oversight

Potential Antideficiency Act Violations Intergovernmental Personnel Act Agreements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-05-30.

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

                                        U.S. DEPARTMENT OF
                           HOUSING AND URBAN DEVELOPMENT
                                   OFFICE OF INSPECTOR GENERAL




                                            May 30, 2014
                                                                       MEMORANDUM NO:
                                                                           [2014-FW-0801]



Memorandum
TO:           Helen Kanovsky
              Acting Deputy Secretary, SD

              David Sidari
              Deputy Chief Financial Officer, F

              //signed//
FROM:         Gerald R. Kirkland
              Regional Inspector General for Audit, 6AGA

SUBJECT:      Potential Antideficiency Act Violations
              Intergovernmental Personnel Act Agreements

                                     INTRODUCTION

Based upon a complaint, we reviewed two Intergovernmental Personnel Act (IPA) agreements as
part of a joint assignment with our Office of Investigation and Office of Legal Counsel. During
the review, we identified potential Antideficiency Act (ADA) violations with one of the
agreements. Specifically, the U. S. Department of Housing and Urban Development (HUD)
incorrectly used more than $620,000 in Office of Public and Indian Housing (PIH) and Office of
Housing-Federal Housing Commissioner personnel compensation funds to pay the salary of a
senior advisor to the HUD Secretary. Additionally, HUD paid more than the agreement allowed
and made payments without an agreement in place. HUD did not have procedures in place to
prevent these potential ADA violations. Our objective was to determine whether HUD violated
the ADA when it obtained the services of two people through IPA agreements.

                              METHODOLOGY AND SCOPE

To accomplish our objective, we

   •   Reviewed relevant Federal law, regulations, and implementing guidance;
   •   Interviewed current and former HUD employees;
   •   Reviewed agreements and related obligations and expenditures;
   •   Reviewed emails pertaining to the agreements and its process; and
    •   Reviewed budgetary documentation.

Our scope was from October 2010 through March 2014. We performed work in Washington,
DC, Fort Worth, TX, and Oklahoma City, OK, from July 2013 through March 2014.

                                             BACKGROUND

While reviewing a complaint regarding a person under an IPA agreement, we became aware of a
similar IPA agreement with another person which HUD approved around the same time. Under
the agreement, this person would continue to be employed by Community Builders, Inc., but
would assist HUD with an initiative that became the Rental Assistance Demonstration program. 1
The General Deputy Assistant Secretary for Public and Indian Housing approved funding
availability for this person to start working at HUD under the agreement in February 2011, and
she approved the payment for the invoices until March 2013. The Acting General Deputy
Assistant Secretary for Housing approved payment of the invoices for services beginning in
March 2013.

According to the Office of Personnel Management, the goal of the IPA program is to facilitate
the movement of employees for short periods of time when this movement serves a sound public
purpose. Each assignment should be made for purposes that the Federal agency head or his or
her designee determines are of mutual concern and benefit to the Federal agency and to the
non-Federal organization. Assignments arranged to meet the personal interests of employees, to
circumvent personnel ceilings, or to avoid unpleasant personnel decisions are contrary to the
spirit and intent of the mobility assignment program. 2

Under the IPA, HUD enters into an agreement with the person’s employer. Cost-sharing
arrangements for the IPA are negotiated between the participating organizations. Non-Federal
employees on detail to Federal agencies remain employees of their permanent organizations for
most purposes. The employee is expected to return to the employer at the end of the agreement.
The agreement details the scope, job duties, pay, leave, and other details.

The Constitution of the United States gives Congress the “power of the purse” and further
provides that the executive branch will “faithfully execute” the laws that Congress passes.
Article 1, Section 9, of the Constitution stipulates that no money shall be drawn from the U.S.
Treasury, but in consequence of an appropriation made by law. Under the ADA, an officer or
employee of the U.S. Government may not make or authorize an expenditure or obligation
exceeding an amount available in an appropriation or fund for the expenditure or obligation. 3

In fiscal year 2008, Congress began appropriating salaries and expenses for the HUD Secretary,
Deputy Secretary, and Assistant Secretaries separately from the rest of HUD salaries in an
1
    According to HUD’s Web site, “The Rental Assistance Demonstration allows proven financing tools to be
    applied to at-risk public and assisted housing.” The Rental Assistance Demonstration program grew out of the
    Transforming Rental Assistance program.
2
    Office of Personnel Management Web site: http://www.opm.gov/policy-data-oversight/hiring-
    authorities/intergovernment-personnel-act/#url=Provisions
3
    31 U.S.C. (United States Code) 1341, popularly known as the Antideficiency Act, placed limitations on
    expending and obligating amounts.



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executive direction account to increase the accountability of lead policy makers. As this
structure was created to increase oversight, the House Committee on Appropriations directed
HUD in 2010 to only fund senior policy makers from this account and wrote that all senior
advisors to the Secretary should be funded directly through the Office of the Secretary. 4
Further, the Committee directed HUD to limit the reprogramming of funds between programs
and expected all offices within HUD to work with the budget office to provide timely and
accurate information for submission to the Committee. 5 Because Congress separately
appropriated the funds, it may have been an ADA violation each time other program areas paid
for salaries and expenses that were required to be paid from the Office of the Secretary’s
executive direction account.

Federal employees who violate the ADA are subject to two types of sanctions: administrative
and penal. Employees may be subject to appropriate administrative discipline, including when
circumstances warrant, suspension from duty without pay or removal from office. 6 In addition,
employees may be subject to fines, imprisonment, or both. 7 If an employee becomes aware of a
potential ADA violation, that employee must notify HUD’s Office of the Chief Financial
Officer, which is responsible for investigating potential violations, determining whether actual
violations have occurred, reporting on any such violations, and ensuring that HUD takes
corrective action. Once it is determined that there has been a violation of the ADA, the agency
head “shall report immediately to the President and Congress all relevant facts and a statement of
actions taken.” 8

                                        RESULTS OF REVIEW

HUD May Have Spent More Than $620,000 in Violation of ADA Requirements

From February 2011 through March 2014, PIH and the Office of Housing collectively
reimbursed Community Builders, Inc., more than $620,000 for a senior advisor to the Secretary.
In February 2011, HUD entered into an agreement with Community Builders, Inc., for the
services of one of its employees. The Community Builders, Inc. employee’s primary job duties,
according to the agreement, pertained to an initiative that became the Rental Assistance
Demonstration program. Under the agreement, HUD would reimburse Community Builders,
Inc., a maximum of $205,000 annually 9 for the employee’s services, which was significantly less
than his salary at Community Builders, Inc. The employee served as an advisor to the Secretary;
therefore, HUD’s reimbursements to Community Builders, Inc. should have been made from the
Office of the Secretary’s executive direction account. However, from February 2011 to March
2013, the reimbursements came from PIH’s personnel compensation account. In March 2013,
the Office of Housing began reimbursing the senior advisor’s salary. Because HUD did not use
the Office of the Secretary’s executive direction account for these reimbursements, HUD may
have violated the ADA.

4
    House of Representatives Report 111-564, page 117
5
    House of Representatives Report 111-564, pages 114-115
6
    31 U.S.C. 1518
7
    31 U.S.C. 1519
8
    HUD Handbook 1830.2, REV-5
9
    Comprised of $155,000 in salary and $50,000 in benefits



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In a January 13, 2011 email, 10 the Assistant Secretary for Public and Indian Housing stated,
“[Community Builders, Inc. employee] is to be the Project Manager for HUD’s [Transforming
Rental Assistance] initiative. He will coordinate all TRA activities and be part of PIH. He is to
be paid by PIH and his physical office is within PIH as well.” 11 In an October 23, 2013
interview, the senior advisor stated that he “technically” reported to PIH, the Office of Housing,
and the Office of the Secretary; however, he worked directly under the HUD Office of the
Secretary. There was no evidence that the senior advisor reported to or was housed within PIH.
According to several documents and videos, this person was a senior advisor to the Secretary.
Further, another advisor to the Secretary announced in an email, dated December 20, 2010, that
this person would be working within the Office of the Secretary, and according to the senior
advisor, he was physically located within the Office of the Secretary. Therefore, any
reimbursements paid to Community Builders, Inc., should have been made from the Office of the
Secretary’s funds.

Congress had specifically addressed HUD’s salary funding for its Secretary’s senior advisors and
previous ADA violations. According to a July 26, 2010 House of Representatives report, 12
“…all senior advisors to the Secretary should be funded directly through the Office of the
Secretary.” In addition, a HUD appropriations attorney wrote in a January 13, 2011, email that a
special advisor to the Office of the Secretary would need to be paid by that office and not another
office within HUD. 13 Despite the direction in the House report and guidance from its own
appropriations attorney, HUD reimbursed Community Builders, Inc., for the senior advisor’s
services from PIH and Office of Housing funds. Subsequently, in June 2012, Congress
admonished HUD for the lack of staffing data it provided and had available internally. Congress
wrote that “this lack of essential information led to multiple Anti-Deficiency Act violations in
fiscal year 2011, in which HUD hired more people than it had resources to pay. To date, HUD
has not even tried to address these problems and thus the Committee has no faith in HUD’s
ability to appropriately staff its operations.” 14 The Chief Financial Officer’s investigation
determined that the IPA payments contributed to ADA violations in PIH in 2011. Yet HUD
continued to fund reimbursements for the senior advisor’s salary and benefits from the PIH
personnel account until March 2013, when the Office of Housing started making the
reimbursements. Again, the Office of the Secretary was responsible for funding the senior
advisor to the Secretary.


10
     A HUD appropriations attorney, HUD’s Chief Operating Officer, and HUD’s Chief Financial Officer were
     among the recipients of this message.
11
     Transforming Rental Assistance was a precursor to the Rental Assistance Demonstration program. In July
     2010, the House Committee on Appropriations recommended no funding for Transforming Rental Assistance.
     It wrote that “[t]he Committee understands that the Department has invested a great deal of time and effort into
     the TRA proposal. However, the attention granted to this proposal seems to have come at the cost of other
     HUD programs, also in need of reform. The Committee is disappointed the Department chose to spend such a
     large amount of time and resources on this new proposal instead of making the regulatory changes badly needed
     in existing programs….” (House of Representatives Report 111-564, page 124).
12
     House of Representatives Report 111-564, page 117
13
     The Assistant Secretary for Public and Indian Housing, General Deputy Assistant Secretary for Public and
     Indian Housing, PIH Director of Budget and Financial Management, and Chief Operating Officer were among
     the recipients of this email.
14
     House of Representatives Report 112-541, page 72



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In addition, HUD reimbursed Community Builders, Inc., more than the maximum amount
($205,000) under the agreement. Specifically, for the agreement in effect for the period
February 13, 2012, through February 13, 2013, HUD’s reimbursements exceeded the maximum
agreed-upon amount by $2,365. Without an updated agreement, the $2,365 was unsupported.

Based on the effective dates of the agreements, HUD also did not have an agreement with
Community Builders, Inc., between February 14, 2013, and March 14, 2013. During this period,
HUD reimbursed Community Builders, Inc., $16,558. The table below shows the total amount
of possible ADA violations and the reasons for the apparent violations. If the Office of the
Secretary did not have the funds to pay for the senior advisor’s salary, multiple ADA violations
may have occurred. HUD must follow its requirements to determine whether ADA violations
occurred and report accordingly. Also, HUD needs to ensure that it charges costs to the correct
appropriation account, does not exceed maximum agreement amounts, and has valid agreements
in place.

                           Reimbursements to Community Builders, Inc.
                   Dates              Amount      Reason for apparent violation
      Feb. 14, 2011 – Feb. 13, 2012   $204,485 Paid by PIH instead of Secretary
      Feb. 13, 2012 – Feb. 8, 2013     205,000 Paid by PIH instead of Secretary
      Feb. 9, 2013 – Feb. 13, 2013        2,365 Paid by PIH instead of Secretary;
                                                payment in excess of agreement
      Feb. 14, 2013 – Mar. 14, 2013      16,558 Paid by PIH instead of Secretary;
                                                payments after agreement lapsed
      Mar. 15, 2013 – Feb. 27, 2014    193,961 Paid by Office of Housing instead
                                                of Secretary
                                Total $622,369


                                       CONCLUSION

The General Deputy Assistant Secretary for Public and Indian Housing and Acting General
Deputy Assistant Secretary for Housing may have caused ADA violations totaling more than
$620,000 when they approved payment for invoices for a senior advisor to the Secretary. HUD
did not follow the necessary guidance during the agreement process to ensure that it reimbursed
the employer from the correct personnel services account and paid the allowed salary amount.
As a result, HUD may have violated the ADA each time it paid amounts from the incorrect
personnel compensation account, paid more than the maximum amount under the agreement, and
did not always have an effective agreement in place.




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                                 RECOMMENDATIONS

We recommend that HUD’s Office of the Chief Financial Officer

1A.   Investigate whether ADA violations of as much as $622,369 occurred and if so, report the
      violation(s) in accordance with Office of Management and Budget Circular A-11 and
      HUD Handbook 1830.2, REV-5.

1B.   If it is determined that ADA violations occurred, take appropriate administrative and
      penal action against employee(s) responsible for causing the ADA violations in
      accordance with the Antideficiency Act, Office of Management and Budget Circular A-
      11, and HUD Handbook 1830.2, REV-5.

We recommend HUD’s Acting Deputy Secretary and Office of the Chief Financial Officer

1C.   Develop and implement procedures to ensure all people under an IPA agreement have an
      effective agreement and ensure payments do not exceed the amounts authorized and are
      paid from the appropriate account.




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        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




                          7
8
                        OIG Evaluation of Auditee Comments

Comment 1   We commend HUD for agreeing to resolve the potential ADA violations
            identified in this memorandum and implement the recommendations. We look
            forward to working with HUD on the resolution of these issues.




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