close X
11/2/2017

CoA Institute Sues OMB, Compelling it to Take Transparency Policy Seriously

Cause of Action Institute (“CoA Institute”) has sued the White House Office of Management and Budget (“OMB”) for failing to respond to two petitions for rulemaking that CoA Institute submitted to the agency.  These two petitions—both aimed at increasing government transparency—were filed during the Obama Administration but were ignored. One petition for rulemaking focused on the OMB’s outdated Freedom of Information Act fee guidelines while the other focused on an executive order related to earmarking. We hope these lawsuits will spur the Trump Administration to action to increase the public’s ability to know what its government is up to.

Petition for Rulemaking on OMB’s Outdated FOIA Fee Guidelines

The Freedom of Information Act requires agencies to produce records on a reduced fee schedule if the requester qualifies as a “representative of the news media” or other favored category.  The FOIA requires agencies to issue records free of charge if the information is in the public interest and the requester has a means to distribute it.  Unfortunately, agencies often use these fee provisions as a mechanism to block requesters that are doing rigorous oversight of the agency.

As information technology advanced over the past two decades, Congress recognized that journalism was changing in fundamental ways and that citizen journalists and nonprofit organizations were just as vital to conducting government oversight as the traditional news media.  That’s why, in the Open Government Act of 2007, Congress provided a statutory definition of a “representative of the news media” that expressly noted that “as methods of news delivery evolve (for example, the adoption of the electronic dissemination of newspapers through telecommunications services), such alternative media shall be considered to be news-media entities.”[1]

But the FOIA also requires OMB to develop and maintain guidelines on FOIA fee issues and it requires agencies to conform their regulations to OMB’s guidelines.  In 1987, OMB issued its one and only guidance document on FOIA fees and in that document it requires “representatives of the news media” to work for organizations that are “organized and operated to publish or broadcast news to the public.”  The Federal Trade Commission (“FTC”) attempted to use this outdated standard against CoA Institute to deny us a preferable fee status and thus drive up the cost of our oversight of that agency.  We took the FTC to the D.C. Circuit and won.  The opinion in that case explained that the “organized and operated” standard was no longer proper.[2]

Yet ten years after Congress changed the statutory standard and two years after the D.C. Circuit directed that the “organized and operated” standard was no longer viable, dozens of agencies still employ it and OMB still has not updated its 1987 FOIA fee guidance.

In an effort to spur OMB to reform its outmoded guidance and to move all agencies toward compliance with the statute, CoA Institute filed a petition for rulemaking with OMB in June 2016.  The agency has not responded to that petition and we were forced to sue to bring the issue to resolution.

Petition for Rulemaking on Executive Order 13457

In 2008, President George W. Bush issued Executive Order 13457 to pressure Congress to reform its profligate earmarking practices.  The order required, inter alia, that executive-branch agencies proactively disclose any attempts by members of Congress or their staff to influence discretionary spending decisions the agencies were making.  President Bush directed OMB to ensure that agencies complied with the order.

Through an investigation, CoA Institute was able to establish that OMB understood Executive Order 13457 to apply to both legislative earmarks (i.e., spending directives in statute and committee reports) and executive branch earmarks (i.e., efforts by outside forces to pressure agencies to make certain spending decisions).  CoA Institute’s investigation also revealed that very few agencies were complying with the order; the Department of Energy was a notable exception.

In an effort to spur the Obama Administration to implement Executive Order 13457, CoA Institute joined with Demand Progress and filed a petition for rulemaking at OMB asking it “to issue a rule ensuring the continuing force and effect of Executive Order 13457, Protecting American Taxpayers From Government Spending on Wasteful Earmarks[.]”  More than two years have passed since we filed the petition and OMB has not responded.

Conclusion

The White House Office of Management and Budget sits at a unique place in the federal administrative state.  It has the opportunity to put in place and require adherence to cross-agency rules that can increase or decrease government transparency.  Ensuring that FOIA fees are not improperly used to block agency oversight and requiring proactive disclosure of congressional attempts to influence agency discretionary spending decisions are two ways OMB can make a difference.  CoA Institute has filed suit today to compel them to take these responsibilities seriously.

James Valvo is counsel and senior policy advisor at Cause of Action Institute.  He was instrumental in crafting both petitions for rulemaking and the lawsuit discussed in this post.  You can follow him on Twitter @JamesValvo.

[1] 5 U.S.C. § 552(a)(4)(A)(ii)

[2] Cause of Action v. Fed. Trade Comm’n, 799 F.3d 1108 (D.C. Cir. 2015).

Blog, FOIA Learn More
10/27/2017

Newest TIGTA Review Shows Broader Extent of Political Targeting by IRS

The U.S. Department of Justice has filed a proposed consent order settling a federal case in which scores of organizations allege that the IRS violated their rights to free speech, free association, and equal protection of the law when it screened their applications for tax-exempt status on the basis of their names and policy positions alone. In the consent order the IRS admits its process was wrong and the Court will declare that “discrimination on the basis of political viewpoint in administering the United States tax code violates fundamental First Amendment rights.” That’s a spectacular settlement and a welcome outcome for the plaintiffs. But it will not end the IRS’s continuing practice of preparing sensitive case reports for supervisory review whenever an application or request for information might “attract media or Congressional attention.” The Internal Revenue Manual provisions that authorize sensitive case reports are where the scandal of political targeting by the IRS began. And until those provisions are withdrawn, cases and requests that an administration considers “sensitive” but outside the terms of the new consent order may still get special treatment within the IRS.

In a 2013 Audit Report, the Treasury Inspector General for Tax Administration (“TIGTA”) found that the IRS “inappropriately identified specific groups applying for tax-exempt status” whose applications would receive special scrutiny. Over a two-year period beginning in May 2010, the IRS inappropriately identified those groups “based on their names or policy positions instead of developing criteria based on tax-exempt laws and Treasury Regulations.” The result was a process by which the IRS demanded and examined additional information from these groups after labelling them “Tea Party cases,” and the ensuing controversy was dubbed the “IRS Tea Party targeting scandal.”

In its new 2017 Review, published earlier this month, TIGTA recounts how the IRS developed and used 17 “selection criteria” between 2004 and 2013 to identify which groups and applications for tax-exempt status deserved extra attention. Politicians and media outlets are claiming that the 2017 Review proves there never was an “IRS Tea Party targeting scandal” because the IRS also used names and policy positions to select progressive, liberal, and Democratic-affiliated groups for heightened scrutiny. A Washington Post headline sums up the revisionist interpretation:  “Four years later, the IRS tea party scandal looks very different.  It may not even be a scandal.”

This 2017 Review provides new information, disclosing that the IRS sometimes used names and political positions alone as selection criteria for heightened scrutiny of tax-exempt applications instead of the organization’s activities and the requirements of the Internal Revenue Code and related regulations. The initial 2013 Audit Report was limited to two years of IRS practice beginning in May 2010 because that was “the first date that [TIGTA was] informed that the Determinations Unit was using criteria which identified specific organizations by name.” 2013 Audit Report at 9 n. 20.  Yet the 2017 Review shows that the same kind of “inappropriate” practice began at least five years earlier, and neither the new 2017 Review nor the early press and political commenters recognize the significance of this revelation.

Yes, as the early reactions suggest, two of the overtly partisan criteria identified in the 2017 Review are tied expressly to the Democratic Party and “progressive” partisans.  But the IRS first used these criteria to choose applications for heightened scrutiny way back in 2005 and 2007, during the George W. Bush administration.

At the end of 2007, the IRS selected applications from groups named in the “Emerge network of organizations” whose purpose “was to train women to run as Democratic candidates for public office.” By September 2008 the IRS highlighted the “Emerge” criterion in an e-mail alert and training.  Up to 12 applications may have been affected by the Emerge criterion, either initially or upon subsequent review.

In October 2005 the IRS began using the “Progressive” criterion, identifying “the word ‘progressive’” and the “Common thread.”  In April 2007, the IRS noted further that the groups “appear as anti-Republican” with “references to ‘blue’ as being ‘progressive.’”  Up to 74 applications may have been affected by the Progressive criterion.

These two criteria are no small potatoes. Together, the Emerge and Progressive criteria may have played an inappropriate role in more than half (96 of 181) of the applications considered in the 2017 Review.

Two other criteria identified in the 2017 Review are overtly partisan for the other side. Just before the 2010 mid-term elections, the Obama IRS looked for “Pink Slip” and “We the People” in names or titles as proxies for Tea Party groups to select tax-exempt applications for special examination. And in the run up to the 2012 general election in which President Obama was re-elected, the IRS began using “Paying the National Debt” to identify applications for extra scrutiny, a criterion which overlapped with “We the People.”

So, reporters and politicians who claim that the IRS’s inappropriate use of names and policy positions was never a scandal are ignoring the important chronology revealed in the new 2017 Review. By claiming that this selection process was not scandalous because goose and gander got the same sauce without considering who applied that sauce and when, they are condoning politically influenced tax decisions at the IRS so long as the law allows presidents of both political parties to harass their political opponents. But wrongs on both sides don’t make a right. As John McGlothlin of Cause of Action Institute opined last week in “The Hill,” the 2017 Review shows that “neither side focused on the larger point – that citizens from both sides of the political spectrum, were being denied their rights.”

Politics periodically infects tax enforcement and administrations of both parties have used political targeting by the IRS. But as Cause of Action Institute has discussed many times, the larger point is that the IRS and Congress have turned blind eyes to the identifiable, current provisions in the Internal Revenue Manual that allow such meddling. So inappropriate political targeting by the IRS remains a threat under the agency’s own regulations, even now under President Trump. Leviathan’s nature is to flee reform, so let’s hope Congress exercises its power to tame that beast, and soon. Without those reforms, the IRS can and inevitably will continue to use  inappropriate, politically-charged criteria in enforcement, investigatory, and compliance decisions, to evade congressional reforms, and to avoid accountability.

Mike Geske is counsel at Cause of Action Institute.

Media, Blog Learn More
10/20/2017

DHS Watchdog Claims Political Appointees No Longer Politicizing FOIA

One of the earliest transparency scandals of the Obama Administration erupted in 2010 when the Associated Press discovered that officials at the Department of Homeland Security (“DHS”) had, “in a highly irregular move,” started to “filter hundreds of public records requests through political appointees, allowing them to examine what was being requested and delay releasing sensitive material.”  These appointees, along with senior officials and public affairs staff, effectively blocked or delayed the disclosure of potentially embarrassing or politically-damaging agency records under the Freedom of Information Act (“FOIA”).  Their interjection into the FOIA process—and retaliation against career staff members who objected to this “sensitive review”— resulted in a congressional inquiry and damning Oversight Committee report.  The Obama Administration politicized FOIA the same way at the Department of Housing and Urban Development, the Environmental Protection Agency, the State Department, and the Department of the Treasury.  The situation at DHS, however, has improved, according to a recently-released Inspector General report.

The July 7, 2009 memorandum establishing sensitive review procedures at DHS included extensive reporting requirements, including updates to the White House about agency disclosures.  The DHS Inspector General politely described this, in a March 2011 report, as “unprecedented.”  It “created inefficiencies that hampered full implementation” of the FOIA.  More troubling, the policy had the practical effect of targeting media organizations and critics of the Administration.  Agency officials regularly delayed requests from media outlets, for example, so that they could develop a public response to damaging records.  And other disclosure decisions were sometimes based on the political affiliation of a requester.

Now, in response to a June 2015 request from the U.S. Senate Homeland Security and Governmental Affairs Committee, the Inspector General has published a new report that revisits its earlier findings and suggests that the culture of FOIA politicization at DHS has improved.  Since 2011, DHS has “reduced the number of days that political appointees . . . have to review releases from 3 days to 1 day.”  The sensitive review process has been renamed the “1-Day Awareness Notification Process.”  And, in most cases, FOIA officers “no longer wait for approval before releasing responses to significant FOIA requests” because it is “not required.”  An audit of 57 “significant requests” showed that none were delayed because of political appointee intervention.

These findings are positive.  The more limited involvement of fewer political appointees—“an advisor to the DHS Secretary, an official in the Office of Public Affairs, and the Chief FOIA Officer”—as well as a shorter “notification” period, limits the potential for politicization while respecting agency leadership’s concern for being kept aware of disclosures that might ignite media attention.  The apparent removal of any sort of necessary “clearance” authorization from political staff, or the removal of a requirement to obtain such clearance before release, is also a helpful development.  Oddly, DHS’s revised procedures are only “informally documented” in a “2012 email” and “2015 draft guidance.”  According to the Inspector General’s report, the DHS Privacy Office aims to finalize them by the end of the year.  The sooner, the better.

Ryan P. Mulvey is Counsel at Cause of Action Institute.

Media, Blog Learn More
10/19/2017

Congress should reject flawed Back the Blue Act

On May 16, 2017, Representative Ted Poe (R-Texas) introduced the Back the Blue Act in Congress.[1]  The bill has since been referred to the House Judiciary Committee.  The Back the Blue Act of 2017 (“BBA”) creates new federal crimes for killing and assaulting police officers—conduct that is already illegal under the law in all fifty states and has been punished in state courts for years.  The proposed bill goes further, and establishes mandatory minimum sentences for such crimes even though mandatory minimums have been proven to be ineffective at curtailing criminal conduct.  The BBA, as currently written, does not require that the defendant even knew he or she was assaulting a police officer, which means it lacks any mens rea, or “guilty mind,” requirement.

Because of its duplicative nature, adoption of mandatory minimums, and lack of any mens rea requirement, Congress should reject the current version of the BBA.  The lives and working conditions of police officers are at stake.  As a 34-year veteran of the Baltimore and Maryland State Police Departments put it, “the bill would make us less safe and less effective by worsening what is already the greatest threat to policing today: the downward spiral of police-community relations.”[2]

The Back the Blue Act attaches a mandatory minimum of ten years for the attempted killing of a law enforcement officer or for “conspiring” to kill a law enforcement officer.  The BBA also turns any assault on an officer that works for a state or local police department that receives federal funding into a federal crime.  Most definitions of assault make spitting on someone an act of assault, so the potential application of the new law is vast.  Under the BBA, if any injury occurs during the assault, the mandatory minimum sentence is two years.  And if “serious bodily injury” occurs, the defendant faces a mandatory minimum of ten years in prison.  Further, a twenty-year mandatory minimum sentence applies if a deadly weapon is used during the assault.

Mandatory minimums take away sentencing discretion from judges and give it to prosecutors.[3]  This results in arbitrary and severe punishments that undermine the public’s faith in America’s criminal justice system.[4]  Further, evidence shows that mandatory minimums do not deter criminal conduct.[5]

As mentioned, the lack of any mens rea requirement means that a person could be charged by federal prosecutors without even knowing that the person allegedly assaulted was a law enforcement officer.  This risk is particularly high for the charge of conspiracy to kill a law enforcement officer, which imputes liability for actions taken to any person involved in the alleged conspiracy, even if the actual act was not performed by that defendant.  Mens rea has been a key element of American criminal law for centuries.  As the Supreme Court has stated, “we must construe [an imprisonment] statute in light of the background rules of the common law in which the requirement of some mens rea for a crime is firmly embedded.”[6]  Requiring a “guilty mind” in addition to a “guilty act” protects someone who engaged in accidental or innocent behavior from criminal prosecution and it is at the center of our criminal jurisprudence.[7]

Since the bill is duplicative of laws already on the books in all fifty states and the District of Columbia, the Back the Blue Act would waste federal resources and threaten state autonomy.  State and local jurisdictions have the expertise to deal with issues involving their own law enforcement officers.  The “federalization” of their local policing efforts will only deter from their ability to meet the ever-changing needs of local police forces.  Moreover, as laid out by the Tenth Amendment to the U.S. Constitution, “the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States.”[8]  Policing power is not one specifically delegated to federal government, therefore, it is reserved to the states.

The assault provision requires the federal prosecutor to “certify” that either the state lacks jurisdiction, has requested the federal government assume jurisdiction, the verdict obtained by the state left an “unvindicated” federal interest, or that prosecution by the federal government “is in the public interest and necessary to secure substantial justice.”  However, these certification requirements are vague and do not meaningfully limit federal intervention into state interests.

States like Virginia and Wisconsin, for example, have laws nearly identical to the Back the Blue Act except that they also include a mens rea element.  Virginia’s statute states: “if any person commits an assault…against another knowing or having reason to know that such other person is… a law-enforcement officer… such person is guilty of a Class 6 felony, and… the sentence of such person shall include a mandatory minimum term of confinement of six months.”[9]  Wisconsin’s statute uses similar language to also acknowledge the importance of mens rea.[10]

If signed into law, the Back the Blue Act would create waste in the judiciary and in society, deteriorate working conditions for law enforcement officers, and impose costly mandatory minimums unrelated to the severity of the crime.  It would also impede state and local efforts to protect police officers and fail to honor the punishment that a state has assigned for identical crimes on its own law enforcement officers.  For these reasons, Congress should reject the Back the Blue Act in its current form.

Katie Parr is a law clerk and Erica L. Marshall is counsel at Cause of Action Institute.

 

[1] Back the Blue Act of 2017, H.R. 2437, 115th Cong. (1st Sess. 2017).

[2] Neill Franklin, For the sake of police, don’t back the Back the Blue Act, The Hill (Aug. 30, 2017), available at http://thehill.com/blogs/congress-blog/politics/335815-dont-back-the-back-the-blue-act

[3] Paul Larkin, Evan Bernick, Reconsidering Mandatory Minimum Sentences: The Arguments for and Against Potential Reforms, The Heritage Foundation (Feb. 10, 2014), available at http://www.heritage.org/crime-and-justice/report/reconsidering-mandatory-minimum-sentences-the-arguments-and-against.

[4] Id.

[5] See Barbara S. Vincent & Paul J. Hofer, The Consequences of Mandatory Minimum Prison Terms: A Summary of Recent Findings, Federal Judicial Center (1994), available at http://www.fjc.gov/public/pdf.nsf/lookup/conmanmin.pdf/$file/conmanmin.pdf.

[6] Staples v. United States, 511 U.S. 600, 605 (U.S. 1994).

[7] John Malcolm, Michael B. Mukasey, The Importance of Meaningful Mens Rea Reform, The Heritage Foundation (Feb. 17, 2016), available at http://www.heritage.org/crime-and-justice/commentary/the-importance-meaningful-mens-rea-reform.

[8] U.S. Const. amend. X

[9] Va. Code Ann. § 18.2-57(C) (2017).

[10] Wis. Stat. § 940.203(2)(a) (2017).

Media, Blog Learn More
10/17/2017

Civil asset forfeiture policies shrug off due process

In 2014, American police seized more assets from American citizens through civil asset forfeiture policies than burglars stole.

Federal, state and local officers have broad scope to seize assets from Americans without trial or criminal charge, let alone proof that they committed any offense. While property owners can challenge a seizure in court, the burden of proof is on them and costly attorney fees and arcane procedures often discourage them. The value of the property is often less than cost to hire an attorney.

Only a handful of states require that, in some or all cases, police clearly and convincingly prove seized assets are linked to a violation. More than half of states only ask police to show that at the time of the seizure they had probable cause to believe that the property was tied to a violation. Probable cause is usually defined as more than a mere suspicion but less than a prima facie case. This is a much lower burden of proof than “clear and convincing evidence” or “beyond a reasonable doubt”. Anything less than having to show beyond a reasonable doubt that the property was connected to a crime lets the state take property from citizens without a conviction or even charge.

This is a slap in the face to due process. The Fourth Amendment demands:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Before the American revolution, the English Crown would permit customs officials to seize homes and vessels for alleged contraband or for on- or off-loading cargo without proof of having paid import and export duties and taxes.  Legal scholars have suggested this was “among the key grievances that triggered the American Revolution.”

To combat this practice, the founders guaranteed in the Fifth Amendment that “No person shall … be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

According to the New Yorker, asset forfeiture became a serious problem in the U.S. in the 1970s.  The forfeiture was aimed at fighting crime bosses and drug lords and these federal statutes permitted the seizure of assets tied to illegal drug production. When Congress passed the Comprehensive Crime Control Act in 1984, which permitted police departments to keep the proceeds from the forfeitures, the practice expanded, especially in poor areas.

If there is no due process, there is no rule of law. Proper order is impossible when institutions do not maintain fair and constitutional laws. Rather, the government fortifies institutional violations of law and decreases trust in police and government overall.

Apart from its intrinsic problems, civil asset forfeiture policies are also rife with corruption.

In more than 40 states, police departments keep at least 50 percent of the seized assets for themselves. In about half of those states, police are able to keep 100 percent of the seized assets. This provides police with an incentive to seize assets.

As the Washington Post reported, police use hundreds of millions of dollars they received from asset forfeiture to fund “guns, armored cars and electronic surveillance gear,” as well as “luxury vehicles, travel and a clown named Sparkles.”

Chicago alone seized $72 million over seven years, and used the money to purchase items, which include cell-phone tracking devices. As Reason reported, some seized assets in Illinois include “Xbox controllers, televisions, nunchucks, 12 cans of peas, a pair of rhinestone cufflinks, and a bayonet” supposedly linked to crimes. Police hit low-income areas the hardest.

“These forfeiture operations frequently target the poor and other groups least able to defend their interests in forfeiture proceedings,” Supreme Court Justice Clarence Thomas, said on the issue. “Perversely, these same groups are often the most burdened by forfeiture. They are more likely to use cash than alternative forms of payment, like credit cards, which may be less susceptible to forfeiture. And they are more likely to suffer in their daily lives while they litigate for the return of a critical item of property, such as a car or a home.”

Advocates of civil asset forfeiture policies argue the procedure deters crime and helps fund the police. In truth, Constitutional rights are surrendered for a false sense of security. This legal theft traduces due process and law and order. Crime deterrents only work if criminals are being targeted. If everyone is harmed by these policies, it doesn’t deter crime; it just diminishes Americans’ trust in law enforcement.

Tyler Arnold is a communications associate at Cause of Action Institute

Media, Blog Learn More
10/16/2017

Progress has been made in appointing IGs, but more should be done

Earlier this year, we highlighted an important, troubling, occasion: the passage of the 3,000th day without a permanent Department of Interior Inspector General (“IG”).  Five months have passed and President Trump has still not appointed a watchdog for that agency.  At least eight other IG offices are similarly without permanent leadership.  Nevertheless, despite the need for greater effort on the part of the Administration, due credit should be given for the important progress that has been made in appointing competent individuals to some of the vacancies.

We applaud President Trump for nominating five individuals to IG posts since taking office.  In June, Robert Storch was nominated to oversee the National Security Agency.  In September, Mark Greenblatt and Christopher Sharpley were selected for the Export-Import Bank and Central Intelligence Agency, respectively.  And last week, President Trump announced his intent to nominate yet another two IGs—John Edward Dupuy for the Office of Personnel Management, and Gail Ennis for the Social Security Administration.  These candidates all appear to be eminently qualified.  Better, nearly all of them have previous experience working in IG offices.

It was inexcusable for President Obama to neglect to fill empty IG spots with qualified candidates, and President Trump has made important steps to rebuilding the federal government’s watchdog network.  We hope that the White House will make a special effort, however, to find IGs for Cabinet-level entities, such as the Department of Defense, the Department of Energy, and the Department of Housing and Urban Development.  These agencies, in particular, have substantial budgets, and permanent IGs would provide an important internal check on waste, fraud, and abuse.

As we argued before, the absence of permanent IGs is concerning because it can reflect a lack of commitment to transparency and accountability in government.  Acting IGs cannot truly be independent.  As Senator Ron Johnson has commented, “[t]hey are not truly independent [because] they can be removed by the agency at any time; they are only temporary and do not drive office policy; and they are at greater risk of compromising their work to appease the agency or the president.”

President Trump should accelerate his efforts to identify and nominate strong, independent, and motivated watchdogs.  Taxpayers and the federal government only stand to benefit—as the savings illustrated on the new Oversight.gov suggest. We look forward to the White House’s future efforts on this critical issue.

Ryan P. Mulvey is Counsel at Cause of Action Institute.

Media, Blog Learn More
10/13/2017

HUD Ignores the Law for 3 years: A Closer Look

Cause of Action Institute (“CoA Institute”) is investigating the U.S. Department of Housing and Urban Development (“HUD”) for its failure to comply with a 2014 court decision requiring the agency to award contracts based on a competitive bidding process. The United States Court of Appeals for the Federal Circuit held that HUD unlawfully categorized Performance Based Annual Contribution Contracts as “cooperative agreements” instead of procurement contracts.[1] Despite this ruling, HUD has continued to treat these contracts as cooperative agreements for the last three years, allowing unelected bureaucrats to award public housing funds to favored groups and blocking others from competing for the contracts. CoA Institute urges Secretary Ben Carson to bring HUD back into compliance immediately.

Cooperative Agreement v. Procurement Contract

The agency’s use of Performance Based Annual Contribution Contracts’s comports with the statutory definition of a procurement contract. A procurement contract exists when “(1) the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; or (2) the agency decides in a specific instance that the use of a procurement contract is appropriate.”[2] Conversely, a cooperative agreement exists when, “the purpose of the relationship is to transfer a thing of value, to carry out a public purpose of support.”[3] When HUD or any other federal agency uses a procurement contract, it must comply with federal procurement laws, such as the Competition in Contracting Act and the Federal Acquisition Regulation.[4] By improperly classifying Performance Based Annual Contribution Contracts’s, HUD was able to ignore these important contracting safeguards and to select any recipient it wished, making it ripe for cronyism.

Waste of taxpayer dollars

In addition to its defiance of a court order, HUD also harmed its relationship with PHAs like Navigate Affordable Housing Partners (“Navigate”), which had previously been eligible to compete for housing assistance dollars across state lines. HUD’s decision to alter its long-standing classification of these contracts was intended to generate an estimated savings of $208 million in voucher programs and $250 million in the public housing program.[5] Moreover, HUD announced it was not going to allow PHAs to compete for Performance Based Annual Contribution Contracts’s outside of their home states even though some, like Navigate, had competed beyond state lines and were able to provide the government with the best value.[6]

Change on the Horizon

According to a recent Washington Examiner article, discussions of HUD’s return to the competitive bidding process has already begun. HUD officials, however, have failed to elaborate on when the necessary changes will take place. CoA Institute will continue to monitor HUD’s unacceptable delay in complying with the court’s orders. Additionally, CoA Institute will continue to examine whether other government agencies are partaking in the same or similar unlawful activity as HUD.

HUD should take immediate action to ensure that its policies are in line with federal law to ensure money intended for public housing isn’t wasted on bureaucrats’ favored PHAs.

Travis Millsaps is counsel and Katie Parr is a law clerk at the Cause of Action Institute

 

[1] See United States v. CMS Contract Mgmt. Servs., 745 F.3d 1379, 1380 (Fed. Cir. 2014) cert. denied subnom.

[2] 31 U.S.C. § 6303.

[3] See 31 U.S.C. § 6305.

[4] See CMS Contract Mgmt. Servs, supra note 1, at 1381; see also Competition in Contracting Act, P.L. 98-369, §§ 2701-2753, 98 Stat. 1175 (1984) and 48 C.F.R. 31 2017 et seq.

[5] Press Release, Nat’l Ass’n of Hous. & Redevelopment Officials, NAHRO Analyzes Impact of HUD Proposed Savings (Oct. 31, 2012), available at http://www.nahro.org/nahro-analyzes-impact-hud-proposed-savings.

[6] See CMS Contract Mgmt. Servs., supra note 1 at 1383.

Blog, Media Learn More