B-167244, DEC. 4, 1969

B-167244: Dec 4, 1969

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

LOCAL HOUSING AUTHORITIES UNSUCCESSFUL BIDDER'S PROTEST TO ALLEGED VIOLATION OF FEDERAL LAW IN CONNECTION WITH DEVELOPMENT OF LOW RENT HOUSING PROJECT IS DENIED SINCE PROCUREMENT WAS NOT MADE BY FEDERAL AGENCY BUT BY LOCAL HOUSING AUTHORITY UNDER STATE LAW AND. ALTHOUGH PROCUREMENT IS MADE PURSUANT TO U.S. SUCH MATTER IS ONE OF AGENCY POLICY OVER WHICH GENERAL ACCOUNTING OFFICE HAS NO AUTHORITY AND IN CASES INVOLVING FEDERAL GRANTS. TO THE MCNEIL AGENCY: REFERENCE IS MADE TO YOUR LETTER OF JUNE 12. THE THP IN QUESTION IS BEING DEVELOPED BY THE HOUSING AUTHORITY OF THE BIRMINGHAM DISTRICT (HABD). YOU WERE ADVISED THAT A SITE YOU HAD SUBMITTED "WAS LOOKED ON WITH FAVOR" AND YOU WERE INVITED TO SUBMIT A PROPOSAL FOR ITS DEVELOPMENT.

B-167244, DEC. 4, 1969

BIDS--COMPETITIVE SYSTEM--FEDERAL AID, GRANTS, ETC.--LOCAL HOUSING AUTHORITIES UNSUCCESSFUL BIDDER'S PROTEST TO ALLEGED VIOLATION OF FEDERAL LAW IN CONNECTION WITH DEVELOPMENT OF LOW RENT HOUSING PROJECT IS DENIED SINCE PROCUREMENT WAS NOT MADE BY FEDERAL AGENCY BUT BY LOCAL HOUSING AUTHORITY UNDER STATE LAW AND, ALTHOUGH PROCUREMENT IS MADE PURSUANT TO U.S. HOUSING ACT OF 1937, 42 U.S.C. 1404, ET SEQ; NEITHER STATUTE NOR REGULATIONS RELATING TO LOW RENT HOUSING PROGRAM REQUIRE FEDERAL COMPETITIVE BIDDING PROCEDURES TO BE FOLLOWED. SUCH MATTER IS ONE OF AGENCY POLICY OVER WHICH GENERAL ACCOUNTING OFFICE HAS NO AUTHORITY AND IN CASES INVOLVING FEDERAL GRANTS, RECOGNITION MUST BE GIVEN TO PRIMARY AUTHORITY OF GRANTING AGENCY TO DETERMINE COMPLIANCE WITH REGULATIONS PROMULGATED IN CONNECTION WITH ADMINISTERING GRANTS.

TO THE MCNEIL AGENCY:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 12, 1969, AND SUBSEQUENT CORRESPONDENCE, IN WHICH YOU PROTEST CERTAIN ALLEGED VIOLATIONS OF FEDERAL LAW IN CONNECTION WITH THE SELECTION OF A DEVELOPER OF A TURNKEY HOUSING PROJECT (THP) FOR BIRMINGHAM, ALABAMA.

THE THP IN QUESTION IS BEING DEVELOPED BY THE HOUSING AUTHORITY OF THE BIRMINGHAM DISTRICT (HABD), A PUBLIC BODY ORGANIZED PURSUANT TO STATE LAW, WITH FINANCIAL ASSISTANCE FROM THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) PURSUANT TO THE UNITED STATES HOUSING ACT OF 1937 (42 U.S.C. 1404, ET SEQ.). A DESCRIPTION OF THE TURNKEY METHOD MAY BE FOUND AT 24 CFR 1520.6 (B).

ON NOVEMBER 6, 1968, HABD ISSUED AN INVITATION FOR TURNKEY PROPOSALS WHICH REQUESTED OFFERS FOR COMPLETE LOW RENT HOUSING PROJECTS LOCATED IN BIRMINGHAM, ALABAMA. ON DECEMBER 5, 1968, YOU WERE ADVISED THAT A SITE YOU HAD SUBMITTED "WAS LOOKED ON WITH FAVOR" AND YOU WERE INVITED TO SUBMIT A PROPOSAL FOR ITS DEVELOPMENT. PLANS FOR DEVELOPMENT WERE SUBMITTED BUT THE PLANS OF OTHERS WERE FINALLY ACCEPTED. ONE OF THOSE ACCEPTED WAS OUTSIDE THE CITY LIMITS OF BIRMINGHAM.

YOU CONTEND THAT THE ACCEPTANCE OF A SITE OUTSIDE OF THE CITY OF BIRMINGHAM WAS CONTRARY TO THE TERMS OF THE INVITATION FOR TURNKEY PROPOSALS AND CONSTITUTED A VIOLATION OF THE FEDERAL COMPETITIVE BID LAWS.

INITIALLY, IT MUST BE OBSERVED THAT THE INSTANT PROCUREMENT WAS NOT BEING MADE BY A FEDERAL AGENCY, BUT BY A LOCAL HOUSING AUTHORITY ESTABLISHED UNDER STATE LAW. WHILE FEDERAL FINANCIAL ASSISTANCE IS CONTEMPLATED DURING THE COURSE OF THE PROCUREMENT PURSUANT TO 42 U.S.C. 1401, ET EQ., THAT STATUTE DOES NOT BY EXPRESS TERMS OR IMPLICATION REQUIRE THAT FEDERAL COMPETITIVE BIDDING PROCEDURES BE FOLLOWED BECAUSE OF SUCH ASSISTANCE. FURTHERMORE, THE REGULATIONS OF HUD WHICH RELATE TO THE LOW RENT HOUSING PROGRAM, 24 CFR 1520, ET SEQ., LIKEWISE DO NOT REQUIRE THAT COMPETITIVE BIDDING PROCEDURES BE UTILIZED IN PROCUREMENT BY LOCAL HOUSING AUTHORITIES. B-163581, MAY 14, 1968. SINCE THEY ARE PRESCRIBED NEITHER BY LAW NOR REGULATION, SUCH REQUIREMENTS, EVEN IF THEY EXIST, WOULD MERELY REFLECT AN AGENCY POLICY. ADHERENCE TO, OR DEPARTURE FROM AGENCY POLICIES OF SUCH A NATURE ARE PRIMARILY THE CONCERN OF THE HEAD OF THE AGENCY PRESCRIBING THE POLICY, AND THE GENERAL ACCOUNTING OFFICE HAS NO AUTHORITY TO REQUIRE ADHERENCE TO AGENCY POLICIES IN SPECIFIC PROCUREMENTS OR TO HOLD INVALID CONTRACTS WHICH MAY HAVE BEEN AWARDED IN DEROGATION OF SUCH POLICIES. SEE 43 COMP. GEN. 217, 221 (1963).

YOU FURTHER CONTEND THAT HABD REFUSED TO ALLOW YOU ACCESS TO OR THE RIGHT TO SEE PUBLIC DOCUMENTS RELATED TO THE PROJECT; THAT THERE EXISTED A CONFLICT OF INTEREST ON THE PART OF THE EXECUTIVE DIRECTOR OF HABD WITH RESPECT TO THE SELECTION OF A DEVELOPER; AND THAT HUD REGULATIONS HAVE BEEN VIOLATED DURING THE SELECTION OF THE TURNKEY PROJECT DEVELOPER. HUD CONDUCTED AN INVESTIGATION OF YOUR ALLEGATIONS AND THE RESULTS THEREOF ARE SET FORTH BELOW.

INSOFAR AS YOU CONTEND THAT YOU WERE DENIED ACCESS TO OR THE RIGHT TO SEE CERTAIN DOCUMENTS, YOU ARE ADVISED THAT ACTIONS BY HABD IN THIS CONNECTION ARE NOT PROPERLY FOR REVIEW BY OUR OFFICE. HOWEVER, THE INVESTIGATION REPORT INDICATES THAT YOU WERE DENIED ACCESS TO ONLY ONE ITEM OF INFORMATION AND THAT CONCERNED THE PROPOSAL FIGURE SUBMITTED BY A COMPETING DEVELOPER. YOU WERE GIVEN COPIES OF HABD MINUTES AND HUD RECOMMENDATIONS RELATIVE TO YOUR COMPLAINT AND THE TURNKEY PROPOSALS, AND YOU WERE PERMITTED TO SEE A CERTAIN OPTION FOR THE SALE OF LAND WHICH HAD A PARTICULAR INTEREST TO YOU. WE ALSO NOTE THAT THE HABD DENIAL OF YOUR REQUEST FOR A COMPETITOR'S PROPOSAL FIGURE CONTRAVENES NO PROVISION OF THE LOW-RENT HOUSING TURNKEY HANDBOOK, RHA 7420.1, ISSUED BY HUD IN JUNE 1969.

THE INVESTIGATION REPORT GAVE CONSIDERATION TO YOUR CONTENTION THAT THERE WAS A CONFLICT OF INTEREST ON THE PART OF THE EXECUTIVE DIRECTOR OF HABD RELATIVE TO THE DEVELOPMENT OF THE TURNKEY PROJECT. WHILE THE EXECUTIVE DIRECTOR HAD PREVIOUSLY BEEN ENGAGED IN A LAND ACQUISITION VENTURE WITH AGENTS OF A DEVELOPER WHOSE PROPOSAL WAS ACCEPTED FOR THE CURRENT TURNKEY PROJECT, THERE IS NOTHING TO SHOW THAT THE VENTURE INVOLVED LAND IN WHICH HABD HAD, OR HAS, ANY INTEREST. THE REPORT DOES NOT INDICATE THAT THIS VENTURE WAS OTHER THAN A PRIVATE BUSINESS TRANSACTION, SEPARATE AND DISTINCT FROM THE OPERATIONS OF HABD AND THE ACTIVITIES OF THE EXECUTIVE DIRECTOR IN THAT CAPACITY. FURTHERMORE, THERE IS NOTHING IN THE REPORT WHICH WOULD INDICATE A CONFLICT OF INTEREST BY THE EXECUTIVE DIRECTOR WITH RESPECT TO THE DEVELOPMENT OF THE TURNKEY PROJECT. IN SHORT, YOUR INFERENCES OF MISCONDUCT ARE NOT SUBSTANTIATED BY EVIDENCE.

YOUR LAST CONTENTION IS THAT THERE WERE VIOLATIONS OF HUD REGULATIONS IN THE SELECTING OF ONE OF THE THP DEVELOPERS. HUD, ON THE OTHER HAND, CONTENDS THAT THEIR REGULATIONS RELATIVE TO THE SELECTION OF TURNKEY PROJECT DEVELOPERS HAVE NOT BEEN VIOLATED. ON THE BASIS OF THE FACTS SET OUT IN YOUR LETTERS AND THE INVESTIGATION REPORT, WE MUST AGREE WITH HUD SINCE WE FIND NOTHING IN EITHER 24 CFR 1520, ET SEQ., OR THE LOW-RENT HOUSING TURNKEY HANDBOOK, SUPRA, WHICH PROHIBIT ANY OF THE ACTIONS TAKEN BY HABD OR HUD. FURTHERMORE, OUR OFFICE HAS CONSISTENTLY TAKEN THE POSITION, IN CASES INVOLVING FEDERAL GRANTS, THAT RECOGNITION MUST BE GIVEN TO THE PRIMARY AUTHORITY OF THE GRANTING AGENCY OR OFFICIAL TO DETERMINE COMPLIANCE WITH REGULATIONS PROMULGATED IN CONNECTION WITH ADMINISTERING GRANTS. SEE B-166808, JUNE 16, 1969; B 161570, JANUARY 29, 1968; B-163094, JULY 25, 1968.

ACCORDINGLY, WE FIND NO BASIS UPON WHICH TO INTERPOSE A LEGAL OBJECTION TO THE ACTIONS OF HABD OR HUD IN THIS MATTER AND YOUR PROTEST MUST, THEREFORE, BE DENIED.