GAO Finds HUD Should Not Have Used Grant Application Process for Project Based Assistance Contracts, Back to the Drawing Board.

This would likely be comical if you are not directly involved. GAO has decided that HUD should not have used a NOFA grant application process to award contracts for project based assistance contracts; their decision is HERE. 

Appears that HUD will have to go through a third procurement  process to award these contracts. 

(You can find my prior posts by search in box at top right using term "Section 8 Contract Administration"). 

Originally created and posted on the Oregon Housing Blog.

HUD Section 8 Contract Admin NOFA Out on Grants.Gov

Application package and instructions are HERE.

Related HUD Contract Admin web site is HERE.  (That web site currently shows closing date of April 3rd, but Grants.gov says April 10).

Originally created and posted on the Oregon Housing Blog.

UPDATE: Letter from LA City Housing Authority Says $15 Million in Annual Profit From Non Profits Including Section 8 Contract Administration Non Profit.

UPDATE: Thanks to HACLA staff who responded to my public records request today and provided me with a clean copy of the letter. Link to letter below now takes you to that clean copy of the letter. 
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A reporter from the Los Angeles Daily News was kind enough to fax me the letter from HACLA COO Simmons sent to the LA City Council on December 13th. (Recent story is HERE).

Because it is a fax some of text is illegible, but several statements from letter HERE are clear:

1. Simmons indicates that profits from Section 8 contract administration are not considered by HUD to be "federal" monies.  However at end of page 4 he says that his understanding is that any money earned by public agency should be considered public funding.
2. The City of Los Angeles provides no money to HACLA.
3. Simmons did not agree with some of policy calls on spending from former Director and Board Chair.

IRS Form 990's for Los Angeles LOMOD Non Profit. 

Last IRS form 990 that I can find for LOMOD for CY 2009 can be found on web page HERE.  A quick look at that 990 show:

1. None of officers were paid with LOMOD funds; their salaries appear to have been paid by HACLA.
2. No expense for travel was shown ( I wonder if travel expense was included in $4.129 million for "management" ?).
3. Admin fees from HUD totaled $22.3 million, while expenses for OTHER than housing assistance payments totaled $17.3 million (includes "management", "other salaries and wages", and payment to subcontractor Quadel). It is not clear how this $5 million in apparent profit relates to statement in letter that non profits produced $15 million in profit a year; if some of "profit" was received from other non profit controlled by HACLA, I hope that project reserves for HACLA non profit owned projects are fully funded.
4. LOMOD net assets stood at $17.5 million at the end of CY 2009.

Originally created and posted on the Oregon Housing Blog. 

Los Angeles Housing Authority Under Fire for Spending, Including Section 8 Contract Admin Funds from Non Profit.

LA Times story is HERE and says that HUD is participating in new audit.  From the story:

HACLA's former interim executive director, Ken Simmons, said the funds for questionable expenditures came not from federal funds, but from two nonprofit entities overseen by HACLA.The two enterprises generate more than $15 million a year, Simmons wrote in a Dec. 13 letter to the City Council. In his letter, he detailed the nonprofits' work, explaining how the group acts as an administrator processing HUD contracts. Funds from the nonprofits "enable the Authority to carry out its mission," Simmons wrote. "HACLA receives no city resources and its inadequate funding from the federal government severely limits what this agency can do for its residents." Greuel's next audit, expected by next spring, will analyze funds and spending by the two nonprofits, Greuel said.

Earlier KCET story is HERE.  

LA Controller PR and performance audit is HERE. 

Not clear whether any of audits will impact ability of non profit [LOMOD] to respond to NOFA of Section 8 contract administration that is expected to occur after start of new year. 

Originally created and posted on the Oregon Housing Blog.

Most HUD Section 8 Admin Contracts to be Rebid.

Bloomberg Government (subscription) has story, hats off to them for being only national media to cover the story up to now.  

OPB's Capital Currents story by Chris Lehman has Oregon angle HERE.

My understanding is that contract awards will go forward in states where there was only one bidder, extensions of existing contracts for 6 month period will be offered to current contractors in other states, and HUD will use a NOFA to award future contracts.  [Implications on using NOFA process for protests not clear to me]. 

6 month extension would take OHCS and other states through March 2012. 

Would look for some kind of official document from HUD at some point, but then again I and others have been waiting for any official documents or statements for some time.....

Originally created and posted on the Oregon Housing Blog.

Update: Section 8 Contract Administration Bid Protests; 84% of Units Under Protest.

GAO has updated their HUD open docket bid protest website this morning, showing a total of 48 open bid protests for the HUD Section 8 contract administration solicitation, in 30 different states. 

My NON duplicated count indicates that for ALL projects/units in ALL states, 78% [12,224] of 15,601 estimated projects and 84% [888,968] of 1,063,671 estimated units are under protest.

State HFA's Account For 12 of the 30 States Under Protest

19 of the 48 pending bid protests have been filed by state HFA's; after eliminating amended protests these account for 12 of the 30 states under protest. In addition, of the total of 28 bid awards TO state HFA's, my count is that 20 are under protest.

I have assembled a comprehensive 4 page HUD Bid Protest table HERE that lists for those 30 states only (in alpha order):

1. The current successful bidder and their state location,
2. The contractor(s) who are protesting the award and their state location(s).
3. A count of units and projects for each state. [Note that counts are repeated if there are more than one protest in a state].
4. The GAO file number for each protest.(Multiple protests in a state are indicated by a number greater than 1 to the right of the decimal of the file number, and I have sorted list in numerical order within state).
5. A field indicating the last to first chronological order of the GAO bid protest.
6. A field indicating whether the successful bidder is a state HFA. 
7. A field indicating whether the protesting bidder is a state HFA. 
8. A header that shows the non duplicated count of project and units under protest. 

This was a complex effort to put together; if you discover any errors in the post or the table please DO let me know.


Originally created and posted on the Oregon Housing Blog.

How Broad is HUD 's Discretion in Evaluating Section 8 Contract Administration Bids?

In thinking about the significant and undisclosed degree of weight given by HUD to price in the recent Section 8 contract administration bid awards it occurred to me that HUD may be relying on special contracting authority that provides it with significant administrative discretion. (See my earlier post HERE on what otherwise seems like a reasonable basis for the OHCS appeal).

I went back and looked at the final HUD invitation to bid document HERE and a reference on the first page says : "The Invitation is issued pursuant to section 8 of the United States Housing Act of 1937 (1937 Act), 42 U.S.C. 1437f".

I found 42 U.S.C. 1437f HERE and it says: 

(b) Other existing housing programs (1) In general.— The Secretary is authorized to enter into annual contributions contracts with public housing agencies pursuant to which such agencies may enter into contracts to make assistance payments to owners of existing dwelling units in accordance with this section

I haven't found any specific statutory or regulatory provisions that further amplify/or restrict the very broad authority that this statutory language appears to provide. [Then again, I am not an attorney...]. 

Absent some other more restrictive statutory or regulatory authority (or more general and applicable principle of contract law) I wonder if HUD won't be referencing this broad discretionary authority in responding to the bid appeals that have been filed with it and with GAO? 

What do you think/have any insights?-Please DO add a comment below.

Originally created and posted on the Oregon Housing Blog.

Bremerton PHA Also Provides Their Oregon Section 8 Contract Administration Bid Docs Quickly.

Kudos to the Bremerton Housing Authority for quickly responding to my public record request for their [successful] bid materials from their CMS Division for the Oregon Section 8 Contract Administration contract scheduled to begin Oct 1, 2011. (I had earlier had a quick response from OHCS to a similar request for their bid materials).

I am attaching the several PDF documents BHA sent me as a single ZIP file HERE. I would suggest downloading file, unzipping into a folder, and then reviewing each document within that folder.  

As time permits later this week I will look at both the Oregon and BHA bid packages and post any observations that may be of interest to others.

Originally created and posted on the Oregon Housing Blog. 

Updated: Bloomberg Story On Section 8 Contract Administration; Two New Bid Protests Bring Count to 35.

Upated: 
Didn't see map that Bloomberg had created for their story HERE. 
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Full story appears in Bloomberg News today HERE, had been published in Bloomberg Government for subscribers only on Friday (my Friday post HERE).

Note that as of this morning, total protests were up to 35, not the earlier count of 22 as reported in Bloomberg story. States with contracts under protest are now up to 26, representing 70% + of all units.  [I will try to update my table HERE with lower 33 protest count late this week, after I check to see if any additional protests have been filed or withdrawn].

One of new protests was for my home state of Michigan. Turns out that winning bidder is affiliate of Livonia Housing Commission, a PHA in a western suburb of Detroit.  [My belated apology if you drove one of the Fords that I help build a transmission for in Livonia in 1966].

Not sure, but seems possible that winning bidder Quality Affordable Housing Services Corporation is affiliated with private sector firm.

Originally created and posted on the Oregon Housing Blog.

Bloomberg Has HUD Section 8 Contract Bid Story: HUD Says $100 Million Saved, OHCS Says Up to 24 Positions Could be Lost.

Bloomberg Government has picked up on the HUD Section 8 Contract Administration bid story and published a story which unfortunately requires a subscription to view.  

I was contacted by the reporter and provided background and data for the story, so it is disappointing that I cannot yet provide you with a link. I am told it will be available on Bloomberg News on Monday and if I find, I will post that direct link to the story, and I encourage you to read the entire story.  

As a courtesy, the reporter sent me the story and I will summarize some of the reporting from public agencies and officials:

    New York Housing Trust Fund officials indicated that they had a higher technical rating than the winning bidder but lost because HUD failed to reveal importance of price. My Comment: That is same argument raised by OHCS. 

    OHCS says it may need to lay off up to 24 employees.
    Carol Galante, the DAS for MF, and now the Acting FHA Commissioner, said in an interview that HUD will save 30% of costs, or nearly $100 million. She indicated that the average successful bid fee was 1.7%
       One additional comment: While the first version of the story indicates 22 bid protests which was accurate at time story was originally written, the count is now 33 GAO bid protests. My count is that currently more than 10,000 unduplicated projects and 740,00 units are under protest in 25 different states.

Originally created and posted on the Oregon Housing Blog.

OHCS Has Reasonable Basis for Their Appeal of Section 8 Contract Administration Bid Award.

At the Housing Council meeting on Friday July 15th OHCS staff discussed the bid protest underway for the Section 8 contract administration procurement.(See my prior post HERE).

My understanding from OHCS staff discussion was that HUD had advised in a post award conference call that to arrive at a final score HUD had taken the initial score for each bid in each state and divided it by the baseline admin fee included in each bid to arrive at the final score and ranking of applicants for each state.

OHCS staff indicated that this intended weighting was not disclosed in the solicitation and if it had been it would have impacted the fee submitted by OHCS.

Three caveats:
1. I am not a contracting expert, and the degree to which disclosure of all weighting factors was required as part of this contracting I will have to leave up to the attorneys.
2. There could be communications or solicitation documents where this intended weighting of price was disclosed by HUD that I have not seen. 

3. I may have misunderstood the HUD process of taking the initial score and dividing it by the baseline admin fee to arrive at the final ranking within a state.

My Initial Editorial Take: Appears That OHCS and Other Bidders Have A Reasonable Complaint.

1. I looked at the FAQ's for this procurement HERE and I could find NO specific identification of how price was going to be weighed in the final selection. The only reference I can find is very non specific: "the proposed Basic Administrative Fee Percentage for the highest ranked Applications will be considered [emphasis added] in the selection of the awardee." [after final scores for each application were calculated and ranked for each state].
2. I could also find no specific information about the weight to be given to price in the final Invitation for Application document HERE.[This document does not even include the "considered" weighting language found in the FAQ's].
3. Dividing the initial score by the baseline admin bid price would produce results that would sharply discount selection factors other than price. If OHCS had a perfect initial score of 100, and a bid price of 2.45%, it's final score would be 40.816. This would mean that a bid at 1.88% would need only an initial score of at least 76.8  to have received a HIGHER than OHCS final score of 40.851.[These are actual bid prices for Oregon contract administration as reported by OHCS; I do not know what the actual initial scores were for OHCS or the winning Oregon bidder].
4. IF HUD wanted to weigh price so heavily it seems to me that it should have been more transparent in doing so. IF the bid invitation had been more transparent, it seems likely that this would have produced even more competition via even lower bids from at least some of the bidders. 
5. BOTTOM LINE: While the ultimate outcome may or may not have changed, there would be little basis for protest if the weight of the admin fee price in the final evaluation had been more fully disclosed by HUD. I am not sure if the challenge from OHCS and other bidders is legally sufficient, but it IS clearly reasonable based on the facts as I understand them today.  

Originally created and posted on the Oregon Housing Blog.

Updated: Idaho Clear Winner in Contract Administration Competition; WA State PHA Not So Much After Losing WA to WI.

In looking at the contractor selected for California [Los Angeles LOMOD Corporation], their website HERE indicates they are partner with Bremerton PHA's Contract Management Services.(CMS).

Since LOMOD now will have contract for ALL of California, it is possible that LOMOD and CMS partnership actually INCREASED units , rather than decreased units as post below indicates. I have elected NOT to change the post below hoping that HUD will get around to announcing contract winners and providing counts of projects and units for each state. (California Sec of State doesn't keep corp docs on site so no easy way to check on the details of the Partnership in the Articles of Incorporation).

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The Section 8 contract administration so far has resulted in some clear winners and losers. 

While Oregon and OHCS is an apparent big loser in the NW to date, it still might be possible for them or some other Oregon entity to play a role as a subcontractor for the new Washington based contractor for Oregon, a division of the Bremerton public housing authority, Contract Management Services. 

Big NW Winner: Idaho HFA to Administer 22,550 Units in 4 States. 

Within Idaho I estimate there are (only) 125 projects, 3,992 units. However, IHFA won contracts to cover an estimated 508 projects, with 22,550 units in 4 states: Idaho, Utah, Arizona, and Hawaii. This means that IHFA will administer 5.65 times the number of estimated project based Section8 units within their state.

Bremerton WA PHA to Administer 20,358 Units in 3 States, But this May be a REDUCTION of 54,815 units.

The Bremerton WA PHA division (Contract Management Services) picked up contract administration for Alaska, Nebraska and Oregon for an estimated total of 615 projects and 20,358 units. However they lost the contract to administer Washington state to the Wisconsin HFA, losing 439 projects and 18,832 units and they also will not be administering contracts in Hawaii or Southern California.  

A May 2011 Washington state audit (see prior blog post HERE) had estimated that the PHA administered 75,173 Section 8 units in multiple states, and if this was accurate the 20,358 units under the new contract would mean a LOSS of 54,815 units. (some of these units were subcontracted to local agencies, so this likely is not a true one for one reduction).

To see this data for yourself, you will find it within the tables I previously posted in post HERE. 

Originally created and posted on the Oregon Housing Blog.