Protest challenging the award of a sole-source contract is denied. The protester, which was the incumbent, claimed that it was unreasonable for the agency to award a sole-source contract without offering the incumbent a chance to compete for the award. GAO, however, found that the protester had a record on unsatisfactory performance on the incumbent contract. It was reasonable for the agency to award a sole-source without consideration of the incumbent.
The Department of Housing and Urban Development (HUD) administers a mortgage insurance program through which it insures approved lenders against the risk of default. In the event of a default, the lender may acquire title to the property through foreclosure and convey the property to HUD, which will then sell the property. HUD relies on asset management contractors to market and sell these foreclosed properties.
HUD issued a solicitation seeking asset management services for multiple geographic areas around the country. When HUD issued the solicitation, Chronos Solutions was one of the agency’s contractors handling assets in Area 4D, which covered Wisconsin, Iowa, Nebraska, and South Dakota. HUD awarded Chronos a bridge contract to cover the time it would take the agency to evaluate proposals and make awards under the new solicitation.
But Chronos’ performance under the bridge contract was unsatisfactory. The company failed to meet prescribed performance metrics, which left some HUD’s assets unoccupied and subject to blight. Thus, prior to the expiration of Chronos’ bridge contract, HUD awarded a sole-source contract for Area 4D to another company, BLB Resources. The justification and approval issued in support of the sole-source award stated that award to the incumbent was not in the best interest of the government due Chronos’ performance on the incumbent contract.
Chronos filed a protest challenging the sole-source award. Chronos argued that it should have been offered an opportunity to compete for the next bridge contract and that nothing in its prior performance indicated that it was ineligible for the next bridge contract.
GAO found no basis to question HUD’s decision to not solicit Chronos. HUD was concerned about and had taken measures to address, Chronos’ unsatisfactory performance on the prior contract. The agency’s concerns were reasonable and supported it decision to not solicit from Chronos.
Chronos contended that the sole-source award was the result of a lack of advance planning. GAO disagreed, finding that HUD had reasonably attempted to obtain acceptable performance from Chronos on the prior bridge contract. What’s more, HUD had decided to direct its efforts to responding to protests arising from awards made as part of the new solicitation. Under the circumstances, awarding a one year bridge contract to BLB was a reasonable means to facilitate competition at the earliest opportunity and did not reflect inadequate planning.
Chronos is represented by Justin A. Chiarodo, Stephanie M. Harden, and Michael J. Montalbano or Blank Rome LLP. The intervenor, BLB Resources, is represented by David S. Cohen, Laurel A. Hockey, John J. O’Brien, and Daniel J. Strouse of Cordatis, LLP. The agency is represented by Jonathan E. English, William Selinger, and Julie Cannatti of the Department of Housing and Urban Development. GAO attorneys April Y. Shields and Christina Sklarew participated in the preparation of the decision.
