47QFDA24K0010_JOFOC Final_SFTAPwCSS_2024-05-02.pdf

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CUI//SP-SSEL

JUSTIFICATION AND APPROVAL

JUSTIFICATION FOR OTHER

THAN FULL AND OPEN

COMPETITION

Solicitation 47QFDA24R0006

Securitized Transactions Financial Advisor (STFA) Services in support of:

Department of Housing and Urban Development (HUD)

Government National Mortgage Association

(GNMA)

U.S. General Services Administration (GSA)

Federal Acquisition Service (FAS) Assisted Acquisition Services (AAS) APEX 3

Interagency Agreement Number: 47QFDA20S0008

Controlled by: GSA AAS melinda.simon@gsa.gov

The General Services Administration (GSA), Federal Acquisition Service (FAS), Assisted Acquisition Services (AAS), APEX 3, Sector 5 makes this Justification and Approval (J&A) for Other Than Full and Open Competition pursuant to Federal Acquisition Regulation (FAR) 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

1. Identification of Agency and Contracting Activity:

Agency:

GSA AAS FAS APEX 3, Sector 5 acting in support of the Department of Housing and Urban Development (HUD) Government National Mortgage Association (GNMA)

Contracting Activity:

GSA AAS FAS APEX 3, Sector 5 (QFCEA) 1800 F Street, NW Washington, D.C. 20405

2. Nature and/or Description of Action Being Approved:

This is a justification to award a new open market sole source, Firm-Fixed Price (FFP) contract to PricewaterhouseCoopers, LLP (PwC) for Securitized Transaction Financial Advisor (STFA) services in support of the GNMA.

3. A Description of Supplies/Services Required to Meet Agency’s Need (Including the Estimated Value:

The purpose of this requirement is for the GNMA to maintain the STFA services to provide highly complex securitized mortgage, mortgage derivative, and mortgage-related product expertise; ensure that the agency designs, develops, and issues new securities that are favorably received by the market; and significantly contributes towards their mission to support expanded affordable housing in America by providing an efficient government guaranteed secondary market vehicle linking the capital markets with Federal housing markets.

The specific tasks are identified below:

TASKS

Task 1 – Program Management Task 2 – Real Estate Mortgage Investment Conduit (REMIC), Callable Trust and Stripped Mortgage-Backed Securities (SMBS) Transactions Task 3 – Financial Advisory Services

The estimated value of the contract is $17,000,000.00, which includes a one

(1) year base period; two (2) six-month option periods; and FAR 52.217-8 Option to Extend Services up to six-months with a period of performance commencing May 15, 2024.

4. An Identification of the Statutory Authority Permitting Other Than Full and Open Competition:

This sole source contract will be awarded pursuant to the authority of 41 United States Code (U.S.C.) §3304 as implemented by FAR 6.302-1.

FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

5. A Demonstration that the Proposed Contractor’s Unique Qualifications or the Nature of the Acquisition Requires Use of the Authority Cited:

PwC stands as the sole qualified provider of Securitized Transaction Financial Advisor (STFA) services crucial for GNMA’s monthly issuance of Multiclass Securitizations.

These transactions involve intricate structured finance arrangements where cash flows from a pool of assets are partitioned into distinct securities, each possessing unique characteristics and risks. This tailored approach allows issuers to align securities with diverse investor preferences. Leveraging PwC’s extensive corporate knowledge and experience with GNMA’s Multiclass program, they are the only source capable of promptly meeting GNMA’s imperative need for generating Multiclass Securitizations. PwC boasts the immediate capacity and resources to offer precise advice to GNMA on primary and secondary market issues, trustee reviews, and program and policy management enhancements within the agency’s Multiclass program. Their capabilities also extend to performing all deal management and issuance functions, necessitating an intricate understanding of GNMAs Real Estate Mortgage Investment Conduit (REMIC), Structured Mortgage Backed Securities (SMBS), and Callable securities. With an average staffing capacity effectively handling 18-25 distinct monthly transactions, PwC ensures seamless operations.

Furthermore, drawing from their current experience as the subcontractor under the existing task order as a leading master servicer and GNMA trustee, PwC’s staff has been instrumental in assisting GNMA in establishing REMIC operational standards.

Additionally, they aid clients in areas such as loan servicing compliance, MBS pool reporting, master servicing/bond administration, and REMIC tax administration. PwC has also developed a proprietary cash flow modeling system, providing an independent and supplementary layer of reconciliation compared to industry subscription applications.

The complexity, regulatory and financial risks, and potential conflicts of interest associated with securitized financial transactions limits the ability of other contractors to perform these STFA services. This contract reconciles the Multiclass Security structure with their counterpart providing the same service on behalf of the Multiclass Security Issuer. These securities are issued with formal Offer Material which includes description of collateral, security classes and expected yields to investors under different assumptions. The reconciliation forces a matching of results to assure accuracy that the security has been accurately presented. Other accounting firms perform these same services on behalf of other Multiclass Security Issuers (Fannie Mae, Freddie Mac,) so they cannot perform the same services on the same security for GNMA as this results in a conflict of interest. Hence, to prevent sharing of sensitive information amongst the Multiclass security issuers and ensure continued objectivity, PwC is the only source capable of performing these services.

6. A Description of Efforts Made to Ensure that Offers are Solicited From as Many Potential Sources as Practicable:

In accordance with FAR Part 5.203(a)(1), the Contracting Officer will solicit this requirement in accordance with FAR Part 6, FAR Part 12, and FAR Part 15.

7. A Determination by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable:

The Contracting Officer has determined that the anticipated cost to the Government will be fair and reasonable based on analysis of historical data and market research. The sources of historical data will include review of fixed price labor rate comparisons to the current task order and previous task orders. GSA awarded the current task order for the same services utilizing a Multiple Award Schedule (MAS) contract vehicle and will also compare the proposed rates against other schedule rates for similar positions. The Contracting Officer will conduct market research of labor categories and rates for the STFA services utilizing the GSA CALC+IGCE web tool.

8. A Description of the Market Research Conducted and the Results or a Statement of the Reason Market Research was not Conducted:

Market research was conducted by the Government to ascertain the commerciality and identify additional potential sources that could perform the service requirements.

Research was conducted via a combination of internet searches, SAM.gov, and GSA databases. Research revealed these transaction services are commercial in nature in accordance with the definition in FAR 2.101. The STFA contract has been required by GNMA since 1994, the inception of the development and subsequent implementation of the Multiclass Securities Program. The original STFA contract awarded in 1998 was the key to the initial design and fee structure of the program.

Additional research revealed other accounting firms could only provide a portion of the services; however, they are unable to perform the requirement in its entirety due to the work they already perform as REMIC providers for the federal government. This work already being performed would present a conflict of interest for them to also perform the STFA services. These STFA services are primarily only available from large business accounting and financial institutions. There are roughly 25 firms, with no one firm dominating the market from a market share perspective. Small businesses are not competitive based on the investment in human capital, technology, and the data management capability aspect required to successfully provide the STFA services; and typically requires a firm with a larger capital base.

The STFA services are currently being performed under an existing GSA MAS task order 47QFDA21F0046 which was competitively solicited and awarded in 2021 to Guidehouse LLP. Further research of the current order revealed that in 2021 the Government only received one response to the solicitation. PwC has been performing as the subcontractor on the current task order and has established business practices and familiarity with the program to provide continuity without any interruption of services for GNMA. Although the current task order was competed among multiple vendors, only one proposal was received. Therefore, the Government does not anticipate that competing the current award would encourage any cost savings or increased competition. Thus, procuring this requirement as a sole source award is in the best interest of GNMA for continued performance.

9. Any Other Facts Supporting the Use of Other Than Full and Open Competition:

Transitioning the multiclass securitizations to a new contractor would be a complex undertaking requiring extensive transfer of Mortgage Backed Securities (MSB) and REMIC collateral data. Even under normal operating environments, the process to completely transition all collateral related data exceeds six months.

Even if an immediate award could be made to another vendor, Guidehouse has determined it must cease performance no later than May 15, 2024. A transition out would force a cascading negative effect upon the GNMA REMIC Securities Issuance, as there would be a break in service between May 15 and whenever the new vendor could begin service. It is imperative that PwC provide continuous REMIC operational support for monthly issuance of the REMIC security. The sole source contract to PwC leverages their existing corporate knowledge and expertise which meets GNMA’s mission and removes any disruption in service that would have a negative effect on the mortgage market at large.

10. A Listing of the Sources, if any, That Expressed, In Writing, An Interest in the Acquisition:

To date, the Contracting Officer has not received any statements of interest regarding the proposed sole source effort.

11. A Statement of the Actions, if Any, the Agency May Take to Remove or Overcome Any Barriers to Competition Before Any Subsequent Acquisition for the Supplies or Services Required:

While PwC is currently the only source capable of providing the STFA services, the Government will continuously conduct market research on all potential sources to ensure that requirements for future acquisitions will be addressed according to GNMA and GSA directives and acquisition guidelines, and will look first to competing any new requirements.

12. Contracting Officer Certification that the Justification is Accurate and Complete to the Best of the Contracting Officer’s Knowledge and Belief:

I certify that this Justification is accurate and complete to the best of my knowledge and belief, and I determine on the basis of the findings above that an other than full and open competition approach is in accordance with the requirements and is in the best interest of the Government.