U.S. Department of Housing and Urban Development

Section 8 Contract Administrators

 

Issue:HUD has contracted out project-based Section 8 contract administration.The cost of contracting-out this work is taken from the Section 8 fund

If you add up the cost of all these contracts, HUD is paying a minimum of $147 million per year.With incentives, the contractors earn $220 million per year.And HUD wants to add another $41-61 million more in contracts.This money comes from the Section 8 fund.We could hire 3200 staff with this same money, doubling our current Office of Housing staff.[1]We only need 500-1400 employees to do this work nationwide.[2]These contracts currently waste $97 to $176 million Section 8 dollars per year, and new contracts will push the waste up to $237 million.

 

††††††††††† Scarce Section 8 funds are being wasted to pay these contractors.If we hired 1400 staff to do this work, we would have enough money left in the Section 8 fund for 19,158 Incremental Section 8 Vouchers.Using the joint labor/management figure of 500 staff, the extra cost of the contractors would fund 34,762 Vouchers.[3]

 

††††††††††† According to the HUD Inspector General these contracts ďcould adversely affect the integrity of the Section 8 program.ĒIn a report dated September 30, 1999 (#99-PH-163-0002), the IG warned that these contracts could put the entire project-based Section 8 program at risk.This warning was issued months before HUD signed a single contract, nonetheless, HUD has chosen to contract this out.

 

††††††††††† Estimated costs continue to increase.When HUD first proposed these contracts, they estimated the cost at $184 million.When they went to Congress in 1999, they estimated $209 million.They now estimate more than $281 million per year.Thatís a 53% increase in cost in just a few years.

 

Conclusion:

 

††††††††††† Contracting out the administration of the project-based Section 8 portfolio hurts tenants.Itís more confusing, requires tenants to navigate two bureaucracies, misuses scarce Section 8 funds, and puts the entire program at risk.

 

††††††††††† If HUD wonít do it, Congress should stop these contracts.For additional information, please contact us at 617/994-8264.

 



[1] According to HUD Office of Budget, the average cost per HUD employee in 2002 is $88,000.

 

[2] HUDís own analysis assumed that we would need 1400 employees to do this work, though HUDís Inspector General found this number to be inflated.Earlier joint labor/ management work teams estimated that we would need only 500 employees.

 

[3] The per voucher cost is based on HUDís proposed FY í03 budget, or $5063 per Incremental Voucher.