oversight

Comprehensive Strategy Needed to Address HUD Acquisition Challenges

Published by the Department of Housing and Urban Development, Office of Inspector General on 2016-02-02.

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

Comprehensive Strategy Needed To
Address HUD Acquisition Challenges




                  Report Number: 2015-OE-0004
                              February 2, 2016
                               Washington, DC
                                        MEMORANDUM




TO:             Nani Coloretti, Deputy Secretary, SD
                Keith W. Surber, Acting Chief Procurement Officer, N


FROM:           Kathryn Saylor
                Assistant Inspector General for Evaluation, GAH

SUBJECT:        Comprehensive Strategy Needed To Address HUD Acquisition Challenges (2015-OE-0004)

Attached is the report on our evaluation of the U.S. Department of Housing and Urban Development’s
(HUD) initiatives to address longstanding challenges facing its acquisition function. This review was
conducted by Zelos, LLC, for the HUD Office of Inspector General.

Our evaluation assessed the HUD Office of the Chief Procurement Officer’s acquisition improvement
initiatives. Zelos observed three areas where HUD could improve the acquisition function and made ten
recommendations. The agency concurred with all the recommendations and provided additional
information on improvements in process or actions they plan to initiate. The agency’s complete response
is provided in appendix C.

HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on recommended
corrective actions. For each recommendation without a management decision, please respond and
provide status reports in accordance with the HUD Handbook. Please furnish us copies of any
correspondence or directives issued as a result of the evaluation.

If you have any questions, please contact me at 202-809-3093 or Nikki Tinsley at 443-822-8285.
              Comprehensive Strategy Needed to Address HUD Acquisition Challenges (2015-OE-0004)
                                                                                 February 2, 2016


At A Glance
What We Evaluated and Why
The Office of the Chief Procurement Officer (OCPO) is responsible for obtaining goods and services so
that the U.S. Department of Housing and Urban Development (HUD) can meet its objectives.
Acquisition management has faced many challenges over the years, and HUD’s Fiscal Year 2016 Annual
Performance Plan cited the acquisition function as a management challenge. OCPO has developed
several acquisition improvement initiatives to address these longstanding concerns. The Office of
Inspector General wanted to know the status of these efforts and whether practices used by other agencies
would enhance the quality and effectiveness of HUD acquisitions.

What We Found
OCPO had made progress in several areas, including revising and updating HUD’s Procurement
Handbook and redesigning its Web site. However, some initiatives had not been fully implemented or
completed on schedule. OCPO officials said that additional resources would be needed to effectively
implement ongoing and planned improvement efforts. OCPO had not developed a sound, cohesive
strategy to address its improvement initiatives, and program offices did not all agree on resource
requirements and respective responsibilities for their acquisitions staff.

Many OCPO improvement initiatives did not follow successful program management practices or meet
the U.S. Government Accountability Office’s criteria for achieving an efficient, effective, and
accountable acquisition function. We identified several successful practices of other Federal agencies that
would improve HUD’s acquisition function by using measurable objectives and goals, building
partnerships, engaging stakeholders, managing change, streamlining functions, and training staff.

OCPO and the program offices did not collaborate or communicate effectively and did not agree on the
best way to address acquisition problems. HUD had not maintained cost and performance metrics to
determine where inefficiencies existed. Program offices continued to experience challenges, and some
sought alternatives in shared services arrangements with Federal agencies to accomplish their acquisition
objectives. HUD leadership needs to address these issues, or its acquisition function will remain at risk.

What We Recommend
Our primary recommendations in this report are below. In a January 6, 2016 response to the report, HUD
concurred with all the report’s recommendations.

1.       Leadership across HUD’s administration, programs, and OCPO needs to agree on the focus,
priorities, funding, and resources for improving acquisitions.

2.      OCPO should develop an acquisition strategy with measurable goals and objectives that
incorporate successful practices and a communications plan to inform and engage program offices.

3.       Leadership needs to develop decision criteria and metrics to determine which contract types,
sizes, or categories may be most efficiently and effectively accomplished by OCPO or, alternatively, by
shared services providers.
Table of Contents/Abbreviations
Background and Objectives..................................................................... 4
        The Office of the Chief Procurement Officer ......................................................... 4
        HUD Acquisition and Procurement Challenges .................................................... 4
        HUD Acquisition Improvement Initiatives .............................................................. 5
        Evaluation Objectives ........................................................................................... 6
Evaluation Results .................................................................................... 8
        Observation 1: OCPO Had Made Progress on Acquisition Improvement
        Initiatives .............................................................................................................. 8
        Conclusions ....................................................................................................... 11
        Recommendations............................................................................................. 11
        Management Response and Contractor Analysis .............................................. 11
        Observation 2: OCPO Did Not Fully Implement Acquisition Improvement
        Initiatives ........................................................................................................... 12
        Conclusions ....................................................................................................... 17
        Recommendations............................................................................................. 17
        Management Response and Contractor Analysis .............................................. 18
        Observation 3: HUD Lacked a Strategic Approach for Using Shared Services
        and Improving Internal Acquisitions Capacity .................................................... 19
        Conclusions ....................................................................................................... 20
        Recommendations............................................................................................. 20
        Management Response and Contractor Analysis .............................................. 21
Scope and Methodology ........................................................................ 22
Appendixes ............................................................................................. 23
        Appendix A ........................................................................................................ 23
        Appendix B ........................................................................................................ 24
        Appendix C ........................................................................................................ 25


                                                                2
Table of Contents/Abbreviations
Abbreviations

   ARRT         Acquisition Requirements Roadmap Tool
   COR          Contracting Officer Representative
   FAC          Federal Acquisition Certification
   FEVS         Federal Employee Viewpoint Survey
   GSA          General Services Administration
   GAO          Government Accountability Office
   HUD          Housing and Urban Development
   OCPO         Office of Chief Procurement Officer
   OFPP         Office of Federal Procurement Policy
   OIG          Office of Inspector General




                                      3
Background and Objectives
The Office of the Chief Procurement Officer
The Office of the Chief Procurement Officer (OCPO) was created in 1998 as part of the U.S. Department
of Housing and Urban Development’s (HUD) 2020 Management Reform to serve as the focal point to
reform, streamline, and improve procurement operations. OCPO is responsible for obtaining services and
supplies efficiently and in the most cost-effective manner possible to enable HUD to meet its strategic
objectives. For fiscal year 2014, HUD had more than $1.2 billion obligated for a wide range of goods and
services.

HUD Acquisition and Procurement Challenges
The problems with HUD’s acquisition and procurement processes have been a longstanding issue. The
U.S. Government Accountability Office (GAO) concluded in a 2001 study that acquisitions management
was one of the significant challenges facing HUD in its attempts to sustain the progress of its
management reform.1 In 2002, GAO reported that weaknesses in acquisitions management limited HUD’s
ability to prevent, identify, and hold its contractors accountable.2 In 2003, GAO designated acquisitions
management as a major management challenge for several reasons, including managing and training
HUD’s acquisitions workforce.3

In 2010, HUD engaged the National Academy of Public Administration to provide the agency with
strategic planning and business transformation and management consulting services in several areas,
including acquisitions.4 The National Academy of Public Administration made several recommendations
to improve

       Procurement planning.
       Management and performance of government technical representatives and government technical
        monitors.
       Alignment of procurement requirements with program and procurement units.
       OCPO operations and support functions.
       Program office performance and acquisition responsibilities.




1 U.S. General Accounting Office, HUD Management: Progress Made on Management Reforms, but Challenges
Remain, GAO-02-45 (Washington, DC, October 31, 2001)
2 U.S. General Accounting Office, HUD Management: Actions Needed to Improve Acquisition Management,
GAO-03-157 (Washington, DC, November 15, 2002)
3 U.S. General Accounting Office, Major Management Challenges and Program Risks for the Department of
Housing and Urban Development, GAO-03-103 (Washington, DC, January 2003)
4 National Academy of Public Administration report: HUD Transformation Support Services, April 2010



                                                4
In December 2014, HUD’s Office of the Inspector General reported that HUD did not always follow
applicable requirements or use the best procurement practices.5 This report recommended that HUD
implement procedures to ensure that it
     Promotes consistent oversight, accountability, and communication.
     Follows best practices to provide maximum competition.
     Makes decisions with the input of all parties involved.

HUD’s 2014-2018 Strategic Plan identified acquisitions as a management challenge. The plan stated that
for HUD to achieve its program goals, its acquisition operations must be efficient and effective and serve
customer needs. It identified plans to improve planning, processes, accountability, and transparency and
develop and use customer feedback mechanisms. In addition, it stated the need for early collaborative
planning and enhanced use of acquisition tools to improve HUD’s acquisitions performance.

The acquisition function was also cited as a management challenge in HUD’s Fiscal Year 2016 Annual
Performance Plan.6 The Plan stated that the acquisition process can be lengthy, partially due to necessary
compliance with statutes, policies, and procedures, and that OCPO can streamline the acquisition process
and increase customer satisfaction through

       Enhancing the use of available acquisition tools.
       Improving early collaboration and teamwork in executing plans.
       Optimizing the use of acquisition strategies.
       Enhancing accountability for successful outcomes through performance metrics.


HUD Acquisition Improvement Initiatives
OCPO identified in a December 2014 “state of the OCPO” briefing four top priorities7 in addressing
acquisition challenges. These initiatives included

       A contracting officer representative (COR) professionalization initiative.
       Development of program and project managers.
       OCPO reorganization and leadership development.
       Improvement of acquisition polices and quality of requirements documents.

OCPO completed an analysis to identify strengths, weaknesses, opportunities and threats – the factors that
are favorable and unfavorable for achieving its improvement initiatives.8 It outlined these factors in the
state of the OCPO briefing to acknowledge the internal and external attributes that could help and hinder
OCPO’s efforts to achieve its goals and objectives.



5
  HUD OIG report: HUD Did Not Always Follow Applicable Requirements or Use the Best Procurement Practices
in the Procurement and Administration of Its Multifamily Servicing Contract, Audit report number 2015-NY-0001,
December 2, 2014
6
  HUD Fiscal Year 2014 Annual Performance Report and Fiscal Year 2016 Annual Performance Plan
7
  OCPO officials stated that these initiatives were not necessarily in a prioritized order.
8
  See appendix A for a list of all strengths, weaknesses, opportunities, and threats.



                                                  5
Following this briefing, in April 2015, OCPO completed a “deep dive” of OCPO for the Deputy Secretary
– a summary briefing to provide leadership with a better understanding of specific programs and offices
and baseline data to help focus the operational agenda. In this deep dive, OCPO outlined generally the
same four acquisition improvement initiatives and timeframes cited in the state of the OCPO briefing.

OCPO officials then introduced another improvement initiative: establishing an Acquisition Work
Group. In addition, the Deputy Secretary and HUD’s Office of Strategic Planning and Management
formed a Procurement Transformation Steering Committee to address acquisition issues. A briefing was
issued on July 27, 2015, which outlined the following five key work streams for improving the
acquisition function.

         Key work streams                                        Milestones
Build a high-priority procurement         To be discussed and established at July Steering Committee
dashboard                                 meeting

Enhance the quality of key documents      Full implementation timeline not yet established

Form a shared services partnership        Ginnie Mae* interagency agreement to be awarded August
                                          2015

                                          Finalize joint interagency agreement among the Offices of
                                          Housing and Policy Development &Research, and the
                                          Program Support Center of the U.S. Department of Health
                                          and Human Services for fiscal year 2016 contracts

COR professionalization                   Several key milestones cited with dates beginning
                                          September 2015 through June 2016
OCPO workload rebalancing                 Still in development

* Ginnie Mae = Government National Mortgage Association

These five work streams capture one of OCPO’s original state of the OCPO four top priorities: COR
professionalization. Three of the original four initiatives are not listed

      Development of program and project managers.
      OCPO reorganization and leadership development.
      Improve acquisition polices and quality of requirements documents.

Office of Strategic Planning and Management officials told us that the deep dive of OCPO briefing,
which included OCPO’s four original initiatives, had become the focus for improving HUD’s acquisition
function. They also said that the Procurement Transformation Steering Committee’s work streams and
efforts would be incorporated into the deep dive initiative.

Evaluation Objectives
Our evaluation assessed OCPO’s acquisition improvement initiatives. Specifically, our objectives were
to:



                                               6
       Obtain an understanding and determine the status of OCPO acquisition improvement initiatives.
       Determine to what extent OCPO’s improvement initiatives addressed the acquisition challenges
        identified by the program offices.
       Where gaps existed, identify and recommend successful practices from selected Federal agencies
        to address and improve the quality and timeliness of HUD acquisitions.

While OCPO had acquisition improvement initiatives underway, the Office of Inspector General wanted
to know whether the initiatives adequately addressed identified acquisition issues, HUD program offices’
needs, and agency wide goals.




                                                7
Evaluation Results
Observation 1: OCPO Had Made Progress on Acquisition
Improvement Initiatives

OCPO had made progress in several important areas but had not completed several of its acquisition
improvement initiatives and had delayed starting others. According to OCPO officials, OCPO had not
had sufficient resources and staffing to adequately address deficiencies in HUD’s acquisition function. In
addition, program offices had not agreed with OCPO on staff roles and responsibilities in developing and
managing acquisitions, had continued to experience acquisition challenges, and had sought shared
services arrangements with other Federal agencies to achieve their acquisition objectives.

OCPO Acquisition Improvement Initiatives and Status

OCPO cited in a December 2014 state of the OCPO briefing four top priorities in addressing acquisition
challenges.9 Actions OCPO had taken since then to address these priorities included

           Signing a memorandum of agreement with HUD’s training office to develop and deliver Federal
            acquisition certification training.
           Rewriting the HUD Procurement Handbook.
           Redesigning the OCPO Web site.

However, OCPO had delayed some and not completed other acquisition improvement initiatives as
shown in table 1.

Table 1: OCPO acquisition improvement initiatives

        Priority                          Original timeline                           Current timeline status
                                                                                     (as of October 23, 2015)
COR                        Federal acquisition certification COR draft               Memorandum to be signed by
professionalization        guidance: November 2014                                   Deputy Secretary directing an
initiative                                                                           incremental 3-year
                           Final guidance: January 2015                              implementation, beginning
                                                                                     during fiscal year 2016
                           Fully implement across all offices: October
                           2016
Develop program            Issued requirements: September 2014                       To be completed by September
and project                                                                          2016
managers                   12-month certification process for program and
                           project managers – to be completed by
                           September 2015

9
    OCPO officials stated these initiatives are not necessarily in a prioritized order.




                                                          8
OCPO                  Phased implementation:                            No progress or new timeline
reorganization and                                                      defined
leadership            Develop plan: January 2015
development           Identify training targets and develop
                      curriculum: December 2014 (for training in
                      fiscal year 2015)
Improve               Update guidance: February 2015                    Handbook revised August
acquisition polices                                                     2015, in review and approval
and quality of        Rewrite HUD Procurement Handbook: June            process. Its estimated issue
requirements          2015                                              date is by February 28, 2016.
documents             Fully implement the Acquisition Requirements      Training ongoing and use of
                      Roadmap Tool in all offices by March 2015         this Tool was mandatory
                                                                        beginning October 1, 2015.


The status of each initiative is discussed below.

COR Professionalization Initiative

OCPO proposed the COR
professionalization initiative as a       COR Professionalization Goals:
key concept for addressing many              Reengineer HUD’s certification program to comply
acquisition-related problems.                 with the Federal Acquisition Institute’s Federal
                                              acquisition certification FAC-COR model.
OCPO and the program offices did
                                             Professionalize the COR job series.
not agree on the (1) feasibility of
and resources required for the COR           Merge the often collateral government technical
initiative and (2) appropriate roles          representative and monitor functional roles into the
and tasks of OCPO and program                 single, full-time functional role of a COR.
office staff in developing and               Streamline the pre-award and post-award acquisition
managing acquisitions. The                    processes.
program offices had continued to
experience challenges working with OCPO and had sought shared services arrangements with other
Federal agencies to achieve their acquisition objectives. To address these issues, key stakeholders were
consulted through the Deputy Secretary’s deep dive initiative, which was implemented to build a stronger
HUD by connecting mission advancement to operational efforts. In addition, key stakeholders, including
several OCPO staff members, were on a newly established Procurement Transformation Steering
Committee, created to address and improve the acquisition function.

Develop Program and Project Managers

To address this initiative, OCPO signed an agreement with HUD LEARN to train all HUD employees
requiring Federal acquisition program and project manager certification by September 30, 2016.10 The

10
 HUD LEARN is HUD’s Office of the Chief Human Capital Officer’s Learning, Enrichment, and Resources
Network.



                                                    9
original completion timeframe for this initiative was fiscal year 2015. In August 2015, OCPO provided a
list of the Federal acquisition certification courses and number of employees to be trained in fiscal year
2016, but this list did not include the budget necessary to complete the training.

OCPO Reorganization and Leadership Development

The December 2014 briefing cited plans for a phased implementation and training during fiscal year 2015
for this initiative. OCPO had planned a phased reorganization and training for this initiative, but OCPO
officials told us that this effort was delayed due to a lack of funding.

Improve Acquisition Polices and Quality of Requirements Documents

OCPO had made progress in revising the HUD Procurement Handbook, redesigning the OCPO Web site,
and issuing several detailed acquisition instructions. OCPO officials told us that the Handbook should be
finalized, approved, and published by the end of February 2016. They said that the new design of the
Web site would provide better acquisition policies and procedures, as well as guidance from both a task-
based and role-based approach. The Web site was in an interim stage, and the officials had funding and
resources to complete a permanent “in state” version in fiscal year 2016. The original completion
timeframe for the Web site was fiscal year 2015.

OCPO planned to have the Acquisition Requirements Roadmap Tool (ARRT) fully implemented in all
offices by March 2015. OCPO officials told us that they had customized the ARRT training to be more
HUD specific and were providing training to program offices and getting positive reviews. They added
that the use of ARRT would be mandatory beginning October 2015. They said that the benefit of ARRT
is the standardization it provides for developing requirements packages.

OCPO Strengths, Weaknesses, Opportunities, and Threats

The state of the OCPO briefing cited strengths and opportunities that OCPO can leverage to help it
achieve its goals and objectives. It also recognized weaknesses and threats (which included attrition and
that turnover reduces the knowledge base and creative problem solving) that could negatively impact
OCPO’s improvement efforts. Focusing on these key factors, coupled with the GAO Framework for
Assessing the Acquisition Function at Federal Agencies to enable high-level, qualitative assessments
of the strengths and weaknesses of the acquisition function, provides OCPO avenues for promoting an
efficient, effective, and accountable acquisition function and addressing areas needing improvement.

OCPO acted on its strength for establishing standard policies, processes, and procedures in its handbook,
Web site, and acquisition instructions. In addition, it pursued the opportunity to develop better training
courses more specific to HUD by customizing the ARRT training and partnering with HUD LEARN to
develop and deliver Federal acquisition certification training for HUD employees.

OCPO acted on the opportunity to use Federal Employee Viewpoint Survey (FEVS)11 results. OCPO
officials told us that they emphasized the importance of completing the 2015 survey and OCPO’s staff
response rate was 97 percent. OCPO improved on 63 of the 71 core FEVS questions from 2014 to 2015.
Despite this improvement, OCPO’s FEVS scores remained below those of HUD as a whole, and HUD’s

11
  FEVS measures Federal employees’ perceptions of whether and to what extent conditions that characterize
successful organizations are present in an organization.



                                                   10
scores were generally lower than those of the Federal Government. Thus, several key areas will require
continued monitoring and effort by management to improve working conditions and relationships. These
areas include satisfaction with collaboration and communication across work units, opportunities for
adequate training, and overall satisfaction with work environment. Potential attrition is of particular
concern as more than 60 percent of OCPO staff members responded that they were considering leaving in
the next year.

Conclusions
OCPO had made some progress but had delayed or not completed several of its acquisition improvement
initiatives. The deep dive and associated initiatives being directed from the Deputy Secretary’s office
changed the emphasis of several OCPO initiatives and added others. Further, OCPO and program offices
did not agree on the feasibility of and resources required for one of the major initiatives—COR
professionalization—or on the best use of shared services from other Federal agencies. Without
agreement on and commitment to acquisition improvement priorities, resources, and staffing, HUD
acquisitions will remain at risk.

Recommendations
To improve HUD’s acquisition function, we recommend the Acting Chief Procurement Officer:

       1A. Reach agreement with and obtain commitment from HUD leadership and program
       offices on the focus and priorities for improving acquisitions.

       1B. Communicate and collaborate more effectively with and actively engage the program
       offices and other key stakeholders.

       1C. Continue to emphasize its initiatives to address workforce morale and job satisfaction
       and to address FEVS areas that need improvement.

Management Response and Contractor Analysis
HUD concurred with the above recommendations. It provided additional information on
accomplishments the agency has made and plans for continuing acquisition improvements.

Management’s complete response is provided in appendix C, pages 3, 4, and 5.




                                               11
Observation 2: OCPO Did Not Fully Implement Acquisition
Improvement Initiatives

Although OCPO had made progress in some important areas, it had not always followed proven, effective
planning and program management practices. Factors contributing to OCPO’s inability to fully
implement acquisition improvement initiatives included staff turnover and not effectively collaborating
with key stakeholders.

OCPO’s initiatives were not supported by detailed plans that specified budget and resource requirements,
measurable goals and objectives, completion timeframes, or reporting strategies for monitoring progress.
This level of information is critical for OCPO to appropriately address and improve the acquisition
function. OCPO needs an acquisition improvement strategy with a well-defined and agreed-upon
mission, objectives, goals, and outcome measures. This strategy needs to include the following key
program management components

       A communications plan to effectively inform and engage the program offices and other key
        stakeholders.
       An acquisition human capital plan that includes steps to recruit, train, and retain talented
        acquisition professionals and a long-term strategy to address attrition challenges.
       A training plan with specific milestones and timeframes for acquisition workforce
        development training, rolling out the HUD Procurement Handbook and redesigned OCPO
        Web site, and defining the OCPO reorganization and leadership development initiative.
       An Acquisition Work Group charter that defines the Group’s mission, goals, objectives,
        tasks, and responsibilities.

We identified successful practices of other Federal agencies that could be incorporated into OCPO’s
current or future initiatives. These practices align with the GAO Framework to promote an efficient,
effective, and accountable acquisition function. Incorporating key project management components and
successful practices of other Federal agencies can help HUD improve its acquisition function.

Strategic Approach for Improving HUD’s Acquisition Function

According to the GAO Framework, strategic planning requires identifying and managing relationships
among the parties involved in the acquisition process. Sufficient attention should also be given to
analyzing overall agency needs and devising strategic acquisition plans to meet those needs.

OCPO did not have an acquisition improvement strategy with a well-defined and agreed-upon
mission, charter, goals, outcome measures, objectives, and a monitoring system. The state of the
OCPO briefing identified priorities and some timeframes, but needed additional details to
effectively guide and measure progress. In July 2015, as part of the deep dive initiative, OCPO
began to work with HUD’s Office of Strategic Planning and Management to

       Develop a broad plan with specific components, each having milestones and metrics.
       Provide regular project updates.



                                                12
       Manage the components to completion in an agreed-upon timeframe.

HUD did not have metrics and
performance measures related to         Performance Measures assess:
acquisition efficiency, effectiveness,   1. An organization’s current performance level.
or results embedded into its overall     2. Important processes that require focused
acquisition improvement approach             management attention.
and communicated regularly to the        3. Realistic goals for improvement.
entire organization. It is important     4. Impacts over time
that these metrics be tied to the
agency’s mission and goals and be used to assess the success of the acquisition function. In
addition, leaders need to use meaningful metrics to measure the effectiveness of the acquisition
function and provide the foundation for continuous improvement.

OCPO used procurement administrative lead time to determine the overall efficiency of the
acquisition process. Program office officials said that this was not a true measure of how long the
process took. They stated that it measured the time after the procurement package was accepted by
OCPO. Several offices stated that additional performance measures would be needed to identify
where delays occur from the time a need for goods and services is identified to final contract
issuance.

The Defense Acquisition University developed an acquisition lead time metric that captures all activities
before the procurement package is complete. A University official said that agencies need to measure the
entire acquisition process from the time a need is identified through the steps of research, dialogue with
vendors, and communication and collaboration between the acquisition and program office staff. The
University’s guidance states that early collaboration of the program and contracting officials in the
planning phase can result in a thorough statement of work and expedite procurement lead times. It also
cites the importance of complete specifications and obtaining all necessary internal clearances and adds
that both program and contract personnel must meet all agreed-upon schedules.

Communications Strategy and Customer Feedback

GAO’s Framework cites “effective communications and partnering with internal organizations” as factors
critical to the success of the acquisition function and notes that agency leadership needs to communicate
effectively to employees the agency’s missions, values, and guiding principles. OCPO did not have a
communications strategy to inform and engage the program offices and other key stakeholders
effectively. HUD’s program offices cited many examples of ineffective communications and limited
partnering and collaboration with OCPO.

A March 2015 Office of Federal
Procurement Policy (OFPP)                OFPP guidance states that “Ineffective communication
memorandum to all chief acquisition      between the program office and contracting team can
officers outlined the importance of      adversely impact an acquisition leading to unfavorable
and requirement for agencies to          outcomes for taxpayers.”
improve how they receive and use



                                                 13
industry and internal feedback to strengthen their acquisition function.12

Agencies were to obtain feedback on how well they planned, communicated, and provided support for the
acquisition function by July 2015. Specific communications questions addressed how satisfied
respondents were with the procurement offices’

         Responsiveness to questions and communicating in a clear, courteous, timely, and professional
          manner.
         Effectiveness in resolving any issues or delays encountered during the acquisition process.
         Early communications describing the roles and responsibilities of the procurement office and
          program office.

While OCPO had not obtained this feedback by the July due date, an OCPO official told us the survey
was sent to HUD procurement and program office personnel as well as industry officials on October 22.
Responses are due November 10, 2015.

Acquisition Human Capital Plan

The GAO Framework states that successfully acquiring goods and services and executing and monitoring
contracts to help the agency accomplish its missions requires valuing and investing in the acquisition
workforce. Agencies must think strategically about attracting, developing, and retaining talent and
creating a results-oriented culture within the acquisition workforce.

                                                                       OFPP guidance states that for
     OFPP guidance states that “Many agencies concentrate              human capital planning to be
     on filling vacancies in the contracting community rather          successful, it must be an
     than developing longer term growth and succession                 integral part of each agency’s
     plans for their acquisition workforce, including program
                                                                       strategic planning process.
     managers and contracting officer representatives.”

                                                                        HUD is not alone in having
significant human capital needs and challenges in getting and keeping trained procurement and
acquisition personnel. Acquisition organizations across the government are facing mission and
performance challenges resulting from an anticipated and unprecedented loss of their knowledgeable and
experienced acquisition professionals. In addition, there is a lack of a substantial, knowledgeable pool of
successors to replace them.

HUD needs a strategic approach to recruit, train, and retain talented acquisition professionals and address
attrition challenges. OCPO officials acknowledged that both turnover and shortages of staff had impeded
its acquisition improvement initiatives. The 2015 FEVS results highlighted that attrition was of particular
concern as more than 60 percent of OCPO staff members responded that they were considering leaving in
the next year. Staff attrition in OCPO was a significant concern identified by all of the program offices in


12
  March 18, 2015, memorandum from Anne Rung, OFPP Administrator, Office of Management and Budget, on
Acquisition 360 - Improving the Acquisition Process through Timely Feedback from External and Internal
Stakeholders



                                                   14
our review. They stated that turnover negatively impacted their experience with OCPO and contracting
decisions. As a result of attrition, OCPO faced challenges in meeting its customers’ expectations.

HUD’s Fiscal Year 2015 Acquisition Human Capital Plan cited that recruiting, hiring, and retaining an
agile and high-quality Federal acquisition workforce is essential to the efficiency, effectiveness, and
stewardship of agency program objectives, outcomes, and results. The Plan included a more robust
employee recognition program to enrich employee morale and retention. However, it stated that “reduced
budgets for awards and little differentiation in amounts between ratings reduced their effectiveness in
retention.” It also cited an OCPO initiative for fiscal year 2014 to “Revise the Federal Acquisition
Certification for Program and Project Managers” to improve the program and add information technology
specialization for these managers. However, it stated that OCPO had not met the initiative’s objectives as
it did not have enough certified managers to meet HUD’s needs.

The Plan named adequate staffing and training as critical challenges in managing HUD’s acquisition
workforce. It stated that the shortage of trained and certified program and project managers increases risk
in successful programmatic outcomes, including the effective use of budget, resources, and performance
metrics. In addition, it acknowledged that a shrinking budget authority challenges HUD’s ability to
provide a robust training program.

The section of the Plan called “Talent Management” included the COR professionalization initiative,
stating that it would

       Improve performance of HUD’s CORs.
       Develop a COR workforce that maintains dual expertise to drive programmatic outcomes and
        maintain focused contract oversight.

The Plan acknowledged that this initiative may require additional funding, training, and full-time
employees in some program offices but that these items were not funded in the fiscal year 2016 budget.

Training Strategy

Industry and government experts recognize that training is a critical tool in successfully introducing and
implementing new ways of doing business as well as reacting to change. An agency’s overall training
strategy—including planning, developing, implementing, and continually improving its programs—is an
important factor in ensuring that staff has the necessary skills, knowledge, and experience to meet agency
missions.

OFPP guidance states that successful acquisition outcomes depend on having properly trained and
experienced staff to

       Select the proper contract vehicle for various acquisition approaches.
       Evaluate whether the contractor is meeting its cost, schedule, and performance goals.
       Identify what specific corrections and actions are needed if changes warrant.
       Ensure that taxpayer dollars are spent effectively, efficiently, and economically.
       Identify the possibility of fraud, waste, or abuse.



                                                 15
       Recognize situations that warrant termination if contracts do not meet the government’s
        needs.

OFPP also stated in its September 2011 guidance that “Strengthening the acquisition workforce is critical
to ensuring that the government gets the best value for the more than $500 billion of goods and services it
procures annually.” The previous Federal acquisition certification requirements had just one level of
certification for all CORs. This updated guidance has three levels of certification with varying
requirements for training, experience, and continuous learning, depending on the types of contracts being
managed. This guidance was effective for all CORs beginning January 1, 2012. OCPO planned to have
CORs trained by September 30, 2015. However, this did not occur and subsequent plans were to complete
the Federal acquisition certification requirements by the end of fiscal year 2016.

OCPO did not have a training strategy for ensuring that the acquisition workforce provided the proper
contract management and oversight. While OCPO had implemented some training, most had been
delayed until fiscal year 2016. In addition, officials told us that inadequate training in the acquisition area
had been a longstanding concern and continued to be a significant weakness in the acquisition area.
Program offices also told us that training was inadequate, stating that

       Guidance was unclear as to what was required for staff to be certified at levels I, II, or III.
       Additional training was needed for both OCPO and program office staff on how to complete a
        project work statement.
       Staff members needed COR certification before they could be assigned to work on contracts.
       The combination of turnover and inadequate training had resulted in an inexperienced workforce
        in OCPO.

Also, program offices had significant concerns about and questioned whether they would be able to obtain
the resources and training to fit the COR professionalization initiative model.

Acquisition Work Group Charter

OCPO developed the Acquisition Work Group to address acquisition issues. OCPO officials told us that
Group’s mission was to work on various projects to enhance collaboration and communications between
OCPO and the HUD program offices; however, it did not have a charter, mission statement, goals, or
objectives to guide its actions. We provided OCPO officials with a sample of another Federal agency’s
acquisition work group charter, which outlined the mission, goals, objectives, membership, and
responsibilities. OCPO officials said that the charter was useful and would help define and guide their
Acquisition Work Group objectives and actions.

Successful Acquisition Practices

We identified successful acquisition practices of other Federal agencies to provide assistance and
alternatives that could be incorporated into OCPO’s current or future initiatives. The following
items address developing useful guidelines, streamlining functions, training staff, building
partnerships, and managing change:




                                                  16
       Charter documents, standard operating procedures for an acquisitions portal (Web site), and
        an acquisition workforce survey. These documents streamline acquisition functions,
        improve communications, and provide professional development for the acquisition
        workforce [General Service Administration (GSA)].
       Templates, policies, procedures, and instructions to guide the acquisition function (Bureau
        of Fiscal Services, U.S. Department of the Treasury).
       Many guidelines on successful acquisition practices, including Transforming the
        Marketplace, Improving the Acquisition Process through Timely Feedback, and Conducting
        Acquisition Assessments (OFPP).
       Quarterly Interagency Acquisition Career Managers Council meetings with more than 20
        civilian agencies. The goals are to (1) increase efficiencies by leveraging resources, (2)
        reduce duplication, and (3) optimize outreach and communication opportunities. Successful
        practices and information on topics, including human capital planning, contract specialist
        training, and acquisition internships, are provided on the Federal Acquisition Institute’s
        Web site.
       Federal Shared Services Implementation Guide, which provides information on using shared
        services in the Federal Government to help achieve organizational goals, improve performance,
        increase return on investment, and promote innovation (Federal Chief Information Officer
        Council).
       An online continuous learning center with a curriculum and learning opportunities that offer
        successful practices (Defense Acquisition University).

These practices align with the GAO Framework for promoting an efficient, effective, and accountable
acquisition function. Incorporating key planning and project management components and successful
practices of other Federal agencies can help HUD improve its acquisition function.

Conclusions
While OCPO had several improvement initiatives underway, many did not meet the criteria stated in the
GAO Framework for achieving an efficient, effective, and accountable acquisition function. OCPO has
opportunities to incorporate the advice of experts by building partnerships with successful organizations
that are leaders in the area. Without effective implementation steps, including adequate planning, and
active collaboration with customers, HUD’s acquisition improvement initiatives had not been successfully
accomplished, placing the acquisition function at risk. These longstanding acquisition challenges and
weaknesses hindered HUD’s ability to make progress in its management reform to streamline and
improve acquisition operations.

Recommendations
In consultation with the Office of Strategic Planning and Management and program offices, OCPO should
implement and follow a systematic program management plan. This plan should incorporate successful
practices and tools from other agencies to ensure that the planned approaches meet OCPO’s and program
offices’ needs and will be successful.




                                                17
To strengthen HUD-wide acquisitions that will result in contracts that meet program needs and comply
with Federal procurement policies and procedures, we recommend that the Deputy Secretary:

        2A. Direct OCPO, the Procurement Transformation Steering Committee members, working
        teams, and project leaders to incorporate successful acquisition practices to improve and
        strengthen current or planned acquisition improvement efforts. These practices include
        developing and implementing the following:
           An acquisition improvement strategy with measurable goals and objectives.
           A communications strategy to effectively inform and engage OCPO, program offices, and
             other key stakeholders.
           An acquisition human capital plan that includes steps to recruit, train, and retain talented
             acquisition professionals and a long-term strategy to address attrition challenges.
           A training strategy with specific milestones and timeframes for acquisition workforce
             development training, rolling out the HUD Procurement Handbook and redesigned OCPO
             Web site, and defining the OCPO reorganization and leadership development initiative.
           An Acquisition Work Group charter that defines the Group’s mission, goals, objectives,
             tasks, and responsibilities.

        2B. Evaluate the resources and organizational support needed to develop and implement an
        ongoing, comprehensive, HUD-wide acquisition improvement strategy.


Management Response and Contractor Analysis
HUD concurred with the recommendations. HUD stated that the Deputy Secretary has directed the CPO
to (1) continue to refine and/or develop a strong acquisition improvement plan that includes successful
acquisition practices, such as those listed and (2) provide options related to the resources and
organizational support needed to develop and implement a comprehensive HUD-wide acquisition
improvement strategy. Some of this work is underway through the deep dive management and
operational review, particularly with respect to strategic sourcing, contract consolidation, and enhanced
use of shared services. The agency also stated that as evidenced in part by GSA’s government-wide
benchmarking exercise, OCPO is relatively under-resourced; HUD advocated and was successful in
increasing resources for OCPO in fiscal year 2016.

Management’s complete response is provided in appendix C, pages 5, 6, 7, and 8.




                                                18
Observation 3: HUD Lacked a Strategic Approach for Using Shared
Services and Improving Internal Acquisitions Capacity
OCPO and program offices did not agree on the fundamental approach for addressing acquisition
issues. OCPO had focused on COR professionalization to improve the quality of requirements
documents and contract management, but some program offices sought to use shared services
models provided by other Federal agencies. They did not agree on the

       Feasibility of the COR professionalization initiative.
       Appropriate roles and tasks of OCPO and program office staff in developing and managing
        acquisitions.
       Best use of shared services provided by GSA, the U.S. Department of Health and Human
        Services, the U.S. Department of the Treasury, and other agencies.

These issues were being reconsidered as part of the Deputy Secretary’s deep dive. OCPO acknowledged
that the COR professionalization initiative was not working as initially planned. Program offices were
moving to shared services in response to difficulties working with OCPO. These stakeholders had not
developed, agreed upon, communicated, and implemented a strategic plan for effective assignment of
acquisition roles and tasks to OCPO staff, program office staff, and shared service providers.

Internal Resources Versus Shared Services

OCPO’s and the program offices’ lack of collaboration and a strategic approach for using internal
acquisitions resources versus shared services was not consistent with the GAO Framework criteria.
Program offices said that they were concerned about collaboration, training, and the use of resources to
accomplish acquisition objectives. The program offices sought greater use of shared services, while
OCPO wanted to use the COR professionalization initiative. A collaborative approach that yields
agreement on the most effective strategies for the different HUD program offices and their particular
acquisition needs is crucial. Some acquisitions may be most effectively accomplished through shared
services opportunities that simplify acquisitions and reduce costs. Others may be most effectively
achieved by working with OCPO and improving the training of OCPO and program office acquisitions
and project management staff. OCPO and program offices need cost and performance metrics and data so
informed decisions can be made that address and meet HUD’s mission effectively.

OCPO’s goals for the COR professionalization initiative are to merge collateral functional roles of
government technical representatives and government technical monitors into the single full-time
functional role of a COR; professionalize the COR job series; strengthen the relationship and
collaboration between OCPO, CORs, and program personnel; and streamline pre-award and post-award
acquisition processes. Program offices expressed concerns about the ability to obtain the resources and
training required to support this initiative. They questioned whether having more full-time CORs and
fewer subject-matter experts was reasonable, especially if their total staffing levels remained the same.
They stated that this measure would impede their work and increase attrition. Program offices stated that
OCPO had not adequately engaged them in the process, addressed their concerns, or communicated
effectively. Program offices consistently said that OCPO did not understand their business needs and was
not strong on customer service. The COR professionalization initiative was one of the Procurement



                                                19
Transformation Steering Committee work streams and had several actions and milestones to be completed
during fiscal year 2016, which would provide a sufficient timeline for adjustments.

In a budget-constrained environment, several program officials told us that they preferred to work with
other Federal agencies to secure needed services. Shared services involve public-sector bodies working
together in developing or delivering services (most commonly administrative or back office functions).
Advantages that the program offices and shared services providers cited were improved efficiency
through pooling resources or combining demand and concentrating expertise to deliver higher quality
services to customers. OCPO said that a shared services disadvantage was the fees HUD would have to
pay to shared services providers.

Some HUD program offices have contracted with other agencies for shared services. For example, the
office of Community Planning and Development had partnered with Policy Development and Research
and the U.S. Census Bureau to get custom census data for Community Development Block Grants
because it had trouble getting the contract awarded through OCPO. HUD and GSA entered into an
interagency agreement to complete five pilot procurements for Ginnie Mae in fiscal year 2015. The
president of Ginnie Mae asked to continue with GSA in a long-term relationship and wanted to move all
contracts to GSA, citing that GSA provided better quality and more timely results.

HUD’s July 2015 Procurement Transformation Steering Committee briefing cited shared services as one
of five key work streams and stated a goal to “Utilize shared services as a means to improve the overall
effectiveness of the acquisition process by providing a capability to allow for the timely processing of
acquisitions in the face of limited and declining budgets.” The Committee directed a “pilot test” of shared
services, with three program offices (Ginnie Mae, Policy Development and Research, and Housing) using
other agencies (GSA and the Department of Health and Human Services). The pilot involved comparing
progress toward specific milestones among the different service providers. This pilot test was ongoing,
and the costs, benefits, and feasibility were not known. Work teams had begun to study where challenges
occurred for specific milestones, what lessons could be learned to address common “pain points,” and
which types of acquisitions should be sent to shared services providers and which should be performed by
OCPO. Criteria had not been determined that would reflect specialized program office needs.

Conclusions
OCPO’s acquisition improvement initiatives highlighted priorities OCPO was pursuing to address the
acquisition management challenge, but there was not sufficient collaboration or agreement with the
program offices. HUD lacked a strategic approach that outlined, for both OCPO acquisition resources
and shared services, detailed objectives, budget requirements, measurable goals and outcomes,
timeframes, and staff alignment. This level of collaboration and strategic planning is critical for OCPO to
appropriately address and improve the acquisition function.

Recommendations
We recommend the Deputy Secretary continue working with OCPO and the program offices to develop a
strategic approach across HUD to:




                                                 20
        3A. Systematically determine which types, sizes, or categories of contracts may be most
        efficiently and effectively accomplished by OCPO and which should use a shared services
        approach.

        3B. Develop decision criteria, protocols, and assistance for program offices to implement either
        OCPO or shared services acquisitions that are the most efficient and economical.

        3C. Evaluate the roles and responsibilities of CORs, government technical representatives, or
        government technical monitors and the acquisition staffing needs of the program offices.

        3D. Work closely with each program office to reach agreement on the staffing model and
        resources needed to implement the COR professionalization initiative.

        3E. Continue to develop HUD-specific training and career advancement opportunities for CORs
        and other acquisition professionals within the program offices and OCPO. OCPO should base
        these opportunities on identified needs for a range of knowledge and skills, including technical
        acquisition expertise as well as skills related to enhancing communication and collaboration.



Management Response and Contractor Analysis
HUD concurred with recommendation 3A. It stated that the Deputy Secretary has directed that the CPO
recommend a shared services approach based on contract characteristics that may be the most efficiently
and effectively conducted by OCPO versus a shared service provider.

HUD concurred with recommendation 3B. It stated that the Deputy Secretary has directed the CPO to
provide an analysis of when program offices should use OCPO versus a shared service provider to
conduct an acquisition. The agency cited that this direction will build on existing work already completed
by OCPO and program offices related to determining when to use shared service providers versus OCPO
for procurement services.

HUD concurred with recommendations 3C, 3D, and 3E, and provided additional information on the COR
professionalization initiative and plans for continuing acquisition training and certification programs.

Management’s complete response is provided in appendix C, pages 8 and 9.




                                                21
Scope and Methodology
Our evaluation focused on OCPO’s acquisition improvement initiatives and successful acquisition
practices of other Federal agencies. We used the GAO Framework for Assessing the Acquisition
Function at Federal Agencies to
classify and document gaps between      GAO Framework Cornerstones:
desired and anticipated results of
OCPO and program office                  Organizational Alignment and Leadership
acquisition improvement efforts.  13
                                         Policies and Processes
This framework comprises four            Human Capital
interrelated cornerstones that           Knowledge and Information Management
promote an efficient, effective, and
accountable acquisition function.14 In addition, there are key elements for each cornerstone and critical
success factors for each key element (see appendix B).

To accomplish our objectives, we

        Identified and reviewed past studies, reports, and testimonies to gain an understanding and
         historical perspective of HUD’s acquisition function.
        Interviewed OCPO officials to understand the acquisition issues and identify OCPO acquisition
         improvement initiatives.
        Obtained and reviewed OCPO plans, acquisition manuals, reference guides, and documentation of
         other improvement activities underway.
        Conducted interviews or focus groups with key program office stakeholders to obtain their
         perspectives on activities underway to improve acquisitions. We met with
             o The Office of Policy Development and Research
             o The Office Public and Indian Housing
             o The Office of Community Planning and Development
             o The Office of Housing
             o The Government National Mortgage Association (Ginnie Mae)
        Identified selected Federal agencies’ successful practices applicable to the HUD acquisition issues
         and initiatives. We contacted OFPP, GSA, the Bureau of Fiscal Services, GAO, the Defense
         Acquisition University, and the Federal Acquisition Institute.
        Used the GAO Framework to classify and document gaps between desired and anticipated
         outcomes of acquisition improvement initiatives.

We performed the evaluation from March through November 2015 at HUD headquarters in
Washington, DC. We performed work in accordance with the Council of the Inspectors General on
Integrity and Efficiency’s Quality Standards for Inspection and Evaluation, January 2012.



13
   Our review focused on non-information technology acquisitions initiatives and successful practices and did not
include initiatives directed at travel and purchase card expenditures or major capital projects.
14
   GAO Framework for Assessing the Acquisition Function at Federal Agencies, GAO-05-218G, September 2005



                                                     22
Appendixes
Appendix A

           OCPO Strengths, Weaknesses, Opportunities, and Threats15

Strengths: What internal attributes of your office or        Weaknesses: What internal attributes of your office or
program bring it closer to achieving its goals and           program negatively impact achievement of its goals and
objectives? Define the areas in which it performs            objectives? Evaluate your liabilities and processes targeted
extremely well.                                              for improvement.

•      Establishing standard policies, processes, and        •   Delayed update to the HUD Procurement Handbook is
       procedures                                                preventing common-sense application of policies,
•      Providing templates and samples                           procedures, and processes
•      Integrated acquisition team concept                   •   Turnover reduces knowledge base and creative problem
•      Risk management & compliance unit to review               solving
       compliance                                            •   Not all OCPO staff members embrace or implement
•      Federal acquisition certification program                 changes regarding required collaborative activities
•      HUD Integrated Management Acquisition System          •   Insufficient budget to implement COR
       (HIAMS)* User Representative Roundtable                   professionalization and training and strategic sourcing
       increases collaboration and knowledge sharing             initiatives
•      Field staff tend to have better retention and more
       experience

Opportunities: What external conditions exist that           Threats: What external conditions exist that challenge
could help your office or program achieve its goals          your office or program’s ability to achieve its goals and
and objectives? Consider important changes and               objectives? Consider competitors, policies and regulations,
trends that are creating new possibilities.                  and obstacles you may face in the future.

•      Execute top priorities                                •   GSA markets unrealistic service expectations to
•      Leverage new recognition programs to retain               customers
       employees                                             •   Lack of budget execution throughout year and heavy
•      Use FEVS results to genuinely improve employee            realigning of unobligated funds for contracts in fourth
       and management working conditions and                     quarter
       relationships                                         •   Attrition and turnover: OCPO staff recruited by other
•      Develop better training courses more specific to          offices
       HUD in lieu of standard commercial courses            •   Attrition and turnover: 1102 mobility throughout the
       often developed to meet Department of Defense             Federal Government results in higher turnover and
       requirements                                              lower experience levels
                                                             •   Difficulties encountered in dealing with poor
                                                                 performers
                                                             •   Reduced training room availability requiring us to seek
                                                                 outside resources for facilities



15
     Source: State of the OCPO December 2014 briefing



                                                        23
Appendix B

                         GAO Framework for Assessing
                   the Acquisition Function at Federal Agencies

                            Organizational alignment and leadership
Key elements                    Critical success factors
Align acquisitions with              Assuring appropriate placement of the acquisition function
HUD’s missions and needs             Organizing the acquisition function to operate strategically
                                     Clearly defining and integrating roles and responsibilities
Obtain commitment from               Clear, strong, and ethical executive leadership
HUD’s leadership                     Effective communications and continuous improvement
                                        Policies and processes
Key elements                    Critical success factors
Planning strategically               Partnering with internal organizations
                                     Assessing internal requirements and the impact of external events
Effectively managing the             Empowering cross-functional teams
acquisition process                  Managing and engaging suppliers
                                     Monitoring and providing oversight to achieve desired outcomes
                                     Enabling financial accountability
Promoting successful                 Using sound capital investment strategies
outcomes                             Employing knowledge-based acquisition approaches
of major projects
                                            Human capital
Key elements                    Critical success factors
Valuing and investing in the         Commitment to human capital management
acquisition workforce                Role of the human capital function
Strategic human capital              Integration and alignment
planning                             Data-driven human capital decisions
Acquiring, developing, and           Targeted investments in people
retaining talent                     Human capital approaches tailored to meet organizational needs
Creating results-oriented            Empowerment and inclusiveness
organizational cultures              Unit and individual performance linked to organizational goals
                            Knowledge and information management
Key Elements                    Critical success factors
Identifying data and                 Tracking acquisition data
technology that support              Translating financial data into meaningful formats
acquisition management               Analyzing goods and services spending
decisions
Safeguarding the integrity of           Ensuring effective general and application controls
operations and data                     Data stewardship



                                                 24
Appendix C

             Office of Chief Procurement Officer Comments




                                25
26
27
28
29
30
31
32
33