Link: GAO Decision
Protestor: Assisted Housing Services Corporation; North Tampa Housing Development Corporation; The Jefferson County Assisted Housing Corporation; National Housing Compliance; Southwest Housing Compliance Corporation; CMS Contract Management Services and the Housing Authority of the City of Bremerton; Massachusetts Housing Finance Agency
Agency: Department of Housing and Urban Development
Disposition: Protests Sustained.
The Department of Housing and Urban Development’s (HUD) use of a notice of funding availability (NOFA) that results in the issuance of a cooperative agreement to obtain services for the administration of Project-Based Section 8 Housing Assistance Payment (HAP) contracts was improper because the “principal purpose”
General Counsel PC Highlight:
The Assisted Housing Services Corporation (AHSC), the North Tampa Housing Development Corporation, The Jefferson County Assisted Housing Corporation (JCAHC), National Housing Compliance, the Southwest Housing Compliance Corporation, CMS Contract Management Services and the Housing Authority of the City of Bremerton, and the Massachusetts Housing Finance Agency protested the terms of a Notice of Funding Availability (NOFA) for the administration of Project-Based Section 8 Housing Assistance Payment (HAP) contracts. The protestors argued that the agency’s use of a NOFA, which provides for the issuance of cooperative agreements to public housing agencies (PHAs) for the administration of the HAP contracts, is improper, because the agency is seeking contract administration services that must be solicited through a procurement instrument that results in the award of contracts.
In 1999, the agency held “its first nationwide competition” and issued an RFP to obtain these contract administration services. The agency awarded 37 performance-based Annual Contribution Contracts (ACCs) under the 1999 RFP, an additional seven ACCs between 2001 and 2003 under another RFP, and then another nine ACCs between 2003 and 2005 under “an invitation for submission of applications” (ISA). In February 2011, the agency began “its second nationwide competition” for contract administration services through the issuance of an ISA. After the agency announced its “award of the ACCs” under the ISA, it received numerous protests for the awards applicable to 42 states. It took corrective action by not “mak[ing] an award of [ACCs] in the states subject . . . to protest.” The NOFA subject to the instant protest covers these 42 states.
The GAO found unpersuasive the agency’s argument that its payments to property owners in accordance with the terms of its HAP contracts can properly be considered as the transfer of a thing of value to the PHAs, noting that the PHAs themselves have no rights to the payments (control over them) and act only as a conduit for the payments to the property owners. Further, the principal purpose of the administrative fees paid to the PHAs is not to “assist” the PHAs in the performance of their mission. The GAO found that the agency’s principal purpose in issuing the NOFA was to acquire the PHAs’ services as contract administrators, to fulfill a role that the agency would otherwise be obligated to perform. As such, the principal purpose of the NOFA and the ACCs to be awarded under the NOFA is for the agency’s direct benefit and use.
The GAO has jurisdiction to hear protests asserting that an agency is improperly using a cooperative agreement or other non-procurement instrument, where a procurement contract is required. The use of cooperative agreements is appropriate where the principal purpose of the agreement is to provide assistance to the recipient to accomplish a public objective authorized by law; procurement contracts must be used if the agency’s principal purpose is to acquire goods or services for the direct benefit or use by the government. In contemplating whether to protest the use of a cooperative agreement before the GAO, potential protestors should carefully evaluate the tasks to be performed under the agreement and what parties those tasks are intended to benefit.