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Navigate: Federal Appeals Court Reverses HUD's Preference-Based System

Restores Fairness to Administration of Low-Income Housing

WASHINGTON, March 25, 2014 /PRNewswire/ -- In a major victory for affordable housing residents and the American taxpayer, the US Court of Appeals for the Federal Circuit today ruled that the Department of Housing and Urban Development (HUD) cannot exclude qualified public housing agencies when contracting out for administrative services to support HUD's low-income housing programs. 

The court ruled that HUD violated federal law when it attempted to select contract administrators without competition by re-labeling the contracts as "cooperative agreements" rather than proceeding with a competitive contracting process as it had in the past. 

"Today's ruling requires HUD to follow the same basic competitive contracting rules as other federal agencies," said Robert K. Tompkins, an attorney with Holland & Knight, LLP, who argued the case for the plaintiffs.

"The Court's ruling requires HUD to restore competition, quality and cost effectiveness to its selection of contractors to support the administration of the Section 8 housing program," added Giles Perkins of Adams & Reese, general counsel to plaintiff, Navigate Affordable Housing Partners. "Today's ruling ensures that taxpayer dollars are being spent in the right way and that HUD is getting the best service to support its housing programs and the low-income families who benefit from them."

For more than a dozen years, HUD procured its contract administration services for the Section 8 housing program through competitively awarded contracts.  HUD reversed course in 2012 when it attempted to re-cast the contracts as cooperative agreements (a form of grant) by issuing a Notice of Funding Availability (NOFA) that, among other things, provided that only in-state housing finance agencies could contract with HUD to administer low-income housing. Navigate Affordable Housing Partners and the other plaintiffs are public housing agencies which have provided services to HUD for years under procurement contracts, but would have been stripped of the opportunity to compete despite years of successful performance.

The public housing agencies protested HUD's move as an illegal end-run on competition and the DC Federal Circuit Court agreed, ruling that "because the PBACCs [Performance-Based Annual Contribution Contracts] at issue are procurement contracts, and because HUD concedes it did not comply with federal procurement laws, the decision of the Court of Federal Claims must be reversed and remanded for disposition consistent with this opinion."

The court noted that "this change in policy excluded from consideration many applicants, including Appellants, who HUD previously determined in 2011 provided the government the best value." It also said that HUD acknowledged as recently as 2013 that groups like the plaintiffs "have helped make HUD a leader among Federal agencies in reducing improper payments."

The plaintiffs in the case are: Navigate Affordable Housing Partners; Contract Management Services; Housing Authority of the City of Bremerton; National Housing Compliance; Assisted Housing Services Corp.; North Tampa Housing Development Corp.; California Affordable Housing Initiatives, Inc.; and Southwest Housing Compliance Corporation. They currently administer Section 8 housing in 15 states.

Robert K. Tompkins
Holland & Knight, LLP
[email protected]
(202) 469-5111

Giles Perkins
Adams & Reese
[email protected]
(205) 250-5037

SOURCE Navigate Affordable Housing Partners

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