IT Modernization: HUD Needs to Improve Its Estimation and Oversight Practices for Single-Family Housing
Fast Facts
The Department of Housing and Urban Development relies on outdated IT infrastructure and manual processes to insure a portfolio of single-family mortgages worth over $1 trillion. HUD has made several unsuccessful attempts to modernize its IT.
We reviewed HUD's modernization effort ("FHA Catalyst"), which started in 2019. HUD addressed some leading practices for acquiring new systems. For example, it tested system modules to see if they met performance requirements. However, it didn't subject results to an independent review. We also found unreliable cost and schedule estimates and other weaknesses.
Our 8 recommendations address these issues.
Highlights
What GAO Found
For the Federal Housing Administration (FHA) Catalyst program, the Department of Housing and Urban Development (HUD) substantially implemented leading practices for managing information technology (IT) requirements and risk management. The Catalyst program is intended to modernize the single-family housing loan life cycle and associated IT systems. Specifically, the department fully implemented two of four requirements management leading practices, and partially implemented the other two. For example, HUD established requirements and performed testing on all FHA Catalyst modules. However, the department did not document agreements among the project managers responsible for managing requirements or subject FHA Catalyst to an independent review to ensure modules were performing as expected. As a result, the FHA Catalyst program is at risk of not performing as intended or of not meeting requirements.
In addition, HUD established a risk management plan, and identified and analyzed risks to FHA Catalyst. However, HUD did not develop contingency plans for the identified risks. Without established contingency plans, the department could be unprepared to handle a critical risk, should one occur.
HUD developed cost and schedule estimates for the FHA Catalyst program that exhibited significant weaknesses in addressing leading practices for cost and schedule estimation and, therefore, were unreliable.
- According to GAO's Cost Estimating and Assessment Guide, the characteristics of a high-quality, reliable cost estimate are that it is comprehensive, well-documented, accurate, and credible. The FHA Catalyst cost estimate was unreliable because it partially addressed the “comprehensive” characteristic, minimally addressed the “well-documented” and “accurate” characteristics, and did not address the “credible” characteristic. For example, although the estimate included life-cycle costs, it did not include the cost of full-time government employees and infrastructure. Without a reliable cost estimate, the department faces an increased risk that the program will cost more than the planned $91.9 million.
- GAO's Schedule Assessment Guide states that a sound schedule estimate is comprehensive, well-constructed, credible, and controlled. The FHA Catalyst schedule was unreliable because it partially addressed the comprehensive, credible, and controlled characteristics, and did not address the well-constructed characteristic found in the guide. The absence of a reliable schedule estimate raises increased doubt that HUD will be able to complete the modernization by December 2023 as planned.
Although HUD took early action to establish FHA Catalyst oversight and partially implemented four related categories of leading practices, gaps exist in the established processes to oversee the program. These gaps include a lack of fully defined roles and responsibilities, and the absence of measures to assess performance. Accordingly, HUD lacks assurance that oversight will be performed and that decision makers have the information needed to monitor the program.
Why GAO Did This Study
For many years, HUD has insured a portfolio of single-family mortgages worth over $1 trillion, relying on an outdated IT infrastructure and manual processes. HUD has made several unsuccessful attempts to modernize IT in the past, leaving it dependent on legacy systems. In April 2019, FHA and HUD's Office of the Chief Information Officer (OCIO), initiated FHA Catalyst.
GAO was requested to review HUD's single-family housing modernization program. This report examines (1) the extent to which HUD has implemented leading practices for managing requirements and identifying and mitigating risks for FHA Catalyst, (2) the reliability of the program's estimated costs and schedule, and (3) the extent to which HUD has established effective oversight for the program.
GAO compared FHA Catalyst documentation on requirements, risk, cost, schedule, and oversight to leading practices identified in the Capability Maturity Model Integration, and GAO's guides on cost, schedule, and investment management. GAO also interviewed FHA and OCIO officials.
Recommendations
GAO is making eight recommendations to HUD to fully implement leading practices for managing requirements and mitigating risks, estimating cost and schedule, and conducting oversight. HUD concurred with the recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to clearly document agreements among the staff responsible for managing requirements to maintain alignment between requirements and FHA Catalyst modules. (Recommendation 1) |
Open
HUD agreed with the recommendation and in a November 2021 update stated that there were efforts underway to address the recommendation. Specifically, HUD intends to update its Executive Steering Committee (ESC) charter to include documenting staff level roles and responsibilities. In October 2022, HUD reported that Housing and OCIO leadership are finalizing updates to the ESC Charter, amongst other tasks. Additional efforts are underway and expected to be completed by 12/30/2022. We will continue to monitor the implementation of this recommendation.
|
| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to ensure that FHA Catalyst is subject to independent verification and validation. (Recommendation 2) |
Open
HUD agreed with the recommendation and in a November 2021 update stated that there were efforts underway to address the recommendation. Specifically, HUD intended to have an independent verification and validation (IV&V) contract in place for FHA Catalyst and future major modernization projects by February 2022. In October 2022, HUD reported that an IV&V contract has been awarded. Additional efforts are underway and expected to be completed by 12/30/2022. We will continue to monitor the implementation of this recommendation.
|
| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to develop contingency plans for risks identified as critical (high probability, high impact) to FHA Catalyst. (Recommendation 3) |
Open
HUD agreed with the recommendation and in a November 2021 update stated that there were efforts underway to address the recommendation. Specifically, HUD intended to ensure that contingency planning is included for any new FHA Catalyst contracts. A new contract is scheduled to be awarded by April 2022. In October 2022, HUD reported that efforts were underway to address this recommendation and expected to be completed by 12/30/2022. We will continue to monitor the implementation of this recommendation.
|
| Department of Housing and Urban Development | The Secretary of Housing and Urban Development should direct the Federal Housing Administration and the Office of the Chief Information Officer to ensure that cost estimation guidance that incorporates the best practices called for in the GAO Cost Estimating Guide is applied to future FHA Catalyst cost estimates. (Recommendation 4) |
Open
HUD agreed with the recommendation and in a November 2021 update stated that there were efforts underway to address the recommendation. Specifically, HUD intended to implement agency-wide cost estimation policy and guidance for all IT projects to include practices from the GAO Cost Estimating and Assessment Guide by February 2022. In October 2022, HUD reported that a cost estimation project team had been developed and efforts were underway to address this recommendation. HUD did not provide a date by which it intends to complete its efforts. We will continue to monitor the implementation of this recommendation.
|
| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to develop, and ensure the implementation of, schedule guidance that incorporates the best practices called for in the GAO Schedule Guide. (Recommendation 5) |
Open
HUD agreed with the recommendation and in a November 2021 update stated that there were efforts underway to address the recommendation. Specifically, HUD intended to improve its schedule estimation and ensure leading practices are followed for any new FHA Catalyst contract. In October 2022, HUD reported that it has taken steps to address this recommendation. Specifically, an IV&V contract was awarded to assist with schedule estimation and ensuring leading practices are followed. Additional efforts are underway and expected to be completed by 5/31/2023. We will continue to monitor the implementation of this recommendation.
|
| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to revise the FHA Catalyst schedule estimate according to the newly developed guidance. (Recommendation 6) |
Open
HUD agreed with the recommendation and in a November 2021 update stated that there were efforts underway to address the recommendation. Specifically, HUD intended to improve its schedule estimation and ensuring leading practices are followed for any new FHA Catalyst contract. In October 2022, HUD reported that it has taken steps to address this recommendation. Specifically, an IV&V contract was awarded to assist with schedule estimation and ensuring leading practices are followed. Additional efforts are underway and expected to be completed by 5/31/2023. We will continue to monitor the implementation of this recommendation.
|
| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to improve oversight practices for FHA Catalyst to ensure that they fully address leading practices for planning for program oversight and assessing program performance, including, but not limited to those for establishing processes, outlining responsibilities, requiring metrics for Agile performance, and balancing periodic program-wide assessments with monitoring progress. (Recommendation 7) |
Open
HUD agreed with the recommendation and in a November 2021 update stated that there were efforts underway to address the recommendation. Specifically, HUD intended to implement improvements for each of the four program oversight areas. For example, the agency planned to ensure that documented policies are followed and updated to incorporate improvements. In addition, HUD planned to ensure that all projects are appropriately staffed and supported. In October 2022, HUD reported that it has taken steps to address this recommendation. Specifically, an IV&V contract was awarded to assist with ensuring leading practices are followed. Additional efforts are underway and expected to be completed by 5/31/2023. We will continue to monitor the implementation of this recommendation.
|
| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to improve the alignment of FHA Catalyst oversight with leading practices for managing corrective actions including, but not limited to defining when a corrective action is needed and how to address that action; and evaluating oversight practices by assessing conformance with established processes. (Recommendation 8). |
Open
HUD agreed with the recommendation and in a November 2021 update stated that there were efforts underway to address the recommendation. Specifically, HUD intended to implement improvements for each of the four program oversight areas. For example, the agency planned to ensure that documented policies were followed and updated to incorporate improvements. In addition, HUD planned to ensure that all projects are appropriately staffed and supported. In October 2022, HUD reported that it has taken steps to address this recommendation. Specifically, an IV&V contract was awarded to assist with tracking the completion of corrective actions, amongst other things. Additional efforts are underway and expected to be completed by 5/31/2023. We will continue to monitor the implementation of this recommendation.
|