oversight

Employment of OMHAR Staff at HUD Following Their Employment at OMHAR

Published by the Government Accountability Office on 2003-06-30.

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

United States General Accounting Office
Washington, DC 20548



          June 30, 2003

          The Honorable Paul S. Sarbanes
          Ranking Minority Member
          Committee on Banking, Housing, and Urban Affairs
          United States Senate

          Subject: Employment of OMHAR Staff at HUD Following Their Employment at
                   OMHAR

          Dear Senator Sarbanes:

          To reduce the estimated multibillion-dollar costs to the federal government of
          renewing rental subsidy contracts while helping preserve available and affordable
          low-income rental housing, Congress passed the Multifamily Assisted Housing
          Reform and Affordability Act of 1997 (Act), which established the “mark-to-market”
          program to restructure the contracts. The Act also created the Office of Multifamily
          Housing Assistance Restructuring (OMHAR) as a temporary organization within the
          Department of Housing and Urban Development (HUD) to administer the contract-
          restructuring program. With OMHAR scheduled to “sunset” (cease operations) on
          September 30, 2001, the Subcommittee on Housing and Transportation, Committee
          on Banking, Housing, and Urban Affairs, held a hearing in June 2001 to determine
          whether it would be more advantageous to the federal government to extend rather
          than end the program. Subsequently, Congress extended the sunset date to
          September 30, 2004, with restructuring work at HUD continuing until 2006. To ensure
          that OMHAR could attract and retain staff with requisite expertise in multifamily
          housing finance issues, the Act provided the Director of OMHAR authority to pay
          salaries comparable with the Federal Deposit Insurance Corporation. 1 As a result,
          OMHAR salaries are generally higher than those paid for most federal positions.
          OMHAR is staffed in part by former HUD employees, and also by former employees
          of other federal agencies and the private sector.

          As you know, the Subcommittee on Housing and Transportation, Committee on
          Banking, Housing, and Urban Affairs has previously highlighted the importance of
          attracting and retaining the skilled staff necessary to carry out OMHAR functions. In
          addition, you have stated that a chief goal of the legislation extending the sunset date
          until 2004 ought to be the retention of OMHAR staff so that program implementation
          would move forward effectively. In light of these issues, in your December 4, 2002,
          request, you expressed concern that HUD might not be honoring pay commitments
          relating to the return of OMHAR staff to HUD after their employment at OMHAR

          1
              Public Law 105-65, Section 574 (b), 111 Stat. 1422, October 27, 1997.


                                                                        GAO-03-703R OMHAR Staff Employment
ends. We agreed with your office to (1) describe what information HUD and OMHAR
officials provided regarding OMHAR staff employment at HUD following their
employment at OMHAR; (2) describe how HUD determined to which OMHAR
employees it would offer employment and what their pay levels would be; and (3)
determine, for eligible OMHAR employees, how accepting HUD’s offer would affect
their pay.

Background

OMHAR is responsible for administering the mark-to-market program, which was
established to reduce rent levels for Federal Housing Administration (FHA)-insured
multifamily properties that receive Section 8 assistance and have rents determined to
                                      2
be above prevailing market levels. The goals of the mark-to-market program include
preserving the affordability and the availability of low-income rental housing while
reducing the long-term costs of Section 8 project-based assistance. Restructuring
generally involves resetting rents to market levels and reducing mortgage debt, if
necessary, to permit a positive cash flow for the project. To facilitate the
restructurings, Congress provided OMHAR with certain tools, such as the ability to
reduce an owner’s mortgage payments by creating a new first mortgage and, where
necessary, deferring some of the debt to a second mortgage that must be repaid only
if sufficient cash flow is available.

As of June 1, 2003, OMHAR had a staff of 78, split among four field offices and its
Washington, D.C., headquarters. Approximately two-thirds of the staff are devoted to
“production” functions such as reviewing, underwriting, or restructuring mortgages
and conducting closing and post-closing activities; the remaining staff perform
administrative functions. HUD and OMHAR managers agreed during the start-up of
OMHAR that HUD’s human resource office would handle personnel processing
functions, because establishing a separate personnel office at OMHAR or using other
agencies would be difficult and might delay hiring.

In December 1998 and January 1999, HUD requested, and received from the Office of
Personnel Management (OPM), the authority to appoint (hire) staff under Schedule A
                             3
of the excepted schedules. Schedule A authority must be used by temporary
organizations (such as OMHAR) that are established within continuing agencies to
hire staff for positions for which it is not practical to hold competitive examinations.4
An appointment into a position under Schedule A is an appointment into the excepted
service, or those positions in the executive branch specifically exempted from

2
 Under Section 8 of the Housing Assistance Act of 1937, tenants pay up to 30 percent of their family or
individual income for rent. The federal government pays property owners the difference between the
actual monthly rent and the family or individual’s payment. This assistance can be project-based
(attached to the unit) or tenant-based (in the form of a voucher held by the tenant). The mark-to-
market program applies only to project-based Section 8 program contracts. Over 800,000 units in
approximately 8,500 multifamily projects have been financed with mortgages insured by FHA and
supported by project-based Section 8 housing assistance payment contracts.
3
 5 C.F.R. 213.3101. OPM is responsible for administering the Civil Service System, including personnel-
related laws and executive orders, and for developing regulations to ensure that all agency personnel
actions are in accordance with merit system principles. 5 U.S.C. §§1103 & 1104.
4
    5 C.F.R. 213.3199.


Page 2                                                    GAO-03-703R OMHAR Staff Employment
competitive service procedures. In contrast, competitive service positions are those
to which competitive civil service laws and procedures do apply. An appointment to
a competitive service position allows federal employees to earn competitive status,
which in turn allows them to be promoted, transferred, reassigned, or reinstated
without taking additional competitive examinations or undergoing competitive
procedures, subject to the conditions prescribed by the civil service rules and
regulations.5

The movement of federal employees among agencies or between positions is subject
to certain limitations. In this letter, we discuss two such limitations; specifically, how
reemployment rights and reinstatement eligibility apply to federal employees.
Reemployment rights allow an employee to return to nontemporary employment
                                                         6
following an assignment to other civilian employment. An employee with
reemployment rights is entitled to, among other things, a position at the same grade
or level and in the same geographic area as the position that the employee previously
held.7 But, under OPM regulations, agencies may only offer reemployment in limited
circumstances, such as movement of staff between executive agencies during
emergencies. To grant reemployment rights in the case of an emergency, an agency
must request that OPM provide it with a letter of authority.8

Reinstatement eligibility, on the other hand, is a broader concept; federal employees
with competitive status are by definition eligible for reinstatement. Reinstatement
eligibility allows an individual formerly employed in the competitive service, who had
competitive status or was probationary when separated, to be considered for a
federal position without undergoing competitive procedures.9 Agencies may still
choose whom to hire; reinstatement eligibility does not guarantee a position, but
rather offers the possibility for appointing an individual to a position.

According to OPM regulations, individuals who have reinstatement eligibility would,
upon accepting reinstatement without competition, have their pay set at no higher
than their last competitive grade held in the General Schedule (GS).10 For example, if
an individual left the competitive service and the last competitive grade held was a
GS-9, he or she would have to be reinstated to a GS-9 position. The hiring agency
could then apply the maximum payable rate rule, which uses highest previous rate of


5
    Competitive status is acquired by completion of a probationary period.
6
Other civilian employment may be with the Foreign Service, public international organizations, or
other agencies in the executive branch.
7
An agency may refuse to reemploy an employee with reemployment rights only when the employee
was separated from the agency for serious cause (5 C.F.R. 352.208).
8
    5 C.F.R. 352.201-203.
9
    5 C.F.R. Part 315, Subpart D.
10
 The General Schedule (GS) is the graded pay system established under the Classification Act of 1949,
as amended (5 U.S.C. Chapter 53, Subchapter III, and 5 C.F.R Part 531). GS grades range from GS-1 to
GS-15, and there are 10 steps in each grade level.



Page 3                                                      GAO-03-703R OMHAR Staff Employment
                                                              11
pay to determine the appropriate step within this grade level. Highest previous rate
is the highest actual rate of basic pay previously received by an individual while
employed in a federal government position, or the actual rate of basic pay for the
highest grade and step previously held by an individual while employed in a position
subject to the general schedule. To set pay, the hiring agency typically would review
the individual’s official personnel folder to determine the last nontemporary GS grade
held in the competitive service. The agency then would have the discretion to set pay
                                                                             12
at any step within the grade without exceeding the last GS pay grade held.

Results in Brief

Over a period of several years, HUD provided inaccurate information to OMHAR
officials and staff regarding OMHAR staff members’ potential employment and pay at
HUD. To encourage HUD employees to apply for positions at OMHAR during start-up
in 1999, HUD provided a memorandum to OMHAR managers stating that certain HUD
employees who joined OMHAR would have “reemployment rights.” However, HUD
had neither requested nor received authority from OPM to grant reemployment
rights. (HUD did have the authority to reinstate employees.) Also during 1999, HUD-
prepared job announcements erroneously advertised some OMHAR positions as
competitive service positions, when they were actually excepted service positions. In
November 2000, HUD sent a memorandum to OMHAR managers, notifying them that
it would correct erroneous OMHAR employee appointments made under incorrect
announcements. However, in the same memorandum, HUD provided inaccurate
information on pay levels that would apply to OMHAR employees eligible to return to
HUD. Specifically, the memorandum stated that “upon the sunset of OMHAR,”
eligible employees would be moved into positions at HUD at their current OMHAR
pay grades rather than, as is correct, their highest previously held grade in the
competitive service.

HUD determined to which OMHAR employees it would offer employment and what
their pay would be using OPM regulations regarding reinstatement eligibility. HUD
laid the groundwork for these decisions in a July 2002 memorandum to OMHAR
managers noting that previous information on employment and pay that it had
provided was not consistent with OPM regulations. The memorandum clarified
previous inaccuracies and explained which regulations applied to staff and how these
would affect employment eligibility and pay for positions at HUD. HUD also stated
that its earlier “reemployment commitment” to eligible staff would be honored.
Shortly after the July 2002 memorandum, OMHAR and HUD officials worked together
to identify OMHAR staff to whom HUD would offer positions, based on their prior
competitive status, and what their pay would be, based on their highest grade level
held in the competitive service. Because OMHAR is a temporary organization and its
positions are excepted rather than competitive, only staff with prior competitive
status have reinstatement eligibility. HUD is using its discretionary authority to offer
positions to OMHAR employees with reinstatement eligibility in an attempt to honor
its “reemployment commitment.” HUD is also using its authority to offer staff pay at
the highest appropriate step within the last competitive grade held. Based on HUD

11
     5 C.F.R 531.201-531.203.
12
     5 C.F.R. 531.203 (c) (1).


Page 4                                           GAO-03-703R OMHAR Staff Employment
and OMHAR’s analysis, as of March 7, 2003, there were 24 staff who had been
identified as eligible for reinstatement at HUD.

By accepting HUD’s offer of reinstatement without competition, all 24 eligible
OMHAR staff would experience a reduction in pay. Based on HUD and OMHAR’s
analysis, as of March 7, 2003, the average decrease in pay for OMHAR staff would be
16.5 percent, or about $17,000. Specifically, 10 staff would experience a decrease of
more than 20 percent, 6 would experience a decrease of 10 to 20 percent, and 8 would
experience a decrease of less than 10 percent. However, to more closely match their
OMHAR salary, eligible OMHAR staff may apply for higher-grade positions at any
federal agency through normal competitive procedures.

In commenting on a draft of this letter, HUD officials agreed with the letter’s findings.
Our evaluation of HUD’s comments appears later in this letter; HUD’s comments
appear in the enclosure. We also requested, but did not receive, comments from
OPM.


HUD Provided Inaccurate Information Regarding Future Employment and
Pay of OMHAR Staff

From 1999 until 2002, HUD provided OMHAR staff with inaccurate information
regarding employment and pay. The inaccurate information was contained in a
variety of documents, including a series of memorandums and job announcements to
OMHAR managers and staff. Prior to hiring staff, HUD mistakenly informed OMHAR
managers that certain HUD employees who joined OMHAR had “reemployment
rights,” when in fact what they had was reinstatement eligibility, which is granted to
all employees with prior competitive status in the federal service. HUD then
incorrectly advertised some positions as competitive and therefore appointed some
OMHAR staff to positions incorrectly designated as competitive when they were
actually excepted positions. Later, HUD corrected OMHAR employee appointments
to address initial mistakes, but presented inaccurate information regarding pay
grades for OMHAR employees eligible to return to HUD; OMHAR’s Director then
communicated this inaccurate information on pay to OMHAR staff.

HUD Mistakenly Informed OMHAR Managers That Eligible Staff Would Have
Reemployment Rights and Erroneously Appointed Many OMHAR Staff

On February 17, 1999, the Deputy Secretary of HUD sent a memorandum to the
Director of OMHAR regarding the employment of HUD employees appointed to
positions at OMHAR. The memorandum incorrectly stated that, under delegated
agency authority granted by OPM, the Deputy Secretary was “granting reemployment
rights to those eligible career and career-conditional HUD employees serving under a
Schedule A excepted service or a career appointment with OMHAR.” 13



13
  A career employee has completed 3 substantially continuous, creditable years of federal service
under a competitive service permanent appointment (5 C.F.R. 315.201). A career-conditional employee
is serving in a competitive service appointment, but has not yet completed the 3-year service period.


Page 5                                                  GAO-03-703R OMHAR Staff Employment
The February 1999 memorandum’s use of the term “reemployment rights” was
inaccurate, because reemployment rights only apply in very specific circumstances.
Although these OMHAR staff did not have reemployment rights, they did have
reinstatement eligibility, which is offered to all federal employees with prior
competitive status, allowing them to be considered for a federal position without
undergoing competitive procedures. Based on our discussions with OPM officials
and review of the regulations, HUD would have had to request a letter of authority
                                                      14
from OPM to be able to offer reemployment rights. After interviews with HUD and
OPM officials, and after review of internal files by these officials, they were unable to
find any documentation that showed that HUD requested or received this authority
from OPM. However, according to HUD and OMHAR officials, HUD believed at the
time that it could offer reemployment rights and used this offer to increase the
interest of prospective HUD employees in applying for positions at OMHAR. HUD
and OMHAR officials also told us that shortly after the memorandum was released,
the Director of OMHAR erroneously decided to extend reemployment rights to all
federal employees to be hired by OMHAR, not just HUD employees, to further
increase interest in the positions.

In 1999, as OMHAR started hiring staff, some HUD-prepared job announcements
incorrectly labeled OMHAR positions as being in the competitive service. Because
OMHAR is a temporary agency, all its appointments must be to excepted service
positions. Consequently, some OMHAR employees were appointed to positions
incorrectly characterized as competitive service positions, and these incorrect
appointments were documented in personnel records such as the Standard Form 50
         15
(SF 50).

After OMHAR appointed staff, it also provided each employee with a memorandum
explaining that the employee had either an excepted service appointment or
(erroneously) an appointment with reemployment rights. For staff erroneously
offered reemployment rights, these individual memorandums, in most cases,
discussed the position and grade level staff would be placed in at HUD following
OMHAR sunset or termination of their appointment.

HUD Presented Inaccurate Information on Pay Grades to OMHAR Managers, Who
Disseminated the Information to OMHAR Staff

On November 7, 2000, the Director of the Office of Human Resources at HUD sent a
memorandum to OMHAR’s Administrative Officer regarding the appointment status
and pay of OMHAR employees. This memorandum was a follow-up to a series of
discussions between HUD’s Office of Human Resources and OMHAR managers
concerning appointment status and pay in light of the impending OMHAR sunset.
OMHAR officials were concerned that there would be a problem retaining qualified
staff and recruiting new staff in the year prior to sunset. As an incentive to reduce
the potential loss of staff, HUD agreed to offer OMHAR employees retention of their
14
     5 C.F.R. 352.201-203.
15
 A Standard Form 50 (SF 50), Notification of Personnel Action, is a document used by federal agencies
to inform employees of changes, such as reassignment, pay adjustments, promotions, or achievement
of status. A copy of every SF 50 issued for an employee is included in the employee’s official
personnel folder.


Page 6                                                  GAO-03-703R OMHAR Staff Employment
OMHAR pay grades rather than use their last competitive grade held. The
memorandum also noted that some appointments had been improperly documented
as competitive, rather than excepted, and outlined the steps that would be taken to
correct employee records. (HUD and OMHAR subsequently provided staff with
corrected SF 50s.) However, the November memorandum continued to erroneously
refer to staff as having reemployment rights.

While the memorandum notified OMHAR managers of the correction of one
misunderstanding, it created another by incorrectly stating that employees with
competitive status, following OMHAR sunset or termination of their appointment,
would be moved into positions at HUD at their “current grades” rather than the grade
last held in a competitive position. The memorandum stated that when this occurred,
“salaries would be based on the GS pay schedule using highest previous rate rules.”
The memorandum also stated that the maximum rate payable under this authority
was step 10 of the GS equivalent to the current grade held. Based on our discussions
with OPM and HUD officials, because OMHAR is a temporary organization with
excepted positions, pay grades under this organization are also temporary, and
cannot be used to set pay if an agency chooses to reinstate an employee without
competition to a competitive position. (Reinstatement without competition would be
                                                   16
to the grade last held in a competitive position.)

Using the information provided in the November 2000 memorandum, the Director of
OMHAR sent a memorandum to OMHAR staff on December 5, 2000, notifying them of
the two issues. The discussion of pay retention in the December memorandum was
almost identical to that of the November memorandum, but added that shortly before
OMHAR sunset, employees would be notified of the positions to which they would be
assigned and the grades and steps of these positions.


HUD Determined to Whom It Would Offer Employment and What Their Pay
Would Be by Applying Federal Personnel Regulations

HUD determined to which employees it would offer positions and what their pay
would be by applying relevant OPM regulations on reinstatement eligibility. Prior to
the originally scheduled (2001) sunset of OMHAR, and after questions were raised by
OMHAR staff, HUD officials began to research employment and pay issues. In so
doing, HUD officials discovered that inaccurate information had been provided to
OMHAR officials and staff from OMHAR’s inception. HUD then contacted OPM to
discuss how HUD’s existing information compared with OPM regulations. OPM
officials described OMHAR employee entitlements based on relevant regulations and
explained specific provisions applying to employees of temporary agencies.

Based on this research, HUD developed a memorandum to clarify previous
misinformation. On July 8, 2002, HUD’s Assistant Secretaries for Administration and
Housing sent this memorandum to the Deputy Secretary of HUD requesting approval
of a policy change on OMHAR employment. This policy change was requested in
order to clarify eligibility of current and future competitive status employees at

16
     See 5 C.F.R. 335.103 (c) (1) (vi) and 5 C.F.R. 335.103 (c) (3) (v).



Page 7                                                           GAO-03-703R OMHAR Staff Employment
OMHAR for positions at HUD and to explain how pay would be set for those
                                    17
employees offered positions at HUD. More specifically, the memorandum explained
that the information on “reemployment rights” and pay that employees had previously
received was inconsistent with OPM regulations. The memorandum also referred to
the December 2000 memorandum that inaccurately indicated that OMHAR employees
could move to HUD at their current pay grades in OMHAR (not to exceed step 10 of
that grade).

Based on discussions with OPM officials and review of the regulations, HUD
determined that those OMHAR employees who had achieved competitive status—
whether at HUD or another federal agency—prior to their appointment with OMHAR
did not have reemployment rights, but rather reinstatement eligibility. Yet the
memorandum also recommended that HUD “honor the commitment” made by the
former Deputy Secretary in February 1999. The memorandum further explained that
current OMHAR employees with competitive status would receive positions at HUD
at a pay grade permissible under OPM regulations, meaning the last competitive
grade held (because they could not be reinstated to a position at a higher grade than
previously held without undergoing competitive procedures).18 Additionally, HUD
stated that all staff hired after July 8, 2002, who had competitive status in a previous
position, would be required to sign an acknowledgment indicating that they were
leaving the competitive service to join the excepted service on a time-limited
appointment and not entitled to permanent reemployment with HUD upon expiration
of their OMHAR appointment.

After the July memorandum was approved, HUD and OMHAR officials began a
process of identifying individuals to whom HUD would offer positions. In August
2002, OMHAR provided HUD with a list of employees who had been told they had
                                              19
reemployment rights when they were hired. HUD then examined official personnel
folders to verify the accuracy of the list. Specifically, HUD determined whether an
individual had prior competitive status and what his or her previous grade level was
in the last competitive position held. Based on HUD and OMHAR’s analysis, as of
March 7, 2003, 24 staff were identified as eligible for reinstatement at HUD.

According to HUD officials, they are trying to find positions at HUD for OMHAR staff
with competitive status in an attempt to honor HUD’s “reemployment commitment.”

17
     The Deputy Secretary approved the memorandum on July 17, 2002.
18
 These employees are not entitled to their OMHAR salaries even though the Director of HUD’s Office
of Human Resources and OMHAR’s Director explicitly promised that they would receive those salaries
at HUD. Federal government employees serve by appointment, rather than by contract. See United
States v. Hopkins, 427 U.S. 123 (1976). Appointing officials cannot exceed their authority in making
appointments and by such conduct create a binding claim against the Government. See National
Treasury Employees Union v. Reagan, 509 F. Supp. 1337 (1981). Courts have also determined that the
appointment documents were not controlling on their face where the Government was able to show
that employees did not have the employment status indicated on the form. See Grigsby v. United
States Department of Commerce, 729 F.2d 772 (Fed. Cir. 1984). Payments of money from the federal
treasury are limited to those authorized by law; the erroneous advice given by these officials does not
supersede HUD’s limited authority to make payments to employees. See Office of Personnel
Management v. Richmond, 496 U.S. 414 (1990), reh’g denied, 497 U.S. 1046 (1990).
19
     We discuss updates and changes to this list in the following section.


Page 8                                                        GAO-03-703R OMHAR Staff Employment
Based on our discussions with OPM officials, HUD’s offer of employment to OMHAR
staff with competitive status is not a guarantee; that is, these individuals do not have
reemployment rights. HUD is using its discretionary authority to choose to hire staff
with reinstatement eligibility. Additionally, HUD is using its discretion to offer pay up
to step 10 of the reinstated employees’ previous competitive grades. A federal agency
has the authority to match, as closely as possible, prospective employees’ current
salary as long as the agency does not exceed the highest step within the last grade
held in a competitive position.


Accepting HUD’s Offer of Reinstatement Would Reduce the Pay of Eligible
OMHAR Staff

Because of the difference between OMHAR and HUD pay schedules, and pay
increases due to promotions that some employees received at OMHAR, all eligible
OMHAR staff would see a reduction in pay if they chose to accept HUD’s offer of
reinstatement without competition. Based on HUD and OMHAR’s analysis, as of
March 7, 2003, 24 eligible OMHAR employees would experience an average pay
decrease of 16.5 percent, or about $17,000. Five staff would experience a decrease of
25 percent or more, 5 staff would experience a decrease of 20 to 25 percent, 6 would
experience a decrease of 10 to 20 percent, and 8 would experience a decrease of less
than 10 percent. In dollars, 4 staff would experience a reduction in pay of $30,000 or
more, 4 would experience a reduction of $17,000 to $30,000, 10 would experience a
reduction of $8,500 to $17,000, and 6 staff would experience a reduction of less than
$8,500.

To verify the number of staff that would be affected and the pay reductions they
would experience, we used the August 2002 HUD-verified list of 36 employees to
whom HUD would offer positions. The list included the grade and step employees
would receive at HUD, their current OMHAR grade and step, and the difference
between the two in dollars. Additionally, on March 7, 2003, OMHAR provided us with
2003 OMHAR pay rates and updates regarding employee status, including
retirements, transfers, and resignations. Based on these updates, the list of 36 was
reduced to 28 employees because 4 staff were offered positions by HUD, 2 staff
retired, 1 took a position with another federal agency, and 1 took a position in the
private sector. As of March 7, 2003, HUD planned to offer positions to 24 employees
                               20
with reinstatement eligibility.

If OMHAR staff wish to obtain or more closely match their OMHAR salary and grade
levels, OPM regulations require that they apply for higher-grade positions through
normal competitive procedures. If an agency then selected these staff into higher-
grade positions, it could use the highest previous rate these staff earned at OMHAR to
set pay up to the step 10 within this new grade. Through this process, OMHAR staff
members could more closely match their OMHAR pay, if such positions were
available.

20
 One individual retired since the March 2003 update, changing the number to 23. In addition, four staff
were also erroneously offered reemployment rights by OMHAR, but did not have prior competitive
status. HUD and OMHAR officials are working to resolve these cases. HUD has hired one of these
individuals since the March 2003 update.


Page 9                                                    GAO-03-703R OMHAR Staff Employment
Agency Comments

We provided a draft of this report to the Department of Housing and Urban
Development (HUD) and the Office of Personnel Management (OPM) for their review
and comment. We received written comments and technical suggestions on the draft
report from HUD’s Assistant Secretary for Housing, but did not receive a response
from OPM. HUD agreed with the report’s findings that the Department initially
provided OMHAR management with incorrect personnel guidance regarding
‘‘reemployment rights’’ and ‘‘return pay’’ levels of OMHAR staff. Where appropriate,
we also incorporated technical suggestions made by HUD.

Scope and Methodology

To describe what information HUD and OMHAR officials provided regarding OMHAR
staff employment and pay following their employment at OMHAR, we obtained
memorandums and interviewed officials from HUD, OMHAR, and OPM. To describe
how HUD determined to which OMHAR employees it would offer employment and
what their pay levels would be, we interviewed HUD and OMHAR officials and
obtained relevant communications and data from HUD, OMHAR, and OPM. We also
obtained and reviewed relevant personnel regulations. To address the impact of
accepting HUD’s offer of employment on eligible OMHAR employees’ pay, we
obtained data from OMHAR and HUD that listed those who were eligible and
compared the current pay of OMHAR staff with the pay they would receive if they
accepted employment with HUD. We then verified this information by reviewing
official personnel folders of the listed staff. HUD was unable to locate one personnel
folder; therefore, we were only able to verify the competitive status and the highest
grade held for 23 of the 24 eligible staff. We conducted our work in Washington, D.C.,
from December 2002 until June 2003 in accordance with generally accepted
government auditing standards.

We are sending copies of this report to the Secretary, Department of Housing and
Urban Development; the Director, Office of Personnel Management; and the Director,
Office of Management and Budget. The report is also available at no cost on GAO's
home page at http://www.gao.gov. Major contributors to this report were John
McGrail, Barbara Roesmann, Wendy Wierzbicki, and Chuck Wilson. If you or your
staff have any questions, please contact me on (202) 512-8678 or at woodd@gao.gov.

Sincerely yours,




David G. Wood
Director, Financial Markets and
Community Investment




Page 10                                         GAO-03-703R OMHAR Staff Employment
           Enclosure

                Comments from the Department of Housing and Urban Development




(250120)   Page 11                                GAO-03-703R OMHAR Staff Employment
                         The General Accounting Office, the audit, evaluation and investigative arm of
GAO’s Mission            Congress, exists to support Congress in meeting its constitutional responsibilities
                         and to help improve the performance and accountability of the federal
                         government for the American people. GAO examines the use of public funds;
                         evaluates federal programs and policies; and provides analyses,
                         recommendations, and other assistance to help Congress make informed
                         oversight, policy, and funding decisions. GAO’s commitment to good government
                         is reflected in its core values of accountability, integrity, and reliability.


                         The fastest and easiest way to obtain copies of GAO documents at no cost is
Obtaining Copies of      through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and full-
GAO Reports and          text files of current reports and testimony and an expanding archive of older
                         products. The Web site features a search engine to help you locate documents
Testimony                using key words and phrases. You can print these documents in their entirety,
                         including charts and other graphics.
                         Each day, GAO issues a list of newly released reports, testimony, and
                         correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site
                         daily. The list contains links to the full-text document files. To have GAO e-mail
                         this list to you every afternoon, go to www.gao.gov and select “Subscribe to daily
                         E-mail alert for newly released products” under the GAO Reports heading.


Order by Mail or Phone   The first copy of each printed report is free. Additional copies are $2 each. A
                         check or money order should be made out to the Superintendent of Documents.
                         GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a
                         single address are discounted 25 percent. Orders should be sent to:
                         U.S. General Accounting Office
                         441 G Street NW, Room LM
                         Washington, D.C. 20548
                         To order by Phone:     Voice:    (202) 512-6000
                                                TDD:      (202) 512-2537
                                                Fax:      (202) 512-6061


                         Contact:
To Report Fraud,
                         Web site: www.gao.gov/fraudnet/fraudnet.htm
Waste, and Abuse in      E-mail: fraudnet@gao.gov
Federal Programs         Automated answering system: (800) 424-5454 or (202) 512-7470


                         Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800
Public Affairs           U.S. General Accounting Office, 441 G Street NW, Room 7149
                         Washington, D.C. 20548
This is a work of the U.S. government and is not subject to copyright protection in the
United States. It may be reproduced and distributed in its entirety without further
permission from GAO. However, because this work may contain copyrighted images or
other material, permission from the copyright holder may be necessary if you wish to
reproduce this material separately.