HUD Scraps Controversial Section 8 Bidding Process

Move by agency comes weeks after Free Beacon report on bureaucrats' emails and allegations of bias

HUD Secretary Dr. Ben Carson / Getty Images
March 17, 2018

The Department of Housing and Urban Development has completely scrapped the bidding process previously underway for contracts to manage the Section 8 program, which provides rental assistance to low-income persons, and will start again from scratch.

The Washington Free Beacon previously reported on the Section 8 contracts, including allegations from a long-time contractor who claimed bureaucrats in the agency had been purposefully skewing the process.

At the time of that report, HUD was in the process of taking comments on proposed language for a new bid, but the process has now ground to a complete halt.

"Based on the extensive comments received in response to the draft solicitation, HUD is taking time to perform additional due diligence to ensure all comments and recommendations are considered in developing the final approach to obtaining the services to replace the current PBCA [Performance Based Contracting Award] services," the department said on the website. "This solicitation is cancelled in its entirety. Future requirements will be initiated through a new solicitation, which is expected to take several more months to develop."

HUD began to contract out management services of most of the department's Section 8 portfolio through a competitive bid in 2000, in large part because HUD was having trouble managing those services themselves. However, for reasons that have never been clearly explained, the department shifted in 2012 to make the process more like a state-based grants structure.

The Government Accountability Office ruled later in 2012 that HUD should keep using the competitive bidding process. When HUD appeared to ignore the GAO determination, a consortium of contractors sued. The contractors lost the original hearing in district court, yet won on appeal.

The U.S. Supreme Court refused to hear the case, meaning the appeals court victory for the group of contractors would stand.

Emails obtained by Navigate, one of the contractors who sued, show bureaucrats discussing the refusal by the Supreme Court to hear the case.

"The Supreme Court denied certiorari yesterday, leaving in place the Federal Circuit's holding that the contracts used to administer the program are procurement contracts," wrote Doris Finnerman, an attorney in HUD's Assisted Housing division. "Procurement contracts" refers to the competitive bidding process, not contracts "awarded" through a grant structure.

"Still to be resolved is the legal/policy question whether the procurement must be a full and open competition or limited to Public Housing Agencies because of the language in the U.S. Housing Act, 42 U.S.C. 1437f. If anyone asks for my opinion — ☺ — I would advise a full and open competition," Finnerman added.

"It'll be up to the lawyers to figure out [if] the competition can be limited," wrote Keith Surber, HUD's acting chief procurement officer.

Doris Finnerman replied, "I'm for any competition that disadvantages the plaintiffs!!"

Scores of other emails scattered over a period of roughly two years also raised questions about HUD's intentions and actions when they shifted away from the standard competitive bidding process in 2012.

In January, the CEO of Navigate, Eric Strong, told the Free Beacon that the bid for which HUD was taking comments at the time was still not a compete and full return to the competitive process used before.

"What we wanted all along was an equal playing field," Strong said at the time. "And we're like so many other businesses and many of our colleagues. We compete. We win. We lose. But we want a level playing field and a fair shot at keeping or getting more contracts."

"We're still hopeful to get past all this and get back to a fair and equitable rebid."

HUD did not respond to a request for comment on the latest developments.