S. E. James & Company

B-415733 Feb 07, 2018 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights S. E. James & Company (SEJC), of Bigfork, Montana, challenges the decisions by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) not to include the protester on a list of approved insurance rating agencies. The protester contends that the actions by Fannie Mae and Freddie Mac are unduly restrictive of competition. We dismiss the protest. We dismiss the protest. View Decision Decision Matter of:  S. E. James & Company File:  B-415733 Date:  February 7, 2018 James A. Esse, for the protester. Karen L. Lambert, Esq., Federal Housing Finance Agency, for the agency. Jonathan L. Kang, Esq., and Laura Eyester, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest challenging actions by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation is dismissed because these entities are not federal agencies as defined by the Federal Property and Administrative Services Act of 1949 and therefore the challenged actions are not matters within GAO’s bid protest jurisdiction.  DECISION S. E. James & Company (SEJC), of Bigfork, Montana, challenges the decisions by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) not to include the protester on a list of approved insurance rating agencies.  The protester contends that the actions by Fannie Mae and Freddie Mac are unduly restrictive of competition.    We dismiss the protest. BACKGROUND Congress has chartered Fannie Mae and Freddie Mac as for-profit, shareholder-owned corporations.  12 U.S.C. § 1716b-1718 and 12 U.S.C. §§ 1452-1453, respectively.   These two entities share a primary mission, which is to enhance the liquidity, stability, and affordability of mortgage credit.  See FEDERAL HOUSING FINANCE AGENCY:  Objectives Needed for the Future of Fannie Mae and Freddie Mac After Conservatorships, GAO-17-92 at 3 (Nov. 2016).  In September 2008, pursuant to its statutory authority in 12 U.S.C. § 4617, the Federal Finance Housing Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorships out of concern that their deteriorating financial condition threatened the stability of the financial market.  See id. at 1. Fannie Mae and Freddie Mac each maintains a guide that details requirements for doing business with the entities as a seller and servicer of residential home mortgage loans.  See Fannie Mae Selling Guide, https://www.fanniemae.com/content/guide/ selling/index.html (last visited January 26, 2018); Freddie Mac Single-Family Seller/Servicer Guide, http://www.freddiemac.com/ singlefamily/guide/ (last visited January 26, 2018).  These guides each contain requirements that certain loans be insured by carriers who meet minimum ratings issued by insurance ratings firms identified in the guides.  See id. SEJC states that it requested inclusion as an insurance rating firm in the Fannie Mae and Freddie Mac guides, but was rejected by each entity.  Protest at 5-6.  SEJC subsequently filed this protest on November 27, 2017 with our Office.  DISCUSSION SEJC argues that the terms and criteria used by Fannie Mae and Freddie Mac for inclusion of insurance rating firms in the selling guides are unduly restrictive of competition, and thus violate the full and open competition requirements of the Competition in Contracting Act (CICA).[1]  The protester argues that because Fannie Mae and Freddie Mac are under the conservatorship of FHFA, their procurement actions must therefore comply with CICA’s competition requirements.  Protest at 4.  FHFA responded to the protest and requested dismissal on the basis that although FHFA is a federal agency for purposes of our Office’s bid protest jurisdiction under CICA, Fannie Mae and Freddie Mac are not federal agencies.  For the reasons discussed below, we agree with FHFA. The jurisdiction of our Office is established by the bid protest provisions of the CICA, 31 U.S.C. §§ 3551-3556.  Our role in resolving bid protests is to ensure that the statutory requirements for full and open competition are met.  Pacific Photocopy & Research Servs., B‑278698, B‑278698.3, Mar. 4, 1998, 98-1 CPD ¶ 69 at 4.  As relevant here, CICA defines a protest to be a written objection by an interested party to a solicitation or other request by a federal agency for bids or proposals for a contract for the procurement of property or services, or an award or proposed award of such a contract.  31 U.S.C.