SOW Monitoring Services

STATEMENT OF WORK

BACKGROUND

The Department of Housing and Urban Development (The Department or HUD) regulates the design and construction of manufactured housing. The National Manufactured Housing Construction and

Safety Standards Act of 1974 (the Act), implemented in June 1976, established the framework for the preemptive Federal Standards and the related manufactured housing regulatory programs (HUD programs) in use today. HUD administers several manufactured housing regulatory programs, of which monitoring the performance of cooperating agencies is one. HUD generally implements the monitoring portion of its program through two sets of regulations: (1) 24 CFR 3280, Manufactured Housing Construction and Safety

Standards (the Standards), which is a nationally preemptive set of standards for the design and construction of these homes (commonly known in this industry as the HUD Code); and (2) 24 CFR 3282, Manufactured

Housing Procedural and Enforcement Regulations (the Regulations), which generally govern the enforcement of the HUD Code. HUD uses Contractors to assist in the implementation of the program.

In addition, the Act establishes an installation program, and a dispute resolution program, which are administered by other contracts. Some States inspect every installation while in others, installation inspections are completed by local governments or not at all. The 1974 Act, as amended in 2000, established, among other things, a consensus committee to make recommendations to the Department for adopting, revising, and interpreting the Standards and procedural and enforcement regulations. Also, the

Act mandates implementation of an installation program by HUD that will provide minimum installation standards in the future. A copy of the Act can be obtained from the Contracting Officer upon request and is located on HUD’s website: www.hud.gov/offices/hsg/mhs/manhsgst.pdf

Through HUD’s manufactured housing program, unsubsidized affordable housing is available for many families who might otherwise not be able to afford home ownership. Manufactured housing comprises approximately one-in-eleven new single-family homes each year. Over 8 million HUD Code homes have been built since 1976, and the overall quality and safety of manufactured homes has continued to improve under the HUD program. Over 85 companies produce manufactured housing in about 215 plants (production lines) with current production of about 237,000 floors per federal fiscal year.

The homes built under this program vary extensively in quality and affordability. For example, a single section manufactured home can be purchased for less than $20,000 and placed on a rented site with a temporary foundation; or, someone can pay over $150,000 for a multi-section home (with property) on a permanent foundation in a single family subdivision. Each year, more of these homes are permanently sited, however, a demand for less expensive homes on rented sites remains.

In recent years, HUD’s role has become more important in assuring that the quality of the home is maintained and that consumer complaints with manufacturer service are appropriately addressed. This role has also been broadened by a trend in the industry to apply innovation to the factory-built home, employing more creative designs and utilizing new products. This serves to enhance the role of HUD and its monitoring and inspection agent, as they are continuously called upon to respond to questions and concerns regarding designs evaluated in accordance with the performance-based Standards.

HUD administers the program, supported by agreements with 38 States’ Administrative Agencies

(SAAs) and contracts with various private firms and non-profits. HUD also uses the services of an administering organization to support the Manufactured Housing Consensus Committee, a committee that provides recommendations to the Secretary to adopt, revise, and interpret certain standards and regulations.

HUD’s effort to obtain the services of qualified Contractors reflects its commitment to safe, durable, and quality housing. To cover the costs of administering this program, home manufacturers in this program are charged a monitoring fee (currently $39 per section or floor). Currently there are seven (7) Design-

Approval Primary Inspection Agencies (DAPIAs) and sixteen (16) In-plant Production Primary Inspection

Agencies (IPIAs), both public and private, approved by HUD to conduct design review and in-plant inspections. Ten (10) of the sixteen (16) active HUD-approved agencies are units of State government and the remaining six (6) are private for-profit corporations, as listed on HUD’s website:

www.hud.gov/offices/hsg/sfh/mhs/mhsid.cfm.

http://www.hud.gov/offices/hsg/sfh/mhs/mhsid.cfm

All designs and design changes must be approved by a manufacturer’s DAPIA that also approves each plant’s quality assurance manual. Each manufacturer must also obtain the services of an IPIA. The

IPIA must certify that the plants under its purview are capable of producing homes in conformance with the

Standards on a continual basis. The IPIA monitors the manufacturer’s quality control program by inspecting each home at some stage of production in the plant, and issues the HUD label that is attached to each section of the home upon completion.

HUD has established separate types of parallel and concurrent monitoring systems for this program. HUD monitors the DAPIAs for the designs they approve and the IPIAs to ensure that the construction of homes is in compliance with the Standards, and assesses the 38 SAAs handling consumer complaints for satisfactory performance. The requirements of this statement of work address the principal tasks of the monitoring and inspection program, the monitoring of DAPIAs and IPIAs, and the performance assessments of the SAAs.

Other Contracted Activities

Administering Organization (AO) Contract

The Administering Organization (AO) and the Manufactured Housing Consensus Committee

(MHCC) are not a direct part of the monitoring and enforcement efforts. The contract for the AO supports the MHCC. Through the AO, the consensus committee reviews and makes recommendations to the

Department on the development of installation standards and adoption, revision, and interpretation of construction and safety standards and procedural and enforcement regulations. Additional background and support information regarding the manufactured housing program can be found through the AO link on

HUD’s website at: www.hud.gov/offices/hsg/sfh/mhs/mhshome.cfm.

Training Contract

The Department currently has a contract with a firm, referred to as the Training Contractor, to assist in organizing events of information exchanges for the multiple parties assisting the federal program in its implementation of the Federal Manufactured Housing Program.

Installation Contract and Dispute Resolution Contract

The Department intends to execute two (2) contracts with firms or organizations to assist the

Office of Manufactured Housing Programs in its implementation of the Model Installation Program and the

Dispute Resolution Program.

Once the Model Installation Contracts have been executed, the monitoring contractor will be required to collect information from and provide information to the designated installation contractor.

C.2. OBJECTIVE

The objective of this IPIA/DAPIA/SAA Monitoring & Inspection Contract is to obtain Contractor services to assist the Department in performing assessment inspections, monitoring and enforcement of the private and state agents of HUD responsible for oversight of design and construction of manufactured housing. This effort includes parallel and concurrent monitoring of the IPIAs and DAPIAs and assessment inspections of the 38 participating SAAs, and additional related services as described in Section E, PRINCIPAL TASK FIVE: OTHER SERVICES.

The IPIA monitoring tasks require performance observation of third-party inspection agencies that perform in-plant inspections of each home under construction and review notification and correction plans.

The IPIA monitoring tasks also provide assistance to HUD in evaluating an IPIA’s performance and determining an IPIA rating required to maintain certification in this program as an inspection entity. The http://www.hud.gov/offices/hsg/sfh/mhs/mhshome.cfm

Contractor’s primary means is to evaluate the quality control procedures in use at manufacturing facilities through auditing, to ensure that the IPIA is performing satisfactorily.

The DAPIA monitoring tasks require the Contractor to assist HUD in tasks required to evaluate the performance of design approval agencies and provide recommendations to HUD on related aspects of the program. These tasks include reviewing a percentage of designs for conformance to the Standards, using engineering audits of design approval agencies to undertake DAPIA performance evaluations. The

Contractor also maintains physical storage of hard-copy designs and microfilm, and an electronic library for the retrieval and storage of manufactured housing designs.

The SAA assessment tasks are to assist HUD in monitoring and verifying that the 38 SAAs handling manufactured housing-related consumer complaints are performed satisfactorily. The Contractor, as detailed in this Statement of Work (SOW), will assist in reviewing and/or verifying data on consumer complaints, and assist HUD in verifying that required actions are taken for groups of homes with similar problems.

Other services include alternative construction reviews, special investigations and studies, regulatory specialist services, and customer feedback. Refer to Section E, PRINCIPAL TASK FIVE:

OTHER SERVICES for more details.

The IPIA, DAPIA, SAA Monitoring & Inspection Contractor will be required to coordinate and integrate its activities in a smooth and seamless fashion with the other program Contractors for HUD in this program. The procedures, reports, and computer software and databases delineated in these principal tasks are currently being utilized in administering the manufactured housing program.

BE FOREWARNED:

While performing the tasks under this SOW and during the duration of this contract, the

Contractor may be subject to legal suits brought forth by monitored entities. Also, due to the nature of this SOW, the Contractor shall expect changes in the industry that may occur during the course of this contract. Examples are:

(a) The quality, number of plants, and production totals of manufactured homes;

(b) The number of design packages and drawings generated;

(c) The type and numbers of post-design or post-production problems experienced in the field;

(d) The frequency and extent of natural disasters;

(e) Problems with the quality control operations, which could require increased or shifted monitoring and audits;

(f) SAA assessment inspection issues;

(g) Special factory, retailer, transport, installation, or site inspection issues; and

(h) Superior or more appropriate methods to carry out the tasks of this SOW.

Such changes may or may not impact the total value of the current contract period of performance, and if necessary, a contract modification will be processed to reflect the required changes.

C.3 SCOPE OF WORK OUTLINE

A. Principal Task One: Project Management

1. Start-up Meeting & Project Management Plans (PMP)

2. Work & Budget Plans (WBP)

3. Work & Budget Plan for Option Year

4. Transition Plan

5. Contract Status Meetings & Reporting

6. Secured Data & Office Space (Computer Hardware and Software Requirements)

7. Internet Materials and Data Access

8. Assist HUD in Coordinating with other Program Contractors

9. Technical Information Exchange and On-site Assistance

B. Principal Task Two: IPIA Monitoring Audit Procedures

1. IPIA Audit Procedures

2. In-Plant Audits

3. Analysis of In-Plant Audit Reports

4. Post-Production Follow-Up Audits/Consumer Sites

5. State Participation in Monitoring and Enforcement Program

6. Contractor Management visits to IPIA Headquarters

7. IPIA Performance Reviews (IPR)

8. Coordination, Reporting and Verification of Labels and Fees

9. IPIA Scheduling, Reports, and Correspondence

10. Procedural Revisions

C. Principal Task Three: DAPIA Monitoring

1. Design Library

2. DAPIA Monitoring Procedures

3. Design Review

4. Design Error Records

5. DAPIA Headquarters Visits

6. DAPIA Performance Review (DPR)

7. DAPIA Scheduling Reports and Correspondence

D. Principal Task Four: SAA Assessment

1. Cooperative Management Assessments (CMAs)

2. Post-Production Audits

3. Record Reviews at Manufacturer Facilities

4. SAA Related Reporting

5. Review of State Plans

E. Principal Task Five: Other Services

1. Special Construction/Alternate Construction Approvals

2. Special Investigations and Studies

3. Analysis and Development of Draft Papers on New Technical Issues

4. Regulatory Specialist Services

5. Administrative Proceedings

6. Freedom of Information Act Requests (FOIAs) assistance for Manufactured Housing

7. Evaluation of Applications for New Manufactured Housing Partners

8. Inquiry Responses

9. Primary Inspection Agency (PIA) Committee Administrative Support

10. HUD Tracking Log

11. Customer Feedback

A. Principal Task One: Project Management

The Contractor is responsible for providing office space, general office equipment, contract policies and procedures, and work plans. General management includes supervision of personnel, staff performance, meetings, data collection and reporting, coordination, planning, and customer feedback.

1 - Start Up Meeting & Project Management Plans (PMP)

The Contractor will confer with the GTR/GTM to schedule a start-up (brainstorming) meeting, to be held within five (5) business days after contract award at HUD Headquarters in Washington, DC.

Topics covered in the start-up meeting shall include: Activities defined in this SOW; a draft transition plan; communications between HUD and the Contractor; the initial draft PMP; staffing; logistics;

timetables; deliverables; vouchers; payments; and other issues, as necessary.

The Contractor shall submit an initial draft PMP, which must include the following details:

(a) Key Personnel, administrative staff, and the appropriate staff allocation/hours for each principal task during the Base Period of the contract.

(b) Criteria for Key Technical Personnel: The method for employing engineering and inspection personnel in accordance with American Society of Testing and Materials (ASTM) E-541 (Standard Criteria for

Agencies Engaged in System Analysis and Compliance Assurance for Manufactured Buildings).

(c) A general narrative addressing the goals to be accomplished as part of each principal task , the activities to be carried out to achieve those goals, and how these activities relate to the overall allocation of budget and staff resources. For each task in the SOW where a deliverable is indicated, the plan shall describe the work product or deliverable, its probable audience, format of documents and reports, and the appropriate method of distribution.

(d) Monthly reports shall outline each principal task and subtasks and the staff allocation, along with an associated cost budget. The PMP shall include a sample monthly report.

Please Note: The PMP may be updated from time to time, as directed by the GTR/GTM, to reflect approved changes during the progress of the contract. In particular, the Contractor shall provide the

Department with an updated plan if: (a) any work requirements of the contract scope or completion date(s) are changed by contract modifications or (b) there is a substantive change in the work requiring reallocation of resources within contract scope, budget, or overall time of completion. This Task will be repeated for each Option Period.

2 - Work & Budget Plan (WBP)

The Contractor shall prepare a WBP projecting for the year details of the budget allocation, staff resources and a proposed schedule with dates for the specific task requirements outlined in this SOW. The

WBP shall include any new approaches or processes and developments that reflect best value to HUD and shall be submitted within 20 business days after the start-up (brainstorming) meeting.

The Contractor’s Project Manager shall monitor monthly progress and make necessary adjustments to the WBP, working closely with the GTR/GTM. Approval shall be obtained from the GTR after providing justifications that impact the budget and the established deliverable schedule. Annual progress reports containing completed work, variations and justification for variances, labor hours spent, and variances in budget versus actual hours/expenses for each subtask shall be provided to HUD within 20 business days of the end of each contract year.

For planning necessary workshops and meetings related to the monitoring activities, the primary participants are generally staff of the IPIAs, DAPIAs and SAAs. Travel, lodging, and per diem costs of those participants, program Contractor staff, and the presenters, may be reimbursed with the authorization of the GTR in accordance with the Federal Travel Regulations (refer to A.9).

3 – WBP for Option Year

Upon notification of HUD’s intent to exercise the coming Option Year, the Contractor shall prepare a new WBP as described in A.2 above, and shall be submitted 20 business days prior to the end of the then-current contract year.

Please Note: Any WBP may also be updated from time to time, as directed by the GTR/GTM, to reflect approved changes during the progress of the contract. In particular, the Contractor shall provide the

Department with an updated plan if: (a) any work requirements within the contract scope or completion date(s) are changed by contract modifications or (b) there is a substantive change in the work requiring reallocation of resources within contract scope, budget, or overall time of completion.

4 - Transition Plan

A transition to a new Contractor may be required before the expiration of the contract period.

Should this occur, a modification to the contract will be issued to incorporate a task for this requirement.

No later than 12 weeks from the date of contract award, the Contractor shall deliver the final version of a transition plan for all contractual activities. The draft plan will assist the Department, at the end of the contract, in assuming or overseeing the transfer of all files and electronic and hardcopy material maintained by the Contractor. By the end of week 6, the Contractor shall provide the GTR/GTM with a draft transition plan outlining the transition steps to be taken, the materials to be transferred, and the schedule for transfer.

The GTR shall return to the Contractor the draft transition plan with any required revisions no later than week 10. The Contractor shall incorporate those changes in a final version of the draft transition plan to be delivered to the GTR/GTM in a hard and electronic copy no later than week 12. A proposed schedule and key steps of such a draft transition plan should include but not be limited to:

1. GTR’s notification to the Contractor of the initiation of the transition period. Meeting with current

Contractor, new Contractor, and HUD staff to discuss background, history, project status, operational rules;

2. Transition of appropriate paper records, files, data and related hard copy data;

3. Transition of appropriate electronic files and data;

4. Meeting with current Contractor, New Contractor, and HUD staff to finalize transition, and close out any other outstanding items.

5 - Contract Status Meetings & Reports

A. Status Meetings

The Contractor’s key personnel and technical staff must be readily accessible to the CO, GTR, GTM and other appropriate HUD personnel for scheduled monthly meetings (TBD) at HUD

Headquarters in Washington, D.C., and also for any impromptu meetings that shall arise to brief the Department on contract activities, progress, and special issues. Some meetings will require in-person attendance within 24 hours of a request. Consequently, phone, email communications, and video conferencing for some meetings will not be acceptable.

The purpose of these meetings is to encourage clear and concise communications between HUD and the Contractor in making swift decisions and taking timely actions. Certain decisions regarding safety or legal issues raised by interested parties often must be made on short notice. Some issues may require joint review of designs, plans, audit information, or similar data.

In addition to the monthly reports, meetings, workshops and seminars, the Contractor staff personnel may be required to attend technical and industry committee meetings, or other manufactured housing meetings related to the development of construction or installation standards, enforcement regulations, or other issues, as authorized by the GTR. The Contractor shall provide notes of these meetings upon request from the GTR. The Contractor shall also provide HUD-approved materials for workbooks on monitoring or assessment-related material for workshops and seminars identified by the GTR/GTM. The Contractor will attend, or participate by conference call, one national workshop, ten industry meetings, and multiple conference calls.

B. Monthly Contract Status and Ad Hoc Reporting

The Contractor shall provide to the Department, on an as-needed basis, 1) reports on current data collected for all tasks in this SOW, and 2) data forms and instruments used to collect data. These reports are likely to be requested in written and electronic formats. The Department anticipates one report per month reviewed during a monthly status meeting. The contractor may use existing data forms and instruments in place (i.e. HUD Form 302, Standard Form 1034 and computer hardware and software) or may create data forms and instruments as may be required.

The contractor shall also provide to the Department information necessary to fulfill any new requirements for data collection, along with the form or information collection instrument to meet those requirements. These are subject to HUD approval, and may be subject to approval from the Office of Management and Budget (OMB).

6 - Secured Data & Office Space (Computer Hardware and Software Requirements and Coordination)

The Contractor shall safeguard all data in relation to the requirements of this SOW. As result, work to be performed under this contract shall be segregated from all other work performed by the organization. Further, the Contractor shall take proactive steps through a Nondisclosure and Confidentiality agreement to separate work functions so as to not create conflicts of interest (see Section J, Exhibit 4). The

Contractor shall provide a written description of its security plan within 15 business days of contract award and shall be based on the proposal submitted in response to this document.

The balance of the staff and equipment utilized under the contract may be located to suit the

Contractor’s business needs, but all of the Contractor’s staff, including central organization staff, must have access to the Contractor’s computer system used to maintain the program data.

Computer workstations for Contractor staff shall be functional within 15 business days from contract award. Operating system shall be Windows 2000 or upgraded version. Minimum software requirements shall include current versions of Word, Excel, and Access, a web browser, and virus protection. Workstations shall also support the existing HUD provided custom applications listed in Section

J, Exhibit 1.

HUD-provided custom software applications shall be installed and functional within 20 business days of contract award. The primary data collection application used by the 38 SAA is CASA. It is a database that supports manufacturer monitoring, consumer complaint handling, dealer monitoring, and other SAA activities. With HUD approval, this application may be modified under this contract in order to better support contract tasks.

The Contractor’s computer system shall address data and system security, network security, application security, database security, quality control of data, reliability, server function and capacity, storage capacities, back-up and recovery, off-site back-up requirements, electronic file transfer with other parties, and the ability for HUD staff to view data and report information remotely. Workstation requirements may vary by specific use; for example, a 21” monitor is necessary for review of design documents using the Imaging and Retrieval application. Also, support for off-site contract staff is required including laptop computers and digital cameras suitable for inspection documentation and report preparation during field inspections.

7 – Internet Materials and Data Access

Upon request by the GTR, the Contractor shall provide materials for the Department’s review and possible posting on HUD’s website. Materials shall be compliant with the HUD’s web publication standards (www.hud.gov:80/library/bookshelfl5/policies/standard.cfm). This currently includes monthly updates of no more than six reports in chart format and several text documents once each quarter. The http://www.hud.gov/library/bookshelfl5/policies/standard.cfm

Contractor shall provide HUD staff with electronic access to data prepared, collected and maintained by the

Contractor. Data is to include at least regular reports, drawings, and label information.

8 - Coordination with other Program Contractors

Coordination with other program contractors to enforce or otherwise support the Department in administering all other elements of the program mandated by the Act. Coordination efforts shall include, but are not limited to:

(a) Participating in monthly contract status meetings with staff of other program contractors and organizations; and

(b) Providing and sharing program data and information.

The Contractor must also be able to demonstrate and coordinate all of its own activities, and subcontractor(s)’activities, and when necessary, work with any program contractor for Manufactured

Housing programs designated by the GTR/GTM (e.g. Training Contractor, Installation Contractor, Dispute

Resolution Contractor).

9 - Technical Information Exchange and On-Site Assistance

The Contractor shall attend appropriate workshops, seminars, and meetings, and may be asked to make presentations on technical issues or participate in teleconference calls. In the past, the Contractor has attended 10 such events per year. The Contractor shall coordinate with the any program Contractor(s) designated by the GTR to provide staff for technical exchange of information or assistance on specific issues of a regulatory nature. The Contractor shall provide materials to the Contractor(s) and assist in assembling workbooks for workshops and seminars. The schedule for these events should be submitted in the WBP (see item A.2 of this Section C).

The Contractor shall provide technical assistance and information to IPIA, DAPIA and SAA staff on SAA-related responsibilities, including the proper procedures in performing in-plant record reviews.

This may take place at the plant during the normal record review process in which SAA staff usually accompanies the Contractor, or the Contractor may provide this assistance at a location other than the plant.

B. PRINCIPAL TASK TWO: In-Plant Primary Inspection Agency (IPIA) MONITORING AUDIT

PROCEDURES

The objective of the IPIA monitoring function, on behalf of HUD, is to verify that each HUD-approved In-Plant Primary Inspection Agency has adequately performed all of its functions as outlined in the regulations including Section 3282.362 and other sections of the Regulations

(www.hud.gov/offices.hsg/sfh/mhs/mhsid.cfm). The Regulations may be viewed on HUD’s document website at www.hudclips.org, through the “Library” link, by searching document number “3282.$” in

Section 24 of the Code of Federal Regulations. Also, IPIA monitoring ensures that the manufacturing process is as stated in plant certification reports.

The Contractor shall monitor to determine whether the IPIAs are performing inspections in accordance with their written procedures, the inspections are effective, and that their label control and record keeping is maintained. The completion of these task activities may require travel in the continental

United States as well as Alaska, Hawaii, Canada, or the US territories.

The contractor shall make recommendations to HUD with respect to continued acceptance, disqualification or re-qualification of each IPIA based on the monitoring data and other background information obtained through monitoring and inspections. The Contractor is also responsible to provide recommendations for changes and enhancements that IPIAs should make in their operations in order to improve services and maintain approval to function as an IPIA. The Contractor shall also carry out inspections and other investigations on behalf of the Secretary. The Contractor shall also monitor the

IPIA’s compliance with applicable regulations, including the conflict-of-interest provisions. The Contractor shall refer all issues of noncompliance to the Department.

Overall, activities in this task include conducting in-plant audits and post-production follow-up audits, developing written reports for each audit and annual evaluation, coordinating State participation in monitoring, providing training and workshops for field and senior auditors, conducting visits to IPIA headquarters, compiling reports, scheduling audit trips, coordination with DAPIAs and SAAs, performing special investigations and studies, and providing revisions of auditing procedures.

1 – IPIA Audit Procedures

Historically, the Contractor carrying out the IPIA Monitoring Task has developed a series of audit procedures for Contractor teams to follow in undertaking the monitoring of quality control in manufactured housing plants. The Department must review and approve these procedures before use by the Contractor. In the past these have included the Inspection or Computer Coded Item (CCI) Guidelines, Standards Training and Inspection (STI) Guidelines, and the Systems-of-Control Guidelines.

Previously, all Contractors have had up to six months to adopt the existing procedures, or to develop their own procedures for review and approval by the Department. The Contractor, subject to program office approval, shall draft uniform procedures for all in-plant auditing.

The method of monitoring IPIA performance through in-plant auditing has included Contractor and state personnel teams (2 persons per team) comprised of quality control auditors. The current guidelines contain criteria by which the Contractor’s monitoring teams can perform a reasonable and uniform evaluation of the IPIA’s quality assurance program in each manufacturing plant, and the effectiveness of the IPIA’s performance.

The current Contractor audit process requires that the audit team provide at least 24 hours advance notice to an IPIA before the in-plant audit. The purpose of the audit is to determine if the IPIA is assuring that the following aspects of the manufacturing process are carried out:

(a) the manufacturer is capable of following the quality control procedures set out in the quality control manual to be followed in the plant;

(b) the manufacturer regularly follows the quality control manual;

(c) any part of a manufactured home that it actually inspects conforms with the design or that it conforms to the standards where the design is not specific;

(d) wherever it finds a manufactured home in production that fails to conform with the design or the standards, the failure to conform is corrected before the manufactured home leaves the manufacturing plant;

(e) if a failure to conform to the design the standards is found in one manufactured home, all other homes still in the plant which the IPIA’s records or the records of the manufacturer indicate might not conform to the design or standards are inspected and, if necessary, brought up to the design or standards before they leave the plant;

2 - In-Plant Audits

The Contractor shall conduct audits for each active manufactured home production facility in order to evaluate the effectiveness of an IPIA’s surveillance and overall effectiveness of the IPIA’s procedures and oversight. Audit activities include inspection of homes, review of the manufacturer’s quality control program, review of the IPIA and manufacturer inspection documents, and post-production home inspections at retailer sites. The IPIA’s performance is measured for the specific IPIA requirements as outlined in the relevant sections of the Regulations (e.g., 3282.362). The Contractor also conducts in-plant audits shortly after an IPIA either certifies a new plant or takes over IPIA services for an existing plant, to evaluate the effectiveness of the IPIA’s plant certification and surveillance processes.

The Contractor shall also monitor the IPIA’s evaluation of remedial actions taken POCA (Plan of

Corrective Action) and determinations made by manufacturers concerning homes with similar problems generally by reviewing appropriate records in accordance with Subpart I of the regulations (Subpart I investigation). Contractor teams shall routinely review the remedial action records of manufacturers and

IPIAs when conducting multi-day audits.

Audits are conducted in accordance with established written guidelines periodically modified by the monitoring Contractor and approved by HUD as outlined above. Audits require Contractor teams, typically of two individuals, to enter a production facility for typically one day and review all quality control and production operations in place at the facility. Two-person audit teams have historically conducted up to three in-plant audits per trip, spending typically one, but up to three business days at each production facility. This includes review and inspection of testing procedures to determine if the IPIA is complying with applicable Standards and Regulations. The audit team also reviews the IPIA's inspection reports, manufacturer and other Q.C. records, service records, etc., and investigates the sources of problems found by the IPIA and previous Contractor audit teams.

The audit teams may also conduct post-production follow-up inspections, as required by the

Department. Audit teams generally include one Contractor engineer (lead auditor) and one State inspector.

The Contractor shall coordinate with the SAAs and HUD to provide SAA personnel to participate on monitoring teams in accordance with the Federal regulations (24 CFR 3282.452(a)). Personnel from an

SAA shall not participate on joint monitoring teams conducting audits at facilities within their State. Prior to involvement, the Contractor shall determine whether SAA personnel are qualified (per ASTM E-541

Standards) to participate.

The Contractor shall conduct in-plant audits at manufacturing plants (production lines) and compile a report for each audit to be submitted to GTR/GTM. This includes additional audits at selected plants as authorized by the GTM, one-day follow-up audits, and special audits including: multiple-day follow-up audits, post-production home inspections, alternative construction inspections, and Quality

Management Audits (QMAs) conducted at the request of home manufacturers and individually approved by GTM/GTR. For a complete list of audit types, explanations, and approximate level of effort, see Section

J, Exhibit 2. Because the number of audits and audit days are estimated in this document, the Contractor shall demonstrate flexibility and capability to perform additional audits if the situation warrants.

Plans of corrective action are developed by the IPIA and manufacturer for about 10 percent of the manufacturing plants each year. The Contractor shall review, provide comments, and discuss these plans at the management level with HUD, The IPIAs, and manufacturers.

3 - Analysis of In-Plant Audit Reports

For each audit report, the Contractor (quality auditor and/or engineer) shall carefully review the

IPIA’s written response to audit findings and prepare a written reply for HUD’s review and issuance.

The Contractor shall prepare a monthly summary of audit results that includes an executive summary and comments obtained from IPIA headquarters. This summary is used in determining which plants are authorized for follow-up and special audits. The monthly summary shall be arranged and indexed by the Contractor so that manufacturing plants with the highest recommendation for follow-up are first and then based on relative descending priority. Monitoring reports prepared by audit teams must also include reviews of the remedial action records of manufacturers and IPIAs to determine whether the IPIAs have been carrying out their responsibilities with respect to remedial actions (3282.452(g)).

4 - Post-Production Follow-Up Audits/Consumer Sites

The Contractor shall conduct post-production inspections of homes at retailer lots and/or consumer sites to follow-up on in-plant findings and to evaluate the IPIA’s performance. These audits are separate from in-plant follow-up audits. The Contractor shall coordinate the inspections with HUD, the

SAA, the manufacturer, and when appropriate, the retailer and/or homeowner. Resulting data is shared with the IPIAs, SAAs, retailers, and homeowners, as appropriate, and as necessary technical issues are resolved.

The Contractor shall conduct these audits upon request from the HUD.

5 - State Participation in Monitoring and Enforcement Program

State participation in the Monitoring Program is provided for through 24 CFR 3282.308. The

Contractor shall coordinate with participating SAAs and HUD to provide some level of State participation.

SAAs may participate in the monitoring program by entering into agreements with the Department or the

Contractor. These agreements are provided to HUD annually and include the following:

(a) an agreement with respect to the number of person-hours to be provided by the State for participation in IPIA monitoring teams organized by the Contractor. The agreement may call for as many qualified personnel as a State can provide. The Contractor shall determine whether personnel are qualified

(ASTM E-541), and shall only accept those that are determined to be qualified, in accordance with the already established qualification criteria for selecting and evaluating inspection personnel.

(b) a provision that upon termination of the contract between the Contractor and HUD, the Contractor’s rights under the agreement with the SAAs shall be assigned to HUD. No more than one person on any team shall be selected from any one State. A person provided by an approved State may not participate on a monitoring team visiting a plant within his/her State. To the extent possible, state personnel should participate in monitoring facilities that export manufactured homes to their States. However, no more than one SAA person may be on a monitoring team evaluating a state IPIA.

6 - Contractor Management visits to IPIA Headquarters

On an as-needed basis, Contractor management personnel shall visit with IPIA management personnel, either at IPIA headquarters or at the manufacturing plants, to review problem facilities or other concerns. In the past, the Contractor has taken about ten trips each year, with a two-person team including a

Lead Auditor.

7 - IPIA Performance Reviews (IPR)

The Contractor shall assist HUD staff in performing a minimum of one annual IPIA Performance

Review (IPR) for each of the IPIA agencies. For a list of IPIAs, see HUD website at

(www.hud.gov/offices.hsg/sfh/mhs/mhsid.cfm). IPIA performance is measured by the specific IPIA requirements as outlined in the relevant sections of the regulations, including conflict-of-interest assessments (3282.3 59). Findings from IPIA monitoring audits and subsequent reviews may also provide information necessary to complete the IPR.

Data used in the assessment of the IPIA’s performance is generally obtained from:

(a) Audit results conducted at IPIA client facilities;

(b) Post-production follow-up audit results;

(c) Evaluations of the effectiveness of the corrective actions instituted and required by the IPIA, including post-production follow-up inspections to verify if corrective action is required of the manufacturer;

(d) Measurement of the steps taken by a manufacturer in accordance with:

(e) IPIA’s direction or findings;

(f) Evaluation of the effectiveness and adequacy of an IPIA headquarters’ procedures to comply with the regulatory requirements;

(g) Trend analysis, based on IPIA and manufacturer findings compared to Contractor findings from one year to the next; and

(h) Evaluation of the effectiveness of an IPIA in reviewing the manufacturer’s determinations of classes of affected homes for notification and correction.

The Contractor shall outline its preliminary findings and the materials it expects to review during the headquarters visit and draft a letter for HUD’s review and signature. After the in-plant audits at each production facility, post-production follow-up audits, and the headquarters visit, the Contractor shall outline its findings and request any additional information it expects from the IPIA to formulate a comprehensive and complete report and provide recommendations to HUD. In some cases, additional data includes information on corrective actions initiated and required by the IPIA and the steps taken by the manufacturer per the IPIA’s direction.

Other information used in the assessment of IPIA performance includes information on the IPIA’s procedures, personnel, and coordination with field or branch activities. The Contractor’s analysis of this data is compiled in a report along with an assessment of the IPIA’s performance.

The report shall be thorough and provide specific recommendations to the Department for any improvement, and for the Department to continue to accept, increase monitoring of, or take other action with the IPIA, after which HUD decides on an appropriate action. The annual report (IPR) shall be organized and include analysis in six major categories:

(a) Plant certification;

(b) Inspections to ensure conformance to designs, QA manuals, and the standards;

(c) IPIA’s follow-up on class determinations and corrective actions;

(d) IPIA’s personnel;

(e) IPIA’s headquarters operations; and

(f) IPIA procedural compliance with Federal Regulations.

The Contractor, as directed by the Department, may perform about six similar mid-year evaluations and conduct special visits at the IPIA headquarters and plants with the IPIA field supervisors. Contractor management staff is required to attend the headquarters audit and special visits.

The Contractor shall monitor the effectiveness and thoroughness of IPIA Plans of Corrective Action and provide written comments to HUD upon request. The Contractor shall maintain a tracking and filing system for both IPIA and manufacturer plans of corrective action.

8 - Coordination, Reporting and Verification of Labels and Fees

A HUD certification label is the approved form of certification by the manufacturer permanently affixed to each transportable section of a home. These labels are initially provided by the Department, through the Monitoring and Inspection contractor, to the IPIA. The IPIA then issues the labels to the manufacturer at the plant. The Monitoring Contractor, the IPIA, and the manufacturer are each required to keep detailed record keeping, with regular reporting to the Department using form HUD-302 (HUD

Manufactured Home Monthly Production Report). The label information is then the property of the

Department and is then the sole source of label information collected and maintained by the Monitoring

Contractor on behalf of the federal program.

A. Database and Records Management

Each month, IPIAs and manufacturers shall transmit to the Contractor, on behalf of the federal program, data required by regulation, in approximately 10 sets of electronic spreadsheets, in a

Windows compatible format. Approximately 85% of the data is transmitted electronically. This will include figures reporting the level of production of manufactured housing by production facility, and the shipments made to each State by each production facility. The Contractor shall be responsible for receiving from each manufacturer the spreadsheets, and for developing and maintaining databases of the collected data to administer the variety of tasks outlined below, on a regular basis. For the small number of manufacturers that supply hand-recorded information, the

Contractor shall key-enter data from the supplied reports. All records are the property of the

Government.

B. HUD Labels; Production, Storage, Inventory Control, and Inquiries

The Contractor shall use the data collected from manufacturers and IPIAs to ensure that each IPIA is supplied (by the Contractor) on a timely basis with a sufficient quantity of HUD Labels for all parties to perform their functions. Currently about 237,000 labels are issued and tracked by the

Contractor annually. The Contractor shall then monitor the home shipment reports provided by the

IPIAs, and compare them against the numbers of labels ordered, to ensure that none are unaccounted for or used illegally. It is the responsibility of the Contractor to investigate, rectify and notify the GTM of conditions or instances where labels are unaccounted for or may be used illegally.

The Contractor is responsible for the production and distribution of all the HUD labels purchased by IPIAs. Recently, annual industry label orders total approximately 237,000 labels with a

Contractor cost of about 25 cents per label. However, label numbers and cost are subject to change depending upon several industry and economic factors such as home production and market conditions. The label shall conform to requirements in the Regulations. IPIAs may provide manufacturers with a two- to four-week supply of labels, with exceptions approved by the GTR.

The Contractor shall provide assistance to manufacturers and IPIAs with label data and is required to handle inquiries and resolve problems regarding lost labels, damaged homes, older homes, or other issues that arise regarding the use of HUD Labels.

C. Tracking and Reporting of Label Data, and Home Production and Shipment Data

The Contractor shall perform a quality control check of label data received from manufacturers to ensure accuracy and consistency in retailer names, addresses, label numbers, etc. By the 7th day of each month, or when requested by the Department, the Contractor shall prepare a report (in both hardcopy and electronic format) of the production and shipment of all homes, reporting at a minimum the level of production by manufacturer, IPIA, and State for the previous month.

Outstanding labels shall be identified and tracked. The Contractor is responsible for regular and accurate reporting of outstanding labels. The Contractor shall then prepare and transmit a monthly national report and other reports such as trend analysis, yearly summaries, and projections to the

GTR.

These home production and shipment reports shall also be provided to the SAAs or other parties designated by the GTR in different formats, such as by retailer, as requested by the individual

SAA or the GTR.

D. Labels and Label Fee Payment Forms

The Contractor shall work with the Department to receive daily copies of checks and accompanying forms received from the program’s lockbox, at the bank with which the Department holds an account for the program. The Contractor shall record and maintain this data on a daily basis, and it shall be readily accessible to the Department.

Before issuing labels to an IPIA, the Contractor shall ensure that the IPIA has received and forwarded to the Contractor payment forms from all manufacturers associated with the IPIA’s label order. This is typically verified through review of the payment forms and copies of checks submitted to the Contractor. The Contractor shall direct the IPIA to contact manufacturers regarding any incorrect payment and require the IPIA to obtain and submit correct payment before issuing labels. If the payment is still incorrect, the Contractor must require that payment from direct manufacturers with payment discrepancies may only be made by certified checks before issuing further labels to the IPIA.

E. State Fee Accounting and Payment Process

The Contractor shall assist the Department in its monthly distribution of funds to the 38 SAAs by coordinating the monthly production numbers and shipment figures from each State in a format provided by the Department upon award of the contract. The Contractor is also responsible for preparing invoices for each participating state, and performing other tasks required to assist HUD in the Department’s disbursement of appropriate and sufficient funds.

F. Letters of Label Verifications

When purchasing, selling or refinancing a manufactured home, FHA and conventional mortgage companies, along with other real estate-related firms, require that the Certification Labels be attached to each manufactured home. To complete the transaction these parties often require additional information such as serial number, name of manufacturer and the year the home was built. For homes receiving an FHA-insured mortgage, where the labels are missing or the data plate has been removed from the inside of the home, the Monitoring Contractor, on the

Department’s behalf, will issue a letter of label verification providing this information to the requesting party. This is a verification service that requires the requesting party provide some information that will allow the Monitoring Contractor to search and find data stored electronically.

The requests are categorized as FHA requests or conventional loan requests. Currently there is no charge to the requesting party for FHA requests as long as a valid FHA case number is provided with the request, which can then be verified by the Department. The Contractor may charge a fee, approved by the Department, for label information not related to a current request for an FHA insured loan. Currently, there are an average of 350 FHA requests and approximately 400 conventional requests made each month.

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