Competition critical to ensuring quality low-income housing
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As the incoming secretary of Housing and Urban Development (HUD), Dr. Ben Carson has the opportunity to restore confidence in the beleaguered agency and bring back competitive contracting to a critical program that helps our nation’s neediest.

Carson may be an unconventional choice but that doesn’t mean he can’t do what’s necessary to put HUD on a positive trajectory. Carson can demonstrate his commitment to increased competition, higher quality services and reduced taxpayer spending.

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It begins with the Section 8 Project-Based Rental Assistance Program, which administers housing to 1.2 million American families and makes payments to more than 17,000 private landlords who provide safe and decent housing to eligible tenants across the country.

 

Given the massive shortage of affordable rental units in the country — 7.4 million to be precise — Congress and the new administration cannot afford to mismanage it.

According to National Low Income Housing Coalition, federal funding for housing assistance remains inadequate for extremely low-income households — there are just 35 affordable, available rental units per every 100 renters.

That’s a major problem that must be addressed. One piece of the solution is proper administration of the Section 8 Project-Based program. After all, if fewer taxpayer dollars are wasted, more will be available to help needy, low-income Americans find housing.

For nearly two decades, HUD contracted with Public Housing Agencies (PHAs) to administer the Project-Based Rental Assistance Program. Early on, HUD used a competitive process that ensured that the highest-quality, best-value bidders prevailed.

The genesis of this contracting program was HUD’s inability to administer the program effectively on its own. In 1995, the Government Accountability Office (GAO) had labeled HUD "high risk" for its insufficient control of the program’s payments.

That prompted HUD in 1999 to begin contracting out, through a competitive bidding process, the day-to-day monitoring and oversight of the program to PHAs, which included non-profits and many state and local housing authorities.

The fundamental element of the initiative was its comprehensive approach — a single PHA in each state oversaw and administered all aspects of the program in order to better detect, respond to and resolve problems of improper payments and noncompliance.

This contracting effort was wildly successful — through competition and a comprehensive approach, the program helped make HUD a leader at reducing improper payments and, by 2007, helped lift the agency out of the GAO’s high-risk category. 

Despite the near two-decade, positive record with competitive contracting, HUD hastily upended its process for selecting contractors five years ago. It changed the rules of the game by re-labelling the contracts “cooperative agreements” — a form of grant not subject to competition requirements.

It also set up a preference-based system that favored certain entities (often as sole-source contractors) and excluded successful incumbents from consideration. Finally, it reduced the scope of work, threatening the proven, comprehensive approach. This not only stifled competition, but it increased taxpayer spending and put quality service at risk.

In response, a set of incumbent PHA contractors, including the company I head — Navigate Affordable Housing Partners — challenged HUD’s attempt to award these contracts on a non-competitive basis. Our litigation was successful, first at GAO and afterward at the Court of Appeals for the Federal Circuit.

Ultimately, in April 2015, the Supreme Court sided with us and declined to hear HUD’s appeal, ending the litigation and upholding the Federal Circuit’s ruling that HUD should use competitive contracts to administer the Section 8 Project-Based Rental Assistance Program and use the traditional procurement process to which every other federal agency adheres.

Now, after five years of delays, millions of taxpayer dollars wasted and orders from multiple arms of the government, HUD is back on track to rebid the contracts that support the Section 8 Project-Based program.

Secretary Carson must keep a vigilant eye on the process, and thoroughly review the impending rebid to ensure it complies with court orders and retains the comprehensive, proven approach to reducing improper payments

This will prove an important moment for incoming Secretary Carson. He will have the opportunity to ensure the rebid process does not become a political one. Moreover, he will have the opportunity to ensure that through the rebid, the program’s successful legacy of fair and open competition remains and that the highest-quality, lowest-cost bidder wins out.

Further, Secretary Carson can ensure that taxpayer money is spent wisely and move toward solving the real problem of inadequate and unaffordable rental housing in America.

Not only is competition good for landlords, renters and taxpayers, it is good government. I’m confident Secretary Carson will agree and will support a competitive rebid of this critical program. It will prove a strong opening salvo for an agency and a new secretary determined to get things right.

 

Eric Strong is the CEO of Navigate Affordable Housing Partners, which provides administrative services to HUD in support of the Section 8 program in Alabama, Virginia, Mississippi and Connecticut.


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