B-176271, AUG 30, 1972

B-176271: Aug 30, 1972

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SUCH DETERMINATION IS PRIMARILY THE FUNCTION OF THE PROCURING AGENCY AND. TO CREDIT SERVICE BUREAU: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE PROPOSED AWARD OF A CONTRACT TO MERCHANTS CREDIT BUREAU BY THE FEDERAL HOUSING ADMINISTRATION (FHA). THE CONTRACT TO BE AWARDED IS FOR FURNISHING FACTUAL DATA (CREDIT) REPORTS FOR FISCAL YEAR 1973. AWARD OF THE CONTRACT IS BEING WITHHELD PENDING OUR DECISION. MERCHANTS CREDIT BUREAU WAS THE CONTRACTOR FOR THESE SERVICES DURING FISCAL YEAR 1972 IN DADE COUNTY. IS THE LOW BIDDER UNDER THE SUBJECT SOLICITATION AT A UNIT PRICE OF $4.00. YOU CONTEND THAT ALTHOUGH MCB IS REQUIRED TO FURNISH FHA CREDIT REPORTS TO BROKERS AND MORTGAGEES FREE OF CHARGE.

B-176271, AUG 30, 1972

BID PROTEST - BIDDER RESPONSIBILITY DENIAL OF PROTEST BY CREDIT SERVICE BUREAU AGAINST THE PROPOSED AWARD OF A CONTRACT TO MERCHANTS CREDIT BUREAU BY THE FEDERAL HOUSING ADMINISTRATION, FOR FURNISHING CREDIT REPORTS FOR FISCAL 1973 IN DADE AND BROWARD COUNTIES, FLA. THE QUESTIONS RAISED BY PROTESTANT RELATE ESSENTIALLY TO MERCHANTS CREDIT BUREAU'S RESPONSIBILITY AS A PROSPECTIVE CONTRACTOR. SUCH DETERMINATION IS PRIMARILY THE FUNCTION OF THE PROCURING AGENCY AND, IN THE ABSENCE OF CLEAR EVIDENCE OF BAD FAITH OR THE LACK OF A REASONABLE BASIS THEREFOR, GAO HAS NO LEGAL BASIS TO OBJECT TO SUCH DETERMINATION. 45 COMP. GEN. 4 (1965).

TO CREDIT SERVICE BUREAU:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE PROPOSED AWARD OF A CONTRACT TO MERCHANTS CREDIT BUREAU BY THE FEDERAL HOUSING ADMINISTRATION (FHA), DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, PURSUANT TO SOLICITATION NO. RPMC-FHA-003-73. THE CONTRACT TO BE AWARDED IS FOR FURNISHING FACTUAL DATA (CREDIT) REPORTS FOR FISCAL YEAR 1973, AND COVERS DADE AND BROWARD COUNTIES, FLORIDA. AWARD OF THE CONTRACT IS BEING WITHHELD PENDING OUR DECISION.

MERCHANTS CREDIT BUREAU WAS THE CONTRACTOR FOR THESE SERVICES DURING FISCAL YEAR 1972 IN DADE COUNTY, AND IS THE LOW BIDDER UNDER THE SUBJECT SOLICITATION AT A UNIT PRICE OF $4.00. YOU CONTEND THAT MERCHANTS CREDIT BUREAU (MCB) SHOULD NOT RECEIVE THE AWARD BECAUSE OF CERTAIN VIOLATIONS OF ITS 1972 CONTRACT. FIRST, YOU CONTEND THAT ALTHOUGH MCB IS REQUIRED TO FURNISH FHA CREDIT REPORTS TO BROKERS AND MORTGAGEES FREE OF CHARGE, IT DOES NOT DO SO AND IN FACT CHARGES THEM TWO OR THREE TIMES THE LEGITIMATE PRICE FOR SUCH REPORTS. SECOND, YOU CONTEND THAT CONFIDENTIAL REPORTS DEVELOPED UNDER THE CONTRACT ARE WRONGFULLY SOLD AT A PRICE OF $3.50 TO VARIOUS MERCHANTS. THIRD, YOU ASSERT THAT CONTRARY TO THE CONTRACT MCB IS USING THE THREAT OF A NEGATIVE CREDIT REPORT TO FORCE COLLECTION OF OUTSTANDING DEBTS. FOURTH, IT IS YOUR POSITION THAT MCB DOES NOT ITSELF OR THROUGH A QUALIFIED REPORTING SERVICE MAKE A SEARCH OF PUBLIC RECORDS SUCH AS COURT FILES. FIFTH, YOU CONTEND THAT CONTRARY TO THE CONTRACT, MCB DOES NOT OBTAIN ANTECEDENT REPORTS FROM OTHER CITIES AND STATES. FINALLY, YOU SAY THAT NEITHER MCB NOR ITS PARENT COMPANY IS LICENSED UNDER FLORIDA LAW AS A CREDIT BUREAU.

THE FHA REPORTS THAT THESE SAME CHARGES WERE MADE DURING THE COURSE OF MCB'S PERFORMANCE AND ITS INVESTIGATION HAS PROVED THEM TO BE WITHOUT MERIT. IN THIS CONNECTION, WE HAVE BEEN FURNISHED A COPY OF FHA'S FILE GENERATED BY YOUR CHARGES. YOUR FIRST CONTENTION RELATES TO SECTION 9(A) OF THE CONTRACT WHICH PROVIDES, AMONG OTHER THINGS, THAT MORTGAGEES, LENDERS AND BROKERS ELECTING TO USE THE FHA CONTRACT SOURCE FOR CREDIT REPORTS IN CONNECTION WITH AN FHA INSURED MORTGAGE LOAN ARE ENTITLED TO RECEIVE THE REPORTS AT FHA'S CONTRACT PRICE. HOWEVER, FHA POINTS OUT THAT MOST OF THE SITUATIONS WHERE MORTGAGEES, BROKERS, AND LENDERS HAVE PAID A FEE INVOLVE REPORTS FOR PURPOSES OTHER THAN FHA MORTGAGE INSURANCE AND, CONSEQUENTLY, INCLUDE DIFFERENT INFORMATION AND MAY BE FURNISHED ON AN EXPEDITED BASIS. IN SITUATIONS WHERE THE CREDIT REPORT WAS OBTAINED IN CONNECTION WITH AN FHA APPLICATION, IT WAS FOUND THAT THE REPORTS HAD BEEN ORDERED UNDER THE MORTGAGEES' INDEPENDENT CONTRACT BECAUSE THE SERVICES REQUESTED INVOLVED MORE THAN PROVIDED FOR UNDER THE FHA CONTRACT.

AS TO SELLING CONFIDENTIAL REPORTS, FHA FOUND THAT THE REPORTS REFERRED TO, FORM 891, ARE NOT BEING FURNISHED TO ANY UNAUTHORIZED PERSON. HOWEVER, MCB DOES UP-DATE ITS CREDIT FILES ON THE BASIS OF INFORMATION OBTAINED IN CONNECTION WITH THE FHA MORTGAGE INSURANCE APPLICATION AND INVESTIGATION. IF MCB DETERMINES FROM THE UP-DATED FILE THAT A PERSON IS A SATISFACTORY CREDIT RISK, IT SENDS A FORM LETTER TO THE INDIVIDUAL ASKING WHETHER HE WISHES TO ESTABLISH CREDIT AT A GIVEN STORE. IF THE ANSWER IS AFFIRMATIVE, MCB THEN SELLS ITS CREDIT REPORT TO THE STORE. FHA FOUND NO EVIDENCE TO SUBSTANTIATE YOUR CHARGE THAT MCB IS USING ITS CREDIT REPORTING SERVICES AS A LEVER TO COLLECT DEBTS. THE INVESTIGATION INDICATED THAT MCB IS COMPLYING WITH THE REQUIREMENT FOR A SEARCH OF PUBLIC RECORDS ON SUITS, JUDGMENTS, FORECLOSURES, GARNISHMENTS, BANKRUPTCIES AND OTHER LEGAL ACTIONS INVOLVING THE APPLICANTS. IT IS ALSO REPORTED THAT MCB HAS AGREEMENTS WITH ALL REQUIRING ASSOCIATED CREDIT BUREAUS OF AMERICA AND THAT IT HAS ARRANGEMENTS WITH 2,000 COOPERATING CREDIT REPORTING AGENCIES TO PROVIDE ANTECEDENT INFORMATION. FINALLY, FHA REPORTS THAT A CHECK WITH FLORIDA STATE AUTHORITIES ON THE LICENSING OF CREDIT BUREAUS DISCLOSED THAT WHERE, AS HERE, A PARENT COMPANY HOLDS A VALID LICENSE THE LAW IS MET.

THE MATTERS TO WHICH YOU HAVE REFERRED, RELATE ESSENTIALLY TO THE QUESTION OF MERCHANTS CREDIT BUREAU'S RESPONSIBILITY AS A PROSPECTIVE CONTRACTOR. SUCH DETERMINATION IS PRIMARILY THE FUNCTION OF THE PROCURING AGENCY AND, IN THE ABSENCE OF CLEAR EVIDENCE OF BAD FAITH OR THE LACK OF A REASONABLE BASIS THEREFOR, OUR OFFICE HAS NO LEGAL BASIS TO OBJECT TO SUCH DETERMINATION. 45 COMP. GEN. 4 (1965). IN THIS CONNECTION, FHA HAS DETERMINED ON THE BASIS OF PAST PERFORMANCE THAT MCB HAS THE CAPABILITY TO PERFORM UNDER THE CONTRACT. FHA ADVISES THAT MCB'S REPORTS HAVE BEEN TESTED FREQUENTLY AND IN SIGNIFICANT NUMBERS AND FOUND TO BE SATISFACTORY, RELIABLE, AND IN ACCORDANCE WITH FHA SPECIFICATIONS.

ACCORDINGLY, YOUR PROTEST IS DENIED.