The Housing and Urban Development Department is charged with managing a $1 trillion portfolio of insured housing mortgages and administering $6 billion in grants each year, but right now the agency struggles to reliably estimate the cost of integral IT investments.
An audit by the Government Accountability Office released this week found “significant weaknesses” in HUD’s cost-estimating practices for investments intended to modernize an IT infrastructure the agency itself says is “overlapping, duplicative and not integrated.”
To remedy its IT enterprise issues, HUD had requested $36 million for IT investments in fiscal 2017. Agencies are supposed to make critical IT decisions based on estimate documentation with four characteristics: It must be comprehensive, well-documented, accurate and credible. GAO found none of HUD’s four prospective investments could meet those traits. Only one investment—HUD’s customer relationship management tool—could more than minimally meet one of them.
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“The cost estimates that HUD developed for each of the four selected investments exhibited significant weaknesses in that they did not meet or substantially meet best practices for each characteristic,” GAO states in the audit. “As such, the estimates were unreliable and did not provide a sound basis for informing the department’s investment and budgetary decisions. Specifically, none of the estimates exhibited all of the characteristics of a reliable estimate, as they were not substantially or fully comprehensive, well-documented, accurate, and credible.”
In other words, HUD didn’t know what it was getting—or what it was spending—until the agency got it.
HUD’s poor cost-estimating processes are likely related to the agency essentially spinning its wheels when it comes to modernizing, GAO said. Though it has “developed a number of plans in recent years to guide its modernization effort,” HUD has still spent as much as 95 percent of its total IT budget on operations and maintenance over the past five years.
Even among federal agencies, which have a legacy IT spending problem, allocating only 5 percent of an IT budget for new technologies is particularly troubling. Despite HUD’s efforts to modernize, it still contains more than 200 information systems GAO describes as “overlapping and duplicative,” stove piped, and some of which are 30 years old. The agency requested $286 million for IT in its 2017 budget.
Improving the agency’s cost estimating processes would be a great first step toward truly modernizing HUD’s systems, GAO states. HUD was on the right track in June 2015 when it began drafting guidance based on GAO’s cost guide, but GAO said the agency “has not yet finalized the guidance because it has focused on establishing the infrastructure needed to support improved cost estimation practices.”
“Until HUD finalizes and ensures the implementation of guidance to improve its cost estimating practices, the department is at risk of continuing to make investment decisions based on unreliable information,” the audit states.
In its audit, GAO recommends HUD wrap up formal cost-estimating guidance before it makes future IT investments. The agency agreed.