The grounds for GAO protests are numerous, ranging from vague terms in a solicitation to showing that an awardee’s proposal lacked needed information. However, they are not unlimited. One protester argued that the terms of a solicitation were inconsistent with regulations concerning mortgage insurance. Unfortunately for them, that isn’t something GAO will consider.
NOVAD Management Consulting, LLC (“NOVAD”) was the incumbent for a contract providing loan servicing support services for the Department of Housing and Urban Development’s (“HUD”) home equity conversion mortgage (“HECM”) program. Novad Mgmt. Consulting, LLC, B-419194.5 (July 1, 2021). On August 27, 2020, HUD issued a solicitation for a new contract for such services. After a couple protests and corrective actions over separate matters, HUD issued a final amended solicitation. The solicitation required specific procedures for contractors to use when servicing HECM loans. Among these provisions were certain property charge requirements based on language once in HUD’s regulations. NOVAD filed another protest, this time arguing, in part, that the property charge requirements in the solicitation were inconsistent with the HUD’s then-current regulations on property charges.
GAO, after rejecting arguments that the solicitation was unduly restrictive and was vague with respect to transition-in provisions, turned to the argument regarding HUD regulations. GAO stated, “Concerning the protester’s argument that the solicitation is inconsistent with HUD’s regulations, we conclude that this allegation does not allege a violation of a procurement law or regulation.” The federal statute that gives GAO its authority, 31 U.S.C. § 3552(a), authorizes it only “to decide bid protests ‘concerning an alleged violation of a procurement statute or regulation.’”
Still, GAO went on to note that it will hear protests for “violations of other statutes or regulations when those statutes or regulations have specific procurement-related provisions.” Addressing NOVAD’s argument that a previous decision, Merck and Company, Inc., B-295888 (May 13, 2005), was similar to the matter at hand, GAO explained:
“In that decision, we concluded a statute establishing a process for an agency to make formulary decisions concerning which pharmaceutical agents to make available to beneficiaries was a procurement statute because agency decisions made under the statute would lead directly to the purchase of pharmaceutical agents using the Federal Supply Schedule…That is to say, we concluded the statute was a procurement statute because decisions made under the relevant statutory provisions would effectively decide future procurements of goods by federal agencies.”
GAO found, however, that the HUD regulations were not similar. True, the regulations govern the HECM program and acceptable practices under it, which do relate to how the services are performed by contractors. But they do not affect the process for deciding how HUD will acquire such services. A review of the regulations in question, 24 C.F.R. Part 206, shows that these regulations provide for things such as how much mortgage insurance premiums are calculated under the HECM program, how sales of insured mortgages are performed, and the like. GAO noted, “[t]he protester has articulated no nexus between the HECM regulations and the process for procuring goods or services by federal agencies.” As a result, GAO dismissed the HUD regulation argument as not alleging a violation of a procurement law or regulation. GAO further rejected an argument that the property charge provisions were impermissibly vague and dismissed NOVAD’s protest as a whole.
Potential protesters will not regularly run into this issue of whether their protest grounds concern a procurement law or regulation. But it is important to keep in mind. If your protest is that the solicitation itself is unreasonably restrictive or vague, or that the agency’s evaluation of your proposal was improper, your protest very likely concerns procurement law. But this is one of the grayer areas in government contracting law. This is a question of what issues GAO will consider, and it can simply come down to whether GAO thinks the law you’re arguing was violated has to do with procurement or doesn’t. While filing a bid protest on your own is usually tough, this issue of determining if your protest is based on procurement law or not can be especially vexing. In such cases, it may be worth seeking out an attorney to review your protest basis regarding this question.
Planning on filing a protest or appeal? Email us or give us a call at 785-200-8919.
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