Multifamily
Assisted Housing
Section
8 Project Based
regarding
Competitive Sourcing and HUD Management and Performance
in the Section 8
Project Based Rental Assistance Program
Table of Contents:
Summary . . . . . . . 2
Presidential Management Agenda . . . . 2
Budget and Performance Integration . . . . 3
Staffing Requirements . . . . . 4
The Proposal . . . . . . . 4
Performance/Means and Strategies . . . . 5
Performance Reporting and Evaluation . . . 5
Multifamily
Assisted Housing
Section
8 Project Based
regarding
Competitive Sourcing and HUD Management and Performance
in the Section 8
Project Based Rental Assistance Program
Summary:
The Proposal will create a measurable pilot program to compare the cost and quality of Section 8 Project Based contract administration by state housing agencies versus in-house staff. The total staff dedicated to the Proposal is no more than 100 FTE.
At this time, the agency has the ability to measure the cost of performance by state housing agencies, currently estimated at more than $250 million annually. However, the agency has not agreed upon an estimated cost if the work were to be performed in-house. Pursuant to a study conducted by HUD in 1999, 1400 FTE would be needed to accomplish this work. Assuming a total average FTE cost of less than $115,000 per FTE[1], the estimated cost would be $161 million in-house, or about $90 million less than using state housing agencies. There is also wide disagreement as to whether HUD could deliver the same quality of work.
The Proposal will include Performance/Means and Strategies and Performance Reporting and Evaluation to allow for accurate comparison of Section 8 Project Based contract administration by state housing agencies versus in-house HUD staff. The Proposal will require a minimum of two years for cost and quality comparison.
Presidential Management Agenda:
The Proposal directly relates to the Presidential Management Agenda (PMA). Of the five government-wide agenda items, the Proposal addresses Competitive Sourcing. The Proposal also addresses a HUD Specific agenda item regarding HUD Management and Performance. Finally, it is designed to meet the agenda goal of Budget and Performance Integration.
HUD continues to be in red status with regard to Competitive Sourcing because it has completed no studies of public-private competitions to determine the best method to deliver services. The Proposal would result in a public-private competition that could help the agency determine the best method for the delivery of services.
Regarding HUD Management and Performance, HUD is in red status though improving. The Proposal will help HUD further improve the management and performance of the Section 8 Project Based program.
Finally, the Proposal is designed to meet the goal of Budget and Performance Integration. HUD is in red status because of a failure to integrate planning, budget and outcomes. The Section 8 Project Based contract administration is a prime example of a failure to integrate budget and outcome. The present cost of contract administration is more than $250 million annually, but HUD has done no studies to determine if the outcomes are sufficient for this large expenditure of funds. Furthermore, to the extent the agency has considered alternative methods of contract administration, every study has shown that this work could be done in-house at less cost. The Proposal would result in a small-scale integration of planning, budget and outcomes.
Budget and Performance Integration:
The Proposal fits with both the agency’s strategic goals as set forth in its Annual Performance Plan (APP) and addresses an OMB recommendation in the final Program Assessment Rating Tool (PART) evaluation. Specifically, the Proposal addresses the APP at Goals A and EM, and the PART evaluation of the Project-Based Rental Assistance program.
Goal A of the APP seeks to “promote decent affordable housing.” The Proposal will “improve the physical quality and management accountability of public and assisted housing” (Objective A.2). It will provide a methodology to determine the most cost effective method for the agency to improve the management accountability for assisted housing. Furthermore, because the cost of contracting out Section 8 Project based contract administration is currently borne by the Section 8 fund, finding cost effective methods of contract administration can result in Section 8 funds being made available to make necessary physical improvements to assisted housing. The Proposal will provide a means to improve both the physical quality and management accountability of assisted housing.
Goal EM of the APP seeks to “embrace high standards of ethics, management and accountability.” The Proposal meets Goal’s Objective EM.3. Objective EM.3 focuses on improving “accountability, service delivery and customer service of HUD and its partners.” “Accountability” includes the concept of accounting—to account for the cost of delivering a service or product. The Proposal will provide the agency with the means to account for and compare the cost of delivering Section 8 Project Based contract administration by state housing agencies versus the use of in-house HUD staff. This will have the effect of improving accountability. We also believe that it will improve customer service, as assisted tenant groups have stated a preference for in-house delivery.
OMB rated the Section 8 Project Based Rental Assistance program as “ineffective” under its Program Assessment Rating Tool (PART) evaluation. OMB’s focus is on program outcomes and the lack of alternative forms of housing assistance. Although the Proposal would not change the basic parameters of the Section 8 Project Based Rental Assistance program, it would provide OMB and the agency with an opportunity to determine if a more efficient means of service delivery oversight could be achieved. Reducing administrative costs would result in more program dollars available for actual services.
Staffing Requirements:
The Proposal includes a request for up to 100 FTE to be added to the Deputy Assistant Secretary for Multifamily Housing (DAS/MF). All staff would be located in the Field in offices to be determined by management. (The Proposal includes a discussion of how staffing numbers are to be determined.)
The Proposal:
For no fewer than five jurisdictions, the DAS/MF will create a pilot program for Section 8 Project Based contract administration using HUD employees as contract administrators.
The DAS/MF will choose no fewer than five jurisdictions that either do not have a Section 8 Performance Based Contract Administration contractor (a PBCA), or whose PBCA is a non or poor performer. If fewer than five jurisdictions meet these criteria, the DAS/MF will select from the poorest performers of those PBCAs whose contracts are to be renewed in FY’05. These shall be known as the pilot jurisdictions.
No REAP data are available regarding appropriate staffing numbers to be assigned to these jurisdictions. Using data supplied by good performing PBCAs, it appears good performers have an average of one staff person per sixteen Section 8 contracts. We recommend that a REAP study be done with the pilot program as soon as possible. In the interim, the Proposal will rely on the average as shown by good performing PBCAs.
Using the standard of 1:16, the DAS/MF will designate staff to work solely on Section 8 Project Based contract administration in each pilot jurisdiction. This staff will be responsible for doing the exact same tasks required of PBCAs, and will be held to the same standards. If experienced HUD staff is utilized for this pilot, they shall be provided 120 days for training and transition. If the agency hires or assigns inexperienced staff, as with PBCAs, they will be given a training and transition period of up to one year.
The staff assigned to each pilot jurisdiction shall include staff responsible for subsidy administration, asset management and information technology support. As with PBCAs, each pilot jurisdiction will provide the HUD Contract Administrator Oversight Monitor (CAOM) with monthly reports. The HUD CAOM will arrange for assessment and review of pilot jurisdictions in a manner comparable to the assessment and review of PBCAs.
The staff assigned to each pilot jurisdiction shall track all time spent on assignments and activity not provided for in the PBCA contract. Thus, time spent meeting with tenants, responding to Freedom of Information Act requests, attending HUD broadcasts, etc., will be specifically accounted for and deducted at the end of the year from the total staff hours spent for the pilot. However, time spent in training to accomplish work required of PBCAs shall be included in the total staff hours spent for the pilot.
Each pilot jurisdiction shall be provided with a travel budget that permits them to meet all travel requirements of the PBCA contracts.
Performance/Means and Strategies:
The means for performance shall include staff dedicated at a ratio of 1:16 contracts in the pilot jurisdiction. They shall be provided with necessary training and travel money. As described under the Proposal above, HUD employees assigned to the pilot jurisdiction shall perform the exact same tasks as expected of the PBCAs.
Performance Reporting and Evaluation:
The performance of the pilot jurisdictions shall be measured in the same manner as the performance of PBCAs. Pilot jurisdictions shall provide monthly reports to the appropriate HUD CAOM. The HUD CAOM shall monitor and evaluate the pilot jurisdictions just as if they were performing under the PBCA contract. The HUD CAOM shall report on the pilot jurisdiction performance in the same manner as if the pilot was a PBCA.
This method of reporting and evaluation will require no additional HUD staff in the Field or in HQ.
At the end of the first and second years, the CFO shall request information from DAS/MF including, but not limited to:
1. To determine the quality of service provided, all HUD CAOM evaluations and reports for the pilot jurisdictions; and
2. To determine the actual cost of services provided:
a. the staffing numbers assigned to each pilot jurisdiction, including position and grade, minus the total number of staff hours expended in activities not related to the PBCA contract; and
b. the travel and training funds expended by each pilot jurisdiction.
3. To compare to the cost of the same services if provided by a PBCA, the estimated 2% Administrative fee plus bonuses that would have been paid to a PBCA had the pilot jurisdiction been done by a PBCA.
With regard to the determination of actual cost, the CFO shall multiply by a factor that accommodates rents, utilities, and personnel and IT services that would not have been incurred by the agency but for the work of the pilot jurisdictions.
This cost comparison shall be made available to the Secretary, Deputy Secretary, Assistant Secretaries for Housing and Administration, Deputy Assistant Secretary for Multifamily Housing, and congressional appropriators.
If the pilot jurisdictions are cost and quality effective, the agency shall continue the pilots. Furthermore, the agency will expand the pilot as PBCA contracts come up for renewal.
[1] This number was calculated using the Salaries and Expenses line item for HUD’s approved ’03 budget, less $20 million directed by Congress to be used for financial systems, divided by the ’03 FTE levels--$1.063 million divided by 9278 FTE. S&E includes all personal services costs including salaries, benefits, rents, utilities, travel, training, EEO investigations, and more.