Supreme Court Denies to Hear HUD Challenge to PBCA Contracting Case

The U.S. Supreme Court recently refused to hear a challenge brought by HUD to a federal appeals court decision requiring the agency to use contracts rather than grants to fund its administration of Section 8 public housing projects. Without offering a specific explanation, the Supreme Court justices implicitly rejected HUD’s argument that the Federal Circuit’s decision would impair its Section 8 housing program.

The plaintiffs in the case are contractors that accused HUD of seeking to evade competition requirements in its administration of subsidized housing in 42 jurisdictions. The legal battle began in February 2011, when HUD chose to recompete its Performance-Based Annual Contribution Contracts, saying that new competition would help the agency save money.

HUD’s new contract decisions were hotly contested, and 66 protests were filed at the General Accountability Office. As a result, HUD withdrew its new contract awards and reissued its solicitation, changing the planned contracts to cooperative agreements that were outside the scope of federal procurement law and not subject to protest, according to the Federal Circuit decision.

The Federal Circuit found that procurement contracts, subject to all the competition and protest rules in the Competition in Contracting Act, should be used when the "principal purpose" of the agreement is “to acquire property or services for the direct benefit or use of the United States government.” In this case, HUD was procuring administrative services, including the delivery of housing subsidies, to help the agency perform its mission of managing the project-based Section 8 rental assistance program, rather than using grants or cooperative agreements to provide assistance in support of its partners’ goals, the court found.