Innotion Enterprises, Inc. ()

B-419907 Sep 14, 2021 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Innotion Enterprises, Inc. of Fairfax, Virginia, protests the decision of the Department of Housing and Urban Development (HUD) to procure on a sole-source basis property management services from DGG RE Investments, Inc. through contract No. DU204SA-17-D-01. The protester contends that the agency's decision to solicit the services on a sole-source basis was arbitrary and capricious. The protester also contends the agency's decision not to extend Innotion's task orders was made in bad faith. We deny the protest in part and dismiss it in part. View Decision Decision Matter of:  Innotion Enterprises, Inc. File:  B-419907 Date:  September 14, 2021 Al Espinoza for the protester. Julie K. Cannatti, Esq., Justin D. Haselden, Esq.,  and Audrey Roh, Esq., Department of Housing and Urban Development, for the agency. Jacob M. Talcott, Esq., and Jennifer D. Westfall-McGrail, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest challenging the agency’s decision not to extend protester’s current task orders and instead make award on a sole-source basis to another contractor is denied where agency’s decision was reasonably justified. DECISION Innotion Enterprises, Inc. of Fairfax, Virginia, protests the decision of the Department of Housing and Urban Development (HUD) to procure on a sole-source basis property management services from DGG RE Investments, Inc. through contract No. DU204SA-17-D-01.  The protester contends that the agency’s decision to solicit the services on a sole-source basis was arbitrary and capricious.  The protester also contends the agency’s decision not to extend Innotion’s task orders was made in bad faith. We deny the protest in part and dismiss it in part. BACKGROUND HUD, through the Federal Housing Administration (FHA), insures lenders against the risk of loss on mortgages obtained with FHA financing.  Contracting Officer’s Statement (COS) at 1.  In the event of a default on an FHA-insured loan, the lender acquires title to the property by foreclosure or other acquisition method, files a claim for insurance benefits, and conveys the property to HUD.  Id.  Due to these acquisitions, HUD has a need to manage the conveyed properties in a way to maximize the return of insurance funds.  Id.  To achieve this end, HUD administers a real estate disposition service through homeownership centers (HOC) in Philadelphia, Pennsylvania; Atlanta, Georgia; Denver, Colorado; and Santa Ana, California.  Id.  Each HOC is responsible for real estate within a designated geographic area.[1]  HUD contracts for three types of management and marketing (M&M) services in these areas:  property management services (performed by field service manager (FSM) contractors), asset management services, and mortgagee compliance management services.  Id. at 1-2.  Contractors awarded FSM contracts perform tasks such as property inspection, property security, cosmetic enhancements, and ensuring the property is “ready to show.”  Id. Over the past several years, HUD has administered various iterations of M&M contracts for FSM services.  Id. at 2.  As relevant here, M&M 3.10 (FSM) contracts were awarded in 2017.  Id.  Awardees included, among others, Innotion and DGG.  Id.  The ordering period for the FSM contracts expired on May 31, 2020, and the final orders issued under those contracts expired on May 31, 2021.  Id. at 2, 4. Currently, HUD is evaluating proposals for M&M 3.12 (FSM).  Id.  Although the agency originally planned to issue this solicitation in October 2018, it was unable to do so until February 2021 due to a series of external events.  Id. at 2-3.  These events included an appeal by the Small Business Administration (SBA) of HUD’s decision to issue M&M 3.12 using full and open competition, and protests of the M&M 3.9 asset management solicitation concerning the effect of COVID-19 on estimated inventory quantities, which led the agency to reconsider the quantity estimates in the 3.12 (FSM) solicitation.[2]   In addition, when the agency sought to obtain interim services through a limited sources “bridge” or short-term contract competition, a protest was filed in May 2021 by Alpine Companies, Inc. (the Alpine protest) challenging the terms of the solicitation.[3]  Id. at 1-4.  According to the agency, following the Alpine protest, it was left with insufficient time to make a competitive award and therefore decided, to avoid a lapse in service, to issue a 60-day sole-source extension to contract holders at the current option pricing pursuant to Federal Acquisition Regulation (FAR) section 6.302-2.[4]  COS at 4-5. Upon receiving notice of the agency’s intentions, several of the current contract holders agreed to extend their contracts at the same pricing.  Id.