DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

ANNUAL REPORT ON MANAGEMENT OF COMMERCIAL ACTIVITIES

FAIR Act Administrative Challenges and Appeals

The following procedures were established in 1999 for the administrative appeals process:

· Inventory recipients are informed of their rights to submit challenges to HUD’s inventory of commercial activities and are provided instructions on how to file such challenges;

· All challenges are received and logged by the Office of the CFO;

· Challenges are forwarded to the appropriate organization(s), based on the subject and nature of the challenge;

· The Office of the CFO provides the challenger with a list of the organizations that would be responding to the challenge;

· Each cognizant organization(s) prepares and transmits its response directly to the challenger, and provides a copy of the response to the Office of the CFO;

· Each response informs the challenger of the right to appeal any adverse decision and provides instructions for filing appeals;

· All appeals are received and logged by the Office of the CFO;

· As the designated A-76 official for the Department, the CFO determines the disposition of all appeals, and prepares and transmits the response to each appeal .

For the Year 2001 Inventory, HUD received only one challenge during the administrative challenge process. The challenge was from the American Federation of Governmental Employees (AFGE) Council of HUD Locals, 222, and centered around the inclusion of the following function codes as commercial activities on HUD’s 2001 FAIR Act inventory:

D606 – Asset Appraisal and Valuation

D708 – Application Receipt/Processing

D709 – Mortgage Underwriting

T804 – Architect-Engineering

D000 – Administrative Support

The AFGE Council of HUD Locals, 222 contended that the functions were inherently governmental in nature. The Office of Housing responded to the challenge, stating that the functions do not constitute applying government authority or making value judgments for the Government, but rather require the application of a body of technical knowledge and expertise within the parameters of established governmental policy. The AFGE Council of HUD Locals, 222 requested reconsideration of the decision (the request was submitted after the official timeframe for submitting an appeal). After consideration of the merits of the request, the Chief Financial Officer upheld the original determination rendered by the Office of Housing.

Year 2002 Inventory Process

The Year 2002 inventory process was very similar to previous years’ inventories. To ensure that the inventory accurately reflected the Department’s baseline Full-Time-Equivalents (FTEs), each organization was required to categorize, classify, and report all FTEs, regardless of whether they were performing commercial or inherently governmental functions. Those FTEs performing inherently governmental functions are identified by “I” in the status code column of the inventory report. Additionally, in an effort to preempt attempts to “protect” FTEs through misclassification, each reporting office was required to provide a written justification for each FTE classified as performing a function that was inherently governmental or commercial in-house core in nature. As requested by OMB, a single report on both commercial and inherently governmental functions was submitted.

Review Process

The 2002 inventory was reviewed to ensure that all FTEs were accounted for, identified through the use of valid function codes, and classified through the use of the correct reason codes. The review also ensured that those FTEs classified as performing inherently governmental functions or as performing functions that are considered to be commercial in nature but “in-house core,” were supported by adequate justification, and that the correct organizational and geographical location was identified for each reported FTE.

Summary Table

Our summary table shows the total FTEs by category for each major organization within HUD. Please note that while the President’s Budget shows direct funded and reimbursable funded FTE levels for the Department, HUD has no FTEs that are funded through reimbursable agreements. The reimbursable funded FTEs are all internal.

As indicated in our transmittal, HUD’s inventory was completed using the on-board staff reported to the National Finance Center for the pay period ended April 6, 2002, as the baseline Full Time Equivalent (FTE) data. Also, our inventory is exclusive of HUD’s Office of Inspector General and the Office of Federal Housing Enterprise Oversight, and does not include GNMA, which is not covered by FAIR Act reporting requirements. Therefore, the total number of FTEs listed on our inventory does not match the total FTEs published in the President’s Budget.

“Summary of HUD’s Year 2002 Federal Activities Inventory”

HUD Organization	Inherently Governmental FTEs	Commercial Category A FTEs (1)	Commercial Category B FTEs (2)	Commercial Category C FTEs (3)	Commercial Category G FTEs (4)	Total All FTEs
Housing[1]	136	1230	1705	68	78	3217
PIH[2]	122	655	611	110	0	1498
CPD	158	438	191	39	0	826
Admin	184	165	342	118	0	809
OFPM[3]	5	618	183	0	0	806
OGC[4]	112	506	0	29	0	647
FHEO[5]	140	496	0	0	0	636
CIO	18	139	68	10	0	235
CFO	67	0	146	0	0	213
PD&R	144	0	0	0	0	144
ODOC[6]	30	62	1	0	0	93
OSEC	43	0	0	0	0	43
CIR	23	0	0	0	0	23
Public Affairs	15	0	0	0	0	15
OHHLHC	12	0	0	14	0	26
Faith-Based	4	0	0	0	0	4
Total HUD Inventory	1213	4309	3247	388	78	9235
HUD %	13.14%	46.66%	35.16%	4.20%	0.84%	100%
GNMA[7]						63

NOTES:

1. Category A - Commercial Core: represents commercial functions which have been exempted from outsourcing consideration by the head of the agency as core functions identified for performance by government employees.
2. Category B - Commercial Competitive: represents commercial functions that are subject to competitive cost comparison studies or direct conversion to contracts, in accordance with the provisions of OMB Circular No. A-76.
3. Category C - Commercial Exempt: represents commercial functions that have been exempted from the competitive cost comparison study requirements of OMB Circular No. A-76 by the Congress, Executive Order or the OMB. This includes activities of 10 or fewer FTEs that can be directly converted to contract without a cost comparison study, provided there is no statutory or other basis prohibiting the contracting-out of the activity.
4. Category G - Commercial Exempt: represents commercial functions that are prohibited from conversion to contract because of legislation.

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[1] Due to realignment, OMHAR FTEs shown separately on the Year 2001 inventory are now included in Housing’s total.

[2] Due to realignment, REAC FTEs shown separately on the Year 2001 inventory are now included in PIH’s total.

[3] OFPM was included under ODOC (see footnote 6) for the Year 2001 inventory and includes FTEs that have now been redeployed.

[4] Due to realignment, DEC FTEs shown separately on the Year 2001 inventory are now included in OGC’s total.

[5] Due to realignment, ODEEO FTEs shown separately on the Year 2001 inventory are now included in FHEO’s total.

[6] Due to realignment, OFPM FTEs included in ODOC’s total on the Year 2001 inventory are now shown separately.

[7] GNMA is not covered by the FAIR Act reporting requirements.