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Government faces new contracting duty

The Supreme Court refused on Monday to spare the federal government from a newly imposed duty to use competitive bidding to sign up partners to provide affordable subsidized housing for low-income families — the so-called “Section 8” program that has existed since 1974.   That denial came as part of a series of newly released orders; the Court did not grant review of any new cases.

Since the Section 8 program was set up, federal housing officials have recruited partners — usually, local government housing authorities — by offering them a negotiated agreement on the terms of their arrangement. But the U.S. Court of Appeals for the Federal Circuit has now ordered the Department of Housing and Urban Development to use the more complex and tightly restricted competitive bidding process instead.

Taking the issue on to the Supreme Court, HUD argued that having to proceed through the bidding process will take away much of its flexibility, and will require it to stage frequent competitions in order to satisfy the procurement contract process.

The kind of contract the government employs in handing out federal dollars depends upon the purpose of the program.  If it is specifically designed to serve an identified federal program aim, the government must dispense the money through competitive bidding, through procurement contracts.  If, however, the aim of the program is to transfer funds to carry out an activity through collaboration with other entities, such as state or local agencies, then federal law requires the mode of cooperative agreement.

HUD told the Court that it has used cooperative agreements throughout the life of the Section 8 program, in which HUD subsidizes rents for qualified residents living in Section 8 projects.  The subsidies are channeled through state and local housing agencies.  After HUD did a partial switch to competition to award cooperative agreements on a statewide basis, picking one housing agency to assume responsibility for all housing assistance within the state, some agencies that had lost out sued HUD, insisting that it use only procurement contracts through competition of all comers.

The Government Accountability Office agreed that this was the mode HUD should use,  but HUD decided to go ahead as it had before with the statewide cooperative agreement competition.  Several agencies then sued HUD, and won in both the Court of Federal Claims and in the Federal Circuit.

The case was United States v. CMS Contract Management Services, Inc.  The Court gave no explanation for the denial.

In other orders Monday, the Justices refused to hear the pleas of two groups of individuals that they or members of their families were harmed or killed by terrorists in Colombia, which they claim was funded by the huge international fruit company, Chiquita Brands International.   The Court was told that, because Chiquita made the decision to fund that organization from points inside the United States, there was a sufficient connection to this country to allow the case to go forward in U.S. courts under the Alien Tort Statute.

They contended that the U.S. Court of Appeals for the Eleventh Circuit had ruled that all of the violations of international law claimed in an ATS case must have occurred inside the U.S. territory — a view that the petitions argued conflicts with more flexible standards used by three other courts of appeals.

The two cases were Cardona v. Chiquita Brands International, and Does 1-144 v. Chiquita Brands InternationalThe denial was not explained.




Recommended Citation: Lyle Denniston, Government faces new contracting duty, SCOTUSblog (Apr. 20, 2015, 12:11 PM),