487. B4_Bundling or Substantial Bundling DF_Final_Signed-SAMv2.pdf

United States Department of Agriculture Determination and Findings (D&F)

Authority to Substantially Bundle Contract Requirements Solicitation Number: 12SAD126Q0007

Rev. 4/9/26

This D&F is prepared in accordance with Revolutionary Federal Acquisition Regulation (FAR) Overhaul 7.107-2 to support a substantially bundled requirement over $2.5M.

FINDINGS

1. Mission Area and Contracting Activity.

Requesting Activity Agency: USDA Rural Development (USDA), Servicing Office (SO)

Contracting Activity: Office of Contracting and Procurement

2. Acquisition Information:

Solicitation/Contract/Order Number 12SAD126Q0007 Period of Performance 1 year base and 9 option years Estimated Total Amount

3. Description of the Requirement: The purpose of this D&F is to document the rationale for combining multiple loan servicing support requirements (core servicing, program compliance, audit, operations) with integrated contractor operational support. SO requires a long-term solution to address servicing support that is focused on cradle to grave loan administration and SO operational integration and execution. Currently, these services are provided through smaller support contracts to stabilize operations, but this turns into “buying labor” rather than gaining the efficiencies of a total solution. This leads to fragmented support, which substantially increases federal oversight and creates vulnerability through accountability gaps. The preferred contracting approach is to use a single accountable contractor to lead operational integration, stabilize operations and transition SO to a modern, flexible, more efficient delivery model, while improving borrower/staff experience, program integrity, and governance. A single award Blanket Purchase Agreement (BPA) will be competed under the GSA schedule to fulfill this requirement. This approach preserves inherently government decision-making authority, with the contractor executing day-to-day servicing operations and focusing on integration, accountability, risk management, and operational excellence, resulting in a more efficient and streamlined approach to servicing delivery. The consolidation will enable the integration of resources across SO functions and provide centralized operational integration and execution that do not exist under the current contracts.

4. Acquisition Strategy

a. Market Research Summary: Market research and vendor engagement started in April

2025 and included an issuance of a Request for Information (RFI) on SAM.gov, an Industry Day in July 2025, and one-on-one meetings with interested vendors. A component of market research was to determine if the Government would achieve substantial benefits by bundling. The Industry Day informed small businesses of planned activities for the consolidation of requirements and provided SO with insight into the capabilities of small businesses. The RFI was also released to gauge contract capability.

Authority to Substantially Bundle Contract Requirements Solicitation Number: 12SAD126Q0007

One-on-One meetings with contractors were accomplished in August 2025. Program officials reviewed responses independently and then discussed among the group the abilities of each vendor to include their understanding of the tasks, capacity, qualifications, systems familiarity, experience, and financial stability. The research results indicated the concerns that small businesses lack the: size (experience in managing the volume of work), scope (resources to provide and manage the portfolio), and financial capability (enough capital to carry costs and cover expenses) to execute.

Small businesses have the capability to perform portions of the work, but they do not have the ability to manage the full scope of SO requirements as the prime contractor.

Multiple small business vendors acknowledged the totality of the requirement was outside their prime capability. Due to the nationwide scope, complexity and size of services, established vendors with Mortgage Industry Standards Maintenance Organization (MISMO) certification and ability to source personnel are required. Market research confirmed that capable vendors are available in the marketplace, and competition is expected. However, no small business firms were identified as capable of performing the full requirement. Pursuant to Executive Order 14240 on eliminating waste and saving taxpayer dollars, market research was also conducted under the GSA Multiple Award Schedule (MAS), to identify capable sources. Leveraging Rural Development’s existing domain knowledge, we targeted services focusing on the relevant Special Item Number (SIN) 522310, Financial Advising, Loan Servicing and Asset Management.

Based on Rural Development’s existing knowledge of the contractor landscape and review of their listed services, multiple large businesses were identified as capable of performing the work. Among the contractors reviewed, Nelnet Government Services LLC, Navient BPO LLC / Pioneer CX (InteLogix), and Guidehouse Inc. each demonstrated the ability to meet the performance work statement (PWS) requirements based on the services offered under their GSA Schedule contracts.

b. Alternative Contracting Approaches: Due to the interdependencies across service lines within SO, the use of multiple contractors to provide separate services has led to the current state of disjointed service delivery, reactive rather than proactive risk identification and resolution, lack of coordination, and oversight and management challenges for SO. These issues already affect current operations under multiple smaller single-award contracts. Consideration of other contracting alternatives such as small business set-aside, partial set-aside, a multiple award BPA or IDIQ would result in the same fragmentation and inefficiencies. Each of these alternatives would still require SO to manage numerous contractors without a single integrator responsible for the full operational scope. As a result, the same levels of fragmentation and inefficiency in service delivery, lack of performance accountability, and inconsistent risk management process would persist. Further, distributing responsibilities across several contractors would likely increase overall cost and schedule risk due to duplicative management structures, increased coordination requirements, higher administrative burden, and potential gaps in responsibility ownership. The lack of a single accountable entity could also jeopardize service continuity, interoperability of service lines, and compliance with program requirements, particularly where unified process standardization and consistent governance are critical. In contrast, a single award to a fully capable prime integrator

Authority to Substantially Bundle Contract Requirements Solicitation Number: 12SAD126Q0007 minimizes these risks by enabling centralized management, streamlined communication, clearer accountability, and integrated performance oversight.

c. Coordination: The determination has been coordinated with the Office of Small Disadvantaged Business Utilization Office. Since June 4th when OSDBU sent the bundling AD-1205 to SBA PCR they asked questions on two occasions during their review. They first requested a list of affected contractors as result of the bundling which was provided the next day. Several weeks later they sent a set of three questions we responded confirming that award had not already been made, that we did not find any small businesses capable of performing at least 50% of the work and that subcontracting would be part of evaluation with goals set higher USDA 22% goal.

d. Impact on Small Business: While small businesses are not expected to perform a prime role, subcontracting opportunities do exist. In current operations, small businesses provide staff to augment SO operations. Oversight and direction are provided by SO since small businesses do not possess the high-level loan servicing experience, capability, or capacity required to create efficiencies, quality improvements, or improve total operations across requirements. Furthermore, during market research large businesses explain how important small businesses are to their operation and how they incorporate them in their organizations.

5. Benefits of Substantial Bundling

a. Cost Savings or Price Reductions: In comparing the costs of work performed under separate contracts versus a consolidated contract, the projected savings are expected to exceed five percent. The primary savings result from a single contractor's ability to efficiently allocate staff across service lines, which is currently hindered by the stove-piping of individual contracts. This consolidation also reduces redundant layers of management, project oversight, and reporting requirements associated with multiple contract awards. The current projected cost for stand-alone contracts over the next ten years is. This is calculated by taking the total annual value of individual contracts in the current year, adjusting for workload additions contemplated by the consolidated requirement, and extending nine additional years with a 3.5% annual escalation. The gap between the base year and subsequent options years is due to transition-in and the ultimate increase in anticipated services under the new scope of work.

Applicable labor rates were developed by researching existing GSA schedules for three

Authority to Substantially Bundle Contract Requirements Solicitation Number: 12SAD126Q0007

(3) similarly situated contracts and averaging the labor costs across the three (3) findings.

This was accomplished for 101 potential labor categories. Example provided:

Average rates were then applied to full-time equivalent hours multiplied by the number of employees required to execute at contract line-item (CLIN) level. Example provided:

POP in CLIN Description Months FTE Cost per

FTE

Total Base

Cost Customer Engagement (Call Center)

- Base 12

XX

Extending this calculation across all CLINs and totaling is the basis for the estimated base value. Option year calculations used the same approach, adjusted by number of employees with the applied 3.5% escalation to labor rates each option year. The estimate includes minimal amounts for other direct costs and travel at $250K and $100K per year respectively.

Additionally, surge CLINs are included to account for any work that exceeds baseline quantities in the PWS. The surge CLINs may be funded up to the available ceiling if required.

The bundled contract is estimated at and is calculated in the same manner as the preceding discussion on the unbundled requirement. Estimating the known level of effort currently performed, estimating future needs, applying appropriate averaged GSA labor rates to perform, and removing layers of operations and management costs that would no longer be necessary in the consolidated requirement. This cost savings represent an annual savings of 8.65%. Furthermore, SO is transitioning from operational augmentation to externalizing business process execution with federal oversight, an essential step to maintain quality and efficiency following recent downsizing. Although overall contractor support will increase as new functions are adopted, a level cost structure will streamline administrative burdens, eliminate duplicated fixed costs, and ensure consistent, qualified staffing. The anticipated growth in contract value will sustain at least 8.65% savings compared to expanding multiple smaller contracts.

b. Quality Improvements that will save time or enhance performance or efficiency:

Approval will allow for major improvement capabilities. Separate contracts are currently stove-piped, allowing for no cross-functional utilization of contracted employees. Separate contractor scope and management lines do not allow for quality or efficiency improvements between service lines. All other contracting approaches would maintain disjointed operations. While quality improvements can be observed through

Authority to Substantially Bundle Contract Requirements Solicitation Number: 12SAD126Q0007 enhanced performance and time savings, quantifying these benefits are challenging as they often manifest in reduced errors, and improved customer outcomes, which are not easily expressed in dollar amounts. Additional qualitative benefits include regulatory compliance rates, timeliness of total loan processing, agent utilization rate, agent turnover rate, early delinquency intervention, interdepartmental issue resolution, and collaboration frequency.

c. Reduction in acquisition lead time: SO currently manages nine different contracts, many of which require modifications or a transition to an entirely new vehicle due to the current FAR overhaul and updated procurement requirements. Current average acquisition lead times are 120+ days and involve six-ten Government employees.

Transition to one service provider will cut lead times to an estimated 14 days per call order and reduce Government employee involvement to three-six personnel. All other alternatives require multiple competitive evaluations that would maintain the 120+ days across the nine contracts. Although time savings can be estimated, the broader impact on organizational agility and responsiveness is not fully quantifiable, since it involves intangible improvements in workflow and decision-making speed.

d. Terms and Conditions: Utilizing the GSA schedule for a consolidated solution provides multiple benefits over standalone open-market contracts. This includes streamlined procurement planning, pre-determined fair and reasonable pricing, and access to vetted contractors, which improves efficiency and consistency. It also aligns with the requirements of Executive Order 14240, ‘Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement,’ which directs agencies to route procurements for standardized services through GSA The primary disadvantage of using the GSA Schedule is that it limits competition to existing schedule holders, which could reduce the number of potential contractors, or innovative solutions. In contrast, an open-market procurement under FAR 15 would allow for any qualified offeror to propose, but would require a more extensive price analysis and negotiations, resulting in longer procurement timelines, and more administrative burden. Overall, the GSA provides a scalable, flexible, and mission-aligned acquisition platform that improves cost efficiency, strengthens oversight, reduces burden on Government staff, and enhances long-term program performance.

e. Other Benefits: The major benefit of this consolidation will be a total solution to SO operational support that is flexible, responsive, streamlined, and provides better customer experience. The ability to utilize contracted personnel across service lines with centralized management will have substantial impacts on productivity and ability for the contractor to develop operational efficiencies. It is standard practice for the Government to encourage retaining existing contracted personnel to all extents possible to preserve continuity, corporate knowledge, and utilize existing small business partners. All alternative approaches as discussed above would result in status quo where SO must orchestrate multiple contractors across multiple contracts and continue to experience fragmented service delivery. Many of these benefits, such as improved continuity, enhanced knowledge retention, and better integration of small business partners, are not quantifiable in dollar amounts, but they represent strategic and

Authority to Substantially Bundle Contract Requirements Solicitation Number: 12SAD126Q0007 qualitative gains that support long-term organizational goals.

f. The total benefits quantified in dollar amounts are: This is 8.65 % of the total estimated contract value, including all options. While this figure represents quantifiable savings, it is important to recognize that the full value of bundling includes significant qualitative benefits that cannot be captured in financial terms but are essential for achieving operational excellence and mission success.

6. Substantial Bundling Justification

a. Describe specific benefits anticipated from substantial bundling: Awarding a single large contract to one experienced contractor, rather than splitting requirements across several smaller contracts, provides the agency with several key benefits. These include easier scalability, better borrower outcomes and performance and streamlined procurement and administration. Under a single contract, SO can more readily accommodate portfolio growth, new requirements, or volume changes rather than renegotiating or adding multiple smaller contracts. Professional and consistent servicing typically results in improved delinquency management, higher borrower satisfaction, and stronger overall portfolio results. In addition, one procurement process, one set of service-level agreements, and consolidated contractor governance save significant time and resources compared to managing several separate awards. Other benefits include lower overall costs, simplified oversight and management, greater consistency and standardization, stronger compliance and risk reduction, and improved financial stability and continuity.

Combining requirements into one large contract reduces management complexity, lowers total costs, minimizes risk, and supports higher-quality, more consistent loan servicing operations. While smaller contracts may offer niche flexibility in rare cases, a consolidated approach is far more efficient and effective for managing a national loan portfolio. the benefits of that approach would substantially exceed the benefits that would be derived from each of the alternative contracting approaches

b. Identify the specific impediments to small business prime participation: Market research indicates that small businesses generally lack the operational scale, technical capacity, and industry experience required to support a nationwide servicing portfolio. The primary barrier to their participation as prime contractors is an inability to scale efficiently or adapt to portfolio growth. Most small firms cannot absorb increases in loan volume, manage seasonal spikes, or support the introduction of new and specialized loan products.

They also lack the capacity to deliver special servicing, complex workout strategies, or forward-looking initiatives, such as digital modernization. Using multiple small contractors further compounds these challenges. Smaller firms often deliver inconsistent service levels, require frequent contract adjustments, and struggle to maintain uniform standards across platforms. Their limited experience with portfolios of comparable size, combined with the absence of MISMO membership, underscores the operational and financial risks of relying on them as primary service providers. Additionally, managing multiple small contractors increases oversight burdens and elevates regulatory and reputational risk. A compliance gap with even one of these multiple contractors creates exposure for the entire program. Larger companies, by contrast, maintain dedicated

Authority to Substantially Bundle Contract Requirements Solicitation Number: 12SAD126Q0007 compliance and audit teams, have extensive experience with regulatory examinations, and are better equipped to navigate evolving rules and policy requirements. A single large-scale contractor also provides consistency, uniform policies, procedures, and borrower experience across the entire portfolio. This reduces training needs, simplifies reporting, enhances data quality, and promotes a clearer, more predictable experience for borrowers. Fragmented servicing models can lead to confusion, inconsistent borrower treatment, and reconciliation challenges. Finally, large contractors bring established national relationships with payment processors, credit bureaus, insurance providers, and technology partners, often at more favorable terms. They also offer benchmarking data and industry insights that smaller firms typically cannot provide

c. Detail actions designed to maximize small business participation as prime contractors, including provisions that encourage small business teaming: Under the Federal Supply Schedule (FSS), two or more FSS contractors may combine their offerors and submit a quote as a FSS Contractor Team Arrangement (CTA) to meet a requirement. Establishing a CTA enables small businesses to compete at the prime level when they would otherwise not be qualified. This requirement will encourage teaming arrangements by expressly permitting the submission of FSS CTA quotes.

d. Detail actions designed to maximize small business participation as subcontractors

(including suppliers) at any tier under the contract: GSA already reviews, negotiates, and approves subcontracting plans at the schedule contract level. To further promote small business participation in the procurement, the use of small businesses will be encouraged by designating subcontracting to small businesses as a primary evaluation factor.

e. Explain why anticipated benefits justify substantial bundling: The execution of this BPA delivers significant operational and strategic benefits. Most critically, SO’s ability to provide efficient, high-quality service has been adversely affected by the reduction in federal staffing. Consolidating multiple smaller contracts into a single award enables SO to respond effectively to this new operating environment through integrated workforce management, something that is not achievable under the current fragmented support model. A single, bundled requirement allows contract personnel to operate cross functionally, increasing efficiency and reducing the total number of support staff, supervisory layers, and duplicative functions. This streamlined structure improves accountability, accelerates decision-making, and enhances overall service delivery.

Partnering with a premier loan servicing contractor under one unified contract also allows SO to adopt industry’s best practices and implement operational improvements. These benefits cannot be realized if SO continues to rely on several small contractors providing overlapping augmentation services within the same mission area. The current model is difficult to manage, and slow to adapt to operational or policy changes. SO’s ability to meet mission requirements depends on having a contractor capable of executing end-to-end business operations through a single, centralized framework. Combining requirements into one contract is the only approach that ensures unified governance, consistent service standards, and the agility needed to support a dynamic mission environment.

Authority to Substantially Bundle Contract Requirements Solicitation Number: 12SAD126Q0007

7. Substantial Financial Benefit Determination

□ The estimated value of the contract is $94 million or less and the anticipated financial benefits are equivalent to 10% or more of the total contract value, including options.

� The estimated value of the contract, including all options, exceeds $94 million, and the anticipated financial benefits are the greater of either 5% of the estimated contract value or $9.4 million.

□ The financial benefits do not meet the thresholds in FAR7.107-2(c)(3). However, they are critical to the agency’s mission success.

8. The draft notification to the public required in FAR 7.107-3 (b) is attached for review and approval. The Contracting Officer will post the approved notification to the Government Point of Entry no less than seven (7) after approval of this D&F. All other required notifications in FAR 7.107-3 will be issued within the required timelines and no solicitation will be issued until the approved timeframe after required notifications.

Authority to Substantially Bundle Contract Requirements Solicitation Number: 12SAD126Q0007

DETERMINATION

Based on the above facts, I determine that in accordance with FAR 7.107-2 for the above referenced requirement provides measurably substantial benefits and is necessary and justified.

Submitted by:

James Sowden Contracting Officer

Reviewed by:

1. The required review has been completed. Resulting comments, if any, have been satisfactorily addressed. The package may be forwarded to the Branch Chief/Procurement Analyst for further review.

Todd Lenox Level Above Contracting Officer

2. The required review has been completed. Resulting comments, if any, have been satisfactorily addressed. The package may be forwarded to the Chief of the Contracting Office (COCO) for further review.

James Sowden Branch Chief/Procurement Analyst

3. The required review has been completed. Resulting comments, if any, have been satisfactorily addressed. The package may be forwarded to the Head of the Contracting Activity (HCA) for further review.

Todd Lennox Chief of Contracting Office

4. The required review has been completed. Resulting comments, if any, have been satisfactorily addressed. The package may be forwarded to the Senior Procurement Executive (SPE) for further review and approval.

Craig Harper Head of Contracting Activity (acting) Approved by:

Hilary Erickson Senior Procurement Executive