GAO Report from B-282808

B-282808 Aug 30, 1999 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights BACKGROUND The solicitation was issued under the General Services Administration's Auditing Services & Financial Management Services Schedule to obtain an audit entitled: "Federal Housing Administration (FHA) Single Family Procurement and Disbursement Review.". According to the statement of work (SOW) which was included in the solicitation. Until they are sold. These properties are maintained by HUD staff under various contract arrangements with real estate asset managers (REAM). Are obtained by HUD field office staff or REAMs through the use of indefinite-quantity contracts. Payment for the services is handled through a centralized disbursing contractor. The agency views the decentralized procurement of the services and centralized disbursement of funds to pay for them as distinct aspects of the audit to be performed under this contract. /1/ This distinction is set forth in the SOW's identification of the audit's objectives: (a) assess the adequacy [of] FHA housing procurement and asset management controls in a decentralized operational environment. View Decision Matter of: Cotton & Company, LLP File: B-282808 Date: August 30, 1999 DIGEST Attorneys DECISION Cotton & Company, LLP protests the award of a task order to KPMG Peat Marwick LLP under solicitation No. GF900000013, issued by the Department of Housing and Urban Development (HUD) for audit services. Cotton challenges the evaluation of its proposal, the application of allegedly unstated evaluation criteria, the conduct of discussions, and the source selection decision. We sustain the protest. BACKGROUND The solicitation was issued under the General Services Administration's Auditing Services & Financial Management Services Schedule to obtain an audit entitled: "Federal Housing Administration (FHA) Single Family Procurement and Disbursement Review." According to the statement of work (SOW) which was included in the solicitation, the FHA, under its mortgage insurance programs, receives single-family properties from investors and loan service organizations in the normal course of settling insurance claims. Until they are sold, these properties are maintained by HUD staff under various contract arrangements with real estate asset managers (REAM). Most of these maintenance services, which include property repairs, landscaping, advertising, and appraisal, are obtained by HUD field office staff or REAMs through the use of indefinite-quantity contracts, and payment for the services is handled through a centralized disbursing contractor. The agency views the decentralized procurement of the services and centralized disbursement of funds to pay for them as distinct aspects of the audit to be performed under this contract. /1/ This distinction is set forth in the SOW's identification of the audit's objectives: (a) assess the adequacy [of] FHA housing procurement and asset management controls in a decentralized operational environment; (b) review the centralized contracted disbursement controls; (c) determine the extent, if any, of fraud, errors and irregularities occurring in these functions using innovative forensic audit techniques, including automated matching[;] and (d) provide sufficient, competent and relevant evidence for significant individual or group referrals to Federal investigators to determine whether Federal crimes or pattern of crimes have been committed. Nationwide financial transactions (Approximately 105,000 checks) issued to more than 50,000 vendors representing a few large national service indefinite quantity contracts with the bulk of the goods or services locally procured for individual FHA cases or properties. SOW Para. 5.0 (emphasis added). Solicitation requirements included a review of the prior audit history and the Office of the Inspector General preliminary audit survey; a review of current housing and contractor policy, procedures and system controls; an assessment of the risk of fraud and management control weaknesses; the submission of a strategic audit plan; conduct of an audit; and a report on audit results. SOW Para. 7.0. As amended, the SOW provided for an agency review of the strategic audit plan and reserved the right of the contracting officer to cancel further work on the audit without any additional cost, based upon the agency's evaluation of the strategic audit plan. SOW Para.