Matter of: Renic Government Systems File: B-249484 Date: November 9, 1992

Matter of: Renic Government Systems File: B-249484 Date: November 9, 1992

PROCUREMENT Sealed Bidding Invitation for bids Post-bid opening cancellation Justification Sufficiency Agency had a compelling reason to cancel a solicitation for real estate property closing services after bid opening where the solicitation, as issued, failed to reflect the agency's minimum needs that an attorney prepare the legal documents affecting title to the properties to be closed.

Attorneys

DECISION Renic Government Systems protests the cancellation after bid opening of invitation for bids (IFB) No. 7-92-059, issued by the Department of Housing and Urban Development (HUD) for real estate property closing services for single family properties owned by HUD in six counties in East Texas. The protester contends that the agency's decision to cancel the IFB after bid opening and to resolicit its requirements is improper. We deny the protest.

The IFB, issued on May 21, 1992, contemplated the award of a firm, fixed- price, indefinite quantity contract to the low, responsive, responsible bidder to provide real estate property closing services in East Texas for a base year and 2 option years. The statement of work in the IFB required the contractor to perform, among other things, the following services: (1) upon HUD's acquisition of properties, review title evidence to ensure that title is clear for approval; (2) conduct a title rundown, beginning with the date the property was deeded to HUD, and clear all title issues that arise during this time period, such as past due taxes, water bills, demolition liens, and association liens, in sufficient time to prevent d deeds; (4) explain all closing documents and papers to the purchaser; and (5) represent HUD at closings.

Two firms submitted bids by bid opening on June 22. The protester, a Florida firm, submitted the apparent low bid. The protester stated in its bid that it had a teaming arrangement with First Southwest Title Company, a Texas title company, to perform the required real estate property closing services for HUD in Texas.

Upon reviewing the bids, the contracting officer realized that the agency had failed to include in the IFB a statement that to be eligible to perform the required real estate property closing services for HUD in Texas--specifically, to be able to prepare, in accordance with Texas state law, the legal documents affecting title to real property without engaging in the unauthorized practice of law--a contractor was required to demonstrate that closing services would be performed by a person who is currently licensed to practice law in Texas, is a member in good standing with the Texas bar, and is engaged in the practice of law under his/her own name and not as an employee or agent of a non-attorney. By letter dated June 25, and received by the protester on July 6, the contracting officer announced that the agency had canceled the IFB because of the agency's omission of the requirement that an attorney perform the required closing services for HUD in Texas.

The protester challenges the agency's decision to cancel the IFB after bid opening and to resolicit its requirements. In its protest submissions, the protester admits that in Texas legal documents affecting title to real property must be prepared by attorneys currently licensed in Texas and in good standing with the Texas bar. In this regard, the protester states that it complies with the licensing and standing requirements and could satisfy the agency's needs because its teaming partner, First Southwest Title Company, is owned by an attorney who is currently licensed to practice law in Texas and who is a member in good standing with the Texas bar. The protester states that this individual, in accordance with Texas state law, will prepare all closing documents for HUD properties in Texas.

The preservation of the competitive bidding system requires an agency to have a compelling reason to support a determination to cancel an IFB after bid opening. Federal Acquisition Regulation (FAR) Sec. 14.404-1(a); Edward Kocharian & Co. Inc., B-244999, Nov. 18, 1991, 91-2 CPD Para. 469. A compelling reason exists when it is determined that an IFB overstates the minimum needs of the government or fails to properly express the agency's minimum needs. Id. Agencies have discretion to determine whether or not appropriate circumstances for cancellation exist, and we will consider the reasonableness of an agency's exercise of that discretion. I.T.S. Corp., B-242725, May 31, 1991, 91-1 CPD Para. 518.

Here, the IFB as issued did not contain any requirement that an attorney currently licensed in Texas and a member in good standing with the Texas bar perform the required real estate property closing services for HUD in Texas, specifically, the preparation of legal documents affecting title to the HUD properties. As a result of the agency's omission of this requirement in the IFB, contractors would not be obligated to have an attorney who satisfied the above-referenced licensing and standing requirements prepare the closing documents. The agency would not be able to hold the contractor responsible for closing documents which were not legally sufficient under Texas state law. Further, as the agency points out, the unauthorized practice of law may be enjoined by a court. By proceeding with award under the original IFB, the agency would take the risk that the state of Texas or another interested party would seek, and be granted, injunctive relief which obviously would disrupt the agency's housing sales activities.

While the protester states in its protest submissions that the owner of First Southwest Title Company, its teaming partner, is an attorney who satisfies the licensing and standing requirements and that this individual will prepare the closing documents for HUD properties in Texas, under a contract based on the IFB as issued, the protester would not be bound to have this attorney, or any other attorney, prepare the closing documents since the IFB did not specify that an attorney was required to prepare the closing documents. The agency would have to rely on the protester's interpretation of Texas law concerning what closing tasks must be performed by an attorney. We do not believe that the agency is obligated to accept the risk that a contract awarded under the original IFB could result in a lawsuit because a non-attorney might engage in the unauthorized practice of law. In our view, because the IFB as issued did not reflect the agency's minimum needs for performance of real estate property closings in Texas, the agency had a compelling reason to cancel the IFB after bid opening.

Accordingly, the protest is denied.