PBCA Update: HUD Will Fight Appeals Loss

We recently shared the news that, on March 25, 2014, HUD lost in the U.S. Court of Appeals for the Federal Circuit.  The Court of Appeals ruled that a NOFA was not an appropriate way for HUD to solicit bids for the task of contract administration – rather, HUD needed to make these awards under an RFP, used to procure services for HUD.

On April 04, 2014 HUD Secretary Shaun Donovan announced that HUD is not conceding defeat.  In his testimony before the House Appropriations Subcommittee for Transportation and Housing and Urban Development, he said that he believes the NOFA is legal and appropriate, as the Court of Federal Claims upheld prior to HUD’s loss on appeal.

Secretary Donovan noted that HUD has been working toward more efficient contracting in past years.  He pointed out that HUD ran the PBCA competition twice (using both an RFP and a NOFA) and the lawsuits brought by PBCAs have delayed the awards.  Donovan stated that HUD’s budget contains language allowing the agency to award PBCA contracts through the NOFA process, which would save $100 million in the project-based Section 8 program next year.

HUD plans to seek Congressional authority to give grants directly to state housing agencies instead of running formal contract competitions.

Giles Perkins of Adams & Reese, co-counsel for the PBCAs, commented, “… Secretary Donovan appears to be suggesting that taxpayers will save more money under a non-competitive cooperative agreement… in fact the opposite is true. Taxpayers get a far
better deal under a competitive procurement process, which ensures the best quality at the best price.“

In 2012, the GAO (General Administration Office) stated that the line between contracts and
cooperative agreements is not always easy to draw, but that using a cooperative agreement such as a NOFA could have the effect of evading competition and other legal requirements for procurement contracts.

The next step?  Wait and see if Congress will give HUD approval to give contract administration grants directly to State Housing Agencies instead of beginning a third competitive process.