PBCA Rebid: Supreme Court Decisions Goes Against HUD

| June 30, 2011

On April 20, the U.S. Supreme Court refused to hear a challenge brought by the U.S. Department of Housing and Urban Development (HUD) to a federal appeals court decision requiring the agency to use procurement contracting methods for selecting third-parties to administer the project-based Section 8 housing program. 

For more than a dozen years, the U.S. Department of Housing and Urban Development (HUD) has procured its contract administration services for the project-based Section 8 housing program through competitively awarded contracts.

In 2012, when HUD changed how it selected Performance Based Contract Administrators (PBCA) from a competitive contracting process to a NOFA process which favored in-state housing finance agencies, the department was sued by a half dozen contractors and contract modifications were frozen in the 42 states under appeal.

In a series of legal suits and counter suits taking the past few years, lower courts approved the NOFA process but the U.S. Court of Appeals reversed the lower court decision. And last year, HUD appealed to the U.S. Supreme Court.

However, on April 20, 2015, the U.S. Supreme Court refused to hear the case. That denial came as part of a series of newly released orders; the Court did not grant review of any new cases.

The U.S. Court of Appeals for the Federal Circuit has now ordered HUD to use the more complex and tightly restricted competitive bidding process known as procurement instead.

HUD anticipates that the competitive bidding process won’t be finalized until the summer of 2016. In the meantime, current contractors in the 42 contested stated continue to have their contracts renewed and they are expected to be extended in 6 month renewal increments thru June of 2017.

Life Goes on in the Other 11 Jurisdictions

Implementation of revised contracts did move forward in the 9 uncontested states and 2 territories in 2011.  These jurisdictions had only 1 applicant and had no protests were filed. The new contracts became effective Oct. 1, 2011 in:

  • Iowa
  • Maine
  • Minnesota
  • Montana
  • New Hampshire
  • North Dakota
  • South Dakota
  • Vermont
  • Wyoming
  • Puerto Rico
  • The U.S. Virgin Islands

With the exception of the Virgin Islands, which did not previously have a PBCA, this involved no change in selected PBCAs.

Management Occupancy Review Schedule

Though the most recent MORs in the contested 42 states are several years old now, HUD does not have the ability under the current contract to have new inspections conducted by the PBCA. HUD itself may conduct MORs as needed based on failing REAC scores, refinance requests, tenant complaints or other triggering actions.

HUD will continue to utilize the “risk based” management reviews schedule in the 11 states operating under the modified contract, which means:

  • All properties that last received “below average” or “substandard” shall be inspected annually.
  • Those that most recently scored a “satisfactory” shall be visited once within the initial 2-year total ACC term.
  • Sites that last received “Above Average” or “Superior” shall not be reviewed during the initial 2 year term.

One major exception, however, is that all Mark-to-Market Projects with PBCA Administered HAP Contracts must still be inspected annually.

HUD has posted information regarding current/latest MOR ratings as follows:

  • MOR Ratings for Projects (Excel: sorted by state, this list does include Mark-to-Market Projects: Options 1, 2, 3a and 4) as of June 4, 2012. The following States have been updated: DE, NC, NJ, PA, SC and WV.

  • Mark-to-Market Projects (Excel: sorted by state: Options 3b) updated June 4, 2012. The following States have been updated: DE, NC, NJ, PA, SC and WV.

PBCA Transition Guidebook

As proposed back in 2011, and should future changes occur, HUD will likely stick to the planned 3-month transition period and processes outlined in guidance developed with the help of LeadingAge and a number of committed partners and stakeholders.   

Full details are provided in the stakeholder recommendations that were compiled into a PBCA Transition Guidebook, which includes what to expect in terms of communications from new PBCAs to owners, to residents, what steps will be taken to transition work in progress related to management reviews, subsidy payments, contract renewals and more.

[NOTE: All HUD properties with Section 8 rental assistance contracts are impacted, including all Section 202 and Section 208s.  HOWEVER, Section 202/PRAC and Section 811 PRAC properties are not involved in this Section 8 contract administration/rebid initiative. As has been the case with PRAC programs and other non-Section 8 issues, the HUD field offices will continue to do the daily operational oversight including budget and management reviews, subsidy payment authorization, etc.]