Handbook No. 7460.8 REV 2
CHAPTER 13. STATE AND LOCAL LAWS AND REGULATIONS
GOVERNING PHA PROCUREMENT
13.1 General
In addition to federal law and regulations, PHAs are governed by a wide assortment of
state and local requirements. In general, where these rules conflict, the more
stringent law or rule applies. For example, the Federal statutory limit on small
purchases is $100,000. That does not prohibit a State from imposing a more stringent
limit, e.g., $25,000, on small purchases. A PHA governed by that State’s law would
comply with the $25,000 limit.
HUD requires a standard form of Cooperation Agreement between a PHA and the Local
Governing Body (LGB) under which the LGB is required to furnish the same public
facilities and services to the PHA and its tenants as to other dwellings. The LGB is
required to cooperate with the PHA in the development and administration of its
projects, to accept dedications of lands for roads, alleys and sidewalks and to
provide water, storm and sanitary storm services for which the PHA shall pay the same
amount as private owners. These arrangements may require some flexibility in
complying with PHA procurement requirements.
This chapter discusses the relationship between these federal, state, and local rules,
as they relate to procurement, and also lists suggested resources and other guidance
to help PHAs remain current in these various requirements.
13.2 Exceptions to Local Pre-emption
In general, a PHA must comply with state or local procurement rules if they are more
stringent. Two exceptions include:
A. Geographic Preferences. Although some States impose certain
geographic preference restrictions in the evaluation of offers,
24 CFR 85.36(c)(2) preempts such laws by prohibiting the use of
geographic restrictions unless expressly required or encouraged
by Federal law.
B. State Prevailing Wage Requirements. Federal wage determinations
(either Davis-Bacon or HUD-Determined Wage Rates) preempt any
State prevailing wage rate when the State wage rate is higher than
the applicable Federally-imposed wage rate (24 CFR Part 965).
Appropriate Federal preemption language is included in the labor
standards clauses found in forms HUD-5370, 5370-EZ, and 5370-C.
13.3 State Law
Typically, PHAs are governed by two sets of state regulations. One set is called
“state-enabling legislation” and the second is a separate set of state statutes or
codes.
A. State public housing laws generally describe the creation and
operation of PHAs within the state (also referred to as “Local
Housing Authorities,” “Municipal Housing Authorities,” “Regional
Housing Authorities,” “County or City Housing Authorities,”
“Consolidated Housing Authorities,” and in some cases a “State
PHA”). Some State public housing laws also provide guidance on
specific operational tasks, such as procurement actions with which
PHAs must comply.
B. The separate State statutes or codes sometimes apply to local
governments, including PHAs, but in other states, the State statutes
or codes do not apply.
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C. The laws that enable the establishment of public housing authorities
and other State requirements that impact procurement activities
differ from state to state, as follows:
1. State-enabling legislation may include specific guidance
on how the various procurement regulations apply to PHA
contracts within that State; or
2. The State law creating public housing may be silent on
procurement, and:
a. The State procurement code applies to units of local
government, including PHAs;
b. The State procurement code does not apply to local
governments, including PHAs;
c. Adoption of the state procurement statutes is not
mandatory for units of local government;
d. A State’s procurement code generally does not apply
to PHAs because they are not State agencies; however,
specific clauses in the regulations may apply; and
e. The State procurement code may mandate certain
practices but specifically exempt PHAs from one or
more of the requirements.
D. Some States have passed laws on procurement but specifically exempt
contracts awarded with Federal funds. Also, in some cases,
procurement laws may be waived if the PHA makes a written request
and provides sufficient justification for not following the State
law.
E. Some States have passed very detailed “Procurement Codes” based on
the American Bar Association’s (ABA) Model Procurement Code for
State and Local Governments, which apply to local governments,
including PHAs. In these States, detailed procedures are provided
for nearly all key aspects of public contracting ranging from
types of specifications to contract administration.
13.4 Local Law
Some local governments pass laws applicable to public housing contracts, others do
not.
A. In cases where State procurement laws do not specifically apply to
PHAs, local government laws on public contracts should be consulted
and PHAs should establish their policy and procedures based on the
most stringent requirements, either Federal or local; and
B. When applicable local laws, in addition to State law, exist on
procurement, the most stringent of the three applies as long as the
procurement conforms to Federal requirements.
Local jurisdictions frequently pass ordinances on specific construction practices and
bonding requirements that a PHA must follow in addition to any State or local laws as
long as they conform to Federal requirements.
13.5 Guidance on State and Local Procurement Laws
A. The complex structure of Federal, State, and local laws pertaining
to procurement and contracting activities (including applicable
labor rates) requires that a PHA have
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a comprehensive understanding of the combination of rules and
regulations with which it must comply. A PHA’s procurement policy
and procedures must incorporate and reflect the relationship
between each set of laws and procurement practices. To properly
carry out the procurement function and ensure compliance with all
applicable Federal, State, and local procurement regulations,
PHAs should take the following steps:
B. Create a procurement resource center that includes copies of all
applicable laws and regulations. Update those resources as
necessary. Consult the following to locate applicable Federal,
State, and local documents:
1. www.hudclips.org
2. www.statelocalgov.net;
3. The state legislation that creates your state’s Housing
Authorities (State enabling legislation);
4. State procurement laws, State procurement codes, or State
statutes pertaining to contracting and procurement;
5. Local government laws on public contracts;
6. Most recent State or local prevailing wage rates; and
7. Most recent Davis-Bacon rates for your area (www.wdol.gov);
and
8. The current HUD Maintenance Wage Decision (HUD-52158) for
the PHA.
C. Ensure that PHA staff involved in contracting and procurement are
familiar with all Federal and State laws (or regulations) and local
ordinances relating to procurement activities.
D. Before submitting a policy for adoption by the Board, it is
advisable to consult with your legal counsel and/or HUD Field
Counsel to ensure that policy language adequately covers all
applicable rules. Update the policy as pertinent regulations
change.
E. Tailor an existing procurement policy (or develop a new procurement
policy) that reflects the mix of all procurement laws applicable to
your PHA.
F. Develop detailed plans of implementation for procurement procedures
and train the staff. Update plans as necessary.
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