It won’t come as news to anyone in affordable housing how dysfunctional the Department of Housing and Urban Development (HUD) has become under the Bush administration. Even my staunchest Republican friends tell me the agency very well may be the worst cabinet-level department in the federal government.

In this issue, Affordable Housing Finance begins a series of stories we call “The trouble with HUD, and how to fix it.” We start with an in-depth look at the huge increase in outsourcing of basic program management functions, and examine questions about how contracts are awarded and monitored.

Our investigation pulls together information from several government reports as well as dozens of conversations with current and former HUD staffers and comments we have received from more than 100 HUD program users over the past year.

All of that information suggests that the biggest problem at HUD is the lack of strong and principled leadership in Washington. It points to Secretary Alphonso Jackson as a key figure in the continued deterioration of HUD, and raises serious allegations that he actively directs HUD contracting to advance political and personal goals.

If a public company handled contracting the way HUD does, and if its financial management systems were as bad as HUD’s are, the CEO would be disgraced or jailed or both. If HUD were a government agency in Texas, it probably would have been abolished by now under that state’s periodic “Sunset” review of every agency and program, which resulted in the termination of the Texas state contracting commission that Jackson once chaired for then-Gov. George W. Bush.

But Jackson and other top HUD executives have not been held accountable for their failures as managers, and no independent investigation of the alleged political manipulation of contracting has been conducted.

Back in 2002, HUD’s Office of Inspector General spent a massive chunk of its annual resources to do detailed audits of every single training and technical assistance grant administered by the Office of Multifamily Housing Assistance Restructuring (OMHAR) to promote tenant and community involvement in Sec. 8 programs, some with values as low as $50,000.

But last year, when Jackson publicly said that he believes there should be a political rationale for HUD contracts, Inspector General Kenneth Donohue did a cursory investigation and then released his less-than-thorough report with heavy redactions.

Did he audit large numbers of the 3,593 contract transactions HUD completed in the critical election year of 2006? Nope. He looked at 22 of them. When even that limited scrutiny yielded some alarming charges, did he dig deeper to substantiate them? Nope.

Donohue, a Bush appointee, ignored a great deal of testimony that Jackson was involved in contracting to a degree that was extremely inappropriate for a cabinet secretary, and quite possibly illegal. He stated that many charges were “inconclusive.” It’s hard to reach a conclusion when you don’t try to sort out truth from fiction in the conflicting statements by Jackson and his accusers.

Even the Government Accountability Office (GAO) has let HUD slide. In 2002, the agency found that HUD may be wasting many millions of dollars due to lax oversight and even fraud. But the GAO has not checked to see if the wasteful and lax practices it cited have been fixed.

Democrats in Congress expressed outrage at Jackson’s comments last April, but they have done nothing to follow up.

It sure is tempting to write HUD off as a lost cause. The tax credit is the primary low-income housing production program, and many of our readers simply avoid HUD. In Washington, policy analysts have suggested cutting the Federal Housing Administration loose from HUD so it can operate more effectively.

Let’s be clear about two things: First, HUD can and must be saved. It has a very important role to play in solving our nation’s housing problems. Second, tearing it apart, or cutting its staff further, as one presidential candidate proposes, is not going to make it better.

I had the chance to talk with some multifamily folks in HUD’s field offices, and I can tell you there are very good people at the agency. They want to get deals done, and they could do much more with proactive leadership in Washington.

It is possible for the agency to become, once again, a key ally with state and local governments and private developers in producing affordable housing. But it cannot happen without you.

If we continue to sit passively, afraid or too busy to speak out against HUD’s horrible top management, Jackson will have another 18 months to run the agency into the ground.

Don’t wait for the Bush administration to run out the clock, hoping that a new president will magically find the will and know-how to restore HUD. AHF will facilitate an industrywide dialogue in the pages of this magazine about how to save HUD, leading right up to the 2008 presidential election campaign.

We need your help. Start by writing to us about your experiences, including those that show what’s wrong with HUD as well as those that help us find success stories to build on.

Help make sure that questions about HUD contracting get answered. Write to the Congressional appropriations subcommittees dealing with HUD and ask them to cut off funds for non-essential HUD contracts until all the many questions about HUD procurement are answered, and the discrepancies in the IG report are resolved.

Tell them it’s time to tear up the blank check HUD has enjoyed for a contracting process that is clearly out of control.