A10_LSJ Above SAT FAR 8.405-6 LLMS Transition - REDACTED.pdf

Limited Source Justification for an Order Exceeding the Simplified Acquisition Threshold for

Loan and Lender Monitoring System (L/LMS)

In accordance with Federal Acquisition Regulation (FAR) 8.405-6(a)(1)(i)

1. Agency and Contracting Activity.

This justification is prepared by the Small Business Administration, Office of Financial Operations & Acquisition Management, Acquisition Operations Division in conjunction with the Office of Credit Risk Management (OCRM) and the Office of Performance Systems Management (OPSM) within Office of Capital Access (OCA).

2. Nature and/or description of the action being approved.

This is a limited sources justification for a transition services task order for the SBA Loan and Lender Monitoring System (L/LMS).

This order will be a sole source to:

Dun & Bradstreet 11710 Plaza Drive Suite 900 Reston, Virginia 20190

(703) 807-5068 GSA

Contract Number GS00F0022DA

3. Description of Supplies or Services.

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.

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. Authority and Supporting Rationale.

The contracting officer has determined the circumstances of the contract action to meet the following statutory exception under FAR 8.405-6 as supported below:

FAR 8.405-6(a)(1)(i)(B) Only one source is capable of responding due to the unique or specialized nature of the work.

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 the 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 seven-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 seven-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 six 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.

Providing a transitional period via this sole source bridge task 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.

5. Determination by the Contracting Officer that the order represents best value.

The contracting officer will determine the task order represents the best value for the government in accordance with FAR 8.404(d). GSA has already found the price fair and reasonable; however, the contracting officer will request additional discounts/price reductions consistent with FAR 8.405-4 and conduct additional price analysis as necessary to ensure fair and reasonable pricing. Price analysis techniques will include historical pricing comparison, comparison of GSA published price lists, comparison between the quote and the IGC, and request for further discounts.

6. Market research.

No market research was conducted for these services for the reasons stated in Section 4.

7. Other facts supporting the justification.

None

8. Actions, if any, the agency may take to remove or overcome any barriers that led to the restricted consideration before any subsequent acquisition for supplies and services is made.

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

9. Certification

I certify that the facts and representations under my cognizance, which are included in this justification, and which form a basis for this justification, are complete and accurate.

[ REDACTED ]

Program Office Official Date

I certify that this justification is accurate and complete to the best of my knowledge and belief.

[ REDACTED ]

Contracting Officer Date

10. Approval

I have reviewed this justification and find it to be accurate and complete to the best of my knowledge and belief.

[ REDACTED ]

Competition Advocate Date