Office of the Chief Human
Capital Officer,
Washington, DC
Management of Intergovernmental
Personnel Act Agreements
Office of Audit, Region 6 Audit Report Number: 2016-FW-0001
Fort Worth, TX March 30, 2016
To: Nani Coloretti, Deputy Secretary, SD
//signed//
From: Gerald R. Kirkland, Regional Inspector General for Audit, 6AGA
Subject: HUD Did Not Effectively Negotiate, Execute, or Manage Its Agreements Under
the Intergovernmental Personnel Act
Attached is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector
General’s (OIG) final results of our review of HUD’s administration of its assignment
agreements under the Intergovernmental Personnel Act.
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 because of the audit.
The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.
If you have any questions or comments about this report, please do not hesitate to call me at
817-978-9309.
Audit Report Number: 2016-FW-0001
Date: March 30, 2016
HUD Did Not Effectively Negotiate, Execute, or Manage Its Agreements
Under the Intergovernmental Personnel Act
Highlights
What We Audited and Why
Due to deficiencies found in prior reviews of two Intergovernmental Personnel Act (IPA or Act)
assignments, we audited the U.S. Department of Housing and Urban Development’s (HUD)
implementation and oversight of the IPA mobility program. The audit objectives were to
determine whether (1) HUD’s use of IPA agreements met the purpose and intent of the IPA
mobility program, (2) HUD’s policies and procedures related to IPA agreements were adequate
to ensure that its agreements met requirements and established proper oversight and monitoring
of the personnel and activities involved, and (3) HUD used IPA agreements to circumvent other
requirements.
What We Found
HUD failed to ensure that its IPA agreements met the purpose of the Act because it did not have
sufficient policies and procedures for negotiating, reviewing, and executing agreements, and its
staff ignored requirements, altered standard documents, and did not disclose information to
decision makers. Based upon the evidence, HUD abused the IPA mobility program to
circumvent other hiring authorities and had no assurance that the agreements were in its best
interest, negotiated at a reasonable cost, or free from conflicts of interest. Also, HUD did not
properly manage the assignees. This occurred because HUD did not have a central means of
tracking assignees or promptly out-processing them, leaving HUD vulnerable to security threats.
What We Recommend
We recommend that HUD establish an independent, central point of review for IPA agreements
to ensure they are reasonable, meet requirements, and avoid potential conflicts of interest.
Further, the Office of General Counsel should review all IPA agreements before their effective
dates. In addition, HUD should ensure that all IPA assignees receive required training and that it
promptly out-processes them when they leave. HUD should also follow procedures to address
the payment of $224,906 in ineligible costs for two invalid IPA agreements and have
organizations support or repay $49,989 in unsupported payments to employers.
Table of Contents
Background and Objectives ....................................................................................3
Results of Audit ........................................................................................................5
Finding 1: HUD Did Not Establish Controls To Effectively Negotiate and Execute
Its IPA Agreements ........................................................................................................... 5
Finding 2: HUD Did Not Properly Manage or Out-process IPA Assignees ............. 19
Scope and Methodology .........................................................................................27
Internal Controls ....................................................................................................29
Appendixes ..............................................................................................................31
A. Schedule of Questioned Costs .................................................................................. 31
B. Auditee Comments and OIG’s Evaluation ............................................................. 32
C. IPA Agreements Reviewed and Other Pertinent Information ............................. 39
2
Background and Objectives
Purpose and Requirements of the Intergovernmental Personnel Act
The purpose of the Intergovernmental Personnel Act 1 (IPA or Act) was to provide for the temporary
assignment of personnel between the Federal Government and State and local governments,
institutions of higher education, and other organizations, including some types of nonprofit
organizations. One of the requirements of the Act was that the parties enter into a written
agreement recording the obligations and responsibilities of the parties. The Office of Personnel
Management (OPM), which was responsible for overseeing the program, issued guidance stating
that each assignment should be made for purposes which the Federal agency head or his or her
designee determined were 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 were contrary to the spirit
and intent of the mobility assignment program.2 Supervision of an assignee was to be governed by
the written agreement between the Federal agency and the non-Federal employer. OPM’s Optional
Form (OF) 69, Assignment Agreement, contained sections that identified specific terms of the
agreement that generally met the requirements of the Act.
By using assignments under the Act, the U.S. Department of Housing and Urban Development
(HUD) was not required to competitively select assignees and could negotiate the terms of each
agreement, including length, cost, duties, supervision, and other provisions. In many ways, HUD’s
IPA agreements resembled sole-source contracts, in which HUD selected the contractor without the
benefit of open competition. While assignees had certain Federal employee rights and obligations,
the use of assignments under the Act was distinct from established Federal hiring methods,
including that
• Assignees were not in HUD’s payroll system. They remained employees of their
organizations, which submitted periodic invoices to HUD for payment (unless there was
no cost to HUD under the agreement).
• Assignees were expected to return to their employer at the end of the assignment.
• HUD could exceed salary restrictions that applied to other hiring authorities, or it could
pay nothing.
• Assignees were not required to sign the ethics pledge 3 required of political appointees.
• IPA assignments required no approval from the Presidential Personnel Office or OPM. 4
1
5 U.S.C. (United States Code) 3371-3376 and 5 CFR (Code of Federal Regulations) Part 334
2
OPM Web site: http://www.opm.gov/policy-data-oversight/hiring-authorities/intergovernment-personnel-act
3
Executive Order 13490, Ethics Commitments by Executive Branch Personnel, issued January 21, 2009,
required executive agency appointees to sign a pledge that, among other things, restricted gifts from lobbyists
and established a “revolving door ban” on lobbying activity.
4
IPA assignments to classified positions in the Senior Executive Service required approval by OPM, but this did
not occur during the audit scope.
3
HUD Staff’s Roles and Responsibilities for IPA Agreements
HUD’s Chief Human Capital Officer was delegated authority to execute IPA agreements for HUD.
Within the Office of the Chief Human Capital Officer (OCHCO), Linda Hawkins, the director of
the Office of Policy, Programs, and Advisory Staff (OCHCO policy director) administered the IPA
mobility program. Administering the program included devising and carrying out policies, record
keeping, coordinating among the parties to the agreements and other HUD offices, and certifying
organizations for participation in the program if needed. In addition to the OF 69, the program
office was required to submit a written justification memorandum to OCHCO, signed by the
appropriate Assistant Secretary, clearly indicating that the assignment was for a sound public
purpose and furthered the goals and objectives of the participating organizations. HUD executed
21 IPA agreements during the review period. In comparison, HUD employed more than 8,000
staff members. Five of the assignments were in the Office of Sustainable Housing and
Communities (OSHC), which Congress established in 2010 appropriations and renamed the Office
of Economic Resilience (OER) in 2014. Five of the 21 assignment agreements were with colleges
or universities, and 16 were with nonprofit organizations. HUD paid $3.39 million to non-Federal
organizations for 14 IPA assignment agreements from May 2010 to September 2015. 5
Reason for Audit
Due to complaints, we previously reviewed two IPA assignments. In one instance, we concluded
that HUD may have violated the Antideficiency Act when it used more than $620,000 in funds from
the Office of Public and Indian Housing and the Office of Housing to pay for a senior advisor to the
HUD Secretary. 6 In the other instance, we concluded that HUD had inappropriately used the Act to
appoint a housing industry advocacy group executive as HUD’s Deputy Assistant Secretary for
Public and Indian Housing’s Office of Policy, Program and Legislative Initiatives.7 Due to the
deficiencies found in the prior reviews, the management level of individuals making IPA selections,
and congressional interest, we reviewed all 21 IPA assignments identified by HUD between 2009
and 2015.
Audit Objectives
Our objectives were to determine whether (1) HUD’s use of IPA agreements met the
purpose and intent of the IPA mobility program, (2) HUD’s policies and procedures
related to IPA agreements were adequate to ensure that its agreements met requirements
and established proper oversight and monitoring of the personnel and activities involved,
and (3) HUD used IPA agreements to circumvent other requirements.
5
HUD did not pay salary costs for six IPA agreements, and it agreed to pay an employer $178,912 for a 1-year
assignment that began in July 2015.
6
Audit Memorandum 2014-FW-0801, Potential Antideficiency Act Violations Intergovernmental Personnel Act
Agreements, dated May 30, 2014
7
Audit Memorandum 2015-FW-0801, Intergovernmental Personnel Act Appointment Created an Inherent
Conflict of Interest in the Office of Public and Indian Housing, dated January 20, 2015. HUD Inspector
General David A. Montoya discussed this IPA assignment in his testimony before the U.S. House of
Representatives Committee on Financial Services’ Subcommittee on Oversight and Investigations on February
4, 2015.
4
Results of Audit
Finding 1: HUD Did Not Establish Controls To Effectively
Negotiate and Execute Its IPA Agreements
HUD failed to ensure that its IPA agreements met the purpose of the Act and were complete and
properly reviewed and executed. This occurred because HUD did not have sufficient policies
and procedures for negotiating, reviewing, and executing agreements and because HUD staff
ignored existing requirements, altered standard documents, and did not disclose information to
decision makers. Additionally, HUD’s procedures were fragmented among different areas with
no central point of review or responsibility to ensure the assignments were reasonable and
protected HUD’s interests. Based upon the evidence, HUD abused the IPA mobility program to
circumvent other hiring authorities and had no assurance that its agreements were in its best
interest, negotiated at a reasonable cost, or free from conflicts of interest. OCHCO drafted a new
handbook containing IPA policies in 2014 after OIG began evaluating complaints about specific
IPA agreements. OCHCO made revisions to the draft handbook in 2014 and 2015 during the
course of OIG’s reviews, but it had not issued the final handbook. OCHCO and the Office of
General Counsel (OGC) also conducted IPA training for HUD managers in 2015, but neither of
these measures prevented problems from continuing to occur.
HUD Appeared To Use the IPA Mobility Program To Circumvent Other Hiring
Authorities
HUD entered into IPA agreements that did not meet the purpose of the Act. Employers
participating in the IPA mobility program understood that HUD used the program to circumvent
other hiring authorities. For example, in an internal email dated April 27, 2015, one employer
wrote, “…she took a job with HUD, but basically to circumvent civil service (legally)….” In
another example, an employer wrote on January 9, 2012, that OSHC director Shelley Poticha
“wants to bring [the assignee] on as an IPA and then move her into a political slot at HUD when
they can get all the approvals in place.” Both of these interpretations were contrary to the intent
of the IPA mobility program.
In at least four instances, IPA assignees did HUD used altered forms to avoid
not intend to return to their employing making required certifications.
organization at the end of their assignments.
HUD modified two of the four contracts to
avoid making the required certification that they would do so. 8 In doing so, HUD circumvented
requirements for competitive and noncompetitive hiring by improperly using IPA assignments
when it knew they did not meet the mutual benefit goals of the Act.
8
Both OPM and the General Services Administration maintained fillable forms OF 69 on their Web sites that
generally met requirements and did not allow the user to alter them.
5
Example 1 (Appendix C, Item 1)
In 2010, while arranging for the extension of an IPA assignment agreement in OSHC, OCHCO
policy director Hawkins reportedly instructed the nonprofit employer to cross out wording in the
IPA assignment agreement certifying that the employee would return to his position with the
employer at the end of the agreement, as shown in figure 1.
Figure 1: Crossed out certification
The individual began his assignment in November 2009 with an initial 6-month term at no cost
to HUD. The extension agreement in question provided that HUD would pay the cost beginning
May 4, 2010. According to an email from the assignee to his employer, Secretary Shaun
Donovan and Deputy Secretary Ron Sims asked that he stay at HUD in a permanent, full-time
capacity under the IPA for the remainder of the administration’s current term. According to the
assignee, the offer was for a senior position to bring leadership to priority areas of the
administration’s agenda. HUD agreed to reimburse the nonprofit organization for the assignee’s
$180,000 annual salary plus benefits under the agreement, which exceeded amounts it could
have paid him as a HUD employee.
Records showed that the employer required the assignee to resign his position effective
May 14, 2010, and it agreed to continue to pay his normal salary and benefits but only if HUD
reimbursed it on a timely basis. The employer provided email messages that indicated the
employer had discussed the situation with OCHCO policy director Hawkins. The extension
agreement was effective May 4, 2010. According to the regulations governing IPA
assignments, 9 an assignment terminated automatically when the employer-employee relationship
ceased to exist. While a relationship existed between the individual and the nonprofit
organization, it was not an employer-employee relationship. Therefore, the agreement was
invalid after the first 10 days because the individual was no longer an employee of the
organization, and HUD’s payments of $195,883 10 to the employer and travel costs totaling
$1,498 were ineligible. Additionally, the nonprofit organization’s records showed that the
individual left his assignment with HUD before its end date to take an IPA assignment in April
2011 with another Federal agency, with the same nonprofit organization posing as his employer.
9
5 CFR 334.107(c)
10
The employer billed HUD for the entire month of May 2010. Questioned costs include the entire amount HUD
paid under the agreement rather than adjusting for the 10 days the assignee technically remained an employee.
6
Example 2 (Appendix C, Item 4)
In 2012, OSHC director Poticha offered Trisha Miller an IPA assignment, and Ms. Miller
understood that the purpose of the arrangement was for her to come to work at HUD. OCHCO
policy director Hawkins provided program office staff with a link to a form maintained on a
third-party Web site that was altered so the parties could avoid making the required certification
that the employee would return to her position with the employer. As shown in figure 2, the
form had been altered to allow the parties to choose which certifications they would make. For
comparison, figure 1 shows the official form and its bulleted certifications, while figure 2
contains the same language with the bullets converted to options for selection. In figure 2, the
third certification was not selected. HUD used this altered version of the form for other
agreements or extensions; however, the parties selected all of the certifications in those
agreements.
Figure 2: Altered requirements
Ms. Miller explained that the intention was always for her to come to work at HUD and the IPA
agreement was the only mechanism HUD offered her, although there had been some discussion
about the possibility of a political appointment. She stated that she interviewed with Secretary
Donovan for the position under the IPA. HUD’s White House Liaison at the time also stated that
there was discussion about using a political appointment to bring the assignee into OSHC. He
stated that the Presidential Personnel Office was interested in providing a list of candidates for
the position, but the process was taking too long for OSHC director Poticha. There was also a
HUD employee being considered for the position. OSHC director Poticha was impatient and
wanted the assignee for the position, so she decided to use the IPA. Ms. Miller stated that it was
difficult for her to convince her employer to participate in the agreement. She had to tell her
managers that she was leaving but ask them to do this for her. Both the employee and the
employer had no expectation that she would return to her position, and the employer planned to
fill her position. As stated previously, the employer believed that OSHC director Poticha
intended to convert this assignee to a political appointee.
Even though the IPA agreement stated that the need for the position was temporary and no
further assignments were envisioned, HUD carried out its intent to convert Ms. Miller to a
political appointee at the conclusion of the assignment. Specifically, HUD awarded her a
superior qualifications political appointment in OSHC as a GS (General Schedule)-15, justified
by her experience while serving under the IPA. In summary, in her impatience to bring the
individual of her choice to HUD, OSHC director Poticha inappropriately used the IPA agreement
to circumvent the political appointment process at the time.
7
Example 3 (Appendix C, Item 5)
In 2014, HUD actively participated in selecting an individual whom a nonprofit organization
would hire to serve as an IPA assignee in the Office of Economic Resilience (OER, formerly
OSHC) at no cost to HUD. Harriet Tregoning, then director of OER (currently Principal Deputy
Assistant Secretary in the Office of Community Planning and Development), asked a third-party
foundation to provide funding for this purpose, and a HUD employee 11 facilitated the foundation
inviting the nonprofit organization to apply for a grant to fund the position. After securing a
$350,000 grant from the foundation, the nonprofit organization went through an extensive 12
search process to hire an individual for the IPA assignment. OER director Tregoning
interviewed the four finalists for the position. 13 The nonprofit organization’s job offer letter to
the eventual assignee explained that the individual would work at the nonprofit organization for
90 days, as required under the Act, and then report to HUD. The individual stated that she had
no expectation of working for the nonprofit organization when the assignment ended. The entire
HUD-initiated endeavor appeared to violate the spirit of the IPA mobility program.
OGC was responsible for performing an ethics review of the agreement before it became
effective. However, OER director Tregoning did not disclose information about the funding and
hiring for this assignment and her involvement in it to OGC. When we informed the OGC
attorney who reviewed the agreement of the situation, he said it was “bizarre” that the cost would
be funded by an organization other than the employer and seemed concerned about it. He also
implied that if he had known that a third-party foundation provided the funding, it may have
influenced his decision.
Example 4 (Appendix C, Item 15)
In 2014, HUD entered into an IPA agreement so that Katherine O’Regan, the President’s
nominee for Assistant Secretary in the Office of Policy Development and Research could begin
working at HUD while awaiting the completion of the Senate confirmation process. The IPA
agreement avoided language indicating that the individual would perform the duties of the
Senate-confirmed position. The justification memorandum for this agreement indicated that
HUD’s White House Liaison; General Deputy Assistant Secretary for Congressional and
Intergovernmental Relations; and Associate General Counsel for Ethics, Appeals and Personnel
Law were involved in deciding to use the IPA in this situation. Other records showed that HUD
officials discussed the agreement widely within HUD and with at least one member of Congress
and the White House, giving the appearance of legitimacy to its actions.
11
The HUD employee previously worked for the nonprofit organization and had been assigned to OSHC in HUD
under the IPA in 2010 at no cost to HUD. The nonprofit organization funded his salary costs using foundation
grants as well. See appendix C, item 2
12
The nonprofit organization received responses from 115 potential candidates and informed the OER director
that it had interviewed 9 candidates.
13
In a different IPA agreement that started in 2015, a foundation asked to place a new assignee at HUD under the
IPA because its previous assignee had served the maximum number of years allowed under the Act. The
foundation advertised the position as an IPA assignment and recruited both internally and externally. HUD
staff were involved in interviewing the applicants and making the final selection. The individual selected was
already an employee of the foundation. See appendix C, item 11
8
While HUD had limited appointment authorities for appointees in waiting and OPM allowed
agencies broad authority under the Act, this assignment appeared to be outside the scope and
purpose of the Act. It was possible that Ms. O’Regan would not be confirmed and would return
to her employer consistent with the intent of the IPA mobility program. However, HUD’s
justification memorandum clearly stated that the purpose of the agreement was to allow her to
begin formally working with HUD staff before her Senate confirmation, and the IPA agreement
did not describe a benefit to the employer. Ms. O’Regan was confirmed by the Senate 3 months
after the start of the agreement. HUD chose to rely on the uncertainty of the situation to justify
the use of the IPA. Yet, it was not likely that the assignment would have taken place without the
nomination. This instance differed from HUD’s actions in the previous examples in which it
crossed out language or modified forms in an attempt to avoid the requirement that the assignees
return to their employers.
All four agreements were contrary to the purpose of the Act, specifically the mutual concern
provision, representing an abuse of the IPA mobility program. In the first three examples, at the
start of the agreement, the assignees did not intend to return to their employers at the end of the
assignments. Without a planned return to the assignee’s employer, there could be no expectation
or opportunity for all parties to benefit from the arrangement. OCHCO policy director Hawkins
encouraged and accepted the alteration of documents to avoid certifying that the individuals
would return to their employers at the end of their IPA assignments. She argued that HUD could
not enforce the provisions of the agreement against non-Federal employers. Contrary to her
assertion, HUD has a duty to ensure that its IPA assignments comply with requirements, and it,
therefore, can and should enforce the requirements by refusing to execute agreements that it
knows do not comply with the Act. Rather than ignoring requirements and allowing
inappropriate revisions to the contract, HUD should use other means to hire individuals, such as
using existing competitive and noncompetitive hiring authorities, when IPA agreements do not
meet the purpose of the Act.
Discrepancies Existed in Another IPA Agreement (Appendix C, Item 10)
In another agreement, the assignee was not an employee of the outside organization but, rather, a
contracted consultant and was, therefore, not eligible to participate in the IPA mobility program.
Under the IPA agreement, the assignee worked 4 days per week for HUD as part of the
Hurricane Sandy Rebuilding Task Force and 1 day with the nonprofit organization, and HUD
paid 80 percent of his salary. During the negotiation of the IPA agreement, the assignee
informed an OGC attorney assigned to the task force that he was working for the nonprofit
organization as a contracted consultant and asked if he had the option of a specific kind of
appointment instead of the IPA. The OGC attorney replied that they could see if the other
appointment type would save some time if the assignee no longer wanted to work 1 day per week
for the nonprofit. HUD paid $27,525 in salary and travel expenses for this ineligible 3-month
IPA agreement due to the assignee not being an employee of the nonprofit organization.
9
HUD Hired 6 of 17 Former IPA Assignees
Using either political appointments or competitive hiring authorities, HUD hired 6 of 17 IPA
assignees (35 percent) without the assignees first returning to their employers. 14 HUD hired two
IPA assignees during the terms of their IPA agreements under competitive hiring authorities to
positions that were basically the same as their duties under the IPA agreements. For one of the
two assignees, there was evidence that HUD created the position for the individual; however, the
position was in the newly created OSHC, which HUD initially staffed at least partially with IPA
assignees. Two other IPA assignees from OSHC received political appointments in the same
office during or at the end of their IPA assignments. A fifth assignee, Benjamin Metcalf,
received a political appointment in the Senior Executive Service (SES) as the Deputy Assistant
Secretary for Multifamily Housing Programs near the end of a series of IPA assignments in the
Office of Housing. The sixth was Assistant Secretary O’Regan. Table 1 shows when and under
what authority HUD hired the six assignees.
Table 1: IPA assignees HUD hired
Start date
on IPA HUD hire
Assignee agreement date Hire type
Special assistant, OSHC 01/19/2010 11/08/2010 Competitive GS-15 during IPA
assignment
Senior advisor, OSHC 02/15/2010 01/05/2011 Political GS-15 during IPA
assignment
Senior advisor, Office of 01/16/2010 08/09/2013 Political SES as Deputy Assistant
Housing Secretary during IPA assignment
Senior advisor, OSHC 02/20/2012 02/20/2014 Political GS-15 with superior
qualifications appointment at step 3
at end of IPA assignment
Advisor, Office of Policy 01/26/2014 04/29/2014 Presidential appointment, Senate
Development and Research confirmed during IPA assignment
Special assistant, Office of 06/16/2014 12/28/2014 Competitive GS-15 during IPA
Special Needs Assistance assignment
Programs
14
In addition to the 17 former assignees, as of September 2015, HUD had 4 active IPA agreements in 4 different
offices.
10
Evidence showed that HUD engaged in questionable practices, such as entering into agreements
that did not meet the purpose of the Act, and hiring assignees more often when they came from a
nonprofit organization. However, HUD used the IPA mobility program appropriately in some
instances. For example, assignees from universities tended to serve in research or advisory roles
at HUD and then return to their universities. Also, two assignees worked on the Hurricane
Sandy task force because they had relevant experience and expertise, and the agreements were
short-term in nature. Excluding the university and task force assignments, HUD hired 45 percent
of former assignees from nonprofit organizations.
IPA Agreements Were Incomplete and Not Properly Reviewed
HUD’s records contained compliance or completeness deficiencies for all 21 agreements
reviewed. OCHCO was responsible for ensuring that IPA agreements met the requirements of
the Act and were complete, accurate, and fully executed. It was also responsible for ensuring
that organizations were certified to participate in the IPA mobility program and that the program
office provided a justification memorandum to indicate that the assignment was for a sound
public purpose and furthered the goals and objectives of the participating organizations. As
summarized in table 2, there was a variety of discrepancies in the agreements that could impact
their enforceability and clarity, and a number of agreements did not meet legal and management
review requirements. These discrepancies occurred across the entire review period, despite the
draft revisions of policies and procedures HUD initiated in 2014 that were designed to add
integrity to the process.
Table 2: IPA agreement discrepancies
Discrepancy Total
Documents not signed or signed after effective date 8
Missing IPA agreement or extension 3
Missing Deputy Secretary review (if applicable) 6
Missing legal review before execution (if applicable) 3
Cost to HUD unclear 5
Indication of possible conflict of interest 4
Lapses between agreements (discussed in finding 2) 3
Missing certification of entity (if applicable) 4
Missing justification memorandum 6
Did not describe benefit to other organization 3
Discrepancies in beginning or ending dates 4
Assignments Were Not Reviewed by the Deputy Secretary
In January 2014, in response to previous OIG reviews of specific IPA agreements, Deputy
Secretary Maurice Jones issued two memorandums requiring review of IPA agreements by OGC
and the Deputy Secretary’s office. OCHCO revised its IPA policy in a draft handbook in July
2014 and included the OGC review requirement but not the Deputy Secretary’s review
requirement. Since issuance of the directives, HUD had entered into six new IPA agreements or
extensions that should have been subjected to OGC and Deputy Secretary review, yet there was
no evidence that the Deputy Secretary’s office reviewed and approved any IPA agreement after
11
the date of the directive. 15 When asked about not implementing this requirement, OCHCO
policy director Hawkins first stated that she was unaware of the memorandum, although there
was an email showing she received the memorandum when it was issued. She later explained
that she did not follow the requirement because the Deputy Secretary left and it was unclear
whether the new Deputy Secretary would require it.
OGC Reviewed Some Assignments but With Limited Information
After Deputy Secretary Jones’ January 2014 memorandums, to the extent that OGC was aware
of individuals assigned to HUD under IPA agreements, it conducted ethics reviews and
determined whether individuals were required to file financial disclosure reports. However,
OGC did not always receive complete information needed to make its ethics decisions, and
OCHCO did not always inform OGC in time to review agreements or extensions before their
effective dates. For example, one IPA agreement began in June 2014, but OCHCO did not
forward the information to OGC for review until October 2014. Since many of the assignees
were from nonprofit organizations that had a vested interest in HUD policy, lobbied HUD, or
even received HUD funding directly or indirectly, it is essential that OGC reviews the contracts
before the assignee starts to work at HUD to protect HUD, the assignee, and the outside
organization.
In four instances, the duties specified in the IPA agreement indicated the potential for conflicts of
interest. Three of the four agreements predated Deputy Secretary Jones’ requests that OGC
review the agreements. In the fourth case, OGC reviewed the extension of an agreement and
identified conflict-of-interest issues. As a result, HUD elected not to extend the agreement,
demonstrating the importance of this internal control. As another example of the value of OGC
receiving and reviewing all relevant information, in 2013, a nonprofit organization disclosed to
HUD that a potential assignee was not an employee, but a contractor. The nonprofit’s counsel
was concerned that the individual was referred to as an employee in the agreement. OGC
provided guidance that the individual must be an employee of the other organization and that it
would be difficult for HUD to assert that he was. In this case, OGC was provided information
that it needed to give appropriate guidance on the matter, and HUD did not execute an IPA
agreement for this individual.
In contrast, in at least two instances, an IPA agreement was at no cost to HUD, and HUD
program staff were aware that the nonprofit employer funded the agreement with grants from
third-party foundations, one of which was
previously discussed in IPA example 3. While this
practice was not specifically prohibited by the Act, OER director did not disclose relevant
OER director Tregoning should have provided information to OGC.
OGC with this relevant information for
consideration in its ethics review before approving
the agreement. Further, there was no evidence that OER director Tregoning made OCHCO
policy director Hawkins aware of the situation. The Acting Chief Human Capital Officer relied
15
The HUD Chief of Staff signed the justification memorandum for an IPA agreement in 2015.
12
upon the process and the staff involved to ensure the integrity of the agreement and executed the
agreement without knowing that the foundation provided the funding.
OGC did not have written procedures to guide its review of IPA agreements. The unwritten
procedures that ethics attorneys described included preparing ethics guidance for the individual
but not for program office staff or the employer. The procedures they described did not include
performing additional research about the organization or the individual, such as determining
whether the organization received HUD funds or any of the parties had been registered lobbyists
for activities related to HUD programs. Due to the potential for conflicts of interest, OGC
should expand its review procedures and incorporate them into a written document, which should
include asking questions during its ethics review about the sources of funds for IPA agreements
for which HUD does not bear the entire cost. OGC should also determine and consider whether
the employer received or administered any HUD funds or lobbied HUD on topics relevant to the
IPA assignment. Further, OCHCO and program staff need to provide OGC with complete
information to allow it to make an informed decision.
Costs to HUD Were Ambiguous
Five agreements did not clearly define HUD’s financial responsibility. For instance, in three
agreements, HUD agreed to pay salary plus benefits, but the agreement did not disclose the
nature and cost of the benefits, leaving it open for interpretation. In contrast, in other
agreements, HUD appropriately detailed the specific amounts it would pay for specific benefits.
For three agreements, HUD paid more than
$27,000 for IPA assignees to cash out accumulated
vacation when they left their employers, two of HUD paid for assignees to cash out
whom received political appointments at HUD. unused vacation.
The third assignee also received a bonus when she
resigned from her employer more than 4 months
before the agreement was due to expire. The bonus was nearly double the amount of holiday
bonuses she had previously received and seemed unreasonable given that she resigned before she
completed the IPA assignment. HUD did not have a system to track IPA assignees’ time and
attendance, and most of the employers’ invoices did not include this information. Therefore,
HUD had no information for reconciling accrued and used vacation amounts and may have paid
for assignees’ vacation time accrued before their work at HUD or wrongly paid for vacation time
the assignee had already used.
In contrast, two other IPA assignment agreements that began in 2011 included an addendum that
said HUD would not reimburse the employer for any unused leave balance at the end of the IPA
assignment at HUD. This was a more reasonable policy since the purpose of the assignments
was for the assignees to return to their positions with their employers. The agreements need to
clearly describe the expenses and costs that HUD will reimburse. Table 3 shows the vacation
and bonuses HUD paid when it hired the individuals or they resigned.
13
Table 3: Vacation and bonus payments at termination
Vacation Bonus pay
Assignment Termination pay at at Employee status at end of
start date date termination termination assignment
02/01/2010 08/08/2013 $14,928 HUD political SES appointment
as Deputy Assistant Secretary in
Housing
02/15/2010 01/16/2011 5,790 HUD political GS appointment
03/29/2010 11/07/2012 6,362 $1,594 Left HUD and employer
Totals $27,080 $1,594
For another assignment, HUD agreed to pay 80 percent of the individual’s salary, identified in
the agreement as $91,912. However, the employer billed and HUD paid 80 percent of an annual
salary of $115,896. Documents obtained from the employer indicated that an OGC attorney
directed the employer to enter $91,912 as the base salary and that this amount represented 80
percent of the assignee’s actual higher salary. OCHCO’s records did not include this relevant
information, and HUD’s review of the invoices did not identify the discrepancy.
One nonprofit organization had two different IPA assignments at HUD for which the contract
contained language stating that the employee was eligible for bonuses and salary increases
annually or from time to time as determined by the employer. 16 In other cases, HUD agreed to
pay the amounts the individual or employer requested, regardless of whether the amounts were
defined in the agreement. Further, in one example, former Federal Housing Commissioner Carol
Galante agreed to a 43 percent pay increase from $108,633 to $155,000 in an IPA extension for
Mr. Metcalf, an employee of the organization she led before her HUD appointment.
HUD did not establish controls to review and consent to the employer’s or the HUD official’s
unilateral decisions to grant bonuses and salary increases given that these were HUD funds.
OCHCO policy director Hawkins reportedly advised an employer that the amounts in the
agreement were not a budgeted or fixed amount and could be adjusted as costs changed. In
contrast, other IPA agreements identified exact amounts HUD would pay for salary, payroll
taxes, bonuses, and specific benefits. This lack of substantive negotiation, the noncompetitive
nature of IPA assignments, and the fact that the HUD employees who selected particular
assignees usually arranged the terms of the agreement created concerns about the overall
integrity of the IPA mobility program. Further, without knowing the actual costs HUD agrees to
pay, including salary, payroll taxes, and benefits, it cannot properly budget funds, control costs,
and evaluate their reasonableness before executing the agreement. If HUD required an
independent, central point of responsibility to review and approve the agreements, some of these
deficiencies could be avoided.
16
During the same period, Federal employees were subject to a pay freeze.
14
HUD Paid or Agreed To Pay Questionable Relocation Costs for 3 of 11 Assignees Who
Relocated
Although IPA assignments were intended to be temporary, OPM allowed agencies to pay for
limited relocation costs associated with IPA assignments. HUD agreed to pay relocation costs
for three individuals under IPA agreements between 2010 and 2015, although eight other
individuals lived outside the local commuting area at the start of their assignments, and HUD did
not pay their relocation costs. In two cases, HUD political appointees arranged for HUD to make
relocation payments for the colleagues they recruited under the IPA, when HUD had not
previously paid for relocation for any other assignees in the review period. Further, no one at
HUD independently reviewed and evaluated these agreements.
In the first case, Carol Galante was the president at BRIDGE Housing Corporation in San
Francisco, CA, when she received a HUD political appointment as a Deputy Assistant Secretary
in Housing. In 2010, soon after her political appointment, she brought Benjamin Metcalf, who
worked for her at BRIDGE, to HUD under the IPA at his existing salary. Under the agreement,
HUD paid $26,183 in relocation costs for Mr. Metcalf to move to Washington, DC. No prior
IPA assignment reviewed included a relocation benefit. After Ms. Galante was appointed as
Assistant Secretary-Federal Housing Commissioner, she extended Mr. Metcalf’s IPA assignment
and provided him a raise of more than $50,000 with no written justification. After successive
extensions of his IPA assignment, which included provisions that HUD would pay for return
transportation to BRIDGE, in August 2013, Mr. Metcalf received a political appointment as a
Deputy Assistant Secretary in Housing.
In the second case, while still under an IPA agreement, Mr. Metcalf was communicating with a
colleague from another nonprofit organization in San Francisco to facilitate her IPA assignment
in Housing. She began her assignment in September 2013. The agreement provided that HUD
would pay for relocation to Washington, DC, and back to San Francisco for a 1-year assignment.
This individual was the second assignee to receive a relocation benefit. The assignee said that
she would not have taken the assignment if HUD had not agreed to pay relocation costs. Further,
Mr. Metcalf said he received little guidance for negotiating IPA agreements and relied upon his
own experience as an IPA assignee with HUD. HUD later extended the agreement for a second
year and paid for the assignee to move back to San Francisco and work in the local HUD office
for the last 5 months of her assignment. In total, HUD paid or agreed to pay $43,676 in
relocation costs for what became a 2-year assignment. The level of the HUD officials involved
in the decisions and their relationships with the assignees, coupled with the departure from the
normal practice in which HUD did not pay relocation costs for other IPA assignees, gave the
appearance of favoritism.
In an unrelated assignment agreement with a university, effective July 1, 2015, HUD agreed to
pay an estimated $14,500 in relocation costs for a 1-year agreement for an assignee who would
work on a part-time basis in the Office of Policy Development and Research. The relocation
authorization approved expenses up to $17,770 for the individual to move from Los Angeles,
CA, to Washington, DC, 23 percent more than the amount in the IPA agreement. This is another
example of HUD’s agreements not adequately defining the costs it would pay. HUD needs a
system to independently and objectively evaluate the cost and reasonableness of paying
relocation costs and document the justification when it does.
15
OCHCO Drafted a New Policy and, Together With OGC, Provided IPA Training for HUD
Managers
OCHCO drafted a new handbook, entitled “Details, Interagency Agreement Assignments, and
Intergovernmental Personnel Act Assignments Policy,” and circulated it for departmental
clearance in July 2014. During the audit, HUD had not formally adopted the policy in the draft
handbook because it was negotiating with employee labor unions. HUD did adopt and
implement some of the revised policies, which remained in draft form, including OGC’s review
of IPA agreements. After completing the departmental clearance process for the draft handbook,
OCHCO policy director Hawkins made other changes to include prohibiting IPA assignees from
supervising government employees, which OPM allows, and requiring a justification if HUD
agrees to pay more than 50 percent of the cost of the assignment agreement.
OCHCO and OGC held a webinar in January 2015 to train HUD personnel on IPA requirements.
While the materials that HUD presented during the webinar were accurate, the training alone was
insufficient to correct all issues as evidence showed that HUD continued to fail to follow the
requirements. HUD indicated that it will continue to provide training to IPA assignees and HUD
personnel.
Conclusion
For all 21 IPA agreements reviewed, HUD failed to ensure that it met requirements, such as
meeting the purpose of the Act and ensuring the agreements were complete and properly
reviewed and approved. The agreements contained vague terms and were not properly reviewed
and executed. This occurred because HUD’s procedures for negotiating, executing, and
documenting IPA agreements did not exist or were fragmented among OCHCO, program offices,
and OGC. Further, HUD had no central point of review to objectively evaluate agreements
before executing them to ensure that they were reasonable, appropriate, and met requirements.
As a result, the costs and benefits to HUD were uncertain, and HUD unnecessarily increased its
exposure to ethical violations, including conflicts of interest. These conditions were more
prevalent in HUD’s agreements with nonprofit organizations, which could participate in the IPA
mobility program only if they were certified as an “other organization” under the Act. To correct
the weaknesses in its fragmented system, HUD should revise its policies and implement
additional procedures to address the deficiencies identified in this report. For example, HUD’s
IPA policy should establish an independent, central point of review for IPA agreements before
HUD executes them, and OGC should determine, before the effective date of the assignment,
whether the assignee should file financial disclosure reports.
16
Recommendations
We recommend that the Deputy Secretary require the Chief Human Capital Officer to
1A. Revise the draft IPA policy to incorporate a requirement for an independent,
central point of review for IPA agreements. This central point of review would be
responsible for reviewing and approving IPA assignment agreements before the
assignment begins to ensure that they are reasonable, meet the purpose of the Act,
do not circumvent established hiring procedures, and that there are no indications
of a conflict of interest. This should include reviewing the full cost of the
agreement, including salary, benefits, bonuses, and relocation expenses.
1B. Use only OPM’s form OF 69, Assignment Agreement, to document and execute
IPA assignment agreements and ensure that the certifying officials and assignees
make the required certifications.
1C. Establish and implement procedures to guide staff in reviewing IPA documents
for completeness and accuracy, including ensuring that the agreements clearly
describe the costs that HUD will reimburse, provisions that HUD must review and
approve any bonuses and salary increases, verifying employment status, and
ensuring that that all parties sign the agreement before the effective date.
1D. Develop and implement procedures to ensure that OCHCO retains, in accordance
with HUD’s record retention policy, all relevant information to document the
transaction and any extensions or modifications. This documentation should
include but not be limited to relevant correspondence, certification of the
organization to participate in the IPA mobility program (if required), justification
memorandums, OGC review and financial disclosure determination, central point
of review and approval documentation, and fully executed documents.
1E. Develop and implement procedures and protocols to ensure that program staff
provide OGC with all relevant information to make informed ethics decisions
before executing the agreement and incorporate this requirement into the IPA
policy.
1F. Resubmit the draft handbook containing the IPA policy for departmental
clearance after making the recommended revisions and adopt it as official
policy. 17
17
Finding 2 includes additional recommendations for revising the draft IPA policy.
17
We recommend that the Deputy Secretary require the Associate General Counsel for Ethics,
Appeals and Personnel Law to
1G. Establish written review procedures for IPA assignment agreements, which
should include a review of the sources of funds when HUD does not pay the
entire cost of the agreement, and a determination and evaluation of the impact if
the employer participated in HUD programs, received HUD funding, or lobbied
HUD topics relevant to the IPA assignment.
We recommend that the Deputy Secretary require the Chief Human Capital Officer and the
Associate General Counsel for Ethics, Appeals and Personnel Law to
1H. Continue to provide training to HUD managers about the IPA policy and
procedures, including reinforcing that they must use other means to hire
employees when proposed IPA agreements do not meet the purpose of the Act.
We recommend that the Deputy Secretary require the Chief Financial Officer to
1I. Follow established procedures to address the $224,906 18 in ineligible costs for
invoices and travel associated with two invalid IPA agreements.
18
$195,883 + $1,498 + $27,525 = $224,906
18
Finding 2: HUD Did Not Properly Manage or Out-process IPA
Assignees
HUD did not properly manage IPA assignees once they began working at HUD or properly
out-process them when they departed. HUD allowed three IPA agreements to lapse, did not
properly document two IPA extensions, and did not ensure assignees took required information
technology security awareness and ethics training. Further, HUD did not always ensure that
assignees filed financial disclosure reports, if required, or provide ethics guidance to the assignee
and the employer at the start of the assignment. HUD also did not adequately review and process
invoices for IPA assignments. In addition, HUD did not consistently conduct evaluations for
IPA assignees or ensure that they received adequate guidance to avoid conflict-ofinterest
situations. These conditions occurred because there was no central authority to manage IPA
agreements. As a result, HUD paid $49,989 in invoice overpayments and for IPA agreements
that had lapsed. Further, HUD increased its exposure to security breaches and ethics violations.
HUD Paid for Services Under Three Lapsed IPA Agreements
In three instances, HUD paid costs totaling $30,857, including travel, when it did not have IPA
agreements in place. This problem occurred when existing agreements expired and the extension
or modification agreements were executed at a later date, ranging from 2 to 4 weeks. The costs
were unsupported because there were no underlying obligating agreements supporting the
expenditures. If HUD had properly managed its IPA agreements, it would have known that the
agreements were expiring and could have executed modifications or extensions in a timely
manner to prevent the lapses.
HUD Did Not Document Two Extension Agreements, and OCHCO Could Not Provide
Copies of Two Agreements
HUD did not maintain documentation showing that it extended two IPA agreements. One
agreement 19 contained language stating that it would end on August 31, 2014, unless there was
agreement among all parties to continue for an additional period not to extend past December 31,
2014. OCHCO had no records to document whether the parties extended the agreement;
however, HUD paid for the assignee to travel in September 2014 and did not revoke his
identification card and system access until November 13, 2014. The Deputy Assistant Secretary
in the program area recalled speaking with the employer about extending the agreement but did
not believe that there was an official memorandum or written document. He did not recall the
exact date on which the assignee left, but records obtained from the employer indicated an
employment termination date of November 1, 2014. HUD had no financial obligation other than
official travel under this agreement.
Another agreement was scheduled to end on July 31, 2013. Subpoenaed records from the
employer showed that the parties agreed via email messages to extend the agreement through
19
On October 9, 2013, Secretary Donovan wrote in an email that the assignee’s employer informed him that the
employer would allow the individual to work at HUD for 9-12 months under an IPA agreement. The Secretary
wanted a contact person to walk the assignee through the process. The following week, HUD initiated the IPA
process and the assignee began his HUD assignment on January 6, 2014.
19
August 9, 2013, so the assignee could travel to attend a meeting related to his work under the
agreement on August 8-9, 2013. The parties did not execute a formal extension agreement, and
this information was not in OCHCO’s records. Further, OCHCO could not provide copies of
two IPA agreements for assignments in OSHC that started in November 2009 and January 2010.
The administrative officer in OSHC provided copies of the agreements and related records.
Regulations 20 required that agreements and modifications be in writing and that the agency
maintain copies of them. In these situations, HUD failed to properly maintain records supporting
its agreements and extensions.
Assignees Did Not Complete Required Security Awareness Training
The Federal Information Security Management Act and HUD’s implementing policy required all
users of HUD information system resources to participate in initial and annual information
security awareness training. The training records HUD provided indicated that only one of the
assignees attended the required security awareness training, and that assignee attended only once
during the 3 years that the agreement was in effect. The prevalence of noncompliance with the
security awareness training requirement among IPA assignees suggested that HUD did not
uniformly apply the requirement among its users. HUD cannot protect the confidentiality,
integrity, and availability of its information systems and the information they contain without the
knowledge and active participation of its users in implementing sound security principles.
Assignees Generally Did Not Complete Financial Disclosure Reports or Receive Ethics
Training
HUD determined that eight IPA assignees were required to file financial disclosure reports. The
Office of Government Ethics (OGE) and HUD’s procedures required that they file new entrant
financial disclosure reports within 30 days of starting their assignments and then annually. 21
None of the eight assignees filed the OGE new entrant financial disclosure reports within 30
days. Four of the eight were required to file annual financial disclosure reports due to the length
of their assignments. Of those four, one did not file annual reports. As a result, HUD did not
know whether this individual had conflicting issues that would affect his work with HUD. Table
4 summarizes the initial and annual financial disclosure reports not filed.
20
5 CFR 334.106
21
5 CFR Part 2634
20
Table 4: Financial disclosure report filing deficiencies
Days initial Annual financial
disclosure was disclosure reports
Assignee late not filed
Deputy Assistant Secretary, Office of Public and 861 N/A 22
Indian Housing
Deputy press secretary, Office of Public Affairs Not filed N/A
Senior advisor, Office of Housing 182 2011 and 2012
Senior advisor, OSHC 184 N/A
Communications specialist, OSHC 32 N/A
Special assistant, OSHC 107 N/A
Senior advisor, OSHC 89 N/A
Special assistant, Office of Special Needs Assistance Not filed N/A
Programs
Further, three IPA assignees who filed financial disclosure reports failed to disclose their outside
employers as required. As a result, HUD legal staff reviewing the reports did not have complete
information for evaluating the reports.
The eight assignees who were required to file financial disclosure reports were also required to
attend annual ethics training. Two individuals attended all of the required training, three
attended one of three required trainings, and three attended no ethics training.
OGC stated that it had used an electronic system maintained by another agency in the last 3 to 4
years to track financial disclosure reports and in 2015 began using it to track ethics training as
well. OGC could more effectively use this tool to manage IPA assignees’ compliance with these
requirements if it determined during its initial ethics review of the assignment agreement
whether the assignee would be subject to the requirements. Further, if financial disclosure
reports were required, HUD could condition the agreement on the assignee’s filing the required
report.
Assignees Engaged in Questionable Behavior
Two IPA assignees engaged in questionable communications with their employers. For instance,
subpoenaed records showed that between March and May 2010, an IPA assignee in OSHC
engaged in inappropriate communications with his employer concerning a notice of funding
availability. This communication included soliciting comments from his employer after the
deadline for comments had passed and disclosing information about an expected release date for
the notice. He also provided his employer with information about HUD’s policy positions on
topics that were relevant to his employer’s mission. In the other example, an assignee in the
22
Because OGC changed its opinion as to which financial disclosure report this assignee needed to file, the
assignee may have needed to file an annual report in 2014 and did not do so.
21
Office of Special Needs Assistance Programs had questionable communications with his
employer regarding internal HUD matters and performed a substantial amount of work for his
employer using HUD resources during work hours reimbursed by HUD.
Two additional assignees were involved in apparent conflict-of-interest situations. As previously
reported, Debra Gross, an IPA assignee in the Office of Public and Indian Housing, had an
apparent conflict of interest involving her employer, and this topic was discussed at a
congressional hearing. 23 In another instance, OGC reviewed an IPA extension agreement in
2014 and determined that a conflict existed, and the individual had to recuse himself from
involvement in the program that was the subject of his IPA assignment. HUD terminated the
agreement rather than extend it. The original agreement predated the OGC review requirement.
Further, OGC referred a third assignee to OIG for a possible conflict of interest.
Without procedures to protect it, HUD increased its risk from potential conflicts of interest or
abuse in IPA assignments. OGC provided some assignees with ethics advice via email after OIG
began reviewing specific IPA agreements. OGC began conducting face-to-face ethics briefings
after it began reviewing IPA agreements pursuant to the former Deputy Secretary’s 2014
memorandum. OGC should provide ethics briefings jointly with employers and employees and
should include explanations of the standards of conduct and restrictions on communications,
including the improper disclosure of HUD information.
HUD Did Not Properly Review and Pay Invoices for IPA Assignments
For three agreements, 24 HUD made overpayments of $49,989, including travel, because program
offices did not adequately review invoices and compare them to the terms of the agreements
before approving them for payment. It overpaid $17,358 because employers billed for amounts
that exceeded what HUD agreed to pay in the contract. As previously discussed, it paid $30,857
for agreements that had lapsed, including travel. Further, for eight invoices, one employer failed
to deduct credit amounts for employee benefit copayments from the invoice total, thereby
overstating the amount billed, or HUD failed to deduct credit amounts when paying the invoices.
A simple mathematical check of the invoices should have detected the errors and prevented the
overpayment of $543. Subpoenaed records showed that in 2014, the same employer determined
that it had overbilled HUD $1,231 on its July and August 2013 invoices and made internal
inquiries about how to repay HUD; however, HUD had no record of receiving the funds from the
employer. Table 5 shows the overpayments.
23
Audit Memorandum 2015-FW-0801, Intergovernmental Personnel Act Appointment Created an Inherent
Conflict of Interest in the Office of Public and Indian Housing, dated January 20, 2015, discussed at a
congressional hearing on February 4, 2015
24
HUD agreed to reimburse or partially reimburse the employer in 15 of 21 agreements.
22
Table 5: IPA agreement overpayments
Exceeded Lapse Overbilling
contract between identified by
Assignee amount agreements Errors employer Total
Senior advisor, Office
of Housing $11,947 $ 7,514 $543 $1,231 $21,235
Senior policy advisor,
Office of Housing 2,258 6,785 9,043
Senior advisor to
Secretary Donovan 3,153 25 16,558 26 19,711
Total $17,358 $30,857 $543 $1,231 $49,989
HUD Did Not Consistently Provide Assignees With Performance Appraisals
HUD did not consistently perform evaluations of the assignees’ performance annually as part of
a normal performance appraisal process or before awarding extensions, bonuses, or salary
increases. The draft handbook that went through departmental clearance contained a provision
that required HUD to provide performance appraisals for assignees. After departmental
clearance, OCHCO added a provision that HUD supervisors should provide performance
feedback to the employer upon request. There was no consistency among program staff
concerning providing performance feedback for IPA assignees. One manager stated that she
provided an assignee with a 360-degree performance appraisal, but she did not document it in the
IPA file. The manager said that IPA assignees should have an appraisal and it was important for
them to have feedback on their performance. HUD needs to evaluate and document each
assignee’s performance to ensure that the objectives of the agreement are achieved and its costs
are supported by the completion of those objectives.
HUD Did Not Properly Out-process Assignees
Because it did not keep track of its IPA assignments, HUD did not ensure that it properly
out-processed assignees at the end of their assignments. This deficiency included not promptly
revoking identification cards and access to HUD systems and facilities. By not properly
out-processing assignees, HUD exposed itself to an unnecessary risk of information being
inappropriately accessed, misused, released, or lost.
Identification Cards Were Not Revoked
HUD issued identification cards to assignees to grant access to its information systems,
buildings, and offices. However, HUD did not promptly revoke assignees identification cards at
the end of their assignments, creating a physical security risk of unauthorized access to its
25
We questioned $2,365 of these costs in Audit Memorandum 2014-FW-0801, Potential Antideficiency Act
Violations; Intergovernmental Personnel Act Agreements, dated May 30, 2014. Therefore, we included only
$788 of this amount in the schedule of questioned costs in appendix A.
26
We questioned these costs in Audit Memorandum 2014-FW-0801. Therefore, we did not include amounts for
this overpayment in the schedule of questioned costs in appendix A.
23
buildings and offices. HUD did not provide complete information showing when it issued and
revoked identification cards for five assignees, and based on the information provided, as of
August 2015, it had not revoked an identification card for an assignee who departed 16 months
earlier in April 2014. Additionally, HUD did not revoke the cards for two individuals for 9 to 12
days.
Computer System Access Was Not Revoked
In 10 instances, HUD did not promptly terminate user access to its information systems when
IPA assignments ended. The delays ranged from 2.5 to 12 months. One assignee working in the
Deputy Secretary’s office left in December
2014, but his system access remained active, and An IPA assignee’s email account was
his email account was accessed in July 2015. accessed more than 6 months after his
After we notified them of the situation, HUD
assignment ended.
staff in the Secretary’s office and the Acting
Chief Human Capital Officer took prompt action
to request that the account be disabled.
HUD Did Not Establish a Clearing Process for IPA Assignees
While individuals under IPA agreements were not permanent HUD employees, they did have
access to HUD physical space, computer equipment, and computer systems. HUD employees
were required to use Form HUD-58-A, Clearance for Separation of Employee, which was
designed to ensure that departing employees in headquarters turned in all of their equipment and
received any necessary post-employment advice and that HUD restricted access to computer
systems and physical space. It was HUD’s policy to withhold employees’ final salary payments
until they completed the clearance process. HUD’s Pay, Benefits, and Retirement Division kept
records of the forms for separating employees. Because IPA assignees were not in the payroll
system, there was no mechanism to ensure that the assignees completed the clearance process,
and the Pay, Benefits, and Retirement Division did not have the records for IPA assignees, even
though some assignees completed the form. Some HUD personnel stated that they had no
guidance about whether IPA assignees should complete a clearance form but that it made sense
for them to do so.
There was evidence that three assignees completed the clearance forms, yet HUD did not
promptly revoke all access, leaving it vulnerable to physical and information technology security
threats. Most troubling was that each of the assignees worked in the Secretary’s or Deputy
Secretary’s office or on a secretarial initiative and had access to sensitive areas and information.
• Subpoenaed documents from the employer of a senior advisor to former Secretary
Donovan showed that the assignee had completed a clearance form. HUD signed off on
the computer access and building pass sections in late April 2014. However, HUD could
not document when it revoked the building pass, and it did not revoke computer access
until July 2014, approximately 3 months later. HUD could not provide a copy of the
form.
24
• Subpoenaed documents from the employer of a public engagement advisor on the
Hurricane Sandy Task Force showed that the assignee had completed the clearance form.
HUD signed off on the computer access and building pass sections on August 12, 2013.
HUD revoked the building pass on that date but did not revoke computer access until
January 20, 2014, more than 5 months later. HUD could not provide a copy of the form.
• As previously mentioned, a special assistant to the Acting Deputy Secretary departed in
December 2014, but his account remained active and was accessed more than 6 months
after his departure. The assignee had completed the clearance process using
Form HUD-58-A. HUD’s payroll office did not have the document, but an employee in
the Secretary’s office was able to provide two of the three pages of the form. The page
showing that HUD had revoked the individual’s computer access was missing. HUD
revoked his building pass on January 9, 2015, the same date indicated on the form.
HUD’s records did not explain how the assignees completed the clearance process and obtained
the required signatures from clearance officials verifying that they revoked system and building
access, and HUD failed to terminate the access as indicated. Further, HUD could not produce
clearance forms for two assignees who completed them; however, the employers had copies of
the forms. HUD needs to ensure that IPA assignees complete the same clearance process as
HUD employees and that responsible clearance officials sign the clearance forms only when they
have completed action to revoke the relevant access, and HUD needs to maintain copies of the
clearance forms for IPA assignees in its files. 27
Conclusion
HUD did not manage IPA assignees once their assignments began and did not properly
out-process them when they departed. This occurred because HUD did not have a central means
to track assignees or have policies and procedures for managing and terminating IPA
agreements. HUD’s IPA policy addressed only the process of entering into an agreement and not
managing and terminating the agreements. As a result, HUD paid questionable costs and
unnecessarily increased its exposure to security and ethical breaches. OCHCO should revise its
IPA policy to establish a means to track IPA assignments to ensure that assignees receive
required training, complete financial disclosure reports, if necessary, and receive performance
appraisals, while also ensuring that either it extends expiring IPA assignments or assignees are
promptly and completely out-processed.
27
As out-processing of employees is a typical process-driven action, it was unknown whether the failure to
correctly out-process assignees was because they were assignees or whether it was an organizational control
weakness.
25
Recommendations
We recommend that the Deputy Secretary
2A. Establish points of responsibility to ensure proper oversight and monitoring of the
personnel and activities involved in IPA agreements.
We recommend that the Deputy Secretary require the Chief Human Capital Officer to
2B. Develop and implement a system to track IPA assignments to ensure that HUD
does not spend funds without a valid agreement and that HUD either extends
expiring agreements, if appropriate, or promptly out-processes the assignees.
2C. Revise the draft IPA policy to include the requirement that HUD supervisors of
IPA assignees conduct and document performance appraisals.
2D. Revise the draft IPA policy to include the requirement that IPA assignees
complete the same clearing process as separating employees and develop and
implement procedures to carry out the policy.
We recommend that the Deputy Secretary require the Chief Information Officer to
2E. Establish effective procedures to ensure that IPA assignees receive the required
information technology security awareness training in accordance with the
Federal Information Security Management Act.
We recommend that the Deputy Secretary require the Chief Financial Officer to
2F. Support or require employers to repay $49,989 in overpayments on IPA
agreements. 28
28
HUD paid a total of $49,989 in overpayments or when the agreement had lapsed. However, as discussed in
footnotes 25 and 26, we questioned $18,923 of these costs in a prior audit memorandum. To avoid reporting
these costs twice in HUD’s audit follow-up system, we included only $31,066 as questioned costs for
recommendation 2F in appendix A.
26
Scope and Methodology
Our audit covered IPA agreements and related policies and procedures in effect from November
2009 through October 2015. We performed fieldwork from February to October 2015 at HUD
headquarters located at 451 7th Street SW, Washington, DC; HUD’s Accounting Center located
at 801 Cherry Street, Fort Worth, TX; and our offices located in Fort Worth, TX, and Oklahoma
City, OK.
To accomplish our objectives, we
• Reviewed relevant Federal laws, regulations, and HUD policies regarding IPA assignments.
• Reviewed OCHCO’s IPA policies, including draft revisions.
• Reviewed Federal regulations on contracting, travel, and relocation.
• Gained an understanding of OGC procedures for review of IPA assignments and financial
disclosure report filings.
• Reviewed 21 IPA agreements and HUD records.
• Interviewed HUD staff, including OCHCO staff and management, budget and administrative
staff in various departments, OGC attorneys, and current and former IPA assignees and their
HUD supervisors.
• Subpoenaed employee and salary documentation, including emails, pertaining to IPA
agreements and the process for the 20 assignees 29 from 17 organizations. Reviewed
responsive materials ranging from 31 to 5,300 pages of documents per employer.
• Reviewed invoices submitted to HUD and HUD’s approval of invoices for IPA assignments.
• Reviewed relocation and travel documentation maintained by HUD and the U.S. Department
of the Treasury for IPA assignees.
• Reviewed HUD training records for required government training provided to the assignees.
• Reviewed lobbying disclosure reports from the Web site of the U.S. House of
Representatives.
During the audit, HUD identified 21 IPA agreements from 2009 to 2015. Other evidence
indicated that HUD might have additional agreements, creating doubt that HUD identified the
complete universe of IPA assignment agreements for review. Despite this limitation, there was
sufficient, appropriate evidence upon which to base audit conclusions and recommendations.
We did not review IPA assignments of HUD employees assigned to other organizations.
29
We did not subpoena one assignee’s employer because the assignee started in July 2015, which was after we
issued the other subpoenas.
27
We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
28
Internal Controls
Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to
• Effectiveness and efficiency of operations,
• Reliability of financial reporting, and
• Compliance with applicable laws and regulations.
Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.
Relevant Internal Controls
We determined that the following internal controls were relevant to our audit objectives:
• Program operations – Policies and procedures that management has implemented to
reasonably ensure that a program meets its objectives.
• Compliance with laws and regulations – Policies and procedures that management has
implemented to reasonably ensure that resource use is consistent with laws and regulations.
• Validity and reliability of data – Policies and procedures that management has implemented
to reasonably ensure that valid and reliable data are obtained, maintained, and fairly
disclosed in reports.
We assessed the relevant controls identified above.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, the
reasonable opportunity to prevent, detect, or correct (1) impairments to effectiveness or
efficiency of operations, (2) misstatements in financial or performance information, or (3)
violations of laws and regulations on a timely basis.
Significant Deficiencies
Based on our review, we believe that the following items are significant deficiencies:
• HUD did not have the controls necessary to ensure that it obtained and maintained sufficient
documentation detailing IPA transactions (finding 1).
• HUD did not implement adequate policies and procedures to ensure that it complied with
requirements (findings 1 and 2).
29
• HUD did not implement adequate policies and procedures to ensure that it managed IPA
assignments and assignees to meet the program objectives (finding 2).
30
Appendixes
Appendix A
Schedule of Questioned Costs
Recommendation
Ineligible 1/ Unsupported 2/
number
1I $224,906
2F $31,066
Totals $224,906 $31,066
1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
that the auditor believes are not allowable by law; contract; or Federal, State, or local
policies or regulations.
2/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
or activity when we cannot determine eligibility at the time of the audit. Unsupported
costs require a decision by HUD program officials. This decision, in addition to
obtaining supporting documentation, might involve a legal interpretation or clarification
of departmental policies and procedures.
31
Appendix B
Auditee Comments and OIG’s Evaluation
Ref to OIG Auditee Comments
Evaluation
Comment 1
32
Ref to OIG
Evaluation
Comment 2
33
Ref to OIG
Evaluation
Comment 3
Comment 4
Comment 5
34
Ref to OIG
Evaluation
Comment 6
Comment 7
Comment 5
Comment 7
Comment 5
35
Ref to OIG
Evaluation
Comment 8
Comment 9
Comment 5
Comment 10
36
OIG Evaluation of Auditee Comments
Comment 1 HUD wrote that it was committed to ensuring full compliance with all statutory
and regulatory requirements and it will continue to improve upon its management
of IPA agreements based on the recommendations in the report. We appreciate
HUD’s willingness to improve its use of the IPA mobility program and to
strengthen its controls over it. Implementation of the recommendations in this
report should enhance HUD’s ability to ensure compliance with requirements.
Comment 2 OIG’s Office of Legal Counsel informed HUD that it would be inappropriate for
us to provide subpoenaed documents outside of one of the routine uses of records
obtained by subpoena. As we advised the Deputy Secretary, in keeping with our
practice, records may be disclosed following the issuance of the audit report when
HUD is faced with making decisions regarding the management
recommendations and the disclosure is relevant and reasonably necessary to make
a decision related to the recommendations.
Comment 3 Appendix C of the report contains information regarding the 21 assignments
reviewed, including the effective dates of the assignments. We noted in the report
that certain discrepancies took place either before or after the draft requirements
were in place, such as OGC’s review of IPA agreements. We must reiterate that
HUD has no official IPA policy. Other discrepancies identified in the report, such
as those in table 2, were not addressed in HUD’s draft policy, and we made
recommendations to correct those deficiencies.
As HUD stated in its comments, we reviewed HUD’s draft handbook, entitled
“Details, Interagency Agreement Assignments, and Intergovernmental Personnel
Act Assignments Policy,” in August 2014 during departmental clearance. We
concurred with comments; however, HUD did not address all of our comments,
such as documenting performance appraisals. After making comments on the
draft handbook, we conducted this audit, which provided us a more detailed
understanding of how HUD used IPA agreements and the internal controls needed
to prevent deficiencies. Thus, this report recommends corrective actions to
further improve HUD’s implementation and oversight of its IPA agreements.
Comment 4 We provided four examples in which the IPA agreement or extension was
inappropriate because it did not meet the purpose of the Act at inception. These
examples demonstrate HUD’s pattern of misusing IPA assignments to achieve its
goals and avoid other hiring methods. In two examples, employers expressed
their understanding that it was HUD’s intention to circumvent civil service rules
or to convert an assignee to a political appointee at a later date.
Comment 5 HUD’s comments included statements in several places that it did not violate
certain provisions of law or regulation or that there were no rules governing its
actions. The report presents the facts and conclusions reached based on the audit
evidence and discloses HUD’s relevant actions with respect to IPA assignment
37
agreements, such as using the IPA to circumvent other hiring requirements, hiring
assignees, not disclosing relevant information to OGC, not providing required
training and ensuring assignees filed financial disclosure reports, and not
promptly and properly out-processing assignees.
Comment 6 Based on the evidence described in the report, it is our conclusion that OSHC
director Poticha used the IPA agreement to circumvent the political appointment
process.
Comment 7 We maintain our position that HUD inappropriately used the IPA to bring Ms.
O’Regan to work at HUD while waiting for her to be confirmed by the Senate.
We maintain our conclusion that this agreement did not meet the purpose of the
Act.
Comment 8 We maintain that the purpose of a central point of review, such as by the Deputy
Secretary, is to conclude whether each proposed IPA agreement is in the best
interest of HUD. We encourage the Deputy Secretary to practice this sound
control over IPA assignment agreements before they are executed.
Comment 9 As stated in the report, OER director Tregoning (now Principal Deputy Assistant
Secretary) did not disclose her extensive involvement in arranging and funding
this agreement to OGC, and OGC should have been provided this relevant
information when reviewing the agreement. The OER director should have
consulted OGC in advance about the appropriateness of her acting in her capacity
as a HUD official to secure foundation grant funding for a nonprofit organization
to hire an employee to work at HUD under the IPA.
Comment 10 We disagree that self-certifications in the IPA agreement are an internal control to
ensure that OGC notifies assignees of the need to file financial disclosure reports,
if applicable, and ensures that they do so.
38
Appendix C
IPA Agreements Reviewed and Other Pertinent Information
Annual amounts paid
Term of HUD position Status at end of IPA agreement
Employer by HUD or other IPA
agreement under IPA and additional information
financial arrangement
Office of Sustainable Housing and Communities / Office of Economic Resilience
Advisor for Living Cities paid the
first 6 months, then During the assignment, the person
sustainable
11/02/2009 housing required the assignee to accepted an IPA assignment at a
1 Living Cities resign and charged different Federal agency in
11/03/2012 Senior advisor HUD $180,000 plus 04/2011.
for energy $19,921 in benefits See example 1 on page 6.
efficiency starting in 05/2010.
PolicyLink used
third-party grants from
The Rockefeller During the assignment, HUD
01/19/2010 Foundation (up to competitively hired the person as a
2 PolicyLink Special assistant $225,000) and the GS-15 senior advisor in OSHC on
01/18/2012 Surdna Foundation 11/08/2010.
($27,500) to cover the
IPA agreement and
lodging costs.
During the assignment, HUD hired
the person as a GS-15 political
Annie E. Casey 02/15/2010 HUD paid $121,604 in appointee in OSHC on 01/05/2011.
3 Senior advisor salary plus benefits and In 06/2014, the person was
Foundation 12/31/2011 HUD-related travel. converted to Deputy Assistant
Secretary (DAS) in the Office of
Policy Development & Research.
HUD paid $154,850 in
Green salary plus benefits and At the end of the assignment, HUD
Communities 02/20/2012 HUD-related travel. hired the person as a GS-15
4 Enterprise Senior advisor political appointee senior advisor
Community 02/19/2014 The employer agreed to in OSHC, effective 02/20/2014.
Partners a pay increase only if
See example 2 on page 7.
HUD reimbursed it.
OER director
It did not appear that OGC was
Tregoning arranged for
02/09/2015 aware of the foundation’s financial
Communications a $350,000 Surdna
5 PolicyLink involvement when it reviewed the
specialist Foundation grant to
05/09/2016 IPA agreement.
PolicyLink for the IPA.
HUD agreed to pay See example 3 on page 8.
HUD-related travel.
39
Annual amounts paid
Term of HUD position Status at end of IPA agreement
Employer by HUD or other IPA
agreement under IPA and additional information
financial arrangement
Office of the Secretary
Returned to employer.
Casey Family Programs Casey Family Programs manages
Casey Family 01/23/2011 provided all salary, IPAs across Federal agencies.
6 Special assistant
Programs 12/31/2014 compensation, benefits, The assignee’s HUD email account
and travel expenses. continued to be accessed more than
6 months after his assignment
ended.
Transforming
Rental Assistance HUD paid $155,000
salary and $50,000 in Returned to employer.
The project manager
02/14/2011 benefits, plus official Agreement lapsed.
7 Community Rental Assistance travel.
Builders, Inc. 03/15/2014 Demonstration See Audit Memorandum 2014-
project manager Employer paid FW-0801.
additional salary costs.
Senior advisor
HUD paid 40 percent
of $104,562 plus
Johns Hopkins 10/01/2011 benefits through
8 Policy advisor on Returned to employer.
University 01/12/2013 health 09/30/2012, then 40
percent of $119,300
plus benefits.
HUD paid $155,500
through 08/03/2013,
then prorated to 1 day
Small business per week, plus Served on Hurricane Sandy
Greater New 04/08/2013
9 and economic HUD-related travel and Rebuilding Task Force.
Orleans, Inc. 09/30/2013 revitalization other support costs.
specialist Returned to employer.
Employer paid
remaining salary and
benefits.
HUD paid 80 percent Served on Hurricane Sandy
05/01/2013 Public of $91,912 plus HUD- Rebuilding Task Force.
Emerald Cities related and local travel.
10 engagement IPA assignee was a contractor for
Collaborative 07/31/2013 advisor Employer paid Emerald Cities and returned to the
remaining salary. organization.
Assignment is ongoing.
04/14/2015 Casey Family Programs
Casey Family provided all salary, HUD staff were involved in
11 Special assistant
Programs 04/15/2016 compensation, benefits, selecting the assignee. See footnote
and travel expenses. 13 on page 8.
40
Annual amounts paid
Term of HUD position Status at end of IPA agreement
Employer by HUD or other IPA
agreement under IPA and additional information
financial arrangement
Office of Policy Development and Research
University of 08/06/2012 Sabbatical-in-
12 California, HUD paid $7,500 Returned to employer.
02/08/2013 residence
Berkeley
Yale Law 08/29/2012 HUD paid for HUD-
13 Special assistant Returned to employer.
School 08/30/2013 related travel
Open Society 01/06/2014 HUD paid for HUD-
14 Senior advisor Left HUD and employer.
Institute 08/31/2014 related travel
During the assignment, the person
HUD paid $149,000
was Senate-confirmed as Assistant
New York 01/26/2014 plus HUD-related
15 Advisor Secretary for Policy Development
University travel.
01/26/2015 and Research on 04/29/2014.
Employer paid benefits.
See example 4 on pages 8-9.
HUD paid $178,912
plus $17,770 in
University of 07/01/2015 Senior advisor, relocation costs.
16 Southern Assignment is ongoing.
06/30/2016 housing finance
California Employer paid
additional salary and
incidentals.
Office of Housing
HUD paid:
2010 - $104,750 and
$26,995 in benefits,
2011 - $104,750 and During the assignment, HUD hired
BRIDGE 01/16/2010 $30,090 in benefits, the person as a DAS in Housing
17 Housing Senior advisor under a noncareer SES political
09/30/2013 2012 - $155,000 and appointment, effective 08/09/2013.
Corporation
$52,507 in benefits,
Agreement lapsed.
2013 - $155,000 and
$60,969 in benefits.
Relocation costs of
$26,183.
HUD paid $101,538
Tenderloin plus a 4 percent
Neighborhood 09/16/2013 Senior policy increase each January 1 Agreement lapsed.
18
Development 09/30/2015 advisor and $23,562 in benefits.
Corporation
HUD paid relocation
costs of $43,676.
41
Annual amounts paid
Term of HUD position Status at end of IPA agreement
Employer by HUD or other IPA
agreement under IPA and additional information
financial arrangement
Office of Community Planning and Development
During the assignment, HUD
competitively hired the person as a
National HUD paid $137,494
06/16/2014 GS-15 director on 12/28/2014.
Alliance to plus HUD-related
19 Special assistant travel. The assignee appeared to conduct
End 05/30/2016
Homelessness business for his employer during
Employer paid benefits.
HUD duty hours, using HUD
equipment.
Office of Public Affairs
HUD paid $80,000 plus
benefits and HUD-
Annie E. 03/29/2010 related travel.
Deputy press Resigned from employer and ended
20 Casey HUD reimbursed the
03/31/2013 secretary IPA assignment on 11/07/2012.
Foundation employer $1,594 for a
bonus when the
assignee resigned.
Office of Public and Indian Housing
HUD paid:
2011 - $165,360 and
fringe benefits (not to Returned to employer.
exceed $208,940), plus See Audit Memorandum
travel. 2015-FW-0801.
DAS for the
Council of 2012 - $168,667,
02/28/2011 Office of Policy, HUD Inspector General David A.
Large Public $5,000 merit bonus,
21 Program and Montoya discussed this IPA
Housing 02/22/2014 and fringe benefits (not
Legislative assignment in his testimony before
Authorities to exceed $210,721),
Initiatives the U.S. House of Representatives
plus travel.
Committee on Financial Services’
2013 - $172,040, Subcommittee on Oversight and
$5,000 merit bonus, Investigations on February 4, 2015.
and fringe benefits (not
to exceed $215,295),
plus travel.
42
HUD Did Not Effectively Negotiate, Execute, or Manage Its Agreements Under the Intergovernmental Personnel Act
Published by the Department of Housing and Urban Development, Office of Inspector General on 2016-03-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)