Protest of HUD sole source for loan and document management services dismissed

“On October 7, 2019, Plaintiff, Ideogenics LLC (“Ideogenics”), filed a pre-award bid protest complaint for injunctive, declaratory, and monetary relief with respect to the sole-source Notice of Intent to Award (“Notice”) Solicitation No. 86611491R00001, issued by the U.S. Department of Housing and Urban Development (“HUD”).  The Notice states that HUD intends to award a sole-source contract for loan and document management services to Compu-Link Corporation, D/B/A Celink (“Celink”), but invites capability statements from interested parties for the purpose of determining whether a competitive procurement is in the best interest of the Government.  According to Ideogenics’s Complaint, the Notice describes a “follow-on” requirement to a previous award within the SBA’s 8(a) Business Development Program, and by failing to obtain SBA’s prior approval to remove the procurement from the 8(a) program, HUD thereby violated FAR § 19.815 and 13 C.F.R. § 124.504(d).

In addition to its Complaint, Ideogenics filed a Motion for Temporary Restraining Order (“TRO”) and/or Preliminary Injunction, ECF No. 3 (“Pl.’s Mot. for TRO and/or Preliminary Injunction”), which the Court denied on November 7, 2019, after hearing oral arguments from the parties.  See ECF No. 32.

On October 10, 2019, Celink, the putative awardee of the solicitation at issue, filed a motion to intervene, which the Court granted on October 15, 2019.  ECF No. 16.  On October 21, 2019, Celink filed its response to Plaintiff’s Motion for TRO and/or Preliminary Injunction…”

“Ideogenics’ Complaint contains two counts.  Count I alleges that HUD violated FAR § 19.815 and 13 C.F.R. § 124.504(d) by failing to request or receive approval from the SBA before removing the procurement from the SBA’s 8(a) program.  Count II alleges that, even if HUD received the SBA’s release, the procurement was required to be awarded as a small business, HUBZone, SDVO small business, or WOSB set-aside under 13 C.F.R. § 124.504(d)(3).  Compl. at 13–15.  Notably, both counts are premised on the theory that the procurement at issue is a “follow-on” contract, rather than a “new” procurement.4

In its motion to dismiss, the Government contends that this bid protest should be dismissed on grounds of ripeness and standing.  See Def.’s Mot. to Dismiss at 11–16.  Principally, the Government argues that this suit is not ripe because the administrative agency, HUD, has not made a final contract award or reached a decision as to whether the procurement should be opened to competitive bidding.  Id. at 11–14.  With regard to standing, the Government argues that Ideogenics cannot establish that it has a “substantial chance” of receiving the award because Ideogenics is neither an FHA-Approved HECM Servicer nor an 8(a) small business.  Id. at 14–16.  Therefore, Ideogenics does not possess a direct economic interest necessary to establish standing.

For the reasons set forth below, the Court holds that Ideogenics’ claims are ripe but Ideogenics lacks standing to pursue those claims….”

“Finally, the Government’s argument that the Notice is not a final agency decision because HUD could conceivably cancel the solicitation and procure the requirements in a different manner, is of no moment.  See Mgmt and Training Corp. v. United States, 115 Fed. Cl. 26, 38 (2014) (“Defendant’s categorical position that there can be no final decision unless there has been a solicitation, is contrary to statute as well as precedent.”).  The same could be said of any pre-award bid protest.  As explained above, the Tucker Act empowers this Court to hear claims based on “any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.”  See 28 U.S.C. § 1491(b)(1).  To accept the Government’s argument that a pre-award bid protest is not ripe until an agency makes a final award would be to eviscerate the Court’s jurisdiction over pre-award bid protests.

In sum, Ideogenics complains that it is disadvantaged because HUD wrongly removed this procurement from the 8(a) program.  Thus, Ideogenics has shown that withholding judicial decision would work undue hardship on the parties.”  See Cedars-Sinai Med. Ctr. v. Watkins, 11 F.3d 1573, 1580–81 (Fed. Cir. 1993).  Although the Government contends that Ideogenics is not qualified for the award of the contract, and therefore cannot establish hardship, this argument is more properly considered in the standing context.  Looking to the claims presented in its Complaint, Ideogenics has established that its claims are ripe…”

“In sum, the Court finds that HUD’s Notice constitutes a final agency action such that Ideogenics’ pre-award bid protest is ripe.  Regarding Count I, Ideogenics does not have standing to contest HUD’s removal of the 8(a) program requirement because Ideogenics does not qualify for the 8(a) program.  Regarding Count II, Ideogenics does have standing to contest HUD’s removal of the 8(a) program requirement insofar as it could qualify under other programs if, as alleged in the complaint, HUD had properly removed this procurement from the 8(a) program. Nevertheless, Ideogenics lacks standing because it is not an FHA-Approved HECM servicer.  Thus, even if Ideogenics qualified under the other programs mentioned in Count II, it still could not receive an award under this procurement.  Therefore, Ideogenics cannot “establish that it had a ‘substantial chance’ of receiving the award.”  See Myers Investigative and Security Servs., Inc. v. United States, 275 F.3d 1366, 1370–71 (Fed. Cir. 2002) (“Although [the plaintiff] need not show it would have received the award in competition with other hypothetical bidders, it must show that it would have been a qualified bidder.”).  Consequently, Ideogenics lacks standing to challenge HUD’s actions as alleged in its complaint.  Therefore, the Court hereby GRANTS the Government’s Motion to Dismiss and DISMISSES WITHOUT PREJUDICE Ideogenics’ complaint.”

Read the full 12-page report here.

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