[Link to
GCH-0001](http://www.hud.gov/offices/adm/hudclips/lops/GCH-0001LOPS.doc)

[Link to
GCH-0004](http://www.hud.gov/offices/adm/hudclips/lops/GCH-0004LOPS.doc)

[Link to
GCH-0007](http://www.hud.gov/offices/adm/hudclips/lops/GCH-0007LOPS.doc)

[Link to
GCH-0072](http://www.hud.gov/offices/adm/hudclips/lops/GCH-0072LOPS.doc)

[Link to
GCH-0073](http://www.hud.gov/offices/adm/hudclips/lops/GCH-0073LOPS.doc)

Legal Opinion: GCH-0091

Index: 2.230

Subject: Comprehensive Grant: Ethical or Legal Violations

March 1, 1994

Ms. Jacqueline Aamot

1349 F. Street, N.E.

Washington, D.C. 20002

Dear Jackie:

This is in response to your facsimile of November 3, 1993 and as a

follow-up to our telephone conversation. Please excuse my delay in
responding

to your request for a legal opinion regarding possible legal or ethical

violations involved in a public housing agency\'s (PHA) selection of two

separate companies under the same corporate umbrella who have responded
to two

separate Requests for Proposals (RFP) issued by the PHA.

Your letter indicates that the PHA has issued an RFP for a consultant to

function essentially as the PHA\'s staff for purposes of managing all
aspects

of the Comprehensive Grant process. Company A\'s management arm, an

incorporated entity, is responding to the RFP. The PHA\'s Five-Year Plan

identifies one activity for FY 1994 as asbestos removal in one property,
and

is proceeding to develop an advertisement for an asbestos abatement

contractor. Company A\'s maintenance arm, with a separate incorporation,
is

licensed for asbestos abatement and is planning to bid on that work. The
PHA

is also planning to put several of its projects under private
management.

Because the work has administrative and financial components as well as

property management, maintenance and security, Company A plans to
respond,

offering the services of its various corporations as appropriate. If the

selection process is competitive, you have asked if there are any
ethical or

legal considerations that would preclude the award of all three
contracts to

Company A and/or its components, and whether the work as Comprehensive
Grant

consultant would raise the presumption of inside information.

PHA procurements are governed by 24 CFR Section 85.36. In addition,

PHAs are to have procurement procedures which reflect applicable State
and

local laws and regulations and conform to applicable Federal law. 24 CFR

Section 85.36(b)(1). The general conflict of interest restriction is
that

agents (Company A\'s management corporation in this case) of grantees
(PHA in

this case) shall not participate in selection, or in the award or

administration of a contract supported by Federal funds (Comprehensive
Grant

in this case), if a conflict of interest real or apparent, would be
involved.

24 CFR Section 85.36(b)(3). A real conflict of interest would be
involved,

and Company A\'s management corporation must recuse itself from the
selection,

award or administration of contracts with other Company A corporations.
In

addition, all procurement transactions must be conducted in a manner
providing

full and open competition. Organizational conflicts of interest are

considered restrictive of competition. 24 CFR Section 85.36 (c)(1)(v).
For

example, the management corporation should avoid designing the contract

requirements for contracts which would be bid on by other Company A

corporations. Organizational conflicts of interest could result if the

specifications were so detailed as to be satisfied by only a Company A

corporation or a Company A corporation may be the lowest bidder because
of the

circumstances and information held by the management corporation, as a
result

of restricted requirements or by virtue of their previous participation.

I hope this is helpful in reviewing potential conflict of interest

situations.

Sincerely,

Michael H. Reardon

Assistant General Counsel

Assisted Housing Division