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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

September 2011: 

Information Technology: 

HUD's Expenditure Plan Satisfies Statutory Conditions, and 
Implementation of Management Controls Is Under Way: 

GAO-11-762: 

GAO Highlights: 

Highlights of GAO-11-762, a report to congressional committees. 

Why GAO Did This Study: 

Information technology (IT) is critical to the Department of Housing 
and Urban Development’s (HUD) ability to carry out its home ownership 
and community development mission. Provisions of the Consolidated 
Appropriations Act, 2010, require HUD to develop and submit to 
Congress an expenditure plan for its efforts to modernize the department
’s IT environment prior to using 75 percent of the funds made 
available for IT modernization. The plan is to satisfy certain 
statutory conditions and is to be reviewed by GAO. Accordingly, GAO’s 
objectives were to (1) determine whether HUD’s revised plan satisfies 
statutory conditions and (2) provide observations about the plan and 
management of HUD’s IT modernization program. To accomplish this, GAO 
assessed the plan against the statutory conditions, analyzed 
department documentation and relevant plans on key internal management 
controls, and reviewed HUD’s efforts to address open GAO 
recommendations. GAO also interviewed cognizant department officials. 

What GAO Found: 

HUD’s revised fiscal year 2010 expenditure plan satisfied the 
statutory conditions contained in the act. Specifically, pursuant to 
the statute, the plan identified the functional and performance 
capabilities, mission benefits, lifecycle costs, and key milestones 
for seven identified IT projects that support HUD’s modernization 
efforts. For example, the plan stated that one of the mission benefits 
expected from the HUD Integrated Financial Management Improvement 
Project is to support the timeliness and responsiveness of financial 
transactions by ensuring that invoices are paid on time equal to or 
greater than 98 percent of the time. Further, the plan demonstrated 
that each project had support from an adequately staffed project 
office; conformed to the department’s in-process policies and 
procedures on capital planning and investment control; complied with 
the department’s in-process enterprise architecture; and had been 
managed in accordance with HUD’s in-process lifecycle management 
processes. For example, the plan disclosed detailed information 
regarding how each project was categorized in relation to the 
department’s conceptual architecture currently in development. 

GAO made two observations regarding the department’s management of its 
IT modernization program: 

First, HUD has made progress toward implementing key IT management 
controls. For example, HUD created a conceptual enterprise 
architecture that is expected to be fully defined by spring 2012; 
however, it has not yet established institutional commitment through 
an approved policy to guide the development, maintenance, and use of 
the architecture. Further, the department has begun establishing a new 
investment management governance structure which is expected to 
support the fiscal year 2013 budget process. Lastly, HUD has committed 
to developing an IT human capital plan by December 2011 that is 
expected to include strategies to accomplish the human capital goals 
of the Office of the Chief Information Officer. 

Second, HUD has fully implemented or has plans to address prior GAO 
recommendations related to its expenditure plan and IT management. 
Specifically, of eight recommendations made in two reports issued in 
July 2009 and November 2010, respectively, HUD has fully implemented 
six of these recommendations and is taking steps to address the 
remaining two. For example, GAO recommended that future expenditure 
plans clearly describe the status of the department’s efforts to 
establish and implement modernization management controls. HUD’s 
revised plan addressed this recommendation by detailing what progress 
the department has made and what activities it is taking toward 
institutionalizing management controls. In addition, the department 
has developed a plan to address investment management weakness; 
however, work remains to develop criteria for evaluating the 
investment portfolio. HUD is also developing strategies to close skill 
gaps in its IT workforce. 

What GAO Recommends: 

To ensure institutional commitment for current and future enterprise 
architecture development, maintenance, and use, GAO is recommending 
that HUD approve a policy to govern the architecture prior to further 
developing its segment architectures. In written comments on a draft 
of this report, HUD concurred with GAO’s recommendation. 

View [hyperlink, http://www.gao.gov/products/GAO-11-762] or key 
components. For more information, contact Valerie C. Melvin at (202) 
512-6304 or melvinv@gao.gov. 

[End of section] 

Contents: 

Letter: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments: 

Appendix I: Briefing for Staff Members of the Subcommittees on 
Transportation, Housing and Urban Development, and Related Agencies, 
Senate and House Committees on Appropriations: 

Appendix II: Comments from the Department of Housing and Urban 
Development: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Abbreviations: 

CIO: Chief Information Officer: 

EA: enterprise architecture: 

FHA: Federal Housing Administration: 

HEARTH Act: Homeless Emergency Assistance and Rapid Transition to 
Housing Act of 2009: 

HUD: Department of Housing and Urban Development: 

IT: information technology: 

OCIO: Office of the Chief Information Officer: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

September 7, 2011: 

The Honorable Patty Murray: 
Chairman: 
The Honorable Susan M. Collins: 
Ranking Member: 
Subcommittee on Transportation, Housing and Urban Development, and 
Related Agencies: 
Committee on Appropriations: 
United States Senate: 

The Honorable Tom Latham: 
Chairman: 
The Honorable John W. Olver: 
Ranking Member: 
Subcommittee on Transportation, Housing and Urban Development, and 
Related Agencies: 
Committee on Appropriations: 
House of Representatives: 

The Department of Housing and Urban Development's (HUD) mission is to 
create strong, sustainable, inclusive communities and quality, 
affordable homes for all. Information technology (IT) plays a critical 
role in HUD's ability to carry out its mission. For instance, the 
department reports that its business operations rely on IT to process 
over 50,000 loan requests per week, over 12,000 service calls per 
month, and more than 7,000 grant requests annually for each of its 
major grant programs. Despite this role, HUD's current IT environment 
has not effectively supported its business operations. As we have 
previously reported,[Footnote 1] its information systems are 
overlapping and duplicative, are not integrated, necessitate manual 
workloads, and employ antiquated technologies that are costly to 
maintain. 

Since 2010, the department has been working to modernize its IT 
infrastructure and systems through its Transformation Initiative. This 
initiative represents a strategy for reforming the way the department 
does business, and comprises four components: (1) research, 
evaluation, and program metrics; (2) program demonstrations; (3) 
technical assistance and capacity building; and (4) information 
technology. Congress provided funding for HUD's IT modernization 
projects with certain limitations through the Consolidated 
Appropriations Act, 2010.[Footnote 2] Specifically, the act states 
that the department may not obligate more than 25 percent of the funds 
made available until the Secretary submits to the Senate and House 
Committees on Appropriations an expenditure plan that satisfies two 
sets of statutory conditions and is reviewed by GAO.[Footnote 3] 

In 2010, HUD submitted two initial expenditure plans that were 
intended to be part of a series of incremental plans. We reviewed the 
first of these two plans and reported to the Senate and House 
Committees on Appropriations on August 24, 2010, that the plan did not 
satisfy all of the statutory conditions and thus was limited as a 
congressional oversight and decision-making tool.[Footnote 4] We did 
not report on the second plan because, after its submission, HUD 
reassessed and revised the number and scope of its Transformation 
Initiative IT projects. On February 14, 2011, HUD submitted to 
Congress a revised expenditure plan that sought to obligate a total of 
$122.5 million. According to the revised plan, this funding was to be 
used to support seven modernization projects ($85.7 million), a group 
of enterprisewide services ($33.8 million), and a key assessment of 
HUD's IT environment ($3.0 million). 

In reviewing HUD's revised expenditure plan, our specific objectives, 
as agreed with your offices, were to (1) determine whether HUD's 
expenditure plan satisfies statutory conditions and (2) provide 
observations about the plan and management of HUD's IT modernization 
program. 

On June 9, 2011, we provided your offices with briefing slides that 
outlined the results of our study. On June 15, 2011, we met with your 
staff to discuss our findings, conclusions, and recommendation. The 
purpose of this report is to provide the published briefing slides to 
you and to officially transmit our recommendation to the Secretary of 
the Department of Housing and Urban Development. The slides, which 
discuss our scope and methodology, are included in appendix I. 

We performed our work in support of this performance audit at HUD 
headquarters in Washington, D.C., from November 2010 to September 2011 
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. 

In summary, our review highlighted the following: 

* HUD's revised fiscal year 2010 expenditure plan satisfied the 
statutory conditions contained in the act.[Footnote 5] 

- First, the plan identified the functional and performance 
capabilities, mission benefits, lifecycle costs, and key milestones 
for each of the seven IT modernization projects.[Footnote 6] For 
example, the plan described the Federal Housing Administration 
Transformation project's automated fraud analysis tools that are to 
support risk management within housing insurance programs 
(capabilities) and stated that these tools were expected to be 
delivered by October 2011 (key milestones). 

- Second, the plan demonstrated that each project had support from an 
adequately staffed project office; conformed to the department's in- 
process policies and procedures on capital planning and investment 
control; complied with the department's in-process enterprise 
architecture; and had been managed in accordance with HUD's in-process 
lifecycle management processes. For example, with respect to adequate 
project staffing, the plan provided a list of roles and 
responsibilities for each member of the project team and provided an 
assessment regarding the current status of staffing resources for each 
project. 

* We made two observations regarding HUD's management of its IT 
modernization program: 

First, HUD has made progress toward implementing key IT management 
controls. For example, HUD created a conceptual enterprise 
architecture that is expected to be fully defined by spring 2012; 
however, it has not yet established institutional commitment through 
an approved policy to guide the development, maintenance, and use of 
the architecture. This is of concern because without such a policy, 
segment architectures that are being developed may not reflect 
departmentwide goals and priorities for modernizing the IT 
environment, and as a result, may require future revision. 
Additionally, the department has begun establishing a new investment 
management governance structure which is expected to support the 
fiscal year 2013 budget process. Lastly, HUD has committed to 
developing an IT human capital plan by December 2011 that is expected 
to include strategies to accomplish the human capital goals of the 
Office of the Chief Information Officer. 

Second, HUD has fully implemented or has plans to address the eight 
prior GAO expenditure plan and IT management recommendations made in 
two reports issued in July 2009 and November 2010, respectively. 
[Footnote 7] Specifically, HUD has fully implemented six of these 
recommendations and is taking steps to address the remaining two. 
[Footnote 8] For example, we recommended that future expenditure plans 
clearly describe the status of the department's efforts to establish 
and implement modernization management controls. HUD's revised plan 
addressed this recommendation by detailing what progress the 
department has made and what activities it is taking toward 
institutionalizing management controls. In addition, the department 
has developed a plan to address investment management weakness; 
however, work remains to develop criteria for evaluating the 
investment portfolio.[Footnote 9] HUD is also developing strategies to 
close skill gaps in its IT workforce, and plans to complete these 
strategies by December 2011. 

Conclusions: 

HUD's revised expenditure plan satisfied both sets of statutory 
conditions for the department's seven IT modernization projects. As a 
result, the plan provides key information needed by HUD's 
appropriations subcommittees to oversee these modernization projects 
and hold the department accountable for project results. 

In addition, HUD has made important progress to strengthen its IT 
modernization management capacity; however, critical work remains to 
build on these accomplishments. Specifically, the department has begun 
to implement a new governance structure, as well as fully implementing 
most of the recommendations we have made to improve future expenditure 
plans and develop select IT management controls. HUD has also 
committed to completing key actions necessary to fully address our 
outstanding recommendations in the areas of investment management and 
human capital. However, work to refine the new departmentwide 
architecture is being performed in the absence of an approved 
enterprise architecture policy to guide this effort. Until an 
architecture policy is established and planned actions in response to 
open recommendations are fully completed, the department will be 
unable to effectively institutionalize its modernization management 
program. 

Recommendation for Executive Action: 

To ensure institutional commitment for current and future enterprise 
architecture development, maintenance, and use, we are recommending 
that the Secretary of HUD direct the Chief Information Officer to 
approve a policy to govern the architecture prior to further 
developing its segment architectures. Because HUD has committed to 
specific milestones to address prior GAO recommendations in the areas 
of investment management and human capital, we did not make additional 
recommendations at this time relative to these two areas. 

Agency Comments: 

In written comments on a draft of this report, which are reprinted in 
appendix II, HUD's Chief Information Officer stated that HUD concurred 
with our recommendation and that the comments included in the 
transmitted briefing adequately represented the department's position. 
Moreover, the Chief Information Officer stated that the department 
remains committed to the approval of a policy to govern the enterprise 
architecture and will dedicate resources toward implementing our 
recommendation. 

We are sending copies of this report to interested congressional 
committees. We are also sending copies to the Secretary of the 
Department of Housing and Urban Development and the Director of the 
Office of Management and Budget. Copies of this report will also be 
available at no charge on GAO's Web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staffs have any questions on matters discussed in this 
report, please contact me at (202) 512-6304 or melvinv@gao.gov. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this report. GAO staff who 
made significant contributions to this report are listed in appendix 
III. 

Signed by: 

Valerie C. Melvin: 
Director, Information Management and Human Capital Issues: 

[End of section] 

Appendix I: Briefing for Staff Members of the Subcommittees on 
Transportation, Housing and Urban Development, and Related Agencies, 
Senate and House Committees on Appropriations: 

Information Technology: HUD's Expenditure Plan Satisfies Statutory 
Conditions; Implementation of Management Controls Underway: 

Briefing for Staff Members of the Subcommittees on Transportation, 
Housing and Urban Development, and Related Agencies: 

Senate and House Committees on Appropriations: 

June 9, 2011: 

Contents: 
* Introduction; 
* Objectives; 
* Scope and Methodology; 
* Results in Brief; 
* Background; 
* Results; 
* Conclusions; 
* Recommendation for Executive Action; 
* Agency Comments and Our Evaluation. 

[End of section] 

Introduction: 

Information technology (IT) plays a critical role in the Department of 
Housing and Urban Development's (HUD) ability to carry out its home 
ownership and community development mission. For instance, the 
department reports that its business operations rely on IT to process 
over 50,000 loan requests per week, over 12,000 service calls per 
month, and more than 7,000 grant requests annually for each of its 
major grant programs. 

Despite this role, HUD's current IT environment has not effectively 
supported its business operations. As we have previously reported, 
[Footnote 10] its information systems are overlapping and duplicative, 
are not integrated, necessitate manual workloads, and employ 
antiquated technologies that are costly to maintain. 

Since 2010, the department has been working to modernize its IT 
infrastructure and systems through its Transformation Initiative. 
[Footnote 11] In order to provide oversight and inform decision-
making, Congress established limitations on funding for HUD's 
Transformation Initiative IT modernization projects through the 
Consolidated Appropriations Act, 2010.[Footnote 12] 

Specifically, the act states that not less than $80 million and not 
more than $180 million shall be available for IT modernization 
projects supporting the Transformation Initiative. Further, the act 
states that the department may not obligate more than 25 percent of 
the funds made available until the Secretary submits to the Senate and 
House Committees on Appropriations an expenditure plan that is 
reviewed by GAO and satisfies two sets of statutory conditions: 

First, for each project, the plan must identify: 

* functional and performance capabilities to be delivered, 

* expected mission benefits, 

* estimated lifecycle costs, and, 

* planned key milestones. 

Second, the plan must demonstrate that each project: 

* is supported by an adequately staffed project office, 

* conforms to capital planning and investment control requirements, 

* complies with the department's enterprise architecture (EA), and, 

* is being managed in accordance with applicable lifecycle management 
policies and guidance. 

In 2010, HUD submitted two initial expenditure plans that were 
intended to be part of a series of incremental plans to obligate $138 
million across 29 IT modernization projects. 

The two initial plans sought to obligate $42.8 million of the funds 
across 15 projects. We reviewed the first of these two plans and 
reported to the Senate and House Committees on Appropriations on 
August 24, 2010, that the plan did not satisfy all of the statutory 
conditions and thus was limited as a congressional oversight and 
decision-making tool.[Footnote 13] We also made recommendations aimed 
at improving future plans and the management of HUD's modernization 
efforts. We did not report on the second plan because, after its 
submission, HUD reassessed and revised the number and scope of its 
Transformation Initiative IT projects. This action, undertaken at the 
direction of the Office of Management and Budget, was consistent with 
our recommendation to pursue modernization projects commensurate with 
the department's capacity to manage them.[Footnote 14] 

On February 14, 2011, HUD submitted a revised expenditure plan that 
sought to obligate a total of $122.5 million of the funds made 
available in fiscal year 2010. The revised plan included seven 
modernization projects ($85.7 million), a group of enterprisewide 
services ($33.8 million), and a key assessment of HUD's IT environment 
($3.0 million). 

As agreed with HUD's appropriations subcommittees, our review 
objectives for the revised fiscal year 2010 plan were to: 

* determine whether HUD's expenditure plan satisfies statutory 
conditions, and, 

* provide observations about the plan and management of HUD's IT 
modernization program. 

[End of section] 

Scope and Methodology: 

To accomplish our first objective, we analyzed the expenditure plan to 
determine whether it contained, for all seven IT modernization 
projects, information to address each set of statutory conditions, as 
specified in the act.[Footnote 15] Specifically, 

* For the first condition, we assessed the plan to determine whether 
it contained the following four elements: functional and performance 
capabilities to be delivered, expected mission benefits, estimated 
lifecycle costs, and planned key milestones. 

* For the second condition, we evaluated the plan to determine whether 
it described four elements: support by an adequately staffed project 
office, conformance with capital planning requirements, compliance 
with the department's EA, and management in accordance with applicable 
lifecycle policies and guidance. 

For both conditions, we determined whether the expenditure plan 
satisfied or did not satisfy each condition. To have satisfied a given 
condition, the plan had to meet all elements for a given condition. In 
making our determination, we limited our assessment to the contents of 
the plan because the act required that the plan itself contain 
information to address the statutory conditions. 

To accomplish our second objective, we did the following: 

* Developed observations about HUD's IT modernization program by 
analyzing relevant department-provided documentation on key internal 
management controls, including IT investment management, EA, and human 
capital. We also interviewed relevant department and project 
officials, including the Associate Chief Information Officer for
Customer Relationship and Performance Management and the Director of 
Enterprise Architecture, and observed management review meetings to 
corroborate these observations. 

* Determined the extent to which HUD had implemented our prior 
recommendations on IT management and future expenditure plans by 
analyzing supporting documents, including investment management 
charters and implementation plans, EA development plans, human capital 
plans, and project risk lists. We also interviewed relevant department 
officials such as the Deputy Chief Information Officers responsible 
for human capital and investment management. 

We determined that information provided by HUD, such as action plans, 
executive status reports, cost estimates, and schedules, were 
sufficiently reliable for the purposes of this briefing. To arrive at 
this assessment, we conducted limited reliability testing by comparing 
key information across multiple documents to identify discrepancies 
and interviewing cognizant HUD officials. However, we did not test the 
quality of this information, including project cost estimates and key 
milestones. 

We conducted this performance audit at HUD headquarters in Washington, 
D.C., from November 2010 to June 2011 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. 

[End of section] 

Results in Brief: 

HUD's revised fiscal year 2010 expenditure plan satisfied both sets of 
statutory conditions contained in the Consolidated Appropriations Act, 
2010.[Footnote 16] Specifically, for the first set of conditions, the 
plan identified the functional and performance capabilities, mission 
benefits, lifecycle costs, and key milestones for each of the seven 
projects. For example, the plan stated that one of the mission 
benefits expected from the HUD Integrated Financial Management 
Improvement Project is to support the timeliness and responsiveness of 
financial transactions by ensuring that invoices are paid on time 
equal to or greater than 98 percent of the time. Further, for the 
second set of conditions, the plan demonstrated that each project had 
support from an adequately staffed project office; conformed to the 
department's in-process policies and procedures on capital planning 
and investment control; complied with the department's in-process EA; 
and had been managed in accordance with HUD's in-process lifecycle 
management processes.[Footnote 17] For example, the plan disclosed 
detailed information regarding how each project was categorized in 
relation to the department's conceptual EA currently in development. 

We have two observations regarding HUD's management of its IT 
modernization program: 

* Since our most recent report in November 2010,[Footnote 18] HUD has 
made progress toward implementing key IT management controls. For 
example, HUD created a conceptual EA that is expected to be fully 
defined by spring 2012; however, it has not yet established 
institutional commitment through an approved policy to guide the 
development, maintenance, and use of the EA. This is of concern 
because without such a policy, segment architectures that are being 
developed may not reflect departmentwide goals and priorities for 
modernizing its IT environment, and as a result may require future 
revision. Additionally, the department has begun establishing a new 
investment management governance structure and anticipates finalizing 
it by the end of this month. Lastly, HUD has committed to developing 
an IT human capital plan by December 2011 that is expected to include 
strategies to accomplish the human capital goals of the Office of the 
Chief Information Officer (CIO). 

* HUD has fully implemented or has plans to address prior GAO 
expenditure plan and IT management recommendations. Specifically, of 
eight recommendations made in two reports issued in July 2009 and 
November 2010, respectively,[Footnote 19] HUD has fully implemented 
six of these recommendations and is taking steps to address the 
remaining two. For example, the department has developed a plan to 
address investment management weakness; however work remains to 
develop criteria for evaluating the investment portfolio. HUD is also 
developing strategies to close skill gaps in its IT workforce. In 
addition, we recommended that future expenditure plans
clearly describe the status of the department's efforts to establish 
and implement modernization management controls. HUD's revised plan 
addressed this recommendation by detailing what progress the 
department has made and what activities it is taking toward 
institutionalizing management controls. 

Due to the importance of the department's efforts to modernize its IT 
environment, we are recommending that the Secretary of HUD direct the 
CIO to approve a policy to govern the development, maintenance, and 
use of EA. Because HUD has committed to plans that address prior GAO 
recommendations in the areas of investment management and human 
capital, we are not making recommendations relative to these two areas 
at this time. 

In commenting on a draft of this briefing provided via e-mail, HUD's 
Deputy Associate CIO for Customer Relationship and Performance 
Management neither agreed nor disagreed with our recommendation. The 
department official stated that HUD's approach to developing a new EA 
policy includes several steps to reduce the risk associated with not 
having an approved policy, such as involving senior executives in 
restructuring HUD's IT investment portfolio in light of the new 
architecture design, among other things. While we support this 
approach, we maintain that continued development of segment 
architectures in the absence of an approved policy increases the 
likelihood that the department will continue to invest in systems that 
are potentially duplicative and poorly integrated. 

[End of section] 

Background: 

HUD's mission is to create strong, sustainable, inclusive communities 
and quality, affordable homes for all. To carry out this mission, HUD 
is organized into business areas that perform a range of core 
functions, including providing housing and economic opportunities to 
low- and moderate-income people; regulating aspects of the housing 
industry and maintaining and expanding home ownership, rental housing, 
and health care opportunities; and guaranteeing investors' payments 
and interest by federally insured or guaranteed loans through a HUD-
owned corporation. 

HUD's business areas are aided by several supporting and 
administrative offices. Supporting offices include the Office of Faith-
Based and Neighborhood Partnerships and the Office of Healthy Homes 
and Lead Hazard Control, which provide key services for the quality 
and sustainment of mission areas. Administrative offices include the 
Office of the Chief Financial Officer and the Office of the Chief 
Information Officer (OCIO), which provide management support to 
several business areas. 

A simplified view of the department's organizational structure is 
provided in figure 1. 

Figure 1: Simplified HUD Organizational Chart: 

[Refer to PDF for image: organizational chart] 

Top level: 
Secretary. 

Second level, reporting to Secretary: 
Deputy Secretary. 

Third level, reporting to Deputy Secretary:
* Public and Indian Housing; 
* Fair Housing and Equal Opportunity; 
* Community Planning and Development; 
* Government National Mortgage Association; 
* Housing; 
* Chief Operating Officer: 
- Chief Information Officer. 
        
Source: GAO based on HUD data.      
        
[End of figure] 

HUD's OCIO is responsible for developing, modernizing, and enhancing 
the department's IT environment. In this role, the OCIO has direct 
interaction with IT project managers in order to communicate HUD's 
processes and guidance for modernizing the department's IT 
environment. The OCIO has also been working toward developing and 
establishing key IT management controls that will provide the 
department with institutionalized processes for more efficient and 
effective implementation of systems and technology tools aimed at 
improving the business units' ability to achieve HUD's mission. 

To this end, the OCIO has established four management goals, which 
align with the department's 2010-2015 Strategic Plan:[Footnote 20] (1) 
enhance the quality, availability, and delivery of HUD information to 
citizens, business partners, and government; (2) promote an enterprise 
approach to IT that will foster innovation and collaboration; (3) 
achieve excellence in IT management practice; and (4) transform the 
OCIO to a culture of operational excellence that can achieve current 
and future departmental goals. 

HUD's Transformation Initiative represents a strategy for reforming 
the way the department does business. In particular, the initiative 
comprises four components: (1) research, evaluation, and program 
metrics; (2) program demonstrations; (3) technical assistance and 
capacity building; and (4) information technology. The Consolidated
Appropriations Act, 2010[Footnote 21] authorized not less than $80 
million and not more than $180 million to be available for the 
information technology component of this initiative, which includes 
the department's IT modernization efforts, and stated that HUD may not 
obligate more than 25 percent of these funds until the Secretary 
submits to the Senate and House Committees on Appropriations an 
expenditure plan that is reviewed by GAO and that satisfies the two 
sets of statutory conditions.[Footnote 22] 

HUD submitted the first in a series of incremental expenditure plans 
on April 26, 2010, which sought to obligate about $28.1 million across 
eight modernization projects. On August 24, 2010, we provided the 
results of our review of the April 2010 expenditure plan to the Senate 
and House Committees on Appropriations. We reported that the plan was 
limited as a congressional oversight and decision-making tool because 
it did not satisfy all of the statutory conditions.[Footnote 23] 
Accordingly, we made multiple recommendations to improve future 
expenditure plans, including disclosing risks and ensuring that 
modernization projects are commensurate with the department's 
institutional capacity to execute them. 

On September 16, 2010, HUD submitted a second increment of the 
expenditure plan and provided supplemental information to address 
deficiencies in the first plan. This second plan included an 
additional seven modernization projects and sought to obligate an 
additional $14.7 million. 

In October 2010, at the direction of the Office of Management and 
Budget and to address our recommendation on balancing modernization 
projects with IT management capacity, HUD reassessed its inventory of 
IT modernization projects. As a result, a revised expenditure plan 
that superseded the April and September 2010 plans was submitted to 
the Senate and House Committees on Appropriations on February 14, 
2011. This plan seeks to obligate $122.5 million for seven IT 
modernization projects, a group of enterprisewide services, and a key 
assessment of HUD's IT environment. 

Table 1 summarizes the revised plan's modernization projects and 
associated requested appropriations. 

Table 1: Summary of HUD's IT Modernization Projects and Activities 
Contained in the Revised Fiscal Year 2010 Expenditure Plan, Submitted 
on February 14, 2011: 

Project: Electronic Grants Management in support of the HEARTH Act[A]; 
Purpose: Reengineer processes and implement an automated system for 
managing grants that will reduce application time, eliminate manual 
paper processes, and increase the transparency of grant management 
information; 
Fiscal year 2010 appropriations[C]: $10.1 million. 

Project: Enterprise Services[B]; 
Purpose: Support implementation of core projects by deploying 
enterprisewide services and supporting activities including data 
management, standardized technologies, and transition costs for 
migrating to automated systems and processes; 
Fiscal year 2010 appropriations[C]: $33.8 million. 

Project: Federal Housing Administration (FHA) Transformation; 
Purpose: Implement a commercially available industry standard 
financial infrastructure for all FHA's insurance programs (Single 
Family Housing, Multifamily Housing, and the Insured Health Care) that 
will enable improved lifecycle case management; 
Fiscal year 2010 appropriations[C]: $20.5 million. 

Project: HUD Integrated Acquisition Management System; 
Purpose: Integrate an acquisition management system that is compliant 
with federal regulations to reduce inefficiencies, time, and 
duplication in the procurement process across office locations to 
expedite services rendered to the public; 
Fiscal year 2010 appropriations[C]: $3.4 million. 

Project: HUD Integrated Financial Management Improvement Project; 
Purpose: Deploy a commercial off-the-shelf integrated financial 
management system that will allow the department to be compliant with 
relevant financial management laws and regulations; 
Fiscal year 2010 appropriations[C]: $10.0 million. 

Project: Human Resources End-to-End Solution; 
Purpose: Integrate human resources systems and tools to allow for 
automated recruitment and hiring documentation, reduction of manual 
data entry, and accelerated candidate decision making; 
Fiscal year 2010 appropriations[C]: $10.0 million. 

Project: IT Assessment/Management Support[B]; 
Purpose: Conduct an assessment of the IT environment of modernization 
projects and provide project management support to the core projects 
and OCIO; 
Fiscal year 2010 appropriations[C]: $3.0 million. 

Project: Next Generation Voucher Management System; 
Purpose: Reengineer voucher management processes to establish a 
technical infrastructure that will integrate disparate systems and 
provide consistent information in order to support rental housing 
assistance services; 
Fiscal year 2010 appropriations[C]: $29.0 million. 

Project: Place-based Performance Management System; 
Purpose: Provide business intelligence and geospatial tools for 
documenting and assessing progress toward achieving strategic goals 
that will enhance transparency, reduce workload, increase employee 
productivity and improve data quality; 
Fiscal year 2010 appropriations[C]: $2.7 million. 

Project: Total; 
Fiscal year 2010 appropriations[C]: $122.5 million. 

Source: GAO analysis based on HUD data. 

[A] The Homeless Emergency Assistance and Rapid Transition to Housing 
(HEARTH) Act of 2009, Div B of Pub L. No. 111-22 (May 20, 2009), among 
other things, consolidates separate homeless assistance programs. 

[B] According to the plan, these efforts are not projects in the sense 
of delivering a modernized system solution, and were included to 
disclose and ensure transparency of all funding covered in the plan. 

[C] Transformation Initiative appropriations authorized to be 
transferred from other accounts are available for obligation by the 
department through September 30, 2012. 

[End of table] 

End of section] 

Results: 

Objective 1: Statutory Conditions: 

HUD's Transformation Initiative IT Expenditure Plan Satisfied 
Statutory Conditions: 

In contrast to previously submitted expenditure plans, HUD's February 
2011 plan satisfied both sets of statutory conditions for the seven IT 
modernization projects it covered. By doing so, the plan should 
provide HUD's appropriations committees with greater insight and 
visibility into key aspects of the modernization projects under way in 
order to support effective oversight and inform funding decisions. 

For the first set of conditions, the plan identified the functional 
and performance capabilities to be delivered, expected mission 
benefits, estimated lifecycle costs, and planned key milestones for 
each of the seven projects. For example, the plan described the FHA 
Transformation project's automated fraud analysis tools that are to 
support risk management within FHA's insurance programs (capabilities) 
and stated that these tools were expected to be delivered by October 
2011 (key milestones). 

Table 2 provides a summary of our assessment. 

Table 2: Summary of GAO's Assessment of HUD's Expenditure Plan against 
Statutory Condition 1: 

Description of the first condition: Functional and performance 
capabilities: The information regarding system capabilities should be 
defined to a level that permits meaningful understanding of what the 
system is to do (functions) and how well the system is to perform 
these functions (performance). These capabilities should be defined to 
a level that permits meaningful understanding of what capabilities are 
to be delivered and measurement of progress in doing so; 
GAO assessment: HUD's expenditure plan described the functional 
capabilities that are to be delivered and described information on 
system performance for each of the seven projects. For example, for 
the FHA Transformation, the plan identified functional capabilities 
expected to be delivered by October 2011, such as automated fraud 
analysis tools to support risk management within FHA's insurance 
programs. Further, the plan identified that the Human Resources End-to-
End Solution would provide the capability to track and report real-
time information regarding HUD's hiring and recruitment activities. 

Description of the first condition: Mission benefits: The benefits to 
accrue from a proposed system should be specific and measurable, and 
should be linked to specific capabilities; 
GAO assessment: The plan described mission benefits for each of the 
seven projects that were specific, measurable, and linked to 
functional capabilities. For instance, for the HUD Integrated 
Financial Management Improvement Project, the plan identified that the 
project will support timeliness and responsiveness by ensuring that 
invoices are paid on time equal to or greater than 98 percent of the 
time. The plan also stated that the Electronic Grants Management in 
Support of the HEARTH Act project is expected to eliminate manual 
processes, including the review of paper applications, and that this 
capability would result in $800,000 in annual savings on data entry. 

Description of the first condition: Lifecycle costs: A project's 
lifecycle cost estimate should include all direct and indirect costs 
associated with planning, designing, developing, procuring, deploying, 
operating and maintaining, and disposing of the system. Estimates 
should include enough detail to understand and measure funds for major 
project work activities and deliverables; 
GAO assessment: HUD's plan described costs associated with the 
lifecycle of a project, providing details on funds needed for major 
project work activities and deliverables. For example, for the Next 
Generation Voucher Management System project, the plan described 
direct costs associated with planned deliverables as well as indirect 
costs associated with operation and maintenance activities. 
Additionally, the HUD's Integrated Acquisition Management System 
project estimate contained a breakdown of costs associated with 
lifecycle phases, including design and deployment. 

Description of the first condition: Key milestones: Project milestones 
should be tied to the capabilities to be delivered and should permit 
progress to be measured;  
GAO assessment: The plan described key milestones for each of the 
seven projects. Specifically, the plan described milestones that were 
tied to capabilities, permitted progress to be measured, and 
documented to what extent the milestones were being achieved. For 
instance, for the Electronic Grants Management in Support of the 
HEARTH Act project, the plan identified key milestones by project 
phase and deliverable timeframes for the development of requirements 
and software releases. The plan also outlined key milestones for the 
Place-Based Performance Management System, such as implementing a 
database by July 2010 to track and report department performance 
goals, which the project reported as completed in October 2010. 

Source: GAO analysis of HUD data.  

[End of table] 

For the second set of conditions, the plan described how each project 
complied with the four IT management controls that comprise this 
condition. HUD has not yet fully implemented three of the IT 
management controls,[Footnote 24] two of which are discussed in the 
following section of this briefing. In these cases, we assessed the 
plan against the department's in-process controls. 

The plan stated that each project was supported by an adequately 
staffed project office, conformed to capital planning and investment 
control requirements, complied with the department's EA, and was 
managed in accordance with applicable lifecycle management policies 
and guidance. For example, with respect to adequate project staffing, 
the plan provided a list of roles and responsibilities for each member 
of the project team and provided an assessment regarding the current 
status of staffing resources for each project. 

Table 3 provides a summary of our assessment. 

Table 3: Summary of GAO's Assessment of HUD's Expenditure Plan against 
Statutory Condition 2: 

Description of the second condition: Adequately staffed project 
office: Having adequate project staff is essential to a successful 
systems modernization program. Understanding the gaps in staffing 
resources and identifying qualifications of key staff are critical in 
determining whether or not sufficient staffing resources exist to 
achieve the desired project outcomes; 
GAO assessment: The plan described the adequacy of project office 
staff for the seven projects and identified which projects were 
adequately staffed. In particular, the plan provided a clear 
understanding of staffing resources by identifying qualifications of 
key staff and providing a list of team members and their respective 
roles. For example, for FHA Transformation, the plan stated that all 
key staff positions had been filled and provided the names for the 
individuals that had filled them. Further, the plan reported that only 
one project-—the Next Generation Voucher Management System-—was 
insufficiently staffed as of February 9, 2011. 

Description of the second condition: Capital planning and investment 
control: An organization's performance can be dramatically impacted by 
effective management of its IT investments. Effective management 
includes reviewing IT projects to ensure that they conform to the 
Office of Management and Budget's requirements for selecting and 
controlling investments. Additionally, organizations should establish 
their own capital planning and investment control requirements; 
GAO assessment: The plan stated that each project conformed to the 
department's capital planning and investment control requirements. For 
example, the plan states that HUD's Integrated Acquisition Management 
System project was subject to review by the investment management 
committee in order to continue funding. Further, the plan described 
the department's new IT investment management framework and steps 
being taken to institutionalize associated policies and procedures. 

Description of the second condition: Enterprise Architecture: An 
organization's IT investments should comply with an EA. Approved EA 
artifacts and products should include information regarding an 
organization's IT projects and how those projects are categorized 
relative to segments within the EA; 
GAO assessment: The plan described how each project complied with 
HUD's EA relative to the conceptual architecture and sequencing plan 
that have been developed thus far. In particular, it identifies 
compliance by categorizing each project by the segment architecture 
(e.g., grants management and financial management) as defined in the 
conceptual EA. For example, the plan identified that the Place-Based 
Performance Management System is part of the business analytical 
services segment architecture. The plan also described the status of 
HUD's efforts to develop its EA and provided next steps for 
implementing architecture segments. 

Description of the second condition: Lifecycle management: Following a 
lifecycle management process in which key activities and phases of a 
project are conducted in a logical and disciplined process helps 
ensure that IT modernization projects achieve intended goals within 
established cost and risk levels; 
GAO assessment: The plan described how each project conforms to HUD's 
lifecycle management processes. Specifically, the plan identified the 
type of investment and lifecycle phase for all modernization projects. 
It also listed key project management documentation required by the 
department's lifecycle management processes. For example, for the Next 
Generation Voucher Management System, the plan identified the project 
as a development project in the definition phase and outlined 39 key 
project management analyses and plans that were specific to the 
definition phase of the lifecycle management process. The plan also 
described efforts HUD has under way to establish required management 
reviews before projects are able to proceed to the next lifecycle 
phase. 

Source: GAO analysis of HUD data.  

[End of table] 

[End of Objective 1] 

Objective 2: Observations: 

We have two observations regarding the department's management of its 
IT modernization program: 

* HUD has made progress in developing key components of selected IT 
management controls-—investment management, EA, and human capital-—
that are needed to effectively carry out its modernization efforts. 
However, the department has not yet established an EA policy that 
reflects an institutional commitment for this management control. 

* HUD has fully implemented or has plans to address prior GAO 
recommendations for improving future expenditure plans and IT 
management controls. 

Collectively, these observations indicate that HUD is making progress 
toward effective management of its IT modernization efforts, although 
work remains to ensure that management controls are fully 
institutionalized. 

Observation 1: HUD Has Made Progress in Establishing and Implementing IT
Management Controls, but Further Work to Develop an EA Policy Remains: 

An organization's ability to effectively modernize its IT environment 
greatly depends on the extent to which it has established and 
implemented IT management controls. These controls include IT 
investment management, the development and use of an EA, and IT human 
capital management. 

Over the past 5 years, we have reported on HUD's efforts to establish 
and implement these IT management controls.[Footnote 25] In November 
2010, we reported that HUD was in the process of introducing new 
approaches to its management of IT, which the department described as 
significant in nature and requiring time to accomplish. 

Since that time, HUD has made progress in establishing and 
implementing key elements of these IT management controls, but further 
work to develop a policy for EA remains, as detailed in the following 
discussion. 

IT Investment Management: 

Investment management includes the selection and control of 
investments to ensure that they produce business value in the 
investment decision-making process.[Footnote 26] If managed 
effectively through an appropriate governance structure, IT 
investments can have a dramatic impact on an organization's 
performance and accountability. Through a portfolio-based approach, 
the organization can consider new investment proposals, along with 
previously funded investments, and identify the appropriate mix of 
these investments to best meet mission needs. 

In July 2009, we reported[Footnote 27] weaknesses in HUD's management 
of its IT investment portfolio and recommended that the department 
develop and implement a plan to address these weaknesses. We discuss 
the status of this recommendation in our second observation. 
Specifically, the department has a draft plan to address identified 
weaknesses and expects this plan to be completed by the end of June 
2011. 

In November 2010, we reported[Footnote 28] that HUD was establishing a 
new IT governance structure intended to increase the transparency of 
and facilitate decision-making for its IT investment portfolio, and 
that the department was in the process of restructuring its projects 
into a single portfolio. 

Since then, HUD began implementing the new governance structure and 
completed the restructuring of its Transformation Initiative portfolio 
in December 2010. Specifically, the department has held monthly 
governance meetings that include the review of IT modernization 
investments and have resulted in the approval of a future conceptual 
EA. 

As a result, the department consolidated and re-prioritized its 
Transformation Initiative IT portfolio to align with the new EA 
strategic direction. In addition, HUD has begun to analyze its 
comprehensive list of IT systems to justify ongoing investments, which 
will inform the new single portfolio. 

To support this new structure, HUD developed a governance plan, 
committee charters, and investment management policies and procedures. 
These guiding documents were developed consistent with federal 
requirements[Footnote 29] and are intended to institutionalize the 
governance structure. For example, the investment management policy 
provides criteria for reviewing IT investments, such as demonstrating 
security controls that are consistent with the Federal Information 
Security Management Act of 2002.[Footnote 30] 

The plan and its associated policies and procedures were drafted and 
originally expected to be completed by October 2010; however, the 
department has experienced several delays. According to HUD's Deputy 
Associate CIO for Customer Relationship and Performance Management, 
the department has made progress toward completing the internal 
review, which has taken longer than anticipated. Finalization of the 
new governance structure with its associated documentation is expected 
by the end of this month. 

HUD has applied this new structure to its portfolio of Transformation 
Initiative investments and plans to implement the governance structure 
across all IT investments. According to the Deputy Associate CIO, this 
is expected to occur by September 2011 in support of the fiscal year 
2013 budget approval process. 

Once this new governance structure is finalized and applied to all IT 
investments, HUD should be able to effectively identify the 
appropriate mix of departmentwide investments that best meets its 
mission needs. 

Enterprise Architecture: 

An EA is a corporate blueprint for organizational transformation and 
IT modernization.[Footnote 31] Generally speaking, it describes an 
enterprise's current, or "as-is," operational and technological 
environment and its target, or "to-be," environment, and contains a 
sequencing plan for transitioning from the current to the target 
environment. An approved corporate policy is fundamental to 
establishing institutional commitment and direction for defining an 
EA. Such a policy institutionalizes the architecture's importance, 
role, and relationship to other corporate management areas. The policy 
should define the EA, identify major roles and responsibilities, and 
acknowledge interdependencies and relationships among the EA program 
and other related management controls such as investment management, 
privacy, and records management. Further, this policy serves as an 
executive-level commitment to EA as a corporate asset and should 
govern EA development, maintenance, and use. The absence of a well 
defined EA, based on an approved policy, can result in sub-optimal 
technology infrastructures and systems that are duplicative and poorly 
integrated. 

In August 2006 and July 2009, we reported[Footnote 32] that HUD had 
largely established an EA program but needed to address weaknesses 
associated with the lack of a security architecture and independent 
verification and validation. 

Additionally, in July 2009, we reported[Footnote 33] that HUD's 
approach to developing segment architectures to modernize individual 
components of the overall organization did not reflect key aspects of 
relevant federal guidance. For example, while the department had 
identified and prioritized segments to be modernized, it had not 
adhered to these priorities, and most segments were out of date. 
Accordingly, we made recommendations aimed at improving the 
department's segment architecture approach. 

In November 2010, we reported that HUD's CIO had decided to reexamine 
and redefine the department's EA segments based on business functions 
that transcend business units (e.g., business intelligence, grants 
management, and workflow management).[Footnote 34] Because of this new 
direction, the department initiated work to analyze its existing 
portfolio of modernization projects in order to identify potential 
duplication and inform the next version of its EA. 

By January 2011, HUD had developed a conceptual as-is and to-be 
architecture with a corresponding sequencing plan for transitioning to 
the new environment. For example, the department's conceptual 
architecture calls for 21 segment architectures that are categorized 
into core mission areas, business services, and enterprise services.
This conceptual architecture is expected to be the basis for 
developing HUD's segment architectures. In lieu of an approved EA, the 
OCIO has worked with project teams to categorize investments according 
to their relevant architecture segments. 

However, the department has not updated its EA policy to reflect this 
new direction, but plans to do so by spring 2012. According to the 
Deputy Associate CIO for Customer Relationship and Performance 
Management, updating the EA policy has not been a priority given the 
department's focus on developing segment architectures. This is of 
concern because developing segment architectures in the absence of an 
approved policy could result in rework later on. For example, without 
appropriate stakeholder input, the developed segment architectures may 
not reflect departmentwide goals and priorities for modernizing its IT 
environment. 

Until HUD has an approved policy that establishes institutional 
commitment for its new EA direction, ongoing activities may not align 
with the new direction, which increases the likelihood that the 
department will continue to invest in systems that are duplicative and 
poorly integrated. 

IT Human Capital Management: 

By employing strategic human capital management, organizations can 
better position themselves to have people with the right knowledge, 
skills, and abilities to support mission operations both today and in 
the future.[Footnote 35] Since 2001, we have designated the strategic 
management of human capital as a governmentwide high-risk area. 
[Footnote 36] Principles for strategic workforce planning include, 
among other things, analyzing the gaps between current skills and 
future needs and developing strategies for filling gaps. If performed 
effectively, these activities can collectively create a strategic and 
proactive approach to human capital management. 

In July 2009, we reported[Footnote 37] that HUD had developed a 
strategy for closing IT human capital gaps; however, the strategy was 
based on an unreliable gap analysis and it had yet to be implemented. 
Accordingly, we recommended that the department establish and execute 
IT human capital gap closure strategies that are based on a complete 
and current inventory of its existing IT workforce skills. While we 
indicate the status of this recommendation in our second observation, 
the next slide discusses progress made. 

In November 2010, we reported[Footnote 38] that HUD began work toward 
developing an IT human capital management plan and had mapped skills 
of current staff to determine whether resource gaps exist. We also 
reported that the department had begun to develop IT human capital gap 
strategies but had yet to establish a timeframe for completion. 

Since then, HUD has continued its efforts toward developing the IT 
human capital plan and made progress in implementing our 
recommendation to establish skill gap closure strategies. 
Specifically, the department appointed an OCIO Chief Learning Officer 
to address identified IT skills gaps through targeted training for 
staff. In addition, HUD has created a statement of work related to 
establishing a human capital plan that includes tasks such as 
identifying challenges and developing performance metrics and 
strategies to accomplish OCIO human capital goals. According to the 
CIO, the department plans to complete the IT human capital plan and 
associated strategies to address IT skill gaps by December 2011. 

Once HUD completes its IT human capital management plan as well as 
planned actions to address our recommendation, the department will be 
better positioned to acquire the skill sets needed to effectively 
support the delivery of its IT modernization projects. 

Observation 2: HUD Has Fully Implemented or Has Plans to Address Prior 
GAO IT Management and Expenditure Plan Recommendations: 

As discussed previously in this briefing, HUD has several activities 
under way to address recommendations we made for improving its future 
expenditure plans and IT management capacity. In total, we made eight 
recommendations aimed at improving these areas. HUD has fully 
implemented six of the eight prior recommendations and has plans to 
address the remaining two. Table 4 summarizes our prior 
recommendations, the status of their implementation, and actions taken 
or remaining to fully address weaknesses identified. 
  
Table 4: Status of HUD's Progress in Implementing Prior GAO 
Recommendations: 

GAO recommendation: Report actions planned to address our prior EA 
recommendations and develop a plan for reexamining segment priorities 
and updating and developing segment architectures in accordance with 
these priorities and relevant guidance. (GAO-09-675); 
Status: Implemented; 
HUD actions: HUD developed a conceptual EA that reflects its 
modernization projects. As a result, GAO recommendations made 
regarding HUD's outdated EA are superseded by the department's new EA. 
In addition, the department developed a plan for reexamining and 
updating its segment architectures in accordance with priorities and 
relevant guidance. 

GAO recommendation: Ensure that future expenditure plans satisfy each 
element of each statutory condition for each project in the plan, or 
disclose why any element is not satisfied, along with any associated 
project risks and plans for addressing those risks. (GAO-11-72); 
Status: Implemented; 
HUD actions: HUD's revised expenditure plan satisfied the elements of 
each statutory condition for all projects identified in the plan. In 
addition, the plan includes the associated project risks and plans for 
addressing those risks. 

GAO recommendation: Ensure that future expenditure plans clearly 
describe the status of HUD's efforts to establish and implement 
modernization management controls, along with the project-specific 
risks and mitigation plans associated with this status. (GAO-11-72); 
Status: Implemented; 
HUD actions: The plan clearly describes the status of the department's 
efforts to establish and implement modernization management controls. 
In addition, the plan includes project-specific risks and mitigation 
plans associated with the status of implementing management controls. 

GAO recommendation: Ensure that the number and scope of HUD's 
modernization projects are commensurate with the department's 
institutional capacity to execute them. (GAO-11-72); 
Status: Implemented; 
HUD actions: At the direction of the Office of Management and Budget, 
HUD reduced its portfolio of modernization projects from 29 to 7, 
which was consistent with our recommendation. 

GAO recommendation: Establish an enterprisewide program office with 
the responsibility and authority for managing the department's 
modernization efforts. (GAO-09-675); 
Status: Implemented; 
HUD actions: HUD recently established an enterprisewide project 
management office, headed by the Office of the Chief Human Capital 
Officer, which is responsible for formalizing processes for 
identifying projects. This office has authority for assisting to 
prioritize projects across the department's program management 
offices, and building project management competencies with dedicated 
resources. 

GAO recommendation: Develop a plan for developing and implementing the 
departments new performance management framework, including an 
implementation schedule of key activities and related resource needs, 
and ensure that this plan provides for complying with the statutory 
requirement for annual reporting of progress in achieving IT strategic 
goals. (GAO-09-675); 
Status: Implemented; 
HUD actions: HUD developed and implemented a plan for establishing the 
department's new performance management framework. In May 2010 HUD 
issued a new strategic plan with associated goals, such as 
transforming the way the department does business. Accordingly, the 
OCIO developed new specific IT strategic goals to align to the new 
Strategic Plan. In addition, the OCIO developed a plan that outlines 
specific measures for achieving those goals, such as transforming the 
OCIO to a culture that can achieve current and future departmental 
goals. As a result, the department is positioned to comply with the 
statutory requirement for annual reporting of progress in achieving IT 
strategic goals. 

GAO recommendation: Develop and implement a plan to address the IT 
portfolio investment management weaknesses. (GAO-09-675); 
Status: In progress; 
HUD actions: HUD is making progress in implementing IT portfolio 
investment management controls. In particular, it developed a plan to 
address identified weaknesses in its investment management approach. 
This plan calls for activities that are consistent with federal 
requirements, as discussed in the previous section of this briefing. 
Specifically, the plan calls for establishing key policies and 
procedures for reviewing, evaluating, and improving the departments 
portfolio, as well as establishing resources for reviewing the 
portfolio and ensuring board members are familiar with the process. 
However, the plan does not include activities for developing criteria 
for assessing portfolio performance and defining and collecting data 
consistent with the criteria. According to HUD officials, the plan 
will be updated to include activities for establishing criteria, and 
they expect the plan to be completed by July 2011. 

GAO recommendation: Establish and execute IT human capital gap closure 
strategies that are based on a complete and current inventory of its 
existing IT workforce skills. (GAO-09-675); 
Status: In progress; 
HUD actions: HUD is making progress toward establishing and executing 
strategies to address IT workforce gaps. Specifically, the department 
completed an assessment of existing workforce skills, including a 
review of how IT resources support the goals in HUD's 2011-2015 
strategic plan. The department is still working to develop and execute 
skill gap closure strategies, and these strategies are expected to be 
included in HUD's IT human capital plan, as discussed earlier in this 
briefing. 

Source: GAO analysis based on HUD data. 

[End of table] 

[End of section] 

Conclusions: 

HUD's revised expenditure plan satisfied both sets of statutory 
conditions for the department's seven IT modernization projects. As a 
result, the plan provides key information needed by HUD's 
appropriations subcommittees to oversee these modernization projects 
and hold the department accountable for project results. 

In addition, HUD has made important progress to strengthen its IT 
modernization management capacity; however, critical work remains to 
build on these accomplishments. Specifically, the department has begun 
to implement a new governance structure, as well as fully implementing 
most of the recommendations we have made to improve future expenditure 
plans and develop select IT management controls. HUD has also 
committed to completing key actions necessary to fully address our 
outstanding recommendations in the areas of investment management and 
human capital. However, work to refine the new departmentwide 
architecture is being performed in the absence of an approved EA 
policy to guide this effort. Until an EA policy is established and 
planned actions in response to open recommendations are fully 
completed, the department will be unable to effectively 
institutionalize its modernization management program. 

[End of section] 

Recommendation for Executive Action: 

To ensure institutional commitment for current and future EA 
development, maintenance, and use, we are recommending that the 
Secretary of HUD direct the CIO to approve a policy to govern the EA 
prior to further developing its segment architectures. Because
HUD has committed to specific milestones to address prior GAO 
recommendations in the areas of investment management and human 
capital, we are not making additional recommendations at this time 
relative to these two areas. 

[End of section] 

Agency Comments and Our Evaluation: 

HUD's Deputy Associate CIO for Customer Relationship and Performance 
Management provided comments on a draft of this briefing via e-mail. 
In those comments, the official did not explicitly agree or disagree 
with our recommendation, but acknowledged the value of an approved 
policy to guide HUD's EA and reported that the department has a 
working draft of such a policy. The official also stated that HUD's 
approach for developing an approved policy includes several activities 
aimed at reducing risks associated with the absence of a new policy. 
Specifically, the official said that HUD's senior executives, who have 
taken sponsorship of segments of the EA, are leading discussions to 
review inefficiencies in the mix of investments and systems in order 
to identify EA development priorities, among other things. 
Additionally, the official stated that the department is undertaking 
activities to evaluate the performance of ongoing investments and 
assess external factors that might require changes to its portfolio. 
Further, the official commented that collectively these activities are 
expected to inform the structure, policy, procedures, standards, and 
guidelines being developed for the department's EA. 

We support HUD's approach toward developing a new policy. 
Nevertheless, we maintain our position that an approved policy is 
fundamental to establishing institutional commitment and direction for 
the EA. Continued development of segment architectures without such a 
policy increases the likelihood that the department will continue to 
invest in systems that are duplicative and poorly integrated. 

[End of section] 

GAO on the Web: 

Web site: [hyperlink, http://vvww.gao.gov/] 

Contact: 
Chuck Young, Managing Director, Public Affairs, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: 

Copyright: 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. The published product may be 
reproduced and distributed in its entirety without further permission 
from GAO. However, because this work may contain copyrighted images or 
other material, permission from the copyright holder may be necessary 
if you wish to reproduce this material separately. 

[End of briefing slides section] 

Appendix II: Comments from the Department of Housing and Urban 
Development: 

U.S. Department of Housing and Urban Development: 
Chief Information Officer: 
Washington, Dc 20410-1000: 

August 12, 2011: 

Ms. Valerie C. Melvin: 
Director, Information Management and Human Capital Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Melvin: 

Thank you for the opportunity to comment on the Government 
Accountability Office (GAO) draft report entitled, Information 
Technology: HUD's Expenditure Plan Satisfies Statutory Conditions, and 
Implementation of Management Controls is Underway (GAO-11-762). 

The Department of Housing and Urban Development (HUD) reviewed the 
draft report and concurs with the recommendation for executive action. 
Agency comments on a draft of this briefing document adequately 
represent HUD's position. 

The Department remains committed to the approval of a policy to govern 
the enterprise architecture. To this end, we will dedicate resources 
toward achieving the Executive Action recommended by GAO. 

If you have any questions or require additional information, please 
contact Jerry E. Williams, Chief Information Officer, at 202-708-0306. 

Sincerely, 

Signed by: 

Jerry E. Williams: 
Chief Information Officer: 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Valerie C. Melvin at (202) 512-6304 or melvinv@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Carol Cha (Assistant 
Director), Lee McCracken, Teresa M. Neven, Matthew Strain, and Daniel 
Swartz made key contributions to this report. 

[End of section] 

Footnotes: 

[1] GAO, Information Technology: HUD Needs to Strengthen Its Capacity 
to Manage and Modernize Its Environment, [hyperlink, 
http://www.gao.gov/products/GAO-09-675] (Washington, D.C.: July 31, 
2009); Information Technology: HUD Needs to Better Define Commitments 
and Disclose Risk for Modernization Projects in Future Expenditure 
Plans, [hyperlink, http://www.gao.gov/products/GAO-11-72] (Washington, 
D.C.: November 23, 2010). 

[2] The act, Pub. L. No. 111-117, title II, Department of Housing and 
Urban Development Appropriations Act, 2010, 123 Stat. 3074, 3093-3094 
(Dec. 16, 2009), states that not less than $80 million and not more 
than $180 million shall be available for IT modernization projects 
supporting the Transformation Initiative. 

[3] Under the act, the expenditure plan must satisfy two sets of 
statutory conditions and be reviewed by GAO prior to HUD spending 75 
percent of the funds made available for IT modernization. First, for 
each project, the plan must identify functional and performance 
capabilities to be delivered, expected mission benefits, estimated 
lifecycle costs, and planned key milestones. Second, the plan must 
demonstrate that each project is supported by an adequately staffed 
project office, conforms to capital planning and investment control 
requirements, complies with the department's enterprise architecture, 
and is being managed in accordance with applicable lifecycle 
management policies and guidance. 

[4] [hyperlink, http://www.gao.gov/products/GAO-11-72]. 

[5] Pub. L. No. 111-117, 123 Stat. 3093-3094. 

[6] The seven projects are Electronic Grants Management, Federal 
Housing Administration Transformation, HUD Integrated Acquisition 
Management System, HUD Integrated Financial Management Improvement 
Project, Human Resources End-to-End Solution, Next Generation Voucher 
Management System, and Place-based Performance Management System. 

[7] [hyperlink, http://www.gao.gov/products/GAO-09-675] and 
[hyperlink, http://www.gao.gov/products/GAO-11-72]. 

[8] The two remaining recommendations are in the areas of investment 
management and human capital. 

[9] As reflected in appendix I, HUD officials stated that the plan 
would be updated by July 2011 to include activities for establishing 
criteria; however, as of September 1, 2011, the plan had not been 
updated. 

[10] GAO, Information Technology: HUD Needs to Strengthen Its Capacity 
to Manage and Modernize Its Environment, [hyperlink, 
http://www.gao.gov/products/GAO-09-675] (Washington, D.C.: July 31, 
2009). 

[11] HUD's Transformation Initiative consists of four components: (1) 
research, evaluation, and program metrics; (2) program demonstrations; 
(3) technical assistance and capacity building; and (4) information 
technology. 

[12] Pub. L. No. 111-117, title II, Department of Housing and Urban 
Development Appropriations Act, 2010, 123 Stat. 3074, 3093-3094
(Dec. 16, 2009). 

[13] GAO, Information Technology: HUD Needs to Better Define 
Commitments and Disclose Risks for Modernization Projects in Future
Expenditure Plans, [hyperlink, http://www.gao.gov/products/GAO-11-72] 
(Washington, D.C.: Nov. 23, 2010). 

[14] [hyperlink, http://www.gao.gov/products/GA0-11-72]. 

[15] Pub. L. No. 111-117, 123 Stat. 3093-3094. 

[16] Pub. L. No. 111-117, 123 Stat. 3093-3094. 

[17] The plan was assessed against in-process controls for three of 
the four IT management controls that comprise the second set of 
conditions: capital planning and investment management, EA, and 
lifecycle management. Two of these controls are discussed in our 
second objective. HUD has not fully implemented these controls but has 
fully implemented the remaining control, IT project staffing. 

[18] [hyperlink, http://www.gao.gov/products/GA0-11-72]. 

[19] [hyperlink, http://www.gao.gov/products/GA0-09-675] and 
[hyperlink, http://www.gao.gov/products/GAO-11-72]. 

[20] HUD Strategic Plan Fiscal Year 2010-2015 (May 2010). 

[21] Pub. L. No. 11-117, 123 Stat. 3093-3094. 

[22] For the first condition, for each project the plan must identify 
functional and performance capabilities to be delivered, expected 
mission benefits, estimated lifecycle costs, and planned key 
milestones. For the second condition, the plan must demonstrate that 
each project is supported by an adequately staffed project office, 
conforms to capital planning and investment control requirements, 
complies with the department's EA, and is being managed in accordance 
with applicable lifecycle management policies and guidance. 

[23] [hyperlink, http://www.gao.gov/products/GAO-11-72]. 

[24] The IT controls not yet fully implemented are capital planning 
and investment control, EA, and lifecycle management. 

[25] GAO, Enterprise Architecture: Leadership Remains Key to 
Establishing and Leveraging Architectures for Organizational
Transformation, [hyperlink, http://www.gao.gov/products/GAO-06-831] 
(Washington, D.C.: Aug.14, 2006); [hyperlink, 
http://www.gao.gov/products/GAO-09-675]; [hyperlink, 
http://www.gao.gov/products/GAO-11-72]. 

[26] GAO, Information Technology Investment Management: A Framework 
for Assessing and Improving Process Maturity, [hyperlink, 
http://www.gao.gov/products/GAO-04-394G] (Washington, D.C.: March 
2004). 

[27] [hyperlink, http://www.gao.gov/products/GA0-09-675]. 

[28] [hyperlink, http://www.gao.gov/products/GA0-11-72]. 

[29] The Office of Management and Budget Circular No. A-11, 
Preparation, Submission, and Execution of the Budget (July 2010). 

[30] The Federal Information Security Management Act of 2002 was 
enacted as title III, E-Government Act of 2002, Pub L. No. 107-347,
Dec. 17, 2002. 

[31] [hyperlink, http://www.gao.gov/products/GA0-10-846G]. 

[32] [hyperlink, http://www.gao.gov/products/GA0-06-831], [hyperlink, 
http://www.gao.gov/products/GAO-09-675]. 

[33] Segment architectures can be used to provide a bridge between the 
corporate frame of reference captured in the EA and each individual 
program and system investment. The Office of Management and Budget 
issued the Federal Segment Architecture Methodology (December 2008), 
which provides guidance for agencies to group their segment 
architectures into three categories: core mission areas, business 
services, and enterprise services. 

[34] [hyperlink, http://www.gao.gov/products/GA0-11-72]. 

[35] GAO, Human Capital: Key Principles for Effective Strategic 
Workforce Planning, [hyperlink, http://www.gao.gov/products/GAO-04-39] 
(Washington, D.C.: Dec. 11, 2003). 

[36] GA0, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GA0-11-278] (Washington, D.C.: February 
2011). 

[37] [hyperlink, http://www.gao.gov/products/GA0-09-675]. 

[38] [hyperlink, http://www.gao.gov/products/GA0-11-72]. 

[End of section] 

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