HUD Loses Appeal in PBCA Lawsuit

On March 25, 2014, the U.S. Court of Appeals for the Federal Circuit released its final decision in the case of CMS Contract Management Services et. al. vs. United States, ruling in favor of the PBCAs.  As we previously reported in Practical Points, the PBCA plaintiffs had appealed the previous U.S. Court of Federal Claims decision that allowed HUD to proceed with its August 6, 2013 PBCA contract awards under the 2012 NOFA.

The Court of Appeals ruled that a NOFA was not appropriate for the task of contract administration – rather, HUD needed to make these awards under an RFP, used to procure services for HUD.  So the Court of Appeals reversed the lower court’s decision and provided specific instructions to the lower court to reissue a decision that is consistent with that of the higher court.

So, what happens next?  First, it means HUD cannot proceed with contracts with the PBCA awardees announced on August 6, 2013. Secondly, it means HUD could:

• Appeal the decision (legal proceedings would continue).
• Decide to bring all the PBCA work back to the HUD Offices (probably not feasible).
• Redevelop a new RFP to rebid the contracts following HUD’s procurement rules (this would probably take a couple of years).
• Leave current PBCAs in place and re-negotiate new contracts or contract extensions with them that may or may not include changes to tasks such as MORs.

Stay tuned for additional updates on HUD’s next steps.