A10_JOFOC.13.5 (OM's) - REDACTED.pdf

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SOLE SOURCE JUSTIFICATION

FOR CERTAIN COMMERICAL ITEMS USING

THE PROCEDURES IN FAR 13.5

Identification Number: 73351022F0162

1. Agency and Contracting Activity. Small Business Administration (SBA), Office of Performance, Planning and the Chief

Financial Officer, Office of Financial Operations & Acquisition Management, Acquisition Operations Division and Office of Credit Risk Management (OCRM).

2. The nature and/or description of the action being approved.

This is a Justification and Approval for other than full and open competition for a sole-sourced contract for transition services and migration support for the SBA’s Loan and Lender Monitoring System (L/LMS) to Dun & Bradstreet (D&B).

3. A description of the supplies or services required to meet the agency’s needs (including the estimated value).

The SBA requires assistance with its loan, lender and portfolio monitoring, oversight, and credit risk management services on the 7(a) and 504 loan portfolios and participating industry lenders. These services must be consistent with best practices utilized by commercial lending industry and bank regulators for credit risk management including early warning indicators of possible changes in portfolio performance trends. This requirement will apply credit risk prediction and evaluation to the 7(a) and 504 loan portfolios enabling the SBA to predict and evaluate the risk of individual SBA participants and lenders to identify high risk lenders with two (7(a) and 504) agency guaranteed loan programs. This requirement will also provide credit risk and program management support as well as transition services, system migration support and phase-out services to a new contractor.

These services support the following SBA Mission Essential Functions: SBA Section 7(a) loan processing and approval support; and SBIA Section 504 Certified Development Company loan processing and approval support; and SBIA Section 411 surety bond approval and administration support and Small Business Act (SBA) direct and guaranteed loan servicing and liquidation support; SBIA loan and surety bond guarantee issuance servicing and management support. Without these credit risk analysis services continuously in place, SBA will fail to meet its mission.

This contract will be for a base period of 2 months (09/01/2022 – 10/31/2022) to onboard a new contractor, and an optional period of 8 eight months (11/01/2022 – 06/30/2023) to ensure continuity of operations and a successful transition to a new contractor. In the unlikely event there are performance issues under the follow-on award, FAR 52.217- 8 is also included, but limited to a period of 3 months. The contract value breakout is as follows:

Period of Performance

**Open Market Items

GSA / OLM’s Total Price

Base Period (60-day Onboarding)

09/01/2022 – 10/31/2022

REDACTED REDACTED REDACTED

Optional Transition Services

11/01/2022 – 06/30/2023

REDACTED REDACTED REDACTED

Optional Services (3-mos) 52.217-8

07/01/2023 – 09/30/2023

REDACTED REDACTED REDACTED

Totals REDACTED REDACTED REDACTED *rounded to the nearest dollar.

**The open market items are Bankruptcy Filing Chapter, D&B File Date, Bankruptcy Date and History Indicator data within the reports.

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The full period of performance will allow a successful contractor-to-contractor transition from the current task order (73351020F0260) to the newly competed award (RFQ opened on April 25, 2022, and closed on June 2, 2022). The new award is projected to occur on or about 09/15/2022 and will include a base year plus four additional option years.

4. An identification of the statutory authority permitting other than full and open competition is as follows:

Simplified procedures for certain commercial items in accordance with FAR 13.5 and 41 USC 1901.

5. A statement demonstrating the unique qualifications of the proposed contractor or the nature of the action requiring use of the authority.

Specific characteristics of the requirement limit the availability to a sole source. Only this suggested source can furnish the requirements, to the exclusion of other sources, for the following reasons:

Only one source is capable, and no other supplies or services will satisfy agency requirements:

Dun and Bradstreet is the only contractor capable of providing these services at the level SBA requires without interruption.

Dun and Bradstreet is in a unique position because they are the current contractor fulfilling these duties and can continue to do so without an interruption in services. They are the only contractor that holds the day-to-day operational knowledge, skills and ability SBA requires to fulfill their mission. Furthermore, due to their current position as the incumbent, they are the only contractor capable of transitioning to the new contractor.

A lapse or delay in service will have a negative impact on SBA’s ability to fulfill its mission. Specifically, under the L/LMS contract, the contractor manages all risk and performance reporting for OCA programs. With a lapse in L/LMS services, OCA would be unable to report to SBA leadership, Congress, and the public on OCA program performance. Additionally, the OCRM would be unable to monitor 7(a) & 504 lender performance resulting in significant risk to the agency and to taxpayers.

To ensure that there is no interruption in service and a smooth transition to the next contractor, it is necessary to award a sole-source task order to Dun and Bradstreet with a 10-month period of performance. SBA requires continuous support during this time, and it is not feasible for another contractor to provide these services.

A 10-month transition period is required due to onboarding time, complexity of the system being managed and the system migration that will be required. Specifically, the transitional period will support the following:

#1 – Complex system migration – The L/LMS is currently hosted by Dun and Bradstreet. The ten-month transition period will allow the new L/LMS contractor to migrate the L/LMS system to the new contractor’s own environment.

The new L/LMS contractor will be required to receive the system from Dun and Bradstreet and get it running in their own hosting environment. This system migration is particularly challenging because the L/LMS system was created by Dun and Bradstreet and has been hosted there since 2006. Migration of similar vendor-hosted systems have usually come with surprises and delays. The seven-month transition should give SBA time to run the old and new systems in parallel for one quarterly process to ensure the migration was successful before fully transitioning over to the new system and turning off the old system.

#2 – Develop the Loan Purchase Rate – The ten-month transition period will give the new L/LMS contractor time to develop a new Loan Purchase Rate. Steps include credit score outstanding SBA loans, develop a new Loan Purchase Rate model, present the proposed model to key stakeholders in Office of Capital Access, and publish model changes in the federal register). The contractor will need to generate credit scores for all active 7(a) and 504 loans, develop and test new predictive scoring models, and publish the new models in the federal register. The new contractor is unable to use the incumbent’s predictive scoring system because it uses proprietary Dun and Bradstreet data. In the past, the incumbent’s model redevelopment process has taken about seven months so it will be a challenge for the new L/LMS contractor to complete this task even with the extended transition.

To allow for contingencies and unknowns which can happen during major system migrations and transitions to a new contract, the contract will include FAR 52.217-8 Option to extend the term of the contract.

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Providing a transitional period via this sole sourced order will allow for the smooth on-boarding of new personnel, system migration, and the transfer of information from one contractor to the next without any lapse in service to SBA.

6. A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether a notice was or will be publicized as required by FAR 5.2 and, if not, which exception under FAR 5.202 applies.

The agency diligently worked to remove and overcome any barriers that led to this restriction by actively conducting a re-compete on the GSA Multiple Award Schedule. The anticipated award date of the new award is 09/15/2022 and will be for a base year and four, one-year option periods.

7. Determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

The Contracting Officer determines that the anticipated price(s) will be fair and reasonable based on comparison to GSA pricing, past pricing for this same effort and comparison to other SBA contracts for similar efforts. Prior to award of the proposed order, cost or price information shall be obtained from the contractor and a price/cost analysis will be performed and documented to sufficiently determine that the cost to the Government of the proposed acquisition will be fair and reasonable.

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 not conducted for the reasons stated in Section 4.

9. Any other facts supporting the use of sole source.

“There are no additional facts.”

10. A listing of the sources, if any, that expressed a written interest in the acquisition.

No sources indicated an interest for the reasons stated in Section 4.

11. A statement of any actions the agency may take to remove or overcome any barriers to competition, if subsequent acquisitions are anticipated.

The agency diligently worked to remove and overcome any barriers that led to this restriction by actively conducting a re-compete on the GSA Multiple Award Schedule. The anticipated award date of the new award is 09/15/2022 and will be for a base year and four, one-year option periods.

CERTIFICATION AND APPROVAL

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12. CERTIFICATION: The JOFOC has been prepared and certified by:

Technical / Requirements Personnel: I certify the requirement meets the Government’s minimum need and that the facts, representations, and data included in this justification are complete and accurate.

REDACTED

Contracting Officer’s Representative

Contracting Officer: I certify that the data supporting the recommended use of other than full and open competition is accurate and complete to the best of my knowledge and belief.

Contracting Officer

13. APPROVAL

Director, Acquisitions Directorate

Director, Contracts