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.