B01 Attachment J-1 - Escrow and Investment Fund Management PWS 03.21.2024.pdf

PERFORMANCE WORKSTATEMENT (PWS)

Escrow and Investment Fund Management Support Services

03/21/2024

1. Introduction

1.1 United States Department of Agriculture (USDA), Rural Development (RD) Business Center (BC) provides loans for low and moderate-income applicants located in rural geographical areas to assist them in obtaining decent, sanitary, and safe dwellings through Single-Family Housing (SFH), Guaranteed and Multi-Family Housing (MFH) programs.

From within the BC, escrow is serviced by the Servicing Office (SO) and disbursed by the Finance Office (FO). The SO currently services a portfolio of approximately 206,000 SFH loans, which was valued at a total of $14M at the end of Fiscal Year 2023. The loans are in each of the 50 states and United States Territories including Puerto Rico, Virgin Islands, Guam and the remainder of the Western Pacific Rim islands.

1.2 In 1996, RD began to centralize its operations in St. Louis, MO and convert its SFH - Direct portfolio to a new mortgage-based servicing system to provide centralized support and begin to provide escrow related services for new and existing borrowers. As a result, over 1,000 field offices were closed nationwide, and their functions were absorbed into the Centralized Servicing Center. In 2020, the Business Center was created which split the escrow functions between the Servicing Office and the Finance Office. The RD National Office, located in Washington, D.C., continued to provide oversight for the loan programs.

1.3 The SFH loan portfolio has reached approximately 140,000 "escrowed" borrowers. The escrow portion of the Monthly payments (principal, interest, and escrow) received from these borrowers are retrieved from the U.S. Treasury and directed to an escrow bank account that FO is custodian of for the SFH borrowers.

1.4 FO currently utilizes bank accounts at the Contractor to accumulate and invest the escrow deposits, and other receipts, and later disburse on behalf of SFH borrowers that have a mortgage with RD. An Escrow Concentration Account acts as the "primary" bank account, where escrowed checks are funded from, and other sub-accounts are associated with.

1.5 While the verbiage in this PWS references all accounts and functions as ‘escrow’, the true nature of the required services is aligned with cash management. The Government administers all of the escrow functions within their Single-Family Housing (SFH) Accounting but requires a contractor to hold the funds until they need to be utilized by the SFH borrowers. All ‘escrow’ accounts shall be set up as demand deposit accounts (DDA).

2. Bank Account Operations Background

2.1 The USDA-RD-BC operates and maintains the SFH Direct Loan portfolio using a series of eight (8) interrelated servicing/management accounts. The purpose of the number of accounts used is to isolate and track disbursements based on transaction type and isolate excess balances for investment purposes.

2.2 The accounts used are as follows(corresponding details for each account are listed below):

1) Escrow Concentration Account

2) Escrow Disbursement Account

3) Escrow Concentration Investment Account

4) Net Income Custody Account

5) Net Income Custody Investment Account

6) EFT Account

7) Escrow Voucher Account

8) Emergency Disbursement Account

Account 1: The USDA-RD Escrow Concentration Account is the primary banking account funded with a Monthly ACH reimbursement of borrower funds from the U.S. Treasury. The Escrow Concentration Account shall be capable of receiving and disbursing ACH and wire transfer transactions of approximately $400 Million annually and allow sweeps to/from associated sub-accounts. A balance of at least $50 million is maintained in the account on a Monthly basis. This balance fluctuates based on escrow cash flow, cyclical escrow disbursement projections and short-term investment trends. Balances are invested in a Money Market Mutual Fund that contains 100% U.S. Treasury Securities.

Account 2: The USDA-RD Escrow Disbursement Account is a controlled disbursement, zero-balance account (ZBA), that checks are drawn against. FO disburses checks daily payable to taxing authorities, insurance carriers, etc., on-behalf of borrowers and other miscellaneous disbursements for RD. There are two check presentment clearings at the contractor bank for the Escrow Disbursement Account each business day. At the end of each day, the gross amount of the check presentments is swept from the Escrow Concentration Account. Currently, an average of 55,000 checks are disbursed annually for a total of approximately $106 million.

Account 3: The USDA-RD Escrow Concentration Investment Account contains borrower escrow funds invested in "second tier" investments (i.e., individual U.S. Treasury Bills and/or a Money Market Mutual Fund that contains 100% U.S. Treasury Securities). The Escrow Concentration Investment Account shall be capable of supporting investment balances over $50 Million. The funds invested in this Investment Account are moved to/from the Escrow Concentration Account (greater than the targeted $50 million dollar balance) after receiving written instructions from the FO. As individual investments mature and/or new funds are deposited, the FO will discuss with the service provider's investment advisor a new investment vehicle and maturity.

Account 4: The USDA-RD Net Income Custody Account contains income from investments less the Monthly analysis fees. A balance of $300,000 is maintained in the account Monthly.

Balances are invested in a Money Market Mutual Fund that contains 100% U.S. Treasury Securities. The interest earnings on all accounts are used to pay the Monthly analysis fees.

Monthly analysis fees are the Government’s cost to the bank for having the open accounts and receiving the support services covered in this PWS. Analysis fees are simply service fees or transaction fees (stop pays, voids, number of deposits, etc.). The FO evaluates the Monthly statements and, if necessary, prepares an ACH transaction to pay the remaining Monthly analysis fees out of the Net Income Custody Account. The FO also provides oversight on the amount of analysis fees deducted from interest earnings.

Account 5: The USDA-RD Net Income Custody Investment Account contains outstanding Net Income Custody funds (more than $300,000) which are invested in individual U.S.

Treasury Bills and/or a Money Market Mutual Fund that contains 100% U.S. Treasury Securities. The income earned from the Net Income Custody Investment Account is automatically credited to this account Monthly. As individual investments mature and/or new funds are deposited, the FO will discuss with the service provider's investment advisor a new investment vehicle and maturity. The Net Income Custody Investment Account shall be capable of supporting custody services for investment balances over $20 Million.

Account 6: The USDA-RD EFT Account is the conduit to disburse new loan origination funds via electronic fund transfer (ACH and wire transfer) daily to pre-approved mortgage loan closing agents. SO prepares and FO approves each business day a data file that contains detailed ACH transmission information (i.e., payee name, bank ABA number, payee bank account number, dollar amount of transaction, addenda information, etc.) for mortgage closing agents. A separate "funding" ACH transaction is directed from the USDA-RD FO Disbursements Branch to the EFT Account for the daily gross disbursement dollar amount via Treasury’s Secure Payment System (SPS). The EFT Account shall be capable of supporting ACH and wire transfer services for disbursement transactions of at least 6,250 items and totaling $1.3 Billion annually.

Account 7: Another sub-account utilized by USDA is the USDA-RD Escrow Voucher Account. The Escrow Voucher Account was established to receive electronic fund transfers (ACH and wire transfer). Escrow Vouchers are requested by the SO and funded by the USDA-National Finance Center (NFC). The Escrow Voucher Account allows for ease of receipt, posting, reconciliation and sweep into the Escrow Concentration Account nightly.

The Escrow Voucher Account shall be capable of supporting ACH and wire transfer receipts of at least 10,000 items and totaling more than $60 Million annually.

Account 8: The final sub-account utilized by USDA is the USDA-RD Emergency Disbursement Account. The Emergency Disbursement Account is a ZBA that has been established to disburse manual checks in a continuity of operations planning (COOP) environment when the loan servicing platform is unavailable, and checks cannot be initiated from the Escrow Disbursement Account. Checks disbursed from this account are funded by the Escrow Concentration Account.

3. Government Roles & Responsibilities

3.1 Contracting Officer (CO) - The government official responsible for the execution and administration of the contract on behalf of the government.

3.2 Contracting Officer Representative (COR) - The government official designated by the

CO and responsible for performance monitoring and quality assurance on behalf of the government.

3.3 Finance Office Point of Contact (POC) – The government point of contact designated by the Chief Financial Office who is also responsible for performance monitoring and quality assurance on behalf of the government, as well as the government subject matter expert.

4. Scope of Work

4.1 The contractor shall provide all personnel, compatible software, access to reconciliation tools, financial system administrative set-up, supervision and other items and services necessary to perform the disbursement, banking, custody and investment services, and management reports (i.e., "Full" Months-end (M/E) Account Reconciliation Plan (ARP) to include the prior Months activity for cleared, voided, stop paid and outstanding checks, miscellaneous bank adjustments, M/E bank statements for each bank account, quarterly investment review for both Custody Accounts, etc.) as defined in this Performance Work Statement (PWS). The contractor shall perform to the standards stated in this contract.

4.2 This scope of work must be contracted directly with, and performed directly by, a bank rather than any third-party company. This contract is completely self-funded from the interest earned from the supported accounts, and there are no federal funds available to cover third-party costs. Additionally, the federal government must, and shall, retain total authority and control of these account and the processes covered in this PWS, and all servicing actions and financial reporting must be directed and performed by Rural Development (RD) personnel. Subsequently, performance by a third-party other than directly with a bank is not feasible in accordance with Rural Development’s mandated policies and procedures.

4.3 The contractor shall abide by and perform all transition-in/transition-out requirements for all eight (8) accounts as detailed in Section 7 of this PWS.

5. Requirement (Objectives)

5.1 The purpose of this contract is to maintain, administer and report USDA-RD's disbursement, banking, custody, and investment activity services as they relate to deposits and disbursements. The Contractor shall provide professional banking services, ensure timely and accurate reconciliation of the various investment and disbursement bank accounts, and provide professional investment services to ensure maximum return on investments while preserving principal.

6. Specific Tasks

6.1 The Escrow Concentration Account shall be established by the contractor as soon as possible, and no later than 30 calendar days from contract period of performance start date in accordance with this PWS (pending full set-up and testing), to include all transition-in/transition-out requirements as detailed in Section 7. The contractor shall ensure the account is fully operational to satisfy the requirements of this PWS as soon as possible, and no later than 150 calendar days from contract period of performance start date in accordance with this PWS, to include all transition-in/transition-out requirements as detailed in Section

7. The Escrow Concentration Account will contain both SFH borrower escrow-related funds that have been reimbursed by ACH transmission from the U.S. Treasury. The Escrow Concentration Account shall be capable of receiving and disbursing ACH and wire transfers and allow movement of funds (i.e., sweeps, intra-bank transfers, etc.) amongst the other below listed USDA-RD bank and custody accounts. The daily wires need to process throughout the day and no later than 5:15pm CT on the same business day. The ACH transactions shall provide a confirmation report showing it was approved and those shall process in the nightly update, since ACH transactions will be debited from the Escrow Concentration Account on the next business day. A balance of $50 million is targeted in the account on a Monthly basis. This balance fluctuates based on cash flow, cyclical disbursement cycles and short-term investment trends. Balances will be invested in a Money Market Mutual Fund that contains 100% U.S. Treasury Securities. The Escrow Concentration Account shall have overdraft protection. In the event of an overdraft, the contractor’s Contract Manager, or designee, will "endeavor" to call the FO point of contact to fund the shortfall. At Months-end all associated banking fees incurred by the Escrow Concentration Account from services utilized will be deducted from the USDA-RD Net Income Custody Account. All income earned from investments in the Escrow Concentration Account shall be moved to the USDA-RD Net Income Custody Account at Months-end automatically by contractor.

6.2 The Escrow Disbursement Account shall be established by the contractor as soon as possible, and no later than 30 calendar days from contract period of performance start date in accordance with this PWS (pending full set-up and testing), to include all transition-in/transition-out requirements as detailed in Section 7. The contractor shall ensure the account is fully operational to satisfy the requirements of this PWS as soon as possible, and no later than 150 calendar days from contract period of performance start date in accordance with this PWS, to include all transition-in/transition-out requirements as detailed in Section

7. The Escrow Disbursement Account shall be established as a controlled disbursement, ZBA that USDA-RD checks will be drawn against. FO routinely disburses checks payable to taxing authorities, insurance carriers, etc., on-behalf of escrow borrowers and other miscellaneous disbursements for RD. There shall be two check presentment clearings for the Escrow Disbursement Account each business day. At the end of each day, the gross amount of the check presentments is swept from the Escrow Concentration Account. At Months-end all associated banking fees incurred by the Escrow Disbursement Account of contractor services utilized shall be deducted from the USDA-RD Net Income Custody Account.

6.2.1 The contractor shall make available Monthly images (front and back) of USDA- RD-CFO checks that have cleared the Escrow Disbursement Account and Emergency Disbursement Account that are accessible on-line and compatible with Windows 10 and can be accessed by Microsoft Edge and/or Google Chrome. The contractor shall provide written instructions and the software required to view the check images as applicable.

The contractor shall make available the Monthly images of checks no later than the 15th calendar day of the following Months.

6.2.2 The contractor shall provide on-line access to allow for Escrow Disbursement Account and Emergency Disbursement Account check voids and stop payments processing. The contractor shall provide written instructions and the software required to accomplish each function on-line as applicable. The software shall be compatible with Windows 10 and be accessible by Microsoft Edge or Google Chrome web browser as applicable.

6.3 The USDA-RD Escrow Concentration Investment Account shall be established by the contractor as soon as possible, and no later than 30 calendar days from contract period of performance start date in accordance with this PWS (pending full set-up and testing), to include all transition-in/transition-out requirements as detailed in Section 7. The contractor shall ensure the account is fully operational to satisfy the requirements of this PWS as soon as possible, and no later than 150 calendar days from contract period of performance start date in accordance with this PWS, to include all transition-in/transition-out requirements as detailed in Section 7. The Escrow Concentration Investment Account contains borrower funds and is invested in "second tier" investments (i.e., individual U.S. Treasury Bills and/or a Money Market Mutual Fund that contains 100% U.S. Treasury Securities). The funds invested in this custody account are moved to/from the Escrow Concentration Account (greater than the targeted $50 million-dollar balance) after receiving written instructions from the FO. As individual investments mature and/or new funds are deposited the FO will discuss with contractor's investment advisor a new investment vehicle and maturity. All income earned from investments in the Borrowers Escrow Funds Custody Account shall be moved to the USDA - RD Net Income Custody Account at Months-end automatically by contractor.

6.4 The USDA-RD Net Income Custody Account shall be established by the contractor as soon as possible, and no later than 30 calendar days from contract period of performance start date in accordance with this PWS (pending full set-up and testing), to include all transition-in/transition-out requirements as detailed in Section 7. The contractor shall ensure the account is fully operational to satisfy the requirements of this PWS as soon as possible, and no later than 150 calendar days from contract period of performance start date in accordance with this PWS, to include all transition-in/transition-out requirements as detailed in Section 7. The funds in the Net Income Custody Account, more than $300,000, are invested in the Net Income Custody Investment Account with Money Market Mutual Funds that contain 100% U.S. Treasury Securities. At Months-end, all associated custody and asset management fees incurred shall be automatically deducted from the income earned each Months from the various escrow accounts. The FO will review all escrow statements for accuracy and prepare an ACH transaction from the Net Income Custody Account if the fees exceed the income earned.

6.5 The USDA-RD Net Income Custody Investment Account shall be established by the contractor as soon as possible, and no later than 30 calendar days from contract period of performance start date in accordance with this PWS (pending full set-up and testing), to include all transition-in/transition-out requirements as detailed in Section 7. The contractor shall ensure the account is fully operational to satisfy the requirements of this PWS as soon as possible, and no later than 150 calendar days from contract period of performance start date in accordance with this PWS, to include all transition-in/transition-out requirements as detailed in Section 7. The Net Income Custody Investment Account contains net income from interest on escrow and investment earnings. The funds are invested in individual U.S.

Treasury Bills and/or a Money Market Mutual Fund that contains 100% U.S. Treasury Securities. As individual investments mature and/or new funds are deposited, the FO will discuss with the service provider's investment advisor a new investment vehicle and maturity. All income earned from investments in the Borrowers Escrow Funds Custody Account shall be moved to the USDA-RD Net Income Custody Account at Months-end automatically by contractor.

6.6 The USDA-RD EFT Account shall be established by the contractor as soon as possible, and no later than 30 calendar days from contract period of performance start date in accordance with this PWS (pending full set-up and testing), to include all transition-in/transition-out requirements as detailed in Section 7. The contractor shall ensure the account is fully operational to satisfy the requirements of this PWS as soon as possible, and no later than 150 calendar days from contract period of performance start date in accordance with this PWS, to include all transition-in/transition-out requirements as detailed in Section

7. The EFT Account is used to disburse new loan closing funds via electronic fund transfer (ACH and wire transfer) to pre-approved mortgage loan closing agents. The daily wires shall process throughout the day and no later than 5:15pm CT on the same business day.

The ACH transactions shall provide a confirmation report showing it was approved and those shall process in the nightly update, since ACH transactions shall be debited from the Escrow Concentration Account on the next business day. SO prepares and FO approves a data file each business day that contains detailed ACH transmission information (i.e., payee name, bank ABA number, payee bank account number, dollar amount of transactions, addenda information, etc.) for mortgage closing agents. This ACH processing file is transmitted to the contractor each day at approximately 1:00PM ET. A separate "funding" ACH transaction is directed from the USDA-RD FO Disbursements Branch to the EFT Account for each daily ACH disbursement file gross dollar amount. Currently, FO transmits one daily ACH batch file with approximately 520 ACH transactions per Months at approximately $200,000 per ACH transaction. At Months-end all associated banking fees incurred by the EFT Account from services utilized shall be deducted from the USDA-RD Net Income Custody Account.

6.7 The USDA-RD Escrow Voucher Account shall be established by the contractor as soon as possible, and no later than 30 calendar days from contract period of performance start date in accordance with this PWS (pending full set-up and testing), to include all transition-in/transition-out requirements as detailed in Section 7. The contractor shall ensure the account is fully operational to satisfy the requirements of this PWS as soon as possible, and no later than 150 calendar days from contract period of performance start date in accordance with this PWS, to include all transition-in/transition-out requirements as detailed in Section

7. The Escrow Voucher Account is a sub-account of the Escrow Concentration Account.

The Escrow Voucher Account is used to receive electronic fund transfers (ACH and wire transfer). Escrow Vouchers are requested by the SO and funded by the USDA-NFC. The Escrow Voucher Account allows for ease of receipt, posting, reconciliation and sweep into the Escrow Concentration Account nightly. At Months-end all associated banking fees incurred by the Escrow Voucher Account from services utilized shall be deducted from the USDA-RD Net Income Custody Account.

6.8 The USDA-RD Emergency Disbursement Account shall be established by the contractor as soon as possible, and no later than 30 calendar days from contract period of performance start date in accordance with this PWS (pending full set-up and testing), to include all transition-in/transition-out requirements as detailed in Section 7. The contractor shall ensure the account is fully operational to satisfy the requirements of this PWS as soon as possible, and no later than 150 calendar days from contract period of performance start date in accordance with this PWS, to include all transition-in/transition-out requirements as detailed in Section 7. The Emergency Disbursement Account is a sub-account of the USDA- RD Escrow Concentration Account. The Emergency Disbursement Account is a controlled disbursement account that is established to disburse manual checks for continuity of operations (COOP) in an emergency when the loan servicing platform is unavailable, and checks cannot be initiated from the Escrow Disbursement Account. The Contractor shall provide manual check stock for this purpose. Checks disbursed from this account are funded from the Escrow Concentration Account. At Months-end all associated banking fees incurred by the Emergency Disbursement Account from services utilized shall be deducted from the USDA-RD Net Income Custody Account.

6.9 Reporting and Reconciliation - The contractor shall provide an electronic copy to the Finance Office POC email addresses of Months-end Account Analysis (i.e., billing statement) of services provided with associated volumes and cost on each bank account established and maintained for USDA-RD. This document will be reviewed by the CFO COR and Finance POC’s, and upon agreement of Monthly fees written authorization will be directed to contractor for the total fee amount to be deducted from the USDA-RD Net Income Account. These electronic reports shall be provided no later than the 15th calendar day of the following Months.

6.10 Daily Processing and Monthly Reconciliation Software - The contractor shall provide software, written instructions and training that shall allow FO to access all banking requirements listed above over the internet (on-line). The contractor’s system shall allow USDA to import more than one payment file per day (if necessary), allow to process voids (for checks that are returned as undeliverable) and process Stop Pays (for checks that have not been returned and are presumed lost in the mail). Website access is required to research the status of all checks and print an image of a reconciled check converted to a PDF document for USDA’s Customer Service representatives who receive inquiries from their borrowers regarding the status of the check. Any upfront or one-time charges by contractor for this software, training or access should be documented and presented to the CS and CO in the initial proposal.

6.11 RD System Integration and Automation – The contractor shall address the integration of daily processing software with the NowDocs application that USDA-RD utilizes; where transactions are processed from a SQL database and are transmitted to the NowDocs application. NowDocs has an interface, and the import file layout shows the fields (account number, check number, payee field, etc.) and the maximum length for each field. RD CFO staff upload the payment file or multiple files daily. If more than one file is uploaded during the day, the file names are unique to avoid receiving a duplicate file error message.

NowDocs is the only system that requires integration since the RD loan accounting/servicing systems send the files to NowDocs. The Government does not store any data on the cloud. ACH loan closing is also uploaded by a rep from SO, and that will be uploaded as a bulk import file. The Contractor shall provide all necessary software support for ensuring that successful interfacing has been established. If there are any software upgrades during the life of contract, the Contractor is responsible for seeing that the interface can accommodate any changes in the data stream going to the USDA computerized information system.

6.12 ARP Contractor Contacts - The contractor shall provide the names and contact information for the key contact for ARP purposes. An electronic copy to the Finance Office POC email addresses shall be provided of the "Full" ARP reports for the USDA-RD Escrow Concentration, Escrow Disbursement and Emergency Disbursement Accounts Monthly.

These electronic reconciliations shall be provided no later than the 15th calendar day of the following Months.

6.13 Communications Software - The contractor shall provide FO with necessary data transmission configurations and/or software that shall allow bank information and transactions to be processed and communicated between contractor and the FO in real time.

All upfront or one-time charges by contractor for this software, training or access should be documented and presented to the CO in the initial proposal. The software shall be compatible with Windows 10 and be accessible by Microsoft Edge or Google Chrome web browser as applicable. In addition, the contractor shall provide afterhours support for their software.

6.14 Contractor Facility Access - The contractor shall cooperate fully with USDA-RD with matters related to the contract and be able to meet on a regular basis with USDA-RD to conduct reviews. However, it should be noted, the contractor must still comply with federal regulations and internal controls. All requests for inspection and reviews should be limited to USDA-RD's information for the commercial services received, and addressed to the Client Manager who shall promptly review and respond to the request.

6.15 Meetings - The CO, COR, or Finance POC may request a meeting as deemed necessary. Written minutes of such meetings shall be recorded and signed by the CO, COR, or Finance POC. If the contractor does not concur with any portion of the minutes, such non-concurrence shall be provided to the CO, COR, or Finance POC within 5 calendar days following receipt of the minutes.

6.16 Management Plan - The contractor shall provide and maintain a management plan which describes a comprehensive methodology for executing and managing the contract. Provide information on the support that will be provided for Escrow and Investment Management Fund

Support Services. An understanding of the specific management challenges of the contract. Their capacity and experience to meet these challenges. Their ability of ease to interact with on a routine basis and in resolving issues that may arise in a manner that is consistent with the particular culture and style of the procuring agency. How well they are equipped to successfully deploy resources, coordinate the contract’s diverse activities, respond effectively to unforeseen changes, and deliver high-quality services on time and within budget. How successful they will be in performing the contract with little or no Government intervention or burden on the Agency.

Identify and discuss their approach to coordinating, directing, and effectively managing all their employees to include subcontractors. This Management Plan shall be updated on an annual basis at minimum unless otherwise directed by the CO as a result of performance or a change in scope.

6.17 Quality Control Plan (QCP) – The contractor shall provide and maintain a QCP which shall include a description of the Contractor’s quality control system. The system must cover all contract services, specify work to be inspected on either a schedule or unscheduled basis, and describe how inspections are to be conducted. The name(s) and qualifications of the individual(s) responsible for performing the quality control inspections, and the extent of their authority. A description of the methods to be used for identifying and preventing defects in the quality of service performed. Provisions for recording the results of inspections and for recording corrective action taken. Provisions to update and revise the QCP during the performance of the contract. This QCP shall be updated on an annual basis at minimum unless otherwise directed by the CO as a result of performance or a change in scope.

6.18 Transition-In Plan – In the event that a new contract is awarded for the requirement of Escrow and Investment Fund Management Support Services, the incumbent contractor and new contractor shall abide by all the requirements detailed in the transition-in/transition-out requirements section of the PWS to ensure a smooth transition without interruptions of services.

The Contractor shall provide and abide by the detailed plan concerning how the Contractor shall satisfy the Transition-In requirements of the PWS.

6.19 Transition-Out Plan – In the event that a new contract is awarded for the requirement of Escrow and Investment Fund Management Support Services, the incumbent contractor and new contractor shall abide by all the requirements detailed in the transition-in/transition-out requirements section of the PWS to ensure a smooth transition without interruptions of services.

The Contractor shall provide by and abide by the detailed plan concerning how the Contractor shall satisfy the Transition-Out requirements of the PWS.

7. Transition-In/Transition-Out Requirements

7.1 In the event that the follow-on contract for this requirement is awarded to a new contractor, the incumbent contractor and new contractor shall abide by and fulfill all transition-in/transition-out requirements as detailed in this PWS to ensure a seamless transition without interruption of services.

7.2 The Government estimates that it may take a total of 10-12 Months from date of new contract award to fully transition-out all account funds and services from the incumbent contractor accounts to new contractor accounts, with the new accounts being fully operational. Once all funds have been transitioned-out of the incumbent accounts, those accounts shall be closed by the incumbent contractor at the direction of the Government.

While the requirements of the PWS state that the new accounts must be established with the new contractor within 30 calendar days of contract period of performance start date, the Government estimates that it may take up to 150 calendar days for complete set-up and testing before for those new accounts are determined to be fully operational in accordance with the PWS. After all set-up and testing has been completed, the new contractor shall ensure all required functionality to perform the full scope of the PWS is attained for all eight

(8) accounts no later than 150 calendar days from the new contract period of performance start date. After 150 calendar days from the new contract period of performance start date, all new transactions shall utilize the new contractor’s accounts, and no new transactions will utilize the incumbent contractor’s accounts. Only the minimum balance(s) required to cover outstanding checks and all fees associated with residual work initiated prior to the 150 day mark shall be retained in the incumbent contractor accounts and paid for out of the accounts. As a result, the government anticipates a continuous reduction in the volume of services under the incumbent contract, immediately following the 150th calendar day, until all residual transactions are completed, all accounts are closed, and the transition fully completed.

7.3 The government will provide thorough oversight during the transition period, which will include daily balancing of all accounts and associated funds under both the incumbent contract and the newly awarded contract. Both the incumbent contractor and new contractor shall provide daily balances of all accounts that remain open with each of them no later than 6:15PM ET. Additionally, the Government will also ensure there is an audit trail for all transferring of funds and handling of the investment accounts in accordance with RD-CFO audit requirements.

7.4 The transition-in for the new contractor shall include a complete review and evaluation of any/all service level agreements, establishing the 8 new specific escrow accounts, and ensuring a total understanding of the full scope of the required activities in accordance with the PWS.

7.5 The Government’s estimate of 10-12 Months for the transition period includes the following:

Month 1: The Government and the new contractor will initiate Transition-In Activities to include routing any necessary paperwork such as Service Level Agreements, and/or to obtain any authorized signatures for the bank accounts. All 8 new accounts shall be established (still pending setup and testing).

Month 2: The new contractor shall continue coordinating with the FO to obtain the required authorized signatures for the bank accounts and the government will determine the appropriate procedures for requesting investments in the two (2) investment accounts. Setup and testing of the required capabilities for all 8 accounts shall also commence as soon as possible.

Months 3-4: The new contractor shall ensure all necessary setup and testing for all accounts is completed to include, but is not limited to:

a) Updates to the NowDocs USB module to new bank name, routing number and account number and install on computer in check room to start testing checks.

b) Send test checks to new contractor to ensure MICR coding can be read by their machines. Test transactions only as no live disbursements should process at this time.

c) Test the sweep of transactions for the ZBA Accounts

d) Test the daily upload files and online banking reports to ensure that they match.

e) Coordination with all government effected areas to make changes to banking information in applicable systems.

f) Set up templates and test for daily ACH/Wires to CoreLogic, Proctor and other individual insurance companies USDA-RD may contract with.

g) Set up and test the daily EFT ACH process and inform ALL SFH National Office

Program Staff and State Office Directors of the new bank name, routing number and account number, so they can inform their closing agents to remove ACH blocks for funds coming from USDA-EFT bank account.

h) Set up and test the process for the Georgia Wire Pilot Program that will include changing bank account information and redirecting transactions to new contractor’s accounts.

i) Government initiates transfer funds into the new Escrow Concentration Account and Net Income Custody Account

j) The Government will request investments to take place in the applicable accounts.

k) Begin making all escrow disbursements from the new contractor’s accounts.

l) After all set-up and testing has been completed, the new contractor shall ensure all required functionality to perform the full scope of the Performance Work Statement is attained for all eight (8) accounts no later than 150 calendar days from the new contract period of performance start date.

Month 5: After 150 calendar days from the new contract period of performance start date, all new transactions shall utilize the new contractor’s accounts, and no new transactions will utilize the incumbent contractor’s accounts. Only the minimum balance(s) required to cover outstanding checks and all fees associated with residual work initiated prior to the 150-day mark shall be retained in the incumbent contractor accounts and paid for. As a result, the government anticipates a continuous reduction in the volume of services under the incumbent contract until all accounts are closed and the transition fully completed. The government will monitor outstanding checks issued under the incumbent contractor and void them, as applicable. All checks are allowed 6 Months before they are considered stale dated and are eligible to be voided.

a) The Government will perform daily balancing for both the incumbent accounts and the new accounts.

b) The Government will close incumbent accounts as they are no longer needed.

Months 6-12: All new transactions shall continue utilizing the new contractor’s accounts, and no new transactions will utilize the incumbent contractor’s accounts. Only the minimum balance(s) required to cover outstanding checks and all fees associated with residual work initiated prior to the 150-day mark shall be retained in the incumbent contractor accounts and paid for. The government anticipates a continuous reduction in the volume of services under the incumbent contract until all accounts are closed and the transition fully completed. The government will continue monitoring outstanding checks issued under the incumbent contractor and void them as applicable. All checks are allowed 6 Months before they are considered stale dated and are eligible to be voided.

a) The Government will perform daily balancing for both the incumbent accounts and the new accounts.

b) The Government will close incumbent accounts as they are no longer needed

7.6 Training plans for both the new contractor and the government shall ensure there is a documented mutual understanding, and complete comprehension of the systems, tools, and/or processes required to support and execute all activities required in the PWS.

7.7 All eight (8) accounts covered under this PWS will need to be transitioned-in/transitioned-out at various stages based on their functionality. The Government will monitor the incumbent accounts and new accounts to determine when transition-in/transition-out activities can and shall occur and will direct the incumbent contractor and new contractor to accomplish those transition-in/transition-out activities in accordance with the PWS. Throughout the entirety of the transition-in/transition-out process, the Government will maintain complete control and oversight of all funds in the accounts, to include movement of funds into or out of the accounts. The Government will accomplish daily balancing of all accounts and associated funds under both the incumbent contract and the newly awarded contract. Both the incumbent contractor and new contractor shall also provide daily balances of all accounts that remain open with each of them no later than

6:15PM ET.

Incumbent Contractor Transition-Out Roles and Responsibilities:

a) shall abide by and fulfill all transition-in/transition-out requirements as detailed in this PWS to ensure a seamless transition without interruption of services

b) shall provide daily balances of all open accounts no later than 6:15PM ET

c) shall provide Monthly statements for each incumbent account that remains open

d) once all funds have been transitioned-out of the incumbent accounts, those accounts shall be closed by the incumbent contractor at the direction of the Government

New Contractor Transition-In Roles and Responsibilities:

a) shall abide by and fulfill all transition-in/transition-out requirements as detailed in this PWS to ensure a seamless transition without interruption of services

b) shall initially complete review and evaluation of any/all service level agreements, establishing the 8 new specific escrow accounts, and ensuring a total understanding of the full scope of the required activities in accordance with the PWS

c) shall establish all new accounts as soon as possible, and no later than 30 calendar days from contract period of performance start date, to include coordination of obtaining signatures for required documentation (i.e., Authorization Forms, Service Level Agreements, etc.)

d) after all set-up and testing has been completed, the new contractor shall ensure all required functionality to perform the full scope of the Performance Work Statement is attained for all eight (8) accounts as soon as possible, and no later than 150 calendar days from the new contract period of performance start date

e) shall provide the ability for secure ACH and Wire transactions through the new contractor’s website or portal

f) shall provide daily balances of all open accounts no later than 6:15PM ET

g) shall ensure there is a documented mutual understanding and complete comprehension of the systems, tools, and/or processes necessary to fulfill all activities of the PWS

Government Roles and Responsibilities:

a) will monitor the incumbent accounts and new accounts to determine when transition-in/transition-out activities can and shall occur, and will direct the incumbent contractor and new contractor to accomplish those transition-in/transition-out activities in accordance with this PWS

b) will work with the new contractor to coordinate obtaining signatures for required documentation (i.e., Authorization Forms, Service Level Agreements, and…)

c) will maintain complete control and oversight of all funds in the accounts, to include movement of funds into or out of the accounts

d) will accomplish daily balancing of all accounts and associated funds under both the incumbent contract and the newly awarded contract

e) will also ensure there is an audit trail for all transferring of funds and handling of the investment accounts in accordance with RD-CFO audit requirements.

f) will provide express direction for closing all incumbent accounts

7.7.1 Escrow Concentration Account – This contains the largest volume of borrower funds. The incumbent contractor shall ensure this incumbent account remains open and fully operational in accordance with the PWS during the transition-in/transition-out process until all funds have been transitioned-out of the account and the account is closed at the express direction of the Government. After all set-up and testing has been completed, the new contractor shall ensure all required functionality to perform the full scope of the PWS is attained as soon as possible, and no later than 150 calendar days from the new contract period of performance start date, and that it too remains open and fully operational for the transition-in of funds. After 150 calendar days from the new contract period of performance start date, all new transactions shall utilize the new contractor’s accounts, and no new transactions will utilize the incumbent contractor’s accounts. Only the minimum balance(s) required to cover outstanding checks and all fees associated with residual work initiated prior to the 150 day mark shall be retained in the incumbent contractor accounts and paid for. As a result, the government anticipates a continuous reduction in the volume of services under the incumbent contract until all account are closed and the transition fully completed. The government will accomplish oversight of all funds in both the incumbent account and new account, to include movement of funds into or out of the accounts during the transition-in/transition-out period. The incumbent contractor shall ensure that the Government maintains uninterrupted access to daily and Monthly statements, ability to test transactions, and the ability to move funds until the incumbent account is fully closed. The Government will maintain a sufficient balance in this account with the incumbent contractor during the transition-in/transition-out process to allow the required time (six (6) Months from check issue date) for checks to be presented before they are considered stale dated and thus, would be voided. As checks are presented and cashed, or become stale dated and thus, would be voided, the Government will transition funds out from the incumbent account and into the new account based upon the Government’s monitoring and determination of what level of funds are required and sufficient in each of the accounts (incumbent and new). Only once all the required time has passed for all issued checks to be presented before they are considered stale dated and thus, would be voided, will the Government initiate transferring of all remaining funds from the incumbent account to the new account. After transferring all remaining funds from the incumbent account to the new account and ensuring all necessary Government oversight functions are properly completed, the incumbent contractor shall close the incumbent account at the express direction of the Government.

7.7.1.1 Incumbent Contractor Transition-Out Roles and Responsibilities:

a) shall ensure this incumbent account remains open and fully operational in accordance with the PWS during the transition-in/transition-out process until all funds have been transitioned-out of the account and the account is closed at the express direction of the Government

b) shall ensure that the Government maintains uninterrupted access to daily and Monthly statements, ability to test transactions, and the ability to move funds until the incumbent account is fully closed

7.7.1.2 New Contractor Transition-In Roles and Responsibilities:

a) shall establish the new account as soon as possible in accordance with this PWS, and no later than 30 calendar days from contract period of performance start date, to include coordination of obtaining signatures for required documentation (i.e. Authorization Forms, Service Level Agreements, etc.)

b) after all set-up and testing has been completed, the new contractor shall ensure all required functionality to perform the full scope of the Performance Work Statement is attained for the account as soon as possible, and no later than 150 calendar days from the new contract period of performance start date

7.7.1.3 Government Roles and Responsibilities:

a) will accomplish oversight of all funds in the account, to include movement of funds into or out of the accounts during the transition-in/transition-out period

b) will maintain a sufficient balance in this account with the incumbent contractor during the transition-in/transition-out process to allow the required time (six (6) Months from check issue date) for checks to be presented before they are considered stale dated and thus, would be voided

c) as checks are presented and cashed, or become stale dated and thus, would be voided, the Government will transition funds out from the incumbent account and into the new account based upon the Government’s monitoring and determination of what level of funds are required and sufficient in each of the accounts (incumbent and new)

d) will provide daily and Monthly balancing for the incumbent account and the new account as they remain open

e) will provide express direction for closing incumbent account once all funds have been transitioned from the incumbent account to the new account

7.7.1.4 Estimated Timeline:

The Government’s estimate of up to 12 Months for the transition period includes the following essential steps that relate the Escrow Concentration Account:

Month 1: The Government and the new contractor will initiate Transition-In Activities to include routing any necessary paperwork such as Service Level Agreements, and/or to obtain any authorized signatures for the account. The new contractor shall establish the new account as soon as possible in accordance with this PWS, and no later than 30 calendar days from contract period of performance start date (pending completion of set-up and testing).

Month 2: The new contractor shall continue coordinating with the FO to obtain the required authorized signatures for the account and setup and…