BNUMBER:  B-279161; B-279162; B-279187; B-279188 
DATE:  April 20, 1998
TITLE: Ervin and Associates, Inc., B-279161; B-279162; B-279187; B-
279188, April 20, 1998
**********************************************************************

Matter of:Ervin and Associates, Inc.

File:     B-279161; B-279162; B-279187; B-279188

Date:April 20, 1998

John J. Ervin for the protester.
Shari Weaver, Esq., and Michael J. Farley, Esq., Department of Housing 
and Urban Development, for the agency.
Tania L. Calhoun, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  General Accounting Office will not consider allegation that 
Department of Housing and Urban Development's use of the section 8(a) 
program to meet its needs for various types of services is 
unconstitutional in light of Adarand Constructors, Inc. v. Peï¿½a and 
City of Richmond v. J. A. Croson Co. because neither decision 
constitutes clear judicial precedent on the constitutionality or 
legality of the contracting agency's use of this program.

2.  General Accounting Office will not consider challenge to 
contracting agency's use of section 8(a) set-aside solicitations as 
part of its procurement strategy where there is no showing that 
regulations may have been violated or of possible bad faith on the 
part of government officials.  

DECISION

Ervin and Associates, Inc. protests the Department of Housing and 
Urban Development's (HUD) decision to satisfy its requirements for two 
categories of services--due diligence services for HUD's Housing 
Programs and comprehensive services for the Assistant Secretary for 
Housing-Federal Housing Commissioner--by issuing, for each category of 
services, one solicitation set aside for participants in the Small 
Business Administration's (SBA) section 8(a) program and one 
solicitation subject to full and open competition.  Ervin argues that 
HUD's use of the section 8(a) program to satisfy its needs is 
unconstitutional and that HUD's parallel procurement strategy is 
otherwise improper.

We deny the protests.

Section 8(a) of the Small Business Act authorizes SBA to enter into 
contracts with government agencies and to arrange for the performance 
of such contracts by awarding subcontracts to socially and 
economically disadvantaged small business contractors.  15 U.S.C.  sec.  
637(a) (1994). 

HUD has historically obtained due diligence services[1] through 
section 8(a) set-aside contracts.  HUD's most recent due diligence 
contracts recently expired and, in preparing the follow-on 
procurement, HUD realized that its need for due diligence services had 
significantly increased from the initial needs it identified in late 
1995.  HUD decided that it was in the government's best interest to 
obtain maximum competition to satisfy this increased capacity.  To 
this end, HUD implemented a parallel procurement strategy that would 
enable it to continue sponsoring section 8(a) business development 
opportunities by soliciting for due diligence services at the previous 
level under the section 8(a) program, and to meet its expanded 
requirements for these services by soliciting on a full and open 
basis.  Request for proposals (RFP) Nos. DU100C000018600 and 
DU100C000018561, the set-aside and unrestricted solicitations, 
respectively, were issued on November 21, 1997.

Each solicitation anticipates the award of multiple 
indefinite-quantity task order contracts, and each contains the same 
statement of work.  RFPs  sec.  B-1(b), B-2, I-16, L-4, C.  Each 
solicitation guarantees a minimum order of $250,000 per contract and a 
maximum of $30 million per contract.  RFPs  sec.  B-3.  Each solicitation 
states that multiple awardees will be provided a fair opportunity to 
be considered for award of each task order, pursuant to Federal 
Acquisition Regulation (FAR)  sec.  16.505
(FAC 97-02),[2] and sets forth the same procedures for such 
consideration.  
RFPs  sec.  H-4. 

HUD has historically obtained the comprehensive administrative, 
professional, accounting, financial, and auditing support services for 
overseeing all Federal Housing Administration programs and operations 
through separate contracts, each of which was set aside under the 
section 8(a) program.  The services continue to be a significant 
requirement and are now being consolidated.  HUD explains that, in 
furtherance of its commitment to providing maximum practicable 
contracting opportunities to small disadvantaged business contractors, 
it planned to procure a portion of the required services under the 
section 8(a) program and a portion on a full and open basis.  RFP Nos. 
DU100C000018601 and DU100C000018597, the set-aside and unrestricted 
solicitations, respectively, were issued on November 28.

Each solicitation anticipates the award of multiple 
indefinite-quantity task order contracts, and each contains the same 
statement of work.  RFPs  sec.  B-2, I-14, C.  Each solicitation 
guarantees a minimum order of $250,000 per contract and a maximum of 
$20 million per contract.  RFPs  sec.  B-3; Set-Aside RFP Amendment
No. 3, Question and Answer (QA) 7b, QA 8; Unrestricted RFP Amendment 
No. 3, QA 11b, QA 12.  Each solicitation states that multiple awardees 
will be provided a fair opportunity to be considered for award of each 
task order, and sets forth the same procedures for such consideration.  
RFPs  sec.  G-4.  Each solicitation further states that proposals for task 
orders will be solicited on a rotational basis between the set-aside 
contracts and the unrestricted contracts; successful awardees under 
each contract shall be given a fair opportunity to be considered.  
Set-Aside RFP Amendment No. 3, QA 7a, QA 7b; Unrestricted RFP 
Amendment No. 3, QA 11a, QA 11b.

Ervin first asserts that HUD's decision to procure both of these 
categories of services through the section 8(a) program is 
unconstitutional under Adarand Constructors, Inc. v. Peï¿½a, 515 U.S. 
200 (1995).  In Adarand, the Supreme Court held that racial 
classifications must be subject to strict scrutiny and must serve a 
compelling governmental interest and be narrowly tailored to further 
that interest.  Id. at 224-27.  Ervin, which is not a section 8(a) 
participant, contends that HUD's procurement of these services through 
section 8(a) set-aside contracts cannot pass muster under the strict 
scrutiny standard since there is no evidence of specific past racial 
discrimination in connection with its procurement of these services.  

There must be clear judicial precedent on the precise issue presented 
to us before we will consider a protest based on the asserted 
unconstitutionality of the procuring agency's actions.  Schwegman 
Constructors and Eng'rs, Inc., B-272223, Aug. 28, 1996, 96-2 CPD  para.  90 
at 4; DePaul Hosp. and The Catholic Health Ass'n of the United States,  
B-227160, Aug. 18, 1987, 87-2 CPD  para.  173 at 6.   We have consistently 
held that, since the Court in Adarand simply announced the standard 
that is to be applied in determining the constitutionality of  
programs involving racial classifications in the federal government, 
and remanded the case to the lower courts for further consideration in 
light of that standard, Adarand did not provide that precedent.  
Schwegman Constructors and Eng'rs, Inc., supra; Advanced Eng'g & 
Research Assocs., Inc., B-261377.2 et al., Oct. 3, 1995, 95-2 CPD  para.  
156 at 4 n.3; Elrich Contracting Inc.; The George Byron Co., B-262015, 
B-265701, Aug. 17, 1995,
95-2 CPD  para.  71 at 2.

Ervin incorrectly asserts that Adarand, in tandem with City of 
Richmond v.
J. A. Croson Co., 488 U.S. 469 (1989), provides us with the necessary 
clear judicial precedent.  Neither Adarand, which concerned a 
Department of Transportation program involving financial incentives to 
prime contractors awarding subcontracts to small disadvantaged 
businesses, nor Croson, which concerned a municipality's minority 
set-aside program, constitutes clear judicial precedent on the 
constitutionality or legality of HUD's use of section 8(a) set-aside 
contracts to meet its need for the services at issue here.  These 
decisions addressed the particular programs that were before the Court 
and, while they indicate what factors need to be considered to 
determine the constitutionality of such programs, we are unaware of, 
and the protester does not cite to, any dispositive federal court 
decisions applying the standards articulated in Adarand and Croson to 
any program or procurement which is sufficiently similar to this one 
so as to warrant regarding those decisions as clear judicial precedent 
here.  G.H. Harlow Co., Inc.--Recon., 
B-266144.3, Feb. 28, 1996, 96-1 CPD  para.  116 at 1-2; see also Seyforth 
Roofing Co., Inc., B-235703, June 19, 1989, 89-1 CPD  para.  574 at 1-2.
    
Ervin next asserts that HUD's contracting department has engaged in 
"massive corruption and favoritism" and that its planned award of 
"separate but equal" contracts to provide the same services gives HUD 
the opportunity for "further corruption and favoritism."  In this 
regard, Ervin contends that there is nothing to stop HUD from ordering 
only the minimum guaranteed amount under the due diligence 
unrestricted solicitation and directing the remainder of the task 
orders to its "favored" section 8(a) set-aside contractors.  Ervin 
further contends that the agency's plan to rotate the task orders 
between the two sets of comprehensive services contracts does not go 
far enough since one group of contractors or the other will still be 
excluded from the competition.  

Ervin's objection here is clearly not to the issuance of the 
unrestricted solicitations, but to the issuance of the set-aside 
solicitations.  However, since the Small Business Act affords SBA and 
contracting agencies broad discretion in selecting procurements for 
the 8(a) program, we will not consider a protest challenging a 
decision to procure under the 8(a) program absent a showing that 
regulations may have been violated or of possible bad faith on the 
part of government officials.  Bid Protest Regulations, 4 C.F.R.  sec.  
21.5(b)(3) (1997).  Ervin has made no such showing.

We know of no regulation that is violated by HUD's parallel 
procurement strategy in general or the issue of particular concern to 
Ervin, the allocation of task orders under the contracts.  Each 
solicitation complies with the requirement of
FAR  sec.  16.505(b)(1) to provide each awardee a fair opportunity to be 
considered for each order, and the solicitations for comprehensive 
services go a step further to provide that task orders will rotate 
between each set of contracts.  While Ervin is correct that there is 
no provision to compete the due diligence task orders between the two 
sets of contracts, there is no legal requirement for such a provision.  
HUD's only legal obligation is to order at least the minimum amount 
set forth under each solicitation, FAR  sec.  16.504(a)(1), and offerors 
are to prepare their proposals accordingly.  
  
Ervin's allegation that HUD will use this parallel procurement 
strategy to direct task orders to its "favored" section 8(a) 
contractors is supported by various examples of what Ervin 
characterizes as HUD's bad faith.  However, to show bad faith, the 
protester must establish that the procuring agency acted with a 
malicious and specific intent to injure the protester.  Industrial 
Data Link Corp., B-246682, Mar. 19, 1992, 92-1 CPD  para.  296 at 4.  None 
of Ervin's underlying bases for its claim of bad faith--an ongoing 
criminal investigation of note sales at HUD, a HUD Inspector General 
audit report critical of HUD's procurement practices, and efforts by 
HUD to remake its procurement processes--meet this standard.[3]  
Ervin's allegation merely anticipates improper agency action and is, 
as a result, speculative and premature and will not be considered.  
VSE Corp.--Recon. and Entitlement to Costs,
B-258204.3, B-258204.4, Dec. 28, 1994, 94-2 CPD  para.  260 at 2.  To the 
extent that Ervin's request that our Office "focus on what must be 
done to clean up HUD" can be construed as a request for investigation 
of HUD's procurement practices, our Office does not conduct such 
investigations as part of our bid protest function.  Stabro Labs., 
Inc., B-256921, Aug. 8, 1994, 94-2 CPD  para.  66 at 5.     

We deny the protests.

Comptroller General
of the United States

1. Due diligence encompasses a wide range of services that facilitate 
the sale or restructuring of HUD-held and/or insured single-family and 
multifamily mortgages, as well as Title I home improvement and 
manufactured housing loans.

2. As a general matter, for orders issued under multiple task order 
contracts, each awardee shall be provided a fair opportunity to be 
considered for each order in excess of $2,500.  FAR  sec.  16.505(b)(1).

3. Ervin has lawsuits pending which include allegations that HUD is 
retaliating against Ervin by "blackballing" the firm from competing 
for HUD contracts, as well as allegations of bias, bad faith, and 
procurement irregularities at HUD, some of which are referenced in 
these protests.  Ervin and Assocs., Inc. v. Helen Dunlap, Civil Action 
No. 96-CV1253 (D.D.C. filed June 5, 1996) and Ervin and Assocs., Inc. 
v. United States, No. 96-504C (Fed. Cl. filed Sept. 24, 1997).  To the 
extent that Ervin's reference to HUD's "bad faith with respect to 
Ervin" concerns these allegations, our Office generally will not 
consider any protest when the matter involved is the subject of 
litigation before a court of competent jurisdiction.  4 C.F.R.  sec.  
21.11(b); Robinson Enters.--Request for Recon., B-238594.2, Apr. 19, 
1990, 90-1 CPD  para.  402 at 2.