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Navigate: HUD Secretary Continues to Defy US Court of Appeals

Troubling Testimony Suggests HUD is Above the Rule of Law

WASHINGTON, April 10, 2014 /PRNewswire/ -- US Department of Housing and Urban Development (HUD) Secretary Shaun Donovan on Thursday took on the US Court of Appeals for the Federal Circuit, suggesting to a House Appropriations subcommittee that the court was "wrong" when it ruled late last month that HUD cannot exclude qualified housing agencies from contracting out to support low-income housing programs.

Secretary Donovan told members of the House Appropriations Subcommittee on Transportation, Housing and Urban Development that HUD does not have to follow the same competitive contracting rules as other federal agencies. Specifically, Donovan said that "we believe the [court's] decision is wrong," and that "we have clear authority…to be able to enter directly into those types of [NOFA] contracts."

Two years ago, HUD attempted to recast procurement contracts as a NOFA or a Notice of Funding Availability, which established a preference-based system that, among other things, provided that only in-state housing finance agencies could contract with HUD to administer low-income housing. Several public housing authorizes challenged the move as illegal, and on March 25, the Federal Appeals Court agreed.

"Secretary Donovan's testimony is troubling," said Giles Perkins, an attorney with
Adams & Reese, which represents Navigate Affordable Housing Partners, one of the public housing authorities challenging HUD's anti-competitive contracting system. "The court very clearly ruled that HUD must follow the same competitive contracting rules as other federal agencies. In essence, the Secretary is saying that HUD should operate differently and that competition, fairness and value do not matter."

Just two weeks ago, the Federal Appeals Court ruled against HUD, saying it cannot exclude qualified public housing agencies when contracting out for administrative services. Specifically, the court ruled that HUD violated federal law when it attempted to re-label the contracts as "cooperative agreements" rather than proceed with a competitive contracting process at it had in the past. Navigate joined several other public housing authorities in challenging HUD's policy in court.

This isn't the first time HUD and Secretary Donovan have become entrenched on the issue. Last week, before the same Appropriations subcommittee, Secretary Donovan suggested he disagreed with the court's ruling and that he would even seek to change federal law to avoid going back to a procurement process. And in 2012, HUD ignored a ruling by the Government Accountability Office (GAO) in which – like the Federal Circuit Court – the GAO found that that HUD acted improperly by issuing cooperative agreements rather procurement contracts.

"For more than a dozen years, HUD successfully contracted with public housing agencies to administer Section 8 housing," Perkins said. "The process has ensured competition, quality and fairness because the lowest priced, most qualified bidder prevailed.  It's mind-boggling that Secretary Donovan would oppose a system that's worked and worked effectively for the American people for so many years."

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

SOURCE Navigate Affordable Housing Partners

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