During a House Financial Services Committee hearing prior to the congressional recess, Rep. Mike Flood (R-NE) questioned Stephen Begg, the Acting Inspector General of U.S. Department of Housing and Urban Development, about identifying waste, fraud, and abuse within the agency.
Category
🗞
NewsTranscript
00:00Jeremy is back. The gentleman from Nebraska, Mr. Flood, who is also the Chair of the Subcommittee on Housing and Insurance, is now recognized for five minutes.
00:09Thank you, Mr. Chairman. Inspector General Begg, as the Chairman of the Housing and Insurance Subcommittee, I have significant interest in the operations of HUD and their efficiency.
00:19We need to ensure that HUD has strong processes in place to track funds once they're dispersed and prevent waste, fraud, and abuse, and I appreciate your work in outlining some of the key challenges with the agency.
00:32I'd like to focus on one program you mentioned is needing greater oversight. That's the CDBG Disaster Relief Program.
00:40Given the prevalence of several large weather events and increased congressional conversation on DR funding, additional financial support, can you speak to the oversight challenges that persist at the block grant and sub-grantee level for DR recipients?
00:58Thank you for the question. As you mentioned, disasters are occurring more frequently and they will continue to occur more frequently.
01:07This program has grown exponentially in recent years, and the HUD systems and processes in place were not designed to oversee the DR program in the same way that it was designed to see the regular CDBG entitlement program.
01:25The department's done many things to try and make up for that gap. The universal notice that they published helped streamline the processes,
01:35and HUD's done everything within their control that they can to try to tighten up the timeliness in which funding flows out.
01:43But the system limitations and the lack of a regulatory statutory framework for the program still create a lot of risks in terms of what data is available to know whether it's working,
01:55and how can we ensure that the streamlining is going to be in place when it can change over time if it's simply a HUD notice.
02:04So is HUD, in your opinion, do they have like a robust fraud waste abuse management effort to make sure those things aren't happening?
02:11Is there a system in place to ensure these dollars aren't being wasted?
02:16In the disaster recovery program, we think they have room to improve.
02:20The community planning and development program office does have a fraud risk specialist.
02:26They have expressed interest in working with us more on fraud risk, but they still have not assessed
02:32their particular fraud risks in that program and then come up with corrective actions to mitigate those
02:38and require grantees to do the same. So taking those first steps are really key in our opinion.
02:44So in your prior testimony, you highlighted an instance where the Puerto Rico Department of Housing did
02:50not implement sufficient fraud risk management processes on $20 billion of HUD funding they received
02:58for disaster recovery and mitigation. It's remarkable to me that $20 billion could be awarded if the grantee
03:05doesn't have basic processes in place around managing fraud risks. I think you've answered this question,
03:11but is there a need for uniform processes around fraud risk management? And more importantly,
03:16would congressional authorization of the CDBG-DR program be helpful in potentially establishing
03:24some uniform requirements for dealing with fraud? I think the answer to both is yes. Permanent authorization is
03:32not necessarily a silver bullet to all the challenges in the program, but it would help in going a long way
03:38to standardize and reduce the variance in programs, which does in fact contribute to the fraud risk.
03:44Have you ever put together kind of some guidelines or ideas about what that authorization should look
03:49like from the DR perspective? We've worked with various members over the years to provide technical
03:55assistance. We'd be happy to work with your office in doing that. I would encourage you to reach out to
04:00Mr. Pleamtis in my office because this is something I want to focus on and I think
04:03the ranking member also knows it's an issue. Moving to the home investment partnership program,
04:09the ranking member Mr. Cleaver and I are working on reauthorizing that. Have you and your work seen
04:15any challenges unique to oversight of the home program that you'd like to highlight?
04:22Many of the challenges that we've seen with respect to home are kind of common grants management
04:27challenges, data limitations, more kind of standard that we see across CPD programs. What I can say is
04:36we know that the home program is incredibly important to the stakeholders and the flexibilities it provides
04:40and creating solutions is very valuable. Thank you very much for your testimony and for your work on
04:46behalf of the American people. With that, Mr. Chairman, I yield back.