Protest challenging award of a sole-source contract is denied. The agency attempted to issue a solicitation seeking property management services, but the SBA and others filed protests challenging different procurement decisions. These protests caused delay. To avoid a lapse in services, the agency offered to extend the contracts of incumbents at current option pricing. One of the incumbents declined the offer, so the agency made a short-term sole source award to another incumbent. GAO found that given the delay caused by the protests, the sole-source award was justified to avoid a lapse in services.
The Federal Housing Administration (FHA) insures lenders against loss on mortgages obtained with FHA financing. To obtain insurance proceeds, lenders acquire title to the mortgaged property and then convey the property to the Department of Housing and Urban Development (HUD). HUD hires contractors to manage the conveyed properties.
In 2017, HUD awarded property management contacts to, among others, Innotion Enterprises, Inc. and DGG RE Investments, Inc. The ordering period for those contracts expired in 2020.
HUD planned to issue a new solicitation for when the ordering period on the existing contract expired, but it experienced several delays. The SBA filed a protest challenging HUD’s decision to use full an open competition. Additionally, protests of other property management solicitations led HUD to reconsider its quantity estimates. What’s more, when HUD sought to obtain interim services through a bridge contract, a company protested the terms of the bridge contract solicitation.
With the ordering period set to expire, HUD decided to issue a 60-day extension to existing contractors using current option pricing. Several of the existing contractors agreed to extend their contracts. Innotion refused. As a result, HUD executed a sole-source contract with DGG to cover properties in Innotion’sgeographic areas. Innotion protested.
Innotion first argued that HUD acted in bad faith by not extending its task orders. GAO, however, found that this argument failed to state a valid basis of protest. Innotion argument was akin to allegation that the agency should have exercised an option. An agency’s decision to not exercise an option concerns a matter of contract administration outside of GAO’s bid protest jurisdiction.
Innotion also objected to HUD’s decision to award DGG contracts on a sole-source basis. GAO noted that under the FAR, an agency is entitled to use other than full and open competition when the requirement is of such unusual and compelling urgency that the government would be injured until it is permitted to limit the sources from which it solicits proposal.
Here, due the various protests, HUD was delayed in issuing a solicitation. The existing contracts were about to expire. There was not sufficient time to solicit competition. Innotion, one of the existing contractors, refused to extend its prices. Without the sole-source contract, services were about to lapse. Under the circumstances GAO found that the sole-source contract unobjectionable.
Innotion is represented by Al Espinoza. The agency is represented by Julie K. Cannatti, Justin D. Haselden, and Audrey Roh of the Department of Housing and Urban Development. GAO attorneys Jacob M. Talcott and Jennifer D. Westfall-McGrail participated in the preparation of the decision.
