At the end of March
2019, the Government Accountability Office (GAO) issued a report titled, "REAL
ESTATE ASSESSMENT CENTER - HUD Should Improve Physical Inspection Process and
Oversight of Inspectors."
The 2017 Consolidated Appropriations
Act, Joint Explanatory Statement, included a requirement that the GAO conduct a
review of REAC’s policies and processes; this study has been issued in response
to that requirement.
The report discusses,
among other things, (1) REAC’s process for identifying physical deficiencies
and (2) REAC’s selection, training, and monitoring of contract inspectors and
its own qualify assurance inspectors.
GAO has made 14
recommendations to HUD to improve REAC’s physical inspection process and its
selection, training, and monitoring of contract and quality assurance
inspectors, among other things.
The primary overall
finding is that the REAC standardized procedures to identify physical
deficiencies at HUD multifamily and public housing properties has a number of
weaknesses. For example, REAC has not conducted a comprehensive review of its
inspection processes since 2001. Also, REAC does not track its progress toward
meeting its inspection schedule for certain properties.
REAC uses contractors
to inspect properties; these contract inspectors are trained and supervised by
quality assurance inspectors hired directly by REAC. However, REAC’s processes
to select, train, and monitor both contract inspectors and quality assurance
inspectors have weaknesses.
- Selection: REAC does not
verify the qualifications of contract inspector candidates before they are
selected to begin training to become certified inspectors.
- Training: REAC lacks formal
mechanisms to assess the effectiveness of its training program for contract and
quality assurance inspectors, and there are not continuing education
requirements for inspectors.
- Monitoring: REAC has not met
management targets for the number and timeliness of its inspection oversight
reviews of contract inspectors. REAC has not met its target of conducting three
quality assurance reviews of poor-performing contractors per quarter. In
addition, REAC’s performance standards for its quality assurance inspectors
have not been updated to reflect their broader job duties, such as conducting
inspector oversight reviews and coaching and mentoring contract inspectors.
HUD created REAC in
1997 to obtain consistent information on, among other things, the physical
condition of its public and multifamily properties. REAC generally inspects
properties every one to three years, using a risk-based schedule. REAC
developed a standardized protocol to inspect properties, referred to as the
Uniform Physical Condition Standards (UPCS). REAC’s data system automatically
generates an overall inspection score for the property from 0 to 100 based on
the information an inspector records.
REAC primarily uses
contractors - who are trained and certified in REAC’s UPCS protocol - to
conduct inspections of multifamily and public housing properties.
To procure inspections
of HUD-assisted properties, REAC primarily uses an auction process to award
contracts either to eligible contract inspectors or to companies that employ
contract inspectors.
REAC Roles & Responsibilities
REAC is situated within
the Public & Indian Housing (PIH) branch of HUD. Several departments within
REAC are involved in facilitating the physical inspection process:
- Physical Assessment
Subsystem (PASS): The PASS Physical Inspection Operations division coordinates the
procurement of inspections. The PASS Quality Assurance division evaluates and
monitors REAC’s inspection program to ensure reliable, replicable, and
reasonable inspections. The PASS Inspector Administration division monitors the
performance of inspectors.
- Research &
Development: This division produces data analysis and statistical reports on REAC’s
information products.
- PIH: This office helps
low-income families by providing rental assistance through three programs. The
GAO review focused on physical inspections of the public housing program.
- Multifamily Housing: This office manages
HUD’s portfolio of multifamily properties and provides rental assistance
through several programs, including Section 8 project-based rental assistance,
in which HUD contract with private property owners to rent housing units to
eligible low-income tenants for an income-based rent.
- Department
Enforcement Center: This division is located within HUD’s Office of General Counsel and
works to ensure that program funds are used according to federal regulations.
The 91-page report identified a number of REAC weaknesses.
- REAC’s inspection process has some weaknesses that may hinder its
ability to identify physical deficiencies;
- REAC has not conducted a comprehensive review of its inspection process
since 2001;
- REAC may not be identifying all properties in need of more frequent
inspections or enforcement actions;
- REAC lacks comprehensive or organized documentation of sampling
methodology;
- REAC does not always meet its schedule for inspecting multifamily
properties or track progress toward meeting scheduling requirements;
- While REAC is piloting a process for hard-to-staff inspections, it has
no plans to evaluate the success of the pilot project;
- HUD has made only limited progress in implementing recommendations from
an internal HUD review of REAC;
- REAC’s procedures for selecting, training, and developing inspectors
have weaknesses;
- REAC sets but does not verify qualification requirements for contract
inspector candidates;
- Training for contract
inspectors is not consistent with key attributes of effective training and
development programs;
- Quality assurance
inspector training requirements may not cover all job duties and are not
documented;
- REAC does not require
continuing education for contract and quality assurance inspectors;
- REAC has not met
management targets for reviews of contract inspectors;
- REAC’s Quality
Control Group has not yet implemented procedures for inspector oversight;
- Performance standards
for Quality Assurance Inspectors do not fully align with job duties; and
- HUD’s threshold for
issuing notices for property owners in inconsistent with requirements of
Congressional legislation.
The GAO study found areas for improvement in the REAC inspection process
and made the following 14 recommendations to HUD:
- Conduct a comprehensive review of the physical inspection process;
- Calculate sampling errors associated with the physical inspection score
for each property;
- Develop comprehensive and organized documentation of REAC’s sampling
methodology;
- Track on a routine basis whether REAC is conducting inspections of
multifamily housing properties in accordance with federal guidelines for
scheduling;
- Design and implement an evaluation plan to assess the effectiveness of
the Indefinite Delivery/Indefinite Quality pilot program to ensure timely and
quality inspections for properties in hard-to-staff geographic areas;
- Expedite implementation of the recommendation from the Rapid Response
and Resolution Team;
- Follow through on REAC’s plan to create a process to verify candidate
qualifications for contract inspectors;
- Develop a process to evaluate the effectiveness of REAC’s training
program;
- Revise training for quality assurance inspectors to better reflect their
job duties;
- Develop continuing
education requirements for contract and quality assurance inspectors;
- Develop and implement
a plan for meeting REAC’s management targets for the timeliness and frequency
of quality control reviews;
- Ensure that quality
control’s policies and procedures for overseeing quality assurance inspectors
are implemented;
- Review quality
assurance inspector performance standards and revise them to better reflect the
skills and supporting behaviors that such inspectors need; and
- Report to Congress on
why the Agency has not complied with the 2017 and 2018 legislative requirements
to issue notices to properties when the REAC score is 60 or below.
As with most GAO reports, actual implementation of
the recommendations may take some time. However, as with the recent REAC change
to a 14-day inspection notification, owners and managers of HUD multifamily
properties should be proactive in managing properties in a way that will not
create a negative outcome when (not if) these recommendations ultimately go
into effect.
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