management System 
project, the plan identified specific and measurable benefits, such as 
reducing the time required to build a joint case file by 30 percent. 
The plan also linked mission benefits to organizational reporting and 
data-sharing capabilities. Additionally, the plan identified how the 
mission benefits for each of the projects aligned with HUD's strategic 
plan. For example, the plan described how the Development Application 
Processing project supports the department's goals for risk 
management, fraud protection, and more efficient automated processes. 

Description: Life-cycle costs: A project's life-cycle cost estimate 
should include all direct and indirect costs associated with planning,
designing, developing, procuring, deploying, operating and 
maintaining, and disposing of the system. Estimates should include 
enough detail to understand and measure funds for major project work 
activities and deliverables; 
GAO assessment: Estimated costs for each project were identified in 
the plan. For example, for the HUD Enforcement Management System 
project, the plan identified estimated costs of about $3 million 
associated with planning, design, and development activities, as well 
as costs associated with operating and maintaining the system in 
future years. Further, the plan provided costs for the New Core System 
project that included details on the project work activities and 
deliverables. 

Description: Key Milestones: Project milestones should be tied to the
capabilities to be delivered and should permit progress to be
measured; 
GAO assessment: The plan identified planned key milestones for each 
project. For example, for the Next Generation Management System's 
Affordable Housing Data Architecture project, the plan stated that 
requirements for the data models intended to support the department's 
affordable housing programs would be defined by April 2014. Further, 
for the Next Generation Management System's Integrated Budget 
Forecasting Model project, the plan described forecasting and 
dashboard reporting capabilities to be implemented by August 2014. 

Source: GAO analysis of HUD data. 

[End of table] 

Table 3: GAO Assessment of HUD's Expenditure Plan against the Second 
Set of Statutory Conditions 

Description: Enterprise architecture: An organization's IT investments 
should comply with an EA. Approved EA artifacts and products should 
include information regarding an organization's IT projects and how 
those projects are categorized and aligned relative to segments within 
the EA; 
GAO assessment: The department demonstrated how the projects included 
within the expenditure plan were categorized and aligned to segments 
(e.g., human resource management and subsidies management) of the 
department's EA. For example, the plan demonstrated that Next 
Generation Management System's Portfolio and Risk Management Tool 
project was aligned to the subsidies management segment. In addition, 
the plan demonstrated alignment of the two Physical Assessment Sub-
System projects—Housing Choice Vouchers Physical Inspection Protocol 
and Photo for Physical Inspection—with the controls and oversight 
segments of the EA. The department also provided EA compliance 
checklists that further demonstrated alignment for the projects, as 
applicable. 

Description: Capital planning and investment control: An 
organization's performance can be dramatically impacted by effective 
management of its IT investments. Effective management includes 
reviewing IT projects to ensure that they conform to the Office of 
Management and Budget's requirements for selecting and controlling 
investments. Additionally, organizations should establish their own 
capital planning and investment control requirements; 
GAO assessment: The expenditure plan demonstrated conformance with the 
department's capital planning and investment control requirements for 
each project. For example, the plan included for the Next Generation 
Management System's Affordable Housing Life-cycle Information Center 
project an assessment demonstrating its conformance with Office of 
Management and Budget and HUD requirements for selecting and 
controlling investments. Similarly, for the Facilities Asset 
Management Enterprise System project, the plan included a description 
of how it conformed to investment control requirements. The plan also 
described the fiscal year 2013 IT budget decision criteria and capital 
planning requirements. 

Description: Life-cycle management: Following a life-cycle management 
process in which key activities and phases of a project are conducted 
in a logical and disciplined manner helps ensure that IT modernization 
projects achieve intended goals within established cost and risk 
levels; 
GAO assessment: HUD's plan demonstrated how each project was managed 
in accordance with life-cycle management processes—-specifically, the 
department's project management framework. For example, the plan 
included the specific artifacts for the New Core System project 
related to its life cycle, such as a project charter and risk 
management plan. Additionally, the plan described how the FHA 
Transformation's Lender Electronic Assessment Portal Loan Review 
System project followed a logical and disciplined process using the 
project management framework. The plan also described improvements to 
the project management framework. 

Description: Staffed project office: Having adequate project staff is 
essential to a successful systems modernization project. Understanding 
the gaps in staffing resources and identifying qualifications of key 
staff are critical in determining whether or not sufficient staffing 
resources exist to achieve the desired project outcomes; 
GAO assessment: The expenditure plan demonstrated how each project was 
supported by an adequately staffed project office by providing a list 
of team members and their respective roles. For example, for the 
Tenant Rental Assistance Certification System Low Income Housing Tax 
Credit project, the plan provided a list of all key staff positions, 
including project managers. Similarly, for the Next Generation 
Management System's Integrated Budget Forecasting Model project, the 
plan included a list of staff resources and provided evidence of the 
qualifications for key staff, such as project management certification. 

Source: GAO analysis of HUD data. 

[End of table] 

Observations: 

The Plan Outlined Management Controls and Detailed Individual Projects 
but Did Not Describe Progress toward Institutionalizing the Controls 
or an Overall Approach for Modernization Efforts: 

Beyond its satisfaction of the statutory conditions outlined in the 
appropriations act, we have two observations about HUD's fiscal year 
2013 expenditure plan. 

* The plan outlined IT management controls, but it did not describe 
progress toward institutionalizing these controls. 

* Details on individual projects were included in the plan, but an 
overall approach for modernization efforts was lacking. 

Observation 1: The Fiscal Year 2013 Plan Outlined IT Management 
Controls, but It Did Not Describe Progress toward Institutionalizing 
These Controls: 

A federal agency's ability to effectively and efficiently modernize 
its existing environment depends greatly on how well it employs 
certain IT management controls that are embodied in statutory 
requirements, federal guidance, and best practices.[Footnote 10] 
Establishing a means, such as an expenditure plan, for evaluating 
progress toward institutionalizing management controls enables 
effective oversight and demonstrates management commitments. 
Sufficiently institutionalizing these controls as repeatable processes 
increases the reasonable assurance that modernization efforts will be 
successfully completed. 

Over the past 4 years, HUD has made progress in establishing and 
implementing management controls, but as we have previously reported, 
work remains to fully institutionalize them.[Footnote 11] The fiscal 
year 2013 expenditure plan summarized management controls including 
EA, life-cycle management, and human capital. 

Specifically, the plan outlined integrated management controls the 
department established in 2010 and how the controls are to be used. 
For example, the plan stated that the department's target EA is to 
serve as a guide for developing IT solutions and budget decision 
making. 

However, the 2013 plan did not describe what progress had been made 
toward establishing controls or commit to time lines for activities 
and next steps needed to fully implement and institutionalize the 
controls. 

* For example, the plan stated that a process to develop a methodology 
for standardizing life-cycle cost estimates throughout the department 
would be started, but it did not include information on what specific 
steps would be taken or define a time line for implementing the 
methodology. 

* Similarly, the plan stated that policies for functions such as 
performance and risk management were under development, but it did not 
disclose a time line for finalizing these policies. 

* Further, the plan described intended improvements to project 
management practices and provided an associated time line for doing 
so. However, this time line was limited to activities intended to be 
accomplished prior to the submission of the expenditure plan in August 
2013, and there was no indication if the planned activities were 
completed. 

Moreover, the plan did not indicate whether activities and next steps 
related to implementing management controls identified in prior plans 
had been completed, which would enable oversight in monitoring 
progress. Specifically, while the 2010 and 2011 plans included next 
steps for implementing certain controls such as EA and project 
management practices, the 2013 plan did not build upon these steps or 
describe follow-on activities for the continuation of commitments made 
to fully implement management controls. For example, the 2010 plan 
described efforts to develop a target EA, and the 2011 plan followed 
up with a time line to establish associated architecture segments. 
However, the 2013 plan did not describe the status of establishing the 
architecture segments or what next steps were needed to fully 
transition the department's systems and infrastructure to the target 
EA. 

In addition, the 2013 plan's discussion on cost estimating was limited 
to the development of a methodology and did not indicate whether 
progress had been made toward establishing tools and guidelines as 
mentioned in the 2011 plan. Likewise, the 2013 plan briefly noted that 
policies were under development; however, it did not indicate if 
associated procedures, standards, or guidance would also be developed 
as called for in the 2011 plan. 

HUD officials, including the acting Chief Information Officer, 
acknowledged that while activities to implement management controls 
remain under way, the department did not incorporate the status of 
institutionalizing the controls because they focused on satisfying the 
statutory conditions and did not view the plan as an oversight tool or 
mechanism for evaluating progress toward institutionalizing management 
controls. 

Until HUD establishes a means for evaluating progress toward 
institutionalizing management controls as repeatable processes and 
commits to time lines for activities and next steps, the department 
may lack reasonable assurance that modernization projects under way or 
planned will be completed successfully. 

Observation 2: Details on Individual Projects Were Included in the 
Fiscal Year 2013 Plan, but an Overall Approach for Modernization 
Efforts Was Lacking: 

Our experience with major modernization efforts has shown that having 
sound management for planning, oversight, and reporting progress is 
essential to achieving successful outcomes. Effective planning 
includes defining the scope of the effort, an implementation strategy, 
and a schedule. Furthermore, as we have previously reported, 
establishing results-oriented (i.e., objective, quantifiable, and 
measurable) goals and measures provides the information needed to 
effectively manage and oversee large modernization efforts.[Footnote 
12] 

HUD's plan included details on the scope, implementation strategy, and 
schedule for individual projects requesting fiscal year 2013 funding, 
but lacked a similar discussion regarding the department's overall 
approach for priority modernization efforts aimed at improving its IT 
environment; the plan also did not discuss goals and measures for 
effectively managing and overseeing the overall modernization effort. 

For example, according to the plan, the intent of one individual 
project—-the HUD Enforcement Management System[Footnote 13]-—is to 
integrate six systems (scope) by developing software modules 
(strategy) that are expected to be implemented by August 2014 
(schedule). 

Further, the plan described the status of individual projects 
associated with three of the department's seven priority modernization 
efforts.[Footnote 14] For instance, it stated that the Portfolio 
Evaluation Tool project associated with the FHA Transformation 
priority modernization effort is intended to implement functionality 
to address single family housing requirements for credit risk models 
(scope) that builds upon developing tools for managing risks 
associated with the department's mortgage portfolios (strategy) and is 
expected to be implemented by March 2015 (schedule). 

However, the 2013 plan did not articulate the department's overall 
approach to completing the seven priority modernization efforts and 
related projects. Specifically, the plan did not include the scope, 
implementation strategy, and schedule for completing the priority 
modernization efforts aimed at transforming the department's 
infrastructure and systems or specify how unrelated individual 
projects—-such as the HUD Enforcement Management System project-—would 
ultimately be incorporated into the department's overall modernization 
approach. 

With regard to scope, although the plan discussed projects related to 
three of the seven priority modernization efforts, it did not discuss 
the scope of the remaining four.[Footnote 15] Specifically, the plan 
did not state whether the department intends to continue its focus on 
the seven priority efforts or if new priorities would be established. 

Further, the plan discussed individual projects unrelated to the seven 
priority efforts. For example, 8 of the 16 individual projects 
included in the 2013 plan were associated with the department's 
priority modernization efforts, while the other 8 individual projects 
were unrelated. Additionally, of the unrelated projects, 6 requested 
funding for changes to legacy systems and, according to the plan, were 
not expected to result in modernizing the department's IT 
environment.[Footnote 16] 

The plan also did not include a discussion of the department's overall 
implementation strategy to guide modernization efforts that may need 
additional funding beyond what was requested in fiscal year 2013. In 
particular, the plan stated that future funding will be needed for 5 
of the 16 individual projects,[Footnote 17] but it did not disclose 
when the department expected to request funding for these projects or 
clarify how it would continue to pursue funding for the priority 
modernization efforts identified in prior plans. 

For instance, the plan stated that the Facilities Asset Management 
Enterprise System project requested partial funding in fiscal year 
2013 to enhance the legacy system and complete an alternative analysis 
for developing a new enterprise-wide system in the future. However, 
the plan did not state when additional funding is expected to be 
needed for the new system or whether this project would be 
incorporated into the department's overall approach for modernizing 
its IT environment. 

Moreover, the plan did not include a schedule for completing the 
priority modernization efforts or pursuing other unrelated individual 
projects in the future. Specifically, as we previously mentioned, 
three of HUD's priority modernization efforts were discussed in the 
plan, but a schedule for fully implementing these or the other 
remaining efforts was not included. For example, the plan indicated 
that initial deployment for a priority modernization effort—HUD's 
Integrated Acquisition Management System—was funded with 2010 monies 
during fiscal years 2010 through 2012. However, the plan did not 
indicate when this system is expected to be fully operational and 
integrated with HUD's financial systems.[Footnote 18] 

In addition, the plan did not include results-oriented (i.e., 
objective, quantifiable, and measurable) goals or measures that would 
enable effective oversight and monitoring of projects associated with 
modernization efforts intended to address long-standing challenges 
with the department's IT environment. Specifically, while the plan 
identified mission benefits for individual projects, it did not 
include goals or measures that could be used to gage overall progress 
toward accomplishing the priority modernization efforts or future 
unrelated individual projects, such as implementing a new enterprise-
wide system for the Facilities Asset Management Enterprise System. 

According to HUD officials, including the acting Chief Information 
Officer, the department's overall priorities for modernization have 
not significantly changed since the 2011 plan, although new projects 
have been added that were different from those proposed and funded in 
prior years. Further, they stated that the department continues to be 
focused on simplifying its IT environment, reducing the costs of 
operating, and maintaining legacy costs. The officials acknowledged 
that the changes to the department's priorities and associated goals 
and measures were not included in the 2013 plan, as was done in prior-
year plans. 

Without articulating the scope, implementation strategy, and schedule 
for its overall approach to accomplishing modernization efforts, with 
related goals and measures for effective oversight, HUD's ability to 
effectively manage improvements to its current IT environment may be 
limited. 

Conclusions: 

HUD's fiscal year 2013 expenditure plan satisfied both sets of 
statutory conditions. As a result, the plan should provide HUD's 
appropriations committees with visibility into the 16 IT projects 
under way in order to inform decisions related to fiscal year 2013 
funding requested. 

However, while the department outlined IT management controls, the 
plan did not describe the extent to which progress toward establishing 
controls had been made or commit to time lines for activities and next 
steps needed to fully implement and institutionalize the controls. 
Further, while the plan discussed individual projects, it did not 
articulate the department's overall approach (including a defined 
scope, implementation strategy, or schedule) for completing the 
priority modernization efforts or provide related outcome-based goals 
and measures. Overall, the 2013 plan's deficiencies represent a step 
back from the department's previously submitted plans and limit its 
value as a tool for enabling effective oversight. 

Until HUD establishes a means for evaluating progress toward 
institutionalizing IT management controls and articulates an approach 
with related goals and measures for overseeing its overall 
modernization effort, the department may lack reasonable assurance 
that projects under way or planned will be completed successfully, and 
its ability to effectively manage improvements to its current IT 
environment may be limited. 

Recommendations for Executive Action: 

To ensure effective management and modernization of HUD's IT 
environment, we recommend that the Secretary of Housing and Urban 
Development direct the department's Chief Information Officer to: 

* establish a means for evaluating progress toward institutionalizing 
management controls and commit to time lines for activities and next 
steps, and; 

* define the scope, implementation strategy, and schedule of its 
overall modernization approach, with related goals and measures for 
effectively overseeing the effort. 

Agency Comments and Our Evaluation: 

HUD's Deputy Chief Information Officer for Customer Relationships and 
Performance Management provided comments via e-mail on a draft of this 
briefing. In those comments, the official expressed appreciation for 
our determining that HUD's expenditure plan met the two sets of 
statutory conditions. In addition, the official stated that the 
department concurred with our recommendations and offered views on its 
intent to address them. Regarding the first recommendation on 
institutionalizing management controls, the official indicated that 
the department intended to identify metrics and best practices. 
Concerning the second recommendation, the official commented that 
setting goals and plans is contingent upon available funding, which 
drives the department's modernization efforts. 

We support the department's interest in identifying metrics and best 
practices for institutionalizing management controls, and consider its 
intent to address our recommendation a step in that direction. 
Furthermore, while we acknowledge that modernization efforts may be 
limited by available funding, we maintain our position that defining 
an overall approach with associated goals and measures may increase 
the likelihood that, even when available funding is limited, 
improvements to the department's IT environment will be more 
effectively managed. 

The department also provided technical comments, which we incorporated 
as appropriate. 

[End of section] 

Briefing Slides Footnotes: 

[1] The Consolidated Appropriations Act, 2010, Pub. L. No. 111-117 
(Dec. 16, 2009); Department of Defense and Full-Year Continuing 
Appropriations Act, 2011, Pub. L. No. 112-10, § 2259, 125 Stat. 38, 
197-98 (Apr. 15, 2011); Consolidated and Further Continuing 
Appropriations Act, 2012, Pub. L. No. 112-55 (Nov. 18, 2011); and 
Consolidated and Further Continuing Appropriations Act, 2013, Pub. 
L. No. 113-6 § 1101, 127 Stat. 198, 412-13 (Mar. 26, 2013). Pending 
the submission of an expenditure plan, the department was limited to 
obligating its fiscal year modernization funding to 25 percent in 
2010, 35 percent in 2011, and 25 percent in 2012 and 2013. 

[2] GAO, Information Technology: HUD's Fiscal Year 2011 Expenditure 
Plan Satisfies Statutory Conditions, [hyperlink, 
http://www.gao.gov/products/GAO-12-654] (Washington, D.C.: May 24, 
2012), and Information Technology: HUD's Expenditure Plan Satisfies 
Statutory Conditions, and Implementation of Management Controls Is 
Under Way, [hyperlink, http://www.gao.gov/products/GAO-11-762] 
(Washington, D.C.: Sept. 7, 2011). 

[3] GAO, Information Technology: HUD Needs to Improve Key Project 
Management Practices for Its Modernization Efforts, [hyperlink, 
http://www.gao.gov/products/GAO-13-455] (Washington, D.C.: June 12, 
2013). 

[4] HUD, U.S. Department of Housing and Urban Development: IT Current 
State Assessment (January 2011). 

[5] HUD's seven priority modernization efforts were identified and 
outlined in the fiscal year 2010 and 2011 plans. These efforts are FHA 
Transformation, Homeless Emergency Assistance and Rapid Transition to 
Housing and eGrants Management Implementation, HUD Agency-Wide Place-
Based Performance Management System, Human Resources End-to-End, HUD 
Integrated Acquisition Management System, New Core System, and Next 
Generation Management System. 

[6] Our reviews of the department's expenditure plans for fiscal years 
2010 and 2011 found that the plans satisfied the statutory conditions; 
see [hyperlink, http://www.gao.gov/products/GAO-12-654] and 
[hyperlink, http://www.gao.gov/products/GAO-11-762]. For fiscal year 
2012, the department reported that it did not obligate more than 25 
percent of the appropriations made available to it for IT 
modernization and thus did not develop an expenditure plan. 

[7] GAO, Information Technology: HUD Needs to Strengthen Its Capacity 
to Manage and Modernize Its Environment, [hyperlink, 
http://www.gao.gov/products/GAO-09-675] (Washington, D.C.: July 31, 
2009). 

[8] GAO, HUD Information Technology: More Work Remains to Implement 
Necessary Management Controls, [hyperlink, 
http://www.gao.gov/products/GAO-12-580T] (Washington, D.C.: Mar. 29, 
2012). 

[9] [hyperlink, http://www.gao.gov/products/GAO-13-455]. 

[10] 40 U.S.C. §§ 11303, 11312, 11313, 11315; OMB, Management of 
Federal Information Resources, Circular A-130 (Washington, D.C. Nov. 
28, 2000); GAO, Organizational Transformation: A Framework for 
Assessing and Improving Enterprise Architecture Management (Version 
2.0), [hyperlink, http://www.gao.gov/products/GAO-10-846G] 
(Washington, D.C.: August 2010), and Information Technology Investment 
Management: A Framework for Assessing and Improving Process Maturity, 
[hyperlink, http://www.gao.gov/products/GAO-04-394G] (Washington, 
D.C.: March 2004). 

[11] [hyperlink, http://www.gao.gov/products/GAO-13-455], [hyperlink, 
http://www.gao.gov/products/GAO-12-654], [hyperlink, 
http://www.gao.gov/products/GAO-12-580T], and [hyperlink, 
http://www.gao.gov/products/GAO-11-762]. 

[12] See, 40 U.S.C. §§ 11303, 11313; 5 U.S.C. § 306; 31 U.S.C. §§ 
1115, 1116; GAO, OPM Retirement Modernization: Progress Has Been 
Hindered by Longstanding Information Technology Management Weaknesses, 
[hyperlink, http://www.gao.gov/products/GAO-12-430T] (Washington, 
D.C.: Feb. 1, 2012), and [hyperlink, 
http://www.gao.gov/products/GAO-09-529]. 

[13] This project is not associated with HUD's seven priority 
modernization efforts. 

[14] The three priority modernization efforts are FHA Transformation, 
New Core System, and Next Generation Management System. 

[15] These priority modernization efforts are Homeless Emergency 
Assistance and Rapid Transition to Housing and eGrants Management 
Implementation, HUD Agency-Wide Place-Based Performance Management 
System, Human Resources End-to-End, and HUD Integrated Acquisition 
Management System. 

[16] These individual projects are Development Application Processing, 
Facilities Asset Management Enterprise System, Multifamily Delinquency 
& Default Reporting System, Tenant Rental Assistance Certification Low 
Income Housing Tax Credit, and two Physical Assessment Sub-System 
projects: Housing Choice Vouchers Physical Inspection Protocol and 
Photo for Physical Inspections. 

[17] The 2013 plan indicates that FHA Transformation's Loan Review 
System, Facilities Asset Management Enterprise System, New Core 
System, and the Next Generation Management System's Integrated Budget 
Forecasting Model and Affordable Housing Life-cycle Information Center 
projects will need additional funding. 

[18] In November 2013, HUD officials, including the Deputy Secretary 
and the acting Chief Information Officer, stated that the department 
may terminate the Integrated Acquisition Management System and acquire 
the same functionality this system was intended to provide as part of 
the New Core System modernization effort. However, the department has 
not yet communicated these potential plans as part of an overall 
modernization approach. 

[End of section] 

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

U.S. Department of Housing and Urban Development: 
Chief Information Officer: 
Washington, DC 20410-3000: 

February 4, 2014: 

Ms. Valerie C. Melvin: 
Director, Information Management and Technology Resources Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Melvin: 

The U.S. Department of Housing and Urban Development has reviewed the 
draft report entitled Information Technology: HUD's Expenditure Plan 
Satisfied Statutory Conditions; Sustained Controls and Modernization 
Approach Needed (GAO-14-283), January 2014. 

Thank you for the opportunity to respond to the GAO draft report. We 
concur with the recommendations and have no comments on the draft 
report. When the final report is released, the Department will provide 
a corrective action plan to address the recommendations for executive
action. 

If you have questions or require additional information, please 
contact Joyce M. Little, Chief, Audit Compliance Branch, at (202) 402-
7404 or Juanita L. Toatley, Audit Liaison, Audit Compliance Branch, at 
(202) 402-3555. 

Sincerely, 

Signed by: 

Kevin R. Cooke, Jr. 
Acting Chief Information Officer: 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Valerie C. Melvin at (202) 512-6304 or melvinv@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Mark T. Bird (Assistant 
Director), Teresa M. Yost (Assistant Director), Donald A. Baca, Kami 
J. Corbett, Amanda C. Gill, and Lee A. McCracken made key 
contributions to this report. 

[End of section] 

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