oversight

Department of Housing and Urban Development Could Be Streamlined

Published by the Government Accountability Office on 1977-06-16.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            DOCUMENT RESUME
 02520 -   A1752781]
 Department of   ousing and Urban Development Could Be
 Streamlined. FPCD-77-56; 9-114860. June
 20, 1977. 23 pp. + 9 appendices (23 pp.).16, 1977. Released June

 Report to Sen. Henry Bellmon; by Elmer BD.
 General.                                   Staats, Comptroller

 Issue Area: Personnel Management and Compensation
 Contact: Federal Personnel and Compensation        (3C0).
                                             Div.
 Budget Function: Community and Regional Development:
     Development (451).                                Cnmmunlty
 organization Concerned: Department of Housing
                                               and Urban
     Developmenit.
 Congressional "ilevance Sen. Renry Bellon.

           Streamlining the Department of Housing &nd
 Developmentfs (HUD's) organization through               Urban
 offices and realining selected regional       consolidating    field
                                          and field office
 functions could improve its delivery of
 at reduced costs. Findings/Conclusions: services to the public
 organization could improve services to theStreamlining HUD's
                                              public and save money
 by reducing the resources needed to provide
 would also reduce the potential for duplicatethe services. It
 fragmented authority and responsihbility         'crk and
                                          which   have been problems
 in the past. This streamlining can be accomplished
 the number of field offices and requiring              by reducing
                                             field
 regional offices to operate selected dissimilar    offices   an
                                                     programs, with
 both reporting to the central office, or
offices to operate all programs now being  by requiring field
regional offices. Recommendations: Congress done by both field and
                                                 should request the
Secretary of HUD to submit to appropriate
                                            committees
reorganization plan resulting from the Department's the
organizational assessment before implementing
plan should explain in detail the changes,        the plans. The
                                              and
the following issues: cost benefits anticipated it should address
                                                    from the plannel
reorganization; improvement in program responsiveness
result; changes in staffing requirements                   that will
                                          forecast
reasonable period subsequent to the reorganization;   for  a
impact on organizational patterns, roles,                and the
                                            and authorities of
regional and field offices. (Author/SC)
          RESTRICTED - Not to be rleased outside the @emeoa
          Account.ng Office except on the basis of    appreva
                                                   1spcNif
          by the Office of ConIresNl ilRelaton ,.-


REPORT OF THE
COMPTROLLER GENERAL
OF THE UNITED STATES



Departmen Of Housing
And Urban Development
Could Be Streamlined
Regional offices of the Department of Hous-
ing and Urban Development provide essential
services. Yet, streamlining the Department's
organization through consolidating field of-
fices and realining selected regional and field
office functions can improve its delivery of
services to the public at reduced costs.




FPCD-7756                                         JUNE 16, 1977
                COMPTROLLER GENERAL OF THE UNITED
                                                  STATES
                           WASINGON, D.C.   0411




 B-114860




The Honorable Henry Bellmon
United Sates Senate

Dear Senator Bellmon:

     This report describes (1) the role of regional offices
in the organizational structure of the Departmen'-
                                                   of Housing
and Urban Development and (2) the opportunity to improve
efficiencies and serviceability through streamlining
nization. Particular emphasis was directed toward     the orga-
                                                    past and
present organizational studies conducted by a special
est group, the Congress, a private consultant, and      inter-
ment staff.                                         the  Depart-

     Our review was made pursuant to your request of August
1976, and subseguent discussions with                        2,
                                       your office. As re-
quested by your office, we did not obtain formal comments
from he Department. However, the results of our
discussed with various agency personnel, including review were
                                                    members of
an ad hoc departmental organization assessment group.
comments have been considered in preparing the report. Their
     During our review the organization assessment group
began an intensive study of the Department's organization,
including its basic structure. It plans to prepare
                                                     a reorga-
nization plan for the Secretary to submit to the Office
Management and Budget on or before June 15, 1977.        of

     We are providing a recommendation to the Congress
page 22. We will soon be in touch with your office     on
for release of the report.                          to arrange

                                  S         y      yo      v




                                  Comptroller General
                                  of the United States
REPORT OF THE                               DEPARTMENT OF HOUSING AND
COMPTROLLER GENERAL                         URBAN DEVELOPMENT COULD BE
                                            STREAMLINED


            D I G E S T

            The Department of Housing and Urban Development
            has three organizational levels--a central of-
            fice in Washington, D.C.; 10 regional offices;
            and 76 field offices, with about 15,000 per-
            manent full-time staff located as follows:
                     Location             Number      Percent

            Central office                3,814           26

            Central office staff
              stationed in field            618            4

            Regional offices              1,624           11

            Field offices                 8,790           59

                   Total                 14,846          100

            Streamlining the Department's organization
            could improve services to the public and
            save money by reducing resources needed to
            provide the services. It would also re-
            duce the potential for duplicate work and
            fragmented authority and responsibility,
            which have in the past been problems.
            This can be done by reducing the number of
            field ffices and requiring
            -- field offices and regional offices to
               operate selected dissimilar programs,
               with both reporting to the central of-
               fice, or

            -- field offices to operate all programs now
               being done by both field and regional of-
               fices. (See pp. 8, 42, and 43.)

            Primarily, the regional offices monitor and
            evaluate field offices, provide policy and
            technical advice to them, carry out programs,

TLShm. Upson rmovl, the              t                         FPCD-77-56
cover date should be noted hereon.                             FPCD-77-56
and do administrative work. The time spent
on these functions in the Dallas Regional
Office follows (see p. 15):

         Function                 Percent
Program operations                   42
Administrative operations            20
Monitoring and evaluation            11
Policy and technical advice          17
Dallas's time spent is typical of the other
regional offices. The four functions are es-
sential tasks which, if not done by regional
offices, would have to be done elsewhere.
Recent studies on Housing and Urban Develop-
ment's organizational structure include:
-- A 1973 study commissioned by the Mortgage
   Bankers Association of America. The study
   found disorganization, fragmentation, con-
   fusion, and inefficiency and recommended
   reorganization of regional and field of-
   fices.  (See p. 7.)
-- A March 1976 report of the House Surveys
   and Investigative Staff. It concluded
   that the central office urgently needed
   to review regional office functions,
   especially those that had expanded into
   the operational and decisionmaking func-
   tions of field office directors. (See
   p. 7.)

-- An extensive Housing and Urban Development
   contracted study completed in March 1976.
   It concluded that the number of field of-
   fices and the size of regional offices
   could be reduced, resulting in improved
   programs and a savings of up to $14 mil-
   lion a year.  (See p. 8.)
-- Internal Housing and Urban Development
   studies. These as well as the contracted
   study identified undesirable duplication
   at all levels.  (See p. 8.)
The Senate Appropriations Committee directed
Housing and Urban Development to reduce staff-
ing and promote more efficient and streamlined


                     ii
           services by reorganizing regional offices.
           (See pp. 7 to 8.)

           Housing and Urban Development personnel
           differed on ho, much of the work currently
           done by a regional office should be done
           there,

           Housing and Urban Development is studying
           its organization and expects to submit a
           reorganization plan to the Office of Man-
           agement and Budget by June 15, 1977.
           RECOMMENDATION FOR THE CONGRESS

           GAO recommends that the Congress request
           the Secretary of the Department of Housing
           and Urban Development to submit to appro-
           priate committees the reorganization plan
           resulting from the Department's organiza-
           tional assessment before implementing the
           plan. Te plan should in detail explain
           the changes and address the

           -- cost benefits anticipated from the planned
              reorganization;

           -- improvement in program responsiveness that
             will   esult;

           -- changes in staffing requirements forecast
              for a reasonable period subsequent to the
              reorganization; and

           -- impact on organizational patterns, roles,
              and authorities of regional and field
              offices.

           This should give the Congress an opportunity
           to review the Department's plan to determine
           whether the reorganization will resolve past
           and current problems that have troubled both
           the Congress and Housing and Urban Develop-
           ment.  (See p. 22.)



           GAO did not solicit written Department of
           Housing and Urban Development comments on


T"r shoa                        i ii
the report. However, GAO discussed the re-
port with top management officials and the
organization assessment group. In general,
the Department of Housing and Urban Develop-
ment agreed with the facts presented in the
zeport. (See p. 23.)




                    iv
                       C     n t e n t s


DIGEST                                                      ii

CHAPTER
   1       INTRODUCTION                                     1
               HUD responsibilities                         1
               HUD organizational structure                 2
                   Functions and relationships of
                      or nization levels                    3
                   Lirn;- f authority                       3
                   HUD staffing                             4
               Dallas region staffing                       5
   2       ACTIONS RESULTING FROM ORGANIZATIONAL STUDIES    7
               HUD reorganization study in
                 progress                                  11
               Conclusions                                 13
   3       THE HUD REGIONAL OFFICE FUNCTIONS               14
               What regional offices actually do           14
                   Monitoring and evaluation               15
                   Policy and technical advice             16
                   Program operations                      17
                   Administrative operations               20
               Conclusions                                 20
   4       OVERALL CONCLUSIONS AND RECOMMENDATION          21
               Recommendation for the Congress             22

   5       SCOPE OF REVIEW                                 23
APPENDIX

   I       Letter from Senator Henry Bellmon,
             dated August 2, 1976                          24
  II       Historical developmE t of the Department
             of Housing and       Development              25
 III       Map showing jurisu     ional boundaries         30

  IV       Organizational charts of central and
             regional'offices                              31
   V       HUD staff and line relationships                33
APPENDIX                                                 Pa e

  VI       HUD permanent full-time positions on
             board by organizational level and percent
             of total at the end of each fiscal year
             since 1970 and remarks                       34
 VII       Significant irternal and external studies
             of HUD's organization                        35
VIII       Proposed two-tier organizational
             alternatives                                42
  IX       Definitions of regional office functions      45
                        ABBREVIATIONS
PHA        Federal Housing Administration
GAO        General Accounting Office
HHFA       Housing and Home Finance Agency
HUD        Department of Housing and Urban Development
                            CHAPTER 1
                          INTRODUCTION
      At the request of Senator Henry Bellmon on August 2,
 1976, (see app. I) and subsequent agreements with his office,
we reviewed the role of the regional offices in the organi-
zational structure of the Department of ousing and Urban
Development (HUD). We particularly examined recent HUD
                                                          and
external study reports on the subject to determine to what
extent their recommendations had been considered or imple-
mented. We also made extensive inquiries in HUD's Dallas
Region to assess the result o some of the studies' findings
and to determine what functions a regional office performs
and why. Our objective was to assess whether regional of-
fices were performing essential functions and how
and field office staff felt about these services. regional
                                                    We did not
attempt to determine the optimum number or size of regional
offices. Specific details concerning the scope of our
are contained in chapter 5.                             work

HUD RES2ONSIBILIT;ES

      HUD was created in 1965 to consolidate Federal housing
activities into a Cabinet-level department. HUD's involve-
ment in the housing field has been guided by the Federal
Government's recognition of (1) a responsibility to maintain
and promote economic stability, (2) a social obligation
help those in need, and (3) an emerging interest in how to
                                                           the
country's communities develop. In 1969 HUD and several
social agencies were organized into 10 regions with sated  other
boundaries and regional office locations. On February
1972, Executive Order 11647 formally established Federal10,
gional Councils in each of 10 tandard Federal regions to Re-
develop closer worki..g relatio..ships between major Federal
grant-making agencies and State and local governments and
improve coordination of the categorical grant-in-aid system. to
HUD participates on the Federal Regional Councils.    (The
historical development of the Department is presented in
app. II.)
     HUD is the principal Federal agency responsible for
programs concerned with housing needs and improving and
developing the Nation's communities.  It has responsibility
for the administration of over 50 Federal assistance pro-
grams involving housing, urban development, and related
activities. Some major programs currently ad;: inis-
tered by HUD are:




                              1
     -- Mortgage insurance--A program administered by the
          dIeral Housimg    inistration (FHA) which provides
        mortgage insurance for both single family and
        multifamily housing.
     --Comit..uIty development--A block-grant program to assist
       Toc-l governments with: eliminating slums, blight,
        and conditions which are detrimental to health, safety,
        and public welfare; preventing the deterioration of
       property; conserving and expanding housing stock; ex-
       panding and improving the quality and quantity of
       public services; using land and other resources ef-
        ficiently; diversifying and vitalizing neighborhoods;
       and restoring and preserving property of historical,
       architectural, or esthetic value.
     -- Low-rent ublic housing--A program providing financial
        and technical assistance to public agencies in planning,
        building, acquiring, and operating decent, safe, and
        sanitary housing for low-income families at affordable
        rents.
     -- Comprehensive lanning assistance--A program designed
        to foster sound State and local evelopment through
        comprehensive planning. Grants are made to supplement
        State and local funds for preparing development plans,
        policies, and strategies; deciding implementation meas-
        ures; and coordinating related plans and activities
        being carried on at various levels of government.
     --Federal disaster assistance--A program to provide
       assistance to States, local governments, owners of
       selected private nonprofit facilities, and individuals
       in alleviating hardship and suffering resulting from
       emergencies or major disasters.

     -- Federal insurance--Programs designed to provide flood
        insurance in flood-prone areas; burglary and robbery
        insurance to businesses and residents of homes and
        apartments; and urban property insurance, particularly
        in areas subject to riots or civil disturbance.
HUD ORGANIZATIONAL STRUCTURE

     HUD functions   and responsibilities are generally
performed within a   three-tier organizational structure--
the central office   located in Washington, D.C.; 10 regional
offices located in   designated major U.S. cities; and 76



                               2
field offices (area offices and insuring offices) located in
various U.S. cities. Field offices are under the jurisdiction
of the regional offices. (See app. III for HUD regional of-
fice and field office locations and jurisdictional bounda-
ries.)
     The administration of most HUD program and operating
functions involves all three hierarchical tiers in a de-
centralized arrangement. There are, however. exceptions.
For instance, Policy Development and Research is a com-
pletely centralized arrangement and Federal Disaster As-
sistance Administration is a bilevel, centralized arrange-
ment with central office staff stationed in field locations.
(HUD organization charts are presented in app. IV.)
Functions and relationships
of organization levels
     The functions of the organizational levels prescribed
by HUD are:

     -- Central office--should make and interpret policy;
        establish priorities; promulgate standards, criteria,
        and procedures for all levels of field operation; and
        direct program administration.

     -- Regional offices--should supervise, coordinate, and
        eaiiuate -fie  office operations. They are to
        represent tha Secretary with the Governors and with
        other Federal agencies on the Federal regional oun-
        cils. They should be responsible for the allocation
        of program and administrative funds among field of-
        fices, ceceiving such funds and guidance an' direc-
        tion rom appropriate assistant secretaries. Regional
        offices should not duplicate reviews and operations
        carried out in field offices, but provide program
        and technical backup and support as needed.
     -- Field offices--should operate and make decisions in
        the field and be the Department's principal contact
        with program participants and sponsors. Geaerally,
        delegations to take final actions should be decen-
        tral.zed t this level, without procedural qualifi-
        cations or review requirements to dilute authority.
Lines of authority

     All HUD programs, resources, and activities are
vested by statute in the Secretary. For the most part,


                              3
general line authority flows from the Secretary to the
regional administrators and from them to the field office
directors. This structure was intended to give decision-
making authority to the officials closest to the problems--
the field office directors.
     The flow of programmatic line authority involves an
additional central office level--assistant secretaries.
Assistant secretaries were established to assist the
Secretary in managing and administering HUD programs and
functions. Programmatic authority is delegated to the
assistant secretaries who, in turn, may redelegate to the
regional administrators and, through them, to the field of-
fice directors for the accomplishment of program objectives.
Not all authority, however, has been delegated by the cen-
tral office.   (See app. V for HUD staff and line relation-
ships.)
     Regional administrators are directly responsible to the
Secretary for achieving HUD's goals and objectives, and are
accountable to the responsible assistant secretaries for
program delivery. The regional administrators have assis-
tants to supervise, coordinate, and evaluate the programs
decentralized to the field offices. These assistant regional
administrators are responsible for maintaining quality
control over field office programs; assuring th.c programs
are carried out in accordance with HUD policies, criteria,
and procedures; and seeing that program goals are being met.
They perform continuing evaluations of the field offices
and provide functional, technical, and programmatic guid-
ance to field office staff. Assistant regional administra-
tors, however, do not have line responsibility or authority
over counterpart program areas in the field offices.

HUD staffing
      There are about 15,000 permanent full-time employees
in HUD. The following chart shows Fcw onboard employees
were spread among the three levels o organization as of
September 30, 1976.   (See app. VI for HUD permanent full-
time positions on board by organizational level and percent
cf total at the end of each fiscal year since 1970 and re-
maarks.)




                             4
                                     Number of   Percent of
    Levels of organization           employees     total

Central office                          3,814         26

Central office staff stationed
  in field                                618          4

Regional offices (10)                   1,624         11

Field offices (76)                      8,790         59

    Total                              14.846        100
DALLAS REGION STAFFING

     The Dallas Region consists of a regional office and
1' field offires. These 11 field offices include 5 area
offices and 6 insuring offices. Three insuring offices
located in Albuquerque, Houstoi, and Shreveport are, however,
in the process of being transformed into full-service housing
offices. (See app II, p. 29, for a discussion of this
change.) The area offices have responsibility for all HUD
programs decentralized from central and regional offices.
The insuring offices have responsibility for all decentral-
ized housing programs except low-income and assisted housing.
Full-service housing offices are responsible for activities
of the insuring offices and low-income and assisted housing.
     As of September 30, 1976, there were oer 1,300
permanent full-time employees in the Dallas Regio.i. Th-
following table shows the location, type of office, and dis-
tribution of employees.




                             5
                                   Number of       Percent of
     T"-e/locaticn of office       employees          total
Regional office:
    Dallas, T 9's                     177              13
Area offices:
    Dallas, Texas                     250              19
    Oklahoma City, Oklahoma           138              10
    San Antonio, Texas                120               9
    New Orleans, Louisiana            118               9
    Little Rock, Arkansas             102               8
Insuring offices:
    Houston, Texas (note a)           109               8
    Shreveport, Louisiana
       (note a)                        60               4
    Albuquerque, New Mexico
       (note a)                        54              4
    Fort Worth, Texa-                  86              6
    Lubbock, Texas                     67              5
    Tulsa, Oklahoma                    67              5
        Total                       1,348             *00
a/Designated to be full-service housing offices.




                               6
                          CHAPTER 2
        ACTIONS RESULTING FROM ORGANIZATIONAL STUDIES

     Widespread concern about HUD's organizational structure
has prompted recent external and internal studies. In late
1973 the Mortgage Bankers Association of America commissioned
a study of HUD's organizational structure with emphasis on
FHA's role within the Department. The study concluded that
the disorganization, fragmentation, and confusion of HUD
makes it difficult for the Department to focus on the gravity,
urgency, and organizational nature of its problems and in-
efficiencies. Further, the study noted that HUD's organiza-
tional structure results in red tape, slow service, ineffi-
ciency, and incapacity to control losses. To remedy these
problems the study recommends that, in essence, HUD return
to the organizational arrangement that prevailed rior to
the decentralization of HUD that occured in the _J70-71 re-
organization.  (See p. 27.) This change would result in a
two-tier HUD organizational structure; that is, field and
regional offices would report directly to the central office.
(See p. 42 for a brief description of this alternative.)

     In October 1974 the House Subcommittee on HUD--
Independent Agencies of the Committee on Appropriations re-
quested its surveys and investigations staff to conduct a
comprehensive investigation of HUD's organizational struc-
ture. The study identified deficiencies but urged that HUD
not undergo a major reorganization. Rather, it recommended
that HUD review regional office functions and realine cer-
tain roles that had exparded into operational and decision-
making functions of field offices.  (See app. VII for speci-
fic details regarding the study.)

     As a result of hearings, the House Committee eliminated
333 staff-years in regional offices. They identified the
activities to be eliminated as "* * * the excess of regional
office supervision, evaluation and review of area and insuring
offices." The Senate Appropriations Committee, which also
considered the House Committee report, restored all except
110 staff-years. but stated essential agreement with the
reasons behind the House reduction.

     The Senate Committee made it clear that they considered
the staff of the regional offices larger than needed to per-
form their functions. The Committee concluded that a com-
plete reorganization of the structure and responsibilities
of regional offices was needed.  It directed HUD to submit



                             7
with its fiscal year 1977 budget request a comprehensive
reorganization plan providing for substantial regional staff-
ing reductions in supervision in an attempt to promote more
efficient and streamlined delivery of regional and field
office services.

     In March 1975 HUD initiated a management improvement
program to address the deficiencies cited in the House
staff study and internal concerns resulting from self-
examination. Special teams were established to document
and analyze program processes in regional and field of-
fices and develop more logical procedures for program deliv-
ery.  HUD also commissioned a consulting firm to conduct a
thorough independent study of the organization. This study
included an analysis of the percentage share of total work-
load of various field offices. Based on this analysis, the
consultants concluded that the larger field offices enjoy the
benefits of economy of scale when compared to the work done
by the smaller offices and that inefficient offices could be
closed and personnel reduced or shifted.
     Various near-term and long-term recommendations were
made as a result of these efforts.  (See app. VII for
specifics of both process analysis and the consultant's
study.) The counsultant's study recommended that HUD
reduce a tier of JD organization. It estimated savings
through the reduction of the number of field offices and
size of regional offices at up to $14 million annually.
(See app. VIII, p. 43, for alternative two.)

     Subsequently, the Secretary solicited views on the
proper functions and role of the regional offices front the
assistant secretaries, the regional administrators, and
several field office directors. There was no consensus
among these managers, even those at the same organizational
level. Some favored no regional involvement in proGzam
operations; others believed that regionalization of certain
program operations was appropriate.

     HUD did not subrit a comprehensive reorganization plan
with its fiscal year 1977 budget request.  Instead, it sub-
mitted the "Secretary's Report to Congress on Organization and
Management Activities." This document, dated March 1976,
summarized the findings and resultant actions of a conference
held by the Secretary in February 1976 to consider the various
internal and external studies and the other previously de-
scribed efforts. The Secretary stated that both the internal
analyses and the consultant's study closely paralleled the
conclusions of the House staff study. Specifically:



                             8
     --Ht¶D had been suffering from a lack of stability
       due to a series of reorganizations since the
       late 1960s.
    -- Lines of authority from the central office to the
       regional offices and ultimately to the field offices
       has been fragmented and confused.

    -- Inconsistencies existed in the decentralization of
       authority, which in turn had created undesirable
       duplication at all three levels of the organization.

    -- A lack of clarity was evident in the specific roles
       to be played by each of the three levels of the
       organization, particularly the regional office.

The Secretary noted that a consensus of the required action
had emerged from the various analyses and studies. Namely.
HUD must

     -- articulate clearly and disseminate effectively
        its goals and objectives;

     -- clarify the roles of personnel at the central
        office, regional office, and field office levels
        and ensure effective communication among these
        levels;

     -- eliminate any duplication of work between the
        regional offices and field offices; and

     -- avoid a large-scale reorganization at this time
        because of the potentially devastating effect on
        employee morale and disruptive impact on program
        delivery without curing managment deficiencies.

     The Secretary, however, decided to retain the present
three-tier organization. She commented that the problems
were not endemic to their present organizational structure
but resulted from management deficiencies in defining
program objectives, enforcing respect for lines of
authority, and clarifying relationships in the chain of
command.
     HUD recognizes, however, that maintaining the present
structure offers some disadvantages, such as Congressional
concerns over HUD'o regional office operations and costs not
being fully satisfied. Also, levels of management are not
reduced and program integration and coordination are not sub-


                              9
stantially improved.   Further, opportunities for duplication
remain.
     Actions to be taken by HUD were cited by the Secretary
of HUD during the 1977 appropriation hearings, as follows:

     -- Six major goals and 58 specific secretarial
        and 324 assistant secretarial objectives were
        established for fiscal year 1976.  (These goals
        and objectives are contained in HUD's new goals
        management system.)
     -- Assistant secretaries are to ontinue to be fully
        responsible for all program activities delegated
        to them.
     -- That portion of authority dealing with actual
        program delivery and administration is to be
        decentralized and delegated to field offices
        to the maximum extent possible.
     -- Except in those instances where economies of
        scale can be achieved by delivery at the
        regional office level, all program delivery
        will be delegated to field offices.

     -- Regional offices are to continue to be
        responsible to each appropriate assistant
        secretary for supervising performance of the
        field offices.
     -- Field offices have been   given greater staffing
        flexibility in carrying   out their responsibili-
        ties. Managers are now    being held accountable for
        the results attained by   measurements against
        specific objectives.
     -- Duplicate processing was recognized as extremely
        inefficient and will be eliminated wherever
        possible.
     Regarding the last point, the Secretary stated that all
duplicate program processing should be identified and elimi-
nated except in unusual circumstances in which approval by
the Secretary is required. This was still an open issue.
Therefore, two task forces were formed to deal with it. One
dealt solely with duplicate processing in administrative
support, and the other covered most other aspects of HUD's
operations.


                             10
     The administrative support task force recommended
the authority of field offices be increased to strengthen
their capability to act quickly and decisively on primarily
internal operations issues. Recommendations were also made
to broaden some regional office authority for similar rea-
sons. Of the fifty issues the task force identified, most
dealt with the location of authority and little actual
duplication surfaced.

     The task force that covered most other operating
functions recommended delegating authority to officials at
lower organizational levels on 13 items, all of which have
been accepted.
HUD REORGANIZATION
STUDY IN PROGRESS

      During our review the National Administration changed.
Consistent with the new President's reorganization program,
which includes all executive departments, the Secretary of
HUD, in February 1977, established a    ecial in-house task
force  for internal organizational assessment.  At the outset
this group  planned to:
     -- Review the reporting relationship of assistant re-
        gional administrators for housing and community
        planning and development, including whether this
        reporting relationship should be more vertical to
        the central office.

     -- Review the role of HUD area offices and the functions
        they perform.

     -- Examine the viability and function of the regional
        office system to determine what reforms or modifica-
        tions might be necessary.

     -- Consider consolidating some of the various staff of-
        fices now reporting to the Secretary.
     -- Consider consolidating various field offices.

     The task force, named th3 organization assessment group,
ib composed of rpresentatives from the major program areas
of the Department at the central office level from regional
offices and field offices representing different geographic
areas of the country.




                              11
      Initial assignments for the group have included:
      -- Review the statutory missions of the Department,
         analyzing those programs used to accomplish each
         mission and listing organizational units now having
         lead responsibility for their delivery. HUD considers
         this analysis to be essential to the nature. degree,
         and extent to which the integration and coordination
         of HUD programs can be achieved within certain organi-
         zational alternatives.
      -- Prepare an activity analysis      entify existing HUD
         programs reasonably expected to ontinue in operation
         over the next four years and their estimated levels.
      --Analyze the staffing resources rurrently available
        in the Department. This resource inventory will con-
        tain information on total staff-years and detailed
        data on the availabilty of personnel having specific
        skills necessary to implement programs--appraisers,
        engineers, financial management analysts, architects,
        etc.
     -- Develop a preliminary statement of organizational
        problems now perceived within the Department,
        relying upon several studies already completed and
        the personal experience of the group's participants.
        This analysis already has identified several key
        issues which must be addressed as HUD frames
        alternative organizational structures.
      On March 1, 1977, the Secretary of HUD notified the
 Director of the Office of Management and Budget that HUD
 expects to submit a complete reorganization plan no later
 than June 15, 1977. We were advised by central office of-
 ficials that the magnitude of the reorganization will depend
 upon the results of the organizational assessment. The
 phrase "complete reorganization" may, therefore, be an
 overstatement, especially since the Secretary of HUD stated
that "During its brief eistence as a Cabinet level Depart-
ment, HUD has been reorga,& zed too many times. As a result,
the Department has become preoccupied with its internal
processes, and forgot its external responsibilities." 1/



1/Mar. 28, 1977, in testimony before the Subcommittee on
  HUD--Independent Agencies, Senate Committee on Appropria-
  tions.


                             12
CONCLUSIONS

     The issue of the need for and role of HUD regional
offices has been studied thoroughly in recent years. A
number of problems have been identified, including
     -- duplicate effort at all organizational levels,

     -- fragmented and confused lines of authority, and
     -- inconsistent decentralization of authority.

     Recommendations have been made for substantially reduc-
ing the number of field offices and the size and role of re-
gional offices, and organizational alternatives have been
proposed. (See app. VIII.) Cost savings have been estimated
at up to $14 million annually.
     HUD has begun, short of major reorganization, to alleviate
some of the identified problems in its organization. This
includes establishing departmental goals and objectives and
conducting process analyses, which resulted in proposals for
streamlining HUD procedures for program delivery. In addi-
tion, efforts were made to identify and minimize duplicate
program processing.
     HUD is currently conducting a comprehensive organizational
assessment with a goal to submit a complete reorganization
plan to the Office of Management and Budget no later than
June 15, 1977.




                             13
                            CHAPTER 3
              rHE HUD REGIONAL OFFICE FUNCTIONS
     When HUD was reorganized in 1971-72 and a formal field
office and regional office structure established, HUD
management envisioned that the regional office would relin-
quish the day-to-day responsibility for operating HUD pro-
grams to the field offices. The regional office was to
evaluate and monitor activities of the field office level,
provide them technical services and specialized support,
allocate funds, and set program priorities. In addition,
they were to perform certain operational functions.
WHAT REGIONAL OFFICES ACTUALLY DO

     In 1974 HUD conducted a study of the Philadelphia Re-
gional Office to determine how many people were involved in
various regional office functions. Drawing on this data
HUD projected the total number of people involved in the
various functions in all 10 regional offices, as shown
below.

                                                   Projections of
                                      Percent       total people
                                      of time       involved in
Regional office functions             spent in      ten regional
       (note a)                     Philadelphia      offices
Monitoring and evaluation                13              216
Policy and technical advice              16              266
Program operations                       30              500
Administrative operations                16              266
General management                       14              233
Employee development
  & training                              6              100
Resource allocation
  & management                            5               83
     Total                              100            1,664

a/See app. IX for definitions of regional office functions.

     We reviewed the functions performed by the Dallas Re-
gional Office. We also asked personnel in the Dallas regional
area how they felt about these functions. Our results are
presented below.



                              14
     The Dallas Regional Office generally perform-n the same
functions that were identified in the 1974 Philadelphia study.
The percent of time devoted to the regional office's various
functions is shown below.
                                       Percent of time spent
  Regional office functions                   (note a)

Monitoring and evaluation                        11
Policy and technical advice                      17
Program operations                               42
Administrative operations                        20.
General management                                4
Employee development & training                   4
Resource allocation & manigement                  2

     Total                                      100

a/Does not include time spent by 17 employees in the immedi-
  ate office of the Dallas Regional Administrator.

Monitoring and evalua.ion
     According to HUD officials, monitoring and evaluation is
needed in tracking the performance nd accomplishments of the
76 field offices. In testimony before a subcommittee of the
House Government Operations Committee, the Atlanta Regional
Administrator stated that HUD needs to monitor and evaluate
field offices' performance if only to identify deficiencies
and assist the field offices in correcting them. This func-
tion consists primarily of site evaluations at the field
offices and is a prime responsibility of the regional office.
     The Dallas Regional Administrator advised us that this
function could perhaps be shifted to the central office.
However, he said it would not be performed as well there,
because the closeness of the regional offices to the field
offices allows for more effective execution of the function.
     A task force was formed in December _975 to study cur-
rent monitoring and evaluation processes. Its May 1976
draft report concluded that there are 10 different regional
evaluation systems with no common link to the central office
in terms of procedural guidance, joint planning, or standardi-
zation of performance measures.

     As a result, another task force was created in December
1976 to develop standard technical and management criteria
to evaluate the performance of both the regional and field


                              15
offices. The Deputy Under Secretary for Field Operations
advised us that the monitoring and evaluating function had
been a significantly deficient area for years. He viewed
this effort to develop a standardized system of performance
evaluation with appropriate criteria as an extrememly im-
portant recent undertaking.

Policy and technical advice

     Another major role of the regional office is to provide
policy and technical advice, guidance, and support to field
offices. These services include passing on, explainino, and
interpreting policies, procedures, technical guidelines and
requirements, and related directions and instructions.
     Most field office personnel we interviewed were dis-
pleased with the assistance received from the regional
specialists. Key criticisms expressed were:
     -rThe regional office staff does not have expertise or
       familiarity with HUD programs because they are not
       involved on a day-to-day basis.
     -- The regional office is serving more as a relay station
        between the field and central offices.
     -- Responses from the regional office are untimely.

     Field personnel provided a number of examples to support
their observations. One said the regional office took nearly
a year to respond to a policy question after indicating an
answer would be forthcoming within several days. Another
indicated that because of the region's unwillingness to make
a policy interpretation requested in March 1976, a housing
application form problem remains unsolved. To avoid these
and other problems, field personnel told us they often by-
passed the regional office, directing their inquiries to
the central office. Also, some said they do not request ad-
vice because they are more familiar with the programs and
have more confidence in their own judgments and decisions
than those rendered by regional office personnel.
     Officials in the Dallas Regional Office have acknowledged
these deficiencies and the reasons for them. The Regional Ad-
ministrator contends that the regional office cannot be the
main source of technical assistance because regional office
personnel are caught between the central office, where techni-
cal guidance is formulated, and the field offices where the
day-to-day confrontation between that guidance and reality


                              16
occurs. Accordingly, he maintains that technical assistance
cannot realistically be assigned to the regional office.
According to the Deputy Under Secretary for Field Operations,
these responsibilities should be carried out by selected
field offices instead of the regional office.
     HUD's 1969 reorganization study indicated that for the
regional staff to remain current on actual program conditions,
a close -rking relationship between them and field office
personnel would be necessary. Also, the regional office
staff would have to be self-sufficient in the variety of
skills reaiired for the program being monitored and be
limited in number to insure they did not become enmeshed in
the day-to-day details. However, regional office efforts in
providing policy and technical advice seems to have followed
a rpttern contrary to these views. Close working relationships
dJ not appear to have developed between regional and field
offices.
Program operations

     Under HUD's decentralization theme, program operations
should be the responsibility of the field offices. The study
which led to HUD's reorganization in 1971-72 stressed that if
the regional office level or above is involved in direct pro-
gram processing, another unwanted layer of management would
be created, thereby preventing prompt delivery of services.
At the same time, the study recognized there were some pro-
grams, such as equal opportunity, which were better suited for
direct regional office control. Consequently, some programs
were not decentralized to the field offices.

     HUD defines program operations and its connection with
the regional office as all functiors which normally, under
ideal circumstances and adequate staff resources, would be
performed by field offices. This includes direct project
processing performed in the regional offices and direct con-
tact with clients on pecific cases or projects. Such pro-
cessing may be originated in the regional office, or it may
be a reprocessing of material forwarded from field offices.
The function also includes direct support to field offices.
      In the Dallas Regional Office, approximately 42 percent
of the staff's work time is devoted to program operations.
This ranged from 20 percent in housing management to 87 per-
ce~nt for equal opportunity.




                             17
     Regional involvement in programs
     not delegated
                 to    fleld
     during reorganizai;ion
     Program functions which were not delegated to field of-
fices during the 1971-72 reorganization account for nearly
half of the Dallas Regional Office's involvement in program
operations. These functions include the Regional Counsel's
actions regarding litigation, tort claims, and private
market financing; equal opportunity; and certain engineering
support.
     On a test basis, the central office has delegated full
litigation authority to three field offices--one of which is
in the Dallas region. Field attorneys we interviewed thought
this was long overdue; they believe they are more knowledge-
able of day-to-day operations than the regional office staff.

     Regional office officials stated that equal opportunity
and housing compliance reviews and investigations are more
logically located at the regional office level due to greater
efficiency of operations and the possibility of bias if field
staff were permitted to perform their own reviews and analyses.
Most field personnel did not concur with the regional office
personnel and believed that most, if not all, program opera-
tions performed by the regional office could be decentra-
lized to the field offices.
     Regional office consolidation of engineering services
is designed to alleviate uneven workload distribution while
still maintaining a level of expertise. Field office of-
ficials reacted favorably to this source of expert advice
and were pleased with the services provided by regional of-
fice staff.

     Regional involvement in programs
     regionalized since reorganization
     The remaining program functions currently performed in
the Dallas Regional Office consist of those which management
believed would be best handled by the regional office. Their
rationale included increased efficiency through economies of
scale, inadequate field performance, greater concentration
of expertise, and an improved vehicle for coordination with
other agencies.
     We found insufficient evidence to support the rationale.
For example, seven programs are being phased out as a result
of the Housing and Community Development Act of 1974. Accord-
ing to regional office officials, these programs were

                               18
regionalized because (1) the tield was not iving proper pri-
ority to closing out the projects and consequently was not
meeting its assigned goals and (2) a savings in staff years
was expected. The support provided for the first rationale
included a series of evaluation reports which, in our opinion,
did not reveal any shortcomings that could not have been
corrected by the field offices.  In several programs, the
field had closed more projects during the six months prior
to regionalization than had the regional office during the
six months since regionalization. Additionally, there was
no documentation or formal analysis supporting anticipated
savings in staff years.
     Problems have developed because of regional involvement
in program operations. Tc illustrate, the comprehensive
planning assistance program was regionalized in 1975, but
since then a system of coordination between field and re-
gional office staffs has not developed. Field personnel were
displeased since programmatic difficulties between the com-
prehensive planning assistance program and closely related
programs administered by the field offices have occurred
and the regional office has not taken the initiative to
remedy them.
     Prior to regionalization, a team of HUD analysts
expressed the opinion that regionalization of the comprehen-
sive planning assistance program would undermine the pro-
gram's potential and prevent effective coordination with
closely related programs. For example, the analysts reported
that, because officials in specific field offices have devel-
oped close contact ith chief elected officials who have
influence in local community planning decisions, field office
staff can manage the comprehensive planning assistance program
more effectively than regional office planners. Also, the
analysts claim that there is need for considerable interface
between the comprehensive planning assistance program and
the community development block grant program--administered,
for the most part, at the field office level--because of
common requirements regarding housing assistance plans.
They say that while coordination is not guaranteed if both
programs ae in the field office level, coordination is pre-
cluded by regionalization.
     Possibilities cf additional regionalization in the future
seem strong. The Regional Administrator believes the com-
munity development block grant program, a new approach in fun-
ding city development emanating from the 1974 legislation,
is a candidate because the program's simple format and basic
reliance on locally determined priorities eliminates the need


                            19
for on-the-scene management by HUD employees. This would,
according to a field official, resolve serious problems of
fragmented authority. Some field officials view the whole
series of past regionalizations as means for the regional
office to justify its existence.

Administrative operations

     Another major responsibilty of the regional offices is
direct administrative support for the field offices. Adminis-
trative support includes personnel operations, administrative
services, financial management, and management organization
and information systems.

     Generally, HUD recognizes that a certain degree of cen-
tralized administrative processing is justified because of
the small volume of activity at field offices. Yet, some
field offi,  personnel in the Dallas region believe that
decentralize   more administrative functions would be more
effective, because field office directors are closer to the
problems. They admit, however, that this would most often
require additional staff.
     Recently HUD has studied ways to improve the adminis-
trative operations of the Department. Attention was given
to eliminating duplicate effort and determining the most
lgical levels for performing duties. Most of the recom-
mendations from these studies have been accepted and are
in various stages of implementation.

CONCLUSIONS

     The primary functions of a regional office are (1) moni-
toring and evaluation, (2) policy and technical advice, (3)
program operations, and (4) administrative operations. In
our view, these are essential functions which need to be
performed at some level in the organization. If they were
not done at the regional level, they would have to be done
either by the central office or at selected field offices.

     HUD personnel had differing views on the need for these
functions to be regionalized as well as the effectiveness
with which they were performed by regional office personnel.
Some believe that regionalized functions could be better
carried out by the central or selected field offices; others
believe these functions to be best carried out at the regional
office level. Overall, there was no clear consensus of views.




                            20
                         CHAPTER 4

           OVERALL CONCLUSIONS AND   ECOMMENDATION

     The issue of whether HUD regional offices are needed is
not a simple one to address or resolve. The answer depends,
to an important degree, on the appropriate delegation of
program authority and responsibility to meet Departmental
goals and objectives.

     in recent years the issue of the delegation of authority
and responsibility and its relationship to the regional
offices has been studied. From these studies, organizational
problems have beei identified and recommendations made to
modify HUD's organization, including the role and size of
the regionail offices. Organizational alternatives have been
proposed.   (See app. VIII.)

     HUD has initiated action on some of the study recom-
mendations, short of major reorganization. This reluctance
to reorganize may have been appropriate since a number of
studies, while recognizing the need for reorganization,
concluded that its impact on morale outweighed the benefits
of near-term reorganization.
     Evidence suggests that HUD can streamline its organ'.za-
tion if (1) field offices perform only selected common fn-
tions and their number is reduced through consolidation, while
other functions are performed by regional offices. with both
reporting directly to the central office, or (2) field of-
fices perform all program operation functions now done by
those offices and regional offices, but their number is re-
duced through consolidations and they report directly to the
central office.   Adopting one of these alternatives seems to
be economical and would reduce the opportunities for duplica-
tion and fragmentation of authority which have Lten problems
in HUD in recent years. Nevertheless, the question of the
appropriate organizational form for HUD and the place of the
regional offices in the organization still remain unresolved.
     HUD's priority should be to clearly define its goals and
objectives and sort out appropriate program authority and
responsibility so that organizational form can follow a logi-
cal assignment of functions. This, we believe, is the charge
for HUD's newly formed organizational assessment group. At-
tempts to simplify HUD's organization could go a long way




                            21
toward improving the delivery of its services and minimizing
the resources committed to doing it.
     HUD's efforts to reorganize the Department should,
therefore, focus on the best means to meet its legislated
program responsibilities and Departmental goals and objec-
tives.
RECOMMENDATION FOR THE CONGRESS

     We recommend that the Congress request the Secrtary
of HUD to submit to appropriate committees the reorganizaticn
plan resulting from UD's organizational assessment before
implementing the plan. The plan should in detail explain the
planned changes and address the

    -- cost benefits anticipated from the planned reorgani-
       zation;

    -- improvement in program responsiveness that will
       result;

    -- changes in taffing requirements forecast for a
       reasonable period subsequent to the reorganization;
       and
    -- impact on organizational patterns, roles, and
       authorities of regional and field offices.
    This should give the Congress an opportunity to review
HUD's plan to determine whether the reorganization will
resolve HUD's past and current problems that have troubled
both the Congress and H'JD.




                             22
                          CHAPTER 5
                       SCOPE OF REVIEW

     We reviewed policies, procedures, and practices
relating to various HUD programs. Our methodology included
the use of flow charts to identify and analyze the pertinent
decision points for the major programs. We also reviewed
applicable legislation and congressional hearings.
     We reviewed, analyzed, and summarized reports pertaining
to HUD's organizational structure and overall management.
Organizational alternatives proposed by groups both internal
and external to HUD were considered. We discussed these mat-
ters with, and obtaired narrative comments of, HUD officials
at all major levels ,)f the organization.
     We made our review at HUD Central Office in Washington,
D.C., and at the Dallas Regional Office. We also visited
field offices in Shreveport, New Orleans, Fort Worth. Dallas,
and Oklahoma City.
     The majority of our review work was conducted between
September 1976 and February 1977. At the instruction of
Senator Bellmon's office, we did no* solicit written HUD
comments. Throughout the review, however, we discussed our
findings as they were developed with responsible HUD of-
ficials and obtained their comments. At the conclusion of
our work, we held conferences with HUD top management of-
ficials and the organization assessment group.




                             23
APPENDIX I                                                                    APPENDIX



HENRiY   ELLMON                                                               Cwr

                                                                               UDGIT
                                                                           APPROPRIATIONS
                             'JI+ifeb                                 ^fcdesl
                                                                       ^a~~,ab
                                                                      AGRICULTURE ANOD  ORESTR
                                                                              I
                                            Lf4t*
                                           W~tnffebi      $ZenaiDT                              I
                                                                          OFlrFCAND CIVIL SirViCe
                                        WASHINGTON. WAINTON.
                                                    D.C.
                                                    D.C. MID            l.·S[rCT COMMITTm CON
                                                                      NUTRITION AND HUMAN NIEDS

          August 2, 1976




          Mr. Elnmer Staats
          Comptroller General of the United States
          General Accounting Office
          441 G Street, N. W.
          Washington,   . C. 20548

          Dear Mr. Staats:

         During recent years, the Department of II ousing and Urban Develop-
         ment has created a sizeable bureaucracy at the regional levels. For
         instance, at Dallas, there are now about 200 federal employees
         serving in the Regional Office. At the same time, iIUD operates
         state and district offices in all or most of the 50 states.

         This letter is being written to inquire as to whether or not the General
         Accounting Office has examined the HIUD Regional Office operation
         to determine whether these offices are providing an essential service.
          There is the danger that the Regional Offices anlount to simpl another
         costly layer of bureaucracy.

         If such a study has been made, I would appreciate a copy. If it has not
         been made, I would like to discuss with you or the appropriate membner
         of your staff the possibility f undertaking such an investigation prior
         to the beginning of the apprapriations process for the 1978 budget.

                                                       Sincerely,




                                                    Henry IBelln'on

         FIB:csb
         cc: The lion. William Proxnrire




                                               24
APPENDIX II                                      APPENDIX II


               EISTORICAL DEVELOPMENT OF THE

        DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

PRE-HUD ORGANIZATION

     The complex and many-faceted role of the Federal
Government in housing had its origin in the collapse of the
housing economy during the Great Depression of the 1930s.

     At that time, Congress made two fundamental policy
decisions that remain basically intact today. The first
was completely restructuring the private home financing
system creating
     -- the Federal Housing Administration (mortgage insur-
        ance);

     -- the Federal Home Loan Bank Board and the Bank Sys-
        tem (savings and loan industry);

     -- such institutions as the Federal Deposit Insurance
        Corporation and the Federal Savings and Loan In-
        surance Corporation (insurance on deposits of com-
        mercial banks, mutual savings banks, and savings
        and loan associations); and, finally,

     -- the Federal National Mortgage Association (secondary
        mortgage market).

These institutions resulte in the acceptance of long-term,
low-downpayment, fully amortizing mortgages and a system
to provide a large flow of capital into the mortgage
market.
     The other decision was the concept of Government-
subsidized housing for low-income families. The creation
of the U.S. Housing Authority (subsequently the Public
Housing Administration) by the Housing Act of 1937 began a
program which, although intended primarily as a means of
stimulating employment and clearing slums, marked the
first time-that Federal funds were used to finance new
housing construction for the less fortunate.
     A reorganization in 1947 brought together the Federal
Home Loan Bank Board, the Federal Housing Administration,
and the Public Housing Administration under the auspices
of the Housing and Home Finance Agency (HHFA). This "super
agency," however, had only general supervision and co-
ordination responsibilities for the housing programs under


                             25
APPENDIX II                                      APPENDIX II


these agencies. Each agency, therefore, remained intact
and continued to operate as a distinct entity under HHFA.
For example, FHA continued to run its own discrete organi-
zation with 76 field insuring offices established in the
1930s.   In addition, another organizational structure, with
six regional offices, was created for HHFA's direct adminis-
tration of various categorical grant programs, such as urban
renewal.

     Because the HHFA Administrator did not have line
authority over the subordinate agencies or the power to
reorganize agency functions, HHFA programs often operated
at cross purposes. The inability of State and local officials
to look to a single authority for housing added to the dis-
satisfaction with the lack of coordination within HHFA.
There was a general feeling that only a Cabinet-level de-
partment and an improved organizational structure would give
coherence to the widely separated efforts and provide focus
for local inquiries.
THE CREATION OF HUD
     Efforts to strengthen HHFA's organizational structure
in the 1950s and 1960s paralleled increasing Federal involve-
ment in housing and urban development. Finally, the Depart-
ment of Housing and Urban Development Act, passed September 9,
1965, created HUD. The most significant results were that
the functions of HHFA were raised to Cabinet level and the
administration of these functions was simplified by con-
solidating most statutory authority in the Secretary. It
did not, however, consolidate housing and urban development
functions existing in other parts of the Federal Government
(Farmers Home Administration and Veterans' Administration).
     The initial organizational structure of HUD provided
the Secretary with the full capability to direct HUD policy
and operations. Program responsibilities were regrouped at
the national level by four assistant secretaries who were
to function as both line and staff officers, responsible
not only for executing specific programs, but also for
fully and continuously coordinating these programs.

     In this organizational structure, HHFA regional
administrators represented all HUD programs at the regional
and local levels. They were given responsibility for proc-
essing and approving individual project actions. Each ad-
ministrator was to be assisted by various assistant re-
gional administrators.




                            26
APPENDIX II                                     APPENDIX II


     FHA remained essentially intact and in full control of
its programs, funds, resources and field operations during
the first 3-1/2 years of HUD's existence. One change of
significance in the FHA field structure affected the FHA
zone operations commissioners. These officials had always
been part of the FHA Central Office and had direct lines of
communication and authority between the central office and
the 76 local insuring offices.

     The zone perations commissioners on the FHA Central
Office staff   re replaced by assistant regional administra-
tors for FHA who  were stationed in HUD regional offices.
They continued to  answer to the central office, but were
also responsible  for coordinating with other affected as-
sistant regional administrators on project applications hav-
ing interprogram effects. This was significant because it
marked the beginning of regional layering in the FHA organi-
zational structure.
DECENTRALIZING   UD

     On March 27, 1969, a Presidential policy memorandum
directed HUD to reorganize into eight regions with stated
boundaries and regional office locations. Th:{n original
memorandum was amended on May 21, 1969, to add two addi-
tional Federal regions, with minor adjustments in the origi-
nal boundaries. To comply with this directive and to improve
the effectiveness of the organizational structure, the Secre-
tary undertook a comprehensive study for reorganization. The
primary objectives the Secretary established for the organiza-
tion of the Department were:
     -- To achieve greater effectiveness, coordination, and
        productivity by combining related functions under a
        single official.

     -- To achieve greater responsivenss, flexibility, and
        service to communities by decentralizing operations
        beyond the regional office level to a new level of
        area offices.

      -- To foster better coordination of HUD programs and
         assist communities on a unified basis by organizing
         the area offices on a geographic and functional basis
         rather than a program basis.

     In developing the area office structure, the basic
assumptions were that the area office should

      -- normally have full program processing and decision-
         making authority;

                              27
 APPENDIX II                                      APPENDIX II

      -- have clear lines of authority and direction that flow
         from the regional administrator to the area office
         director to the staff of .ae area offices

     -- be organized to assure maximum coordination and produc-
        tion of all HUD programs;
     --be sructured to insure maximum use of personnel and
       skills available;
     -- provide an easy access "one-stop" capability for
        private and public contacts with HUD.
      In selecting the locations for the new area offices.
HUD officials felt that the existing FHA insuring offices
formed the most obvious base of possible locations because
the factors that governed their original selection put
in urban areas of HUD concern. Of the 76 FHA insuring them
39 assumed the role of area ffices and 37 :emained      offices,
                                                     in the
role of performing FHA insuring functions. out without
essing capability for all HUD programs. Often. an area proc-
will be responsible for FHA mortgage insurance programs office
only a portion of the geographic area for which it has for
sponsibility for other HUD programs. (See app. III.)    re-

      Thus, a major change occurred in the role of the
regional offices. Under the new organization structure.
the regional office was to relinquish day-to-day responsi-
bility for operating HUD programs to the field offices.
regional office was to evaluate and monitor activities     The
the field office level: provide them technical services  at
specialized support; allocate funds; and set program      and
                                                       priori-
ties.

     The reorganization also caused a major change in the
role of the central office. The new modified roles were
the areas of policy establishment and guidance. fund      in
                                                     alloca-
tions, and progress and program management monitoring.

     The objectives of the reorganization were carried out
in two phases for the central office level.  By November
1971. when the second stage was completed, HUD had com-
pletely shifted the focus of its central office from
                                                     narrow
and uncoordinated categorical programs to major functional
areas, with related programs grouped under a single official.

     The revised field organization was similarly carried out
in two phases. The major changes were




                            28
APPENDIX II                                     APPENDIX II


     -- installing area offices and delegating day-to-day
        program operating authority to them and

     -- incorporating FHA insuring offices into the unified
        HUD structure.

     The overall intent o these changes was to give decision-
making authority o n projects and applications to officials
closest to the poblems--the field office directors. Discus-
sions continu- as to whether this philosophy is appropriate,
and it remains to be seen if it will have a permanent impres-
sion on the organization. Certainly if the philosophy does
change. the organizational structure could also be altered
once again.
CREATION OF FULL-SERVICE   OUSING OFFICES

     During our review the Secretary of HUD announced that
16 HUD insuring offices will become full-service housing
offices. These offices join six others that were' established
in mid-1974 on an experimental basis. This change gives full-
service housing offices low-income and assisted housing re-
sponsibilities in addition to the FHA insurance activities
they have had. According to a HUD press release, these addi-
tional duties may or may not require additional people in
each of the offices depending on how they are presently
staffed. If additional staff in a given office are needed,
they will be provided fom resources presently allocated
to that region.
     The Secretary said that the change is being made to get
maximum productivity out of a limited staff available to HUD
and to locate the delivery of HUD's housing programs closer
to those who benefit from these programs. The new Secretary
has, however, stopped the conversion of the Denver and San
Diego Insuring Offices until completion of the ongoing organi-
zation assessment.




                              29
APPENDIX III                                                                                APPENDIX III




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                                                                                32
APPENDIX V                                                                      APPENDIX V

                       STAFF    AND     LINE    RELATIONSHIPS



                                                            SECRETARY




             PROGRAMMATIC
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                   I                                      AREA      OFFICE
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         PROGRAMMATIC
               DIVISION
                CHIEF
                   SOURCE:   RECOMMENDATIONS FOR NEAR TERM FIELD ORGANIZATION
                             STRUCTURE, JANUARY 1S76, COOPERS & LYRRAND.




                                           33
APPENDIX V
                                                                                                                                                                                                                                                                                       APPENDIX VI

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APPENDIX VII                                    APPENDIX VII


          SIGNIFICANT INTERNAL AND EXTERNAL STUDIES

                    OF HUD'S ORGANIZATION


STUDY OF THE HOUSE SURVEYS
AND INVESTIGATIONS STAFF

     The investigation of the regional and field office
structure addressed four general areas:   (1) the organiza-
tion and management of regional and field offices, (2) the
functions and interrelationships of organizational levels,
(3) the effectiveness of program delivery, and (4) the
caliber, adequacy, and morale of HUD's regional and field
office personnel. The information used to prepare the study
was developed through interviews and visits at all levels
within the organization. In all, approximately 115 individ-
uals representing HUD and its clients were contacted. Sup-
plementing the interviews, the staff analyzed HUD handbooks
and other documentation dealing with matters of organization,
management, and delegations of authority.
     The general observation of the investigative staff,
which was reported to the Committee on March 26, 1975. was
that the organization and management of HUD suffered from
confusion, fragmentation, and administrative inconsistency.
This situation had resulted in ineffectiveness in many areas
of HUD's program delivery. More specifically, they observed
that a detrimental effect had resulted from HUD's numerous
reorganizations and realinements, and as a result, confusion
concerning lines of authority and lack of adherence to them
had occurred. Further, the lack of effective decentraliza-
tion of authority had created a perceived tendency to expand
the supervisory role of the regional offices and the adminis-
trative oversight of the central office. The investigative
staff also noted that the field offices had an overall lack
of flexibility in the allocation of funds and use of person-
nel, and that considerable variation existed in the manner
and degree of communications and evaluations which took place
between the various organizational levels.

     The study made several constructive recommendations to
change what they viewed as serious shortcomings in manage-
ment discipline of a Cabinet department. It recommended
that HUD

     -- pursue the establishment of clearly stated Departmental
        objectives and goals for carrying out the legislation
        provided by the Congress;



                             35
APPENDIX VII                                     APPENDIX VII
     -- give immediate attention to insuring stability in its
        organization and management structure; and
     -- instill upon its policymaking officials their respon-
        sibility to more strictly respect the lines of author-
        ity and to renounce those areas in which operational
        functions have been improperly assumed.
In addition, as was pointed out in chapter 2, the study spe-
cified that there was "* * * an urgent need for the central
office to review the regional office functions and, where
necessary, take steps to realign their role that has, in some
instances been expanded into the operational nd decision-
making functions of the area office directors."
     The investigative staff further recommended that the
Committee consider obtaining a commitment from HUD which
would have precluded any further large-scale reorganization
or realinement for a logical period of time.
DEPARTMENTAL MANAGEMENT INITIATIVES

      Initiated in March 1975, Departmental management initia-
tives were a series of comprehensive management studies of
HUD's organization and major field program functions and
operations. Included were an activity known as "process
analysis" and a study by an independent management consulting
firm.

Process analysis

     Process analysis consisted of a series of detailed on-
site reviews of selected field offices to analyze the proc-
esses used to deliver HUD's programs to the public. The
responsibilities assigned to the field teams, which were
headed by field office directors, were specific:
    -- Determine how Departmental program processes are
       actually being carried out at field offices.
    -- Incorporate recommendations of field office staff on
       how these processes can be improved.
    -- Develop these ideas, techniques, and recommendations
       into simplified, improved methods and instructions.
    -- Prepare "as" flow charts of certain program process-
       ing in the designated field office.




                            36
APPENDIX VII                                   APPENDIX VII


     -- Develop simpler, more logical procedures in proc-
        essing and identify them by a recommended flow
        chart.

     In essence, process analysis was an attempt to discover,
through recommendations from field managers, whether there
were better, simpler, and more realistic ways to get the
job done. All four major program areas in the field and a
thorough review of the administrative support functions and
operations were covered. This encompassed the work of about
85 percent of HUD's field staff.
     Numerous recommendations for improvement surfaced from
these efforts, and they may lead to developing and adopting
several more logical procedures aimed at streamlining program
delivery. In addition, many significant observations concern-
ing numerous aspects of HUD management were raised and brought
to the attention of policymaking officials. Two of those
which were common throughout the field offices were the need
for
     -- improved and effective communication and coordination
        between all organizational levels and

     -- clear and supported Departmental policies and goals.

     Current plans are for HUD to continue to employ process
analysis as a means to improve the efficiency of its opera-
tions.

Consultant's study
     The study by a consulting firm focused on HUD's present
organization and made recommendations concerning both near-
term and long-term actions. The methodology employed in-
cluded analyses of administrative and legislative documenta-
tion, interviews with appropriate officials both internal
and external to HUD, and analyses of procedures and decision
points of the various programs. The culmination of these
efforts was internal seminars and a "sounding board" meeting
in which HUD personnel from several levels discussed the
organizational alternatives developed and proposed by the
study.
     The basic organizational problem of HUD field structure
identified by the study could be generally described as an
environment in which a lack of programmatic coordination at
the assistant secretary level had resulted in conflicting



                              37
APPENDIX VII                                   APPENDIX VII

priorities and confused communications in the field. The
study indicated that the present HUD organizational structure
had built-in potential conflicts due to the existence of both
a programmatic line authority from assistant secretaries to
regional administrators to field office directors and a gen-
eral line authority from the Secretary/Under Secretary to
the regional administrators to the field office directors.
This dual authority structure was cited as creating dysfunc-
tions in the formal organizational communications and in the
delegation of authority.
     With specific regard to HD's field organization, the
study stated:
    "In addition to problems caused by the dual author-
    ity structure, the 76 offices in the Field vary
    greatly in workload accomplished when compared by
    staffing and in the staff/grade relationships when
    compared to Headquarters.
    "Our examination of the communications with the
    Field showed that they can be characterized by:

         A lack of standardized channels of communi-
         cations up or down the organization, which
         vary in quality by location, program, or
         personality.
         A lack of standardized procedures for Field
         Office monitoring done by the Regions with a
         separate evaluation format developed by
         each Region.
         A lack of clarity in the de facto authori-
         ties and responsibilities. Each Region
         perceives its role and the role of the
         Field Offices differently and assumes a
         varying degree of authority and responsi-
         bility.
    "To a great degree, these communications prob-
    lems are caused by the delegations of authority.
    These delegations are such that:
         The Department is characterized by a dual
         span of command in which 'general line
         authority' and 'programmatic authori    ,e
         assigned differently and interpreted dif-
         ferently by the Regions.


                           38
APPENDIX VII                                   APPENDIX VII


          The Regional Administrator is the focal point
          for potential conflict between the program-
          matic influence of the Assistant Secretaries
          and the 'general line authority' of his own
          position.

          The delegation of authority to the Area
          Director through the Regional Adminis-
          trator is a source of overlap and confus-
          ion.
          The Assistant Regional Administrators are
          not considered in the programmatic or gen-
          eral line authority chain, but their job
          descriptions say they shall 'supervise'--
          which is exactly what many do.
     "A duplication of programmatic effort exists in
     the Field because:
          The delegation of authority to the Field
          Offices are not followed: many forms that
          are processed at the Field Offices are re-
          viewed and reprocessed again at Headquarters.

          Frequently, the Regions merely reprocess
          Field Office paperwork and then almost
          always concur with the Field Office deci-
          sions--allegedly without independent review.
     "Our analysis showed that in regard to Field
     staffing and workload that:
          With only 25% of the total staff, HUD Head-
          quarters has two-thirds of all grades GS-15
          and higher, whereas the Field has most of
          the responsibility for operating the programs.
          There exist great variations in workload
          performed by similar-sized offices; workload
          varies by office size, location, and program
          area.
          The smaller Area and Insuring Offices suffer
          from diseconomy of scale; they are overstaffed
          and below average in workload equity."
     The study examined five different options for the develop-
ment of both near-term and long-term field organizational



                             39
APPENDIX VII                                   APPENDIX VII

structure. These were (1) maintaining the status quo, (2)
reducing the regional offices to serve strictly a ministerial
function, (3) eliminating completely the regional offices,
(4) consolidating the regional office and coincident field
office, and (5) clustering offices into a series of field
program offices. The latter option was the preferred choice
of the study since it was viewed as a means by which less
efficient offices could be closed and personnel shifted to
bring about economies of scale. The study stated that:
     "Under this alternative, the present Regional
     Offices would be eliminated as a HUD managerial
     tier and the personnel at gsbordinate geographic
     locations of the Field Program Offices should
     be withdrawn to the main FPO [Field Program Office]
     location to the extent politically feasible.   If
     political considerations dictate keeping certain
     other offices, they should be 'service offices'
     subordinate to the FPO and should not be another
     tier in the organization.  In this way, all of
     HUD's Field operations would be conducted out of
     22 to 29 Field locations, and no other managerial
     level would lie between them and a newly reorga-
     nized HUD Headquarters."

     Since the above recommendation involved a major re-
organization, and since the study specifically recommended
that HUD not totally reorganize within the next four years,
various interim steps were suggested for all three organiza-
tional levels. They were proposed in order to restructure
the duties and responsibilities of the regional administra-
tors and the assistant regional administrators to prevent
their involvement in operational activities at the regional
level, to insure the staff role of the assistant regional
administrator position, and to strengthen the coordination
of the craluation function. A two-step approach was recom-
mended for near-term changes in the field structure. Step
one included
     -- removing all program execution (excepting liquidat-
        ing programs) from the regional offices and locat-
        ing them in the coincident field offices;

     -- keeping at the regional office only the program
        expert staff necessary for providing technical
        assistance to the field offices; and
     -- structuring the regional office in such manner as
        to preclude the temptation to pull back programmatic
        authority.


                             40
APPENDIX VII                                 APPENDIX VII


Step two recommendations were
     -- restructuring the duties of the assistant regional
        administrators to remove supervising from their job
        descriptions and to end de facto direction of field
        office program activities;

     -- creating new assistant regional administrators for
        program planning and equal opportunity and citizen
        services; and

     -- eliminating the strictly program execution units
        at the regional offices.




                                41
APPENDIX VIII                                   APPENDIX VIII


        PROPOSED TWO-TIER ORGANIZATIONAL ALTERNATIVES

     Various HUD organizational structures have been proposed
by groups internal and external to HUD. For informational
purposes, brief narratives on two proposed organizational
structures which would reduce or eliminate a level of man-
agement are provided below.

ALTERNATIVE ONE

     An alternative proposing a two-tier organization is the
separation of the subsidized housing and community develop-
ment programs from the FHA mortgage insurance programs of the
Department. In essence, this would constitute a return to
the FHA structure which existed prior to the integration of.
FHA and HUD and, according to some, would represent a revitali-
zation of FHA activities.
      Under this alternative, the regional offices would assume
responsibility for all subsidized housing and community develop-
ment programs and report directly to specific assistant secre-
taries in the central office. All FHP mortgage insurance pro-
grams would be administered by field offices. According to
HUD consulcants. the number of these offices could, however,
be reduced by about two-thirds through consolidations. These
offices would report directly to specific central office as-
sistants to the FHA Commisioner.   (The Department of Housing
and Urban Development Act, 1965, provided that there shall
be in HUD a Federal Housing Commissioner, who shall be one
of the assistant secretaries and shall head a Federal Housing
Administration within HUD.)   It has been purported that this
latter arrangement keeps the lines of communications and
authority between the central office and the field offices
short, direct. and close.

     This alternative structure would give autonomy to FHA,
which could then return to the basic function of insuring
mortgages made by private lenders.  It would also give autono-
my to the other programs of the Department. The overall HUD
structure would then consist of two or three major two-tier
bureaus, each self-contained and fully empowered to carry out
its functions. In addition, this structure could eliminate
program fragmentation that presently exists between field
offices and regional offices, thus reducing the potential
for duplication.

     This alternative coincides with views of several HUD of-
ficials and special interest groups, such as the Mortgage



                            42
APPENDIX VIII                                   APPENDIX VIII

Bankers Association of America. The special interest groups
were especially concerned that both insured and assisted
housing programs are presently a responsibility of each field
office. These groups and several officials we interviewed
maintain that the present offices should not be responsible
for tboth areas and that changing to such a structure would
eliminate current program effectiveness concerns.

     Steps are being aken in behalf of the Mortgage Bankers
Association and others to introduce a proposal in the 95th
Congress, 1st session, to bring about this type of organiza-
tional structure for HUD.
ALTERNATIVE TWO

     Executive Order 11647 and an amended Presidential policy
memorandum require that HUD maintain a regional presence and
preserve the basic integrity of regional boundaries. A re-
duction of the regional office role was proposed by a consult-
ing firm. It recommended, as a long-term option, that HUD
greatly reduce the number of field offices. This could pro-
vice the basis to eliminate the regional office level or
place regional offices in a ministerial role and establish a
two-tier managerial structure.

     To implement this recommendation, the consulting firm
proposed a "clustering" strategy that involved consolidating
HUD field offices into primary offices designated as field
program offices. Based on wokiload considerations, this
would combine all field activities into a lesser number of
offices. The consultants belia HUD's field operations
could be conducted by 22 to 29 ield program offices. These
field program offices would communicate and interact directly
with the central office.

      If field program offices are to be established based on
the clustering methodology, the process of relating the goals
management system to HUD's mission should be beneficial in
deciding which field offices could be closed or reduced in
staff. Based upon workload, field offices could be closed
and programmatic personnel shifted to field program offices
where economies of scale could be achieved.

     Innate to the clustering strategy is the elimination of
the regional office as a managerial tier. The resulting
creation of a two-tier HUD organizational structure would,
according to the consultants, facilitate more effective
management operations and organizational communication while




                             43
APPENDIX VIII                                  APPENDIX VIII


achieving a significant cost savings. HUD consultants esti-
mate that HUD could save between $6.9 and $14.2 million
annually by eliminating 23 to 47 percent of the 1,664 re-
gional office positions. (See p. 14.) Under this plan
HUD would keep between 18 and 16 percent at the regional
offices and relocate between 37 and 18 percent and between
22 and 19 percent to the central office and selected field
offices, respectively. Generally, eliminating these posi-
tions is the result of achieving economies of scale by con-
solidating some functions in the central office.
     Another clustering benefit is the reduction of field
offices. Fewer field offices could enable the central of-
fice to achieve a reasonable span of control with the reor-
ganized two-tier organization.




                            44
APPENDIX IX                                          APPENDIX IX


          DEFINITIONS OF REGIONAL OFFICE FUNCTIONS

GENERAL MANAGEMENT ACTIVITIES
     This category includes general activities relating to
overall regional office and regionwide management functions.
Specifically included are management by objectives, long-range
planning including implementing new legislation or program
activities), the Federal Regional Council, the regional admin-
istrator's staff meetings, general correspondence, public
affairs, and the managing and supervising activities of the
regional administrator and assistant regional administrators.

RESOURCE ALLOCATION AND MANAGEMENT
     This category includes regional office activities de-
voted to the distribution of resources (either funds, person-
nel, or units, etc.) among area and insuring offices and
monitoring and evaluating the use of such resources.
POLICY AND TECHNICAL ADVICE

     This category includes all formal and informal policy and
technical advice, assistance, and direction provided by
regional office staff to HUD field offices or clients. This
includes passing on, explaining, or interpreting policy,
procedures, technical guidelines or requirements, and related
directions or instructions. Activity in this category may
be performed at the regional office through memorandum, by
phone, or onsite at area or insuring offices or client lo-
cations.

MONITORING AND EVALUATION
     This category includes all activities devoted to the
monitoring and evaluation of field office activities and
performance.  Included in this category are two specialized
activities--audit review and followup and the review, anal-
ysis, and consolidation of field office reports. Activities
included in this category may be performed either at the
regional office or onsite in field offices.

EMPLOYEE DEVELOPMENT AND TRAINING

      This category includes most employee development and
 training activities, both formal and informal, but does not
 include all informal on-the-job training. The category in-
 cludes training activities devoted to both regional and
 field office employees and, in some cases, client employees



                                45
  APPENDIX IX
                                                        APPENDIX IX
   (such as housing authority
                              management employees).
  in this category ars workshops                      Included
  such as the quarter v           and regionwide meetings,
                         meeting of area economists.
  PROGRAM OPERATIONS (RETAILING)

       This activity includes
  gional office staff which     all functions performed
                              are,                        by re-
 gram nperations or processing, or relate directly to, pro-
 all functions which normally, etc. This category includes
 adequate staff resources,        under ideal circumstances
 insuring offices. The       would   be performed by area or and
 processing performed in  category   includes direct project
 contact with clients on the regional offices and direct
                           specific cases or projects.
 project processing may                                    Such
 fice, or it may be a    be  originated in the regional
                       reprocessing of material            of-
area and insuring offices.                         forwarded from.
staff support to field         The category includes
                                                       direct
regional office staff offices in terms of the provision
                        as temporary supplements               of
place of, field office                              to, or in
the following activities staff.    The category also includes
                           which, although assigned
regional office, are of                                to the
litigation, private marketan operational or project
                                                       nature:
                             financing, and equal opportunity
complaint processing.
ADMINISTRATIVE OPERATIONS

      This category includes
 ing functions under the        the direct administrative
                           Assistant                       operat-
Administration. It includes           Regional Administrator
                                 such functions as processing for
personnel actions, performing
ing the library,                  accounting operations,
include functions oror running the motor pool.            operat-
                                                 It does not
                        activities such as providing
assistance to field offices                           advice or
monitoring or evaluating       on administrative matters
tions.                      field office administrative or
                                                         func-




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