Single-Family Housing: Improvements Needed in HUD's Oversight of Property Management Contractors
RCED-98-65
Published: Mar 27, 1998. Publicly Released: Apr 01, 1998.
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Highlights
Pursuant to a congressional request, GAO reviewed: (1) whether the Department of Housing and Urban Development (HUD) is ensuring that real estate asset management contractors meet their contractual obligations; and (2) what actions HUD has planned or under way to change its handling and disposition of the single-family properties in inventory.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Housing and Urban Development | So long as contractors are involved in providing asset management services for properties in HUD's single-family inventory, the Secretary of Housing and Urban Development should establish a process for monitoring the administration of such contracts at field offices and homeownership centers. This process should include controls sufficient to ensure that these field locations consistently implement HUD's guidance and effectively oversee contractors' performance. Specifically, these controls should require that: (1) field locations complete performance evaluations of contractors (using the standard monitoring guide in HUD's Property Disposition Handbook) prior to renewing contracts and communicate the results of these evaluations to the contractors in writing in a timely manner; (2) field location program offices maintain files on contractors' performance; (3) HUD staff or contractors hired to perform monitoring duties conduct monthly on-site inspections of a sample of properties in inventory; (4) contracts contain clear and consistent requirements on when contractors' routine inspection reports must be submitted to HUD for review; (5) HUD staff ensure that real estate asset management contractors notify HUD of deteriorated or hazardous conditions at custodial properties; and (6) HUD headquarters obtain sufficient information to monitor homeownership centers' and field offices' administration of the contracts. |
Closed – Implemented
In response to the widespread problems with the maintenance of single-family properties in its inventory that GAO and the HUD Office of Inspector General identified, HUD began contracting out the management and marketing of its single family properties in March 1999. The contractors are responsible for inspecting, appraising, securing, maintaining, and selling the properties. HUD also established a new system for monitoring the performance of the management and marketing contractors. Under the system, staff in HUD's Homeownership Centers are responsible for managing and conducting the monitoring process and preparing monthly reports on contractors' performance. Among other things, the system requires that the physical condition of 10 percent of all properties in the inventory be inspected on a monthly basis; 10 percent of contractor case files be audited on a monthly basis; contractor assessment reports be prepared for each contract area, and monthly performance reviews be held with contractors to assess critical performance measures, identify deficiencies and direct corrective actions. Such actions are consistent with the recommendation and have increased HUD's ability to detect problems with contractor performance. However, in a subsequent report, Single Family Housing: Stronger Measures Needed to Encourage Better Performance By Management and Marketing Contractors (GAO/RCED-00-117), GAO noted that improvements are needed in the mix of incentives and penalties HUD uses to ensure that contractors comply with contract requirements.
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Contract administrationContract performanceFederal agency reorganizationFederal property managementHousing programsMortgage programsPrivatizationProperty disposalReductions in forceBuilding inspection