HUD did not comply with PIIA because it did not report compliant improper and unknown payment estimates for the Office of Public and Indian Housing’s Tenant-Based Rental Assistance (PIH-TBRA) program and the Office of Multifamily Housing Programs’ Project-Based Rental Assistance (MF-PBRA) program. These were HUD’s two largest program expenditures, totaling more than $50 billion in fiscal year 2024. This noncompliance is significant because this is the eighth consecutive year in which HUD has been unable to produce PIH-TBRA and MF-PBRA improper and unknown payment estimates, and that deficiency has contributed to HUD’s noncompliance with improper payment laws for 12 consecutive years.
These programs present payment integrity challenges because they entail thousands of program administrators outside of HUD processing large volumes of payments using nonstandarized processes, and supporting documentation needed for testing is not maintained at HUD. The lack of a detailed approach to resolve these systemic challenges, including coordination by leadership, has prevented HUD from making the progress needed to achieve compliance.
We also determined that HUD did not comply with the Do Not Pay Initiative (DNP) as required by the Payment Integrity Information Act of 2019 because it did not consistently use DNP for prepayment verification. This occurred in large part because the computer matching agreement between HUD and Treasury, related to DNP, expired in 2019 and has still not been renewed. Additionally, we found HUD’s governance of DNP implementation to be weak. Without this computer matching process in place and because of weak governance around DNP implementation, HUD’s risk of improper payments increased. At least $212 million of HUD funds were technically improper payments since the funds were paid to at least 11 entities that did not have an active registration on SAM.gov.
Recommendations
Chief Financial Officer
-
Status2025-FO-0006-002-AOpenClosedPriorityPriority
We believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.
Update HUD Handbook 1900.40, Do Not Pay policy, to clearly define the responsibilities for all parties and align it with current laws, processes, and procedures. This should include defining responsibilities for preaward and prepayment verification, and developing a process and governance structure to ensure that preaward and prepayment verification are consistently performed across HUD’s programs.
Status
HUD has until August 25, 2025 to provide its corrective action plan to OIG for review.
Analysis
Updating the HUD Handbook 1900.40 will define responsible parties for ensuring compliance with the Do Not Pay Initiative (DNP).
The implementation of this recommendation will result in consistent use of DNP, allowing for instant verification of eligibility across the billions in payments that HUD processes. -
Status2025-FO-0006-002-BOpenClosed
Develop a standard operating procedure to ensure that the OCFO is 1) monitoring the DNP Computer Matching agreement to ensure continuity, 2) reporting accurately on its DNP matching, and 3) working with program offices to adjudicate any payments that are identified as potentially improper during the computer matching process.
-
Status2025-FO-0006-002-COpenClosed$212,208,450.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Work with Multifamily Housing to investigate the 11 of 24 entities with expired SAM.gov registrations to determine if those entities should have received payments totaling $212,208,450 and perform the required follow-up actions once a determination is made.