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.† We only need 500-1400 employees to do this work nationwide.† 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.
††††††††††† According to the HUD Inspector General these contracts ďcould adversely affect the integrity of the Section 8 program.Ē† In 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.
††††††††††† 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.
 According to HUD Office of Budget, the average cost per HUD employee in 2002 is $88,000.
 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.†
 The per voucher cost is based on HUDís proposed FY í03 budget, or $5063 per Incremental Voucher.