DU100H-14-R-0006.0714.rtf

SECTION I – Supplies or Services & Price/Cost 16

SECTION II – Performance Work Statement (PWS) 17

SECTION III – Definitions and Acronyms 44

SECTION VI - Evaluation of Offerors 69

SECTION VII – List of Attachments 71

SECTION I – SUPPLIES OR SERVICES & PRICE/COST

See Attachment 001 – Price Schedule

SECTION II – PERFORMANCE WORK STATEMENT (PWS)

PERFORMANCE WORK STATEMENT (PWS)

SINGLE FAMILY LOAN SALE PROGRAM (SFLS)

TRANSACTION SPECIALIST

JULY 11, 2014

C-1

1.1 General. The Department of Housing and Urban Development (HUD), under the auspices of the Federal Housing Administration’s (FHA) Single Family Loan Sale (SFLS) Program sells certain of its single family defaulted portfolio to expedite the disposition of defaulted assets, maximize the recoveries from sales proceeds to the FHA insurance fund, and address the FHA’s public policy objectives of homeownership and neighborhood stabilization. This requirement includes the tasks of obtaining, assembling and presenting information about the assets, marketing the offering of assets in pools to qualified investors, advertising, accepting the bids on sale day and assisting with the settlement with the winning purchasers and transfer of servicing of the assets sold.

1.2 Background. Under the authority in Section 601 of the National Housing Act, single family loan sales began in 2002 with Public/Private Joint Ventures under the Accelerated Claims and Asset Disposition Demonstration Program. HUD conducted four (4) Joint Venture Sales totaling $610.1 million in unpaid principal balance. In 2010, the Department began a series of whole loan sales with the Mortgage Acquisition and Recovery Initiative (“MARI”) Pilot. MARI was expanded and provided the infrastructure when in 2012 the Distressed Asset Stabilization Program (“DASP”) began on a much larger scale. Since 2010, the Department has conducted 13 whole loan sales under both MARI and DASP totaling $8.2 billion in Unpaid Principal Balance (UPB).

1.3 Objectives. The objectives of the SFLS Program are to maximize recoveries to the FHA insurance fund from the sale of the assets and to ensure that FHA’s public policy issues are addressed especially in the Neighborhood Stabilization Outcome offerings in selling single family loans in the most efficient and innovative manner.

To ensure maximum recoveries the contractor is to gather and provide appropriate information to the investor community about the assets, ensure that investors are qualified to purchase, close the transaction and execute the sales contract, market the offering to maximum number of investors, produce best pricing to the government, conduct follow up activities to transfer assets to winning bidders. To successfully achieve these objectives, HUD seeks a qualified Transaction Specialist (TS) to provide state-of-the-art / innovative due diligence and single family loan execution services. The TS contractor supports the objectives of the program by offering its private sector knowledge, expertise, and experience in successfully executing loan sales transactions utilizing state-of-the-art and innovative practices.

1.4 Description of Services. HUD seeks a Contractor who shall assist HUD in: (a) performing loan due diligence services to include gathering and review of loan data, data verification and analysis, database management support, coordinate and gather electronic loan files, preparation and organization of electronic loan files, preparation of due diligence status update, and preparation of a detailed document inventory for each loan; (b) perform analysis of loan data to inform pooling and sale execution strategies; (c) determination of Expected Price for the portfolio of loans being sold; and (d) sale execution to include providing an online password protected trading platform, the preparation and administration of a Bid Evaluation Model, dissemination of loan information/due diligence materials via high speed remote access on Contractor’s trading platform and on CDs upon request; conduct marketing and outreach to potential investors, accepting of bids on bid day and administering of a Bid Evaluation Model on Contractor’s trading platform; and performing post sale services.

1.5 General Information.

1.5.1 Non Personal Services. The Government will neither supervise Contractor employees nor control the method by which the Contractor performs the required tasks. Under no circumstances shall the Government assign tasks to, or prepare work schedules for, individual Contractor employees. It shall be the responsibility of the Contractor to manage its employees and to guard against any actions that are of the nature of personal services, or give the perception of personal services. If the Contractor feels any action constitutes, or are perceived to constitute personal services, it shall be the Contractor’s responsibility to notify the Contracting Officer immediately. These services shall not be used to perform work of a policy, decision making or management nature, i.e. inherently Governmental functions. All decisions relative to programs supported by the Contactor shall be the sole responsibility of the Government.

1.5.2 Period of Performance. The Period of Performance shall be for one Base Year of 12 months and four (4) 12-month Option Years.

1.5.3 Place of Performance. The services to be performed under this contract shall be performed at the Contractor facility with the exception of weekly sale status meetings and activities to be performed on bid day. Weekly sales status meetings and bid day activities shall be executed at Contractor facility and the Asset Sales Office located 451 7th Street, SW, Room 3136, Washington, DC as appropriate.

1.5.4 Hours of Operation. The Contractor is responsible for providing services between the hours of 9:00 am to 5:00 pm Monday thru Friday except Federal holidays or when the Government facility is closed due to local or national emergencies, administrative closing, or similar Government directed facility closings. Government agencies will not be available during scheduled holidays, inclement weather, weekends, and after duty hours.

The Contractor must at all times maintain an adequate workforce for the uninterrupted performance of all tasks defined within the Contract when the Government facility is not closed for the above reasons. When hiring personnel, the Contractor shall keep in mind that the stability and continuity of the workforce is essential.

1.5.5 Post Award Conference/Performance Status Meetings. The Contractor shall attend any post award conference convened by the contracting activity or contract administration office in accordance with FAR 42.5. The Government Technical Representative (GTR) and other Government personnel, as appropriate may meet periodically with the Contractor to review Contractor performance, requirement status, etc. The GTR will apprise the Contractor of how the Government views its performance or progress of the requirement. The Contractor shall apprise the Government of problems, if any. Appropriate action shall be taken to resolve outstanding issues.

1.5.6 Contractor Travel. The Government anticipates periodic travel within the Continental United States (CONUS). Travel shall be in accordance with the contract requirements. Prior to travel (each planned trip), the Contractor shall coordinate with and receive Government authorization from the GTR. The Contractor shall provide in writing to the GTR the purpose of the travel, the destination, the duration of stay, identify the personnel traveling, and provide an individual itemized estimate of the travel cost. Written approval from the GTR is required at least three (3) days prior to any travel. Travel will be reimbursed in accordance to the Federal Travel Regulations (FTR) and FAR 31.205-46. All travel costs associated with the performance of the awarded contract will be reimbursed in accordance with the FTR, if specifically authorized. The Contractor is responsible for obtaining all passenger transportation, lodging and subsistence. Cost incurred for transportation and per diem (lodging, meals and incidentals expenses) shall be billed in accordance with the regulatory implementation of FAR 31.205-46, Travel Costs.

HUD will not reimburse Contractor’s local travel. Local travel is defined as travel within a 100 miles radius of Washington, DC.

1.5.7 Organizational Conflict of Interest

It is the policy of the federal government to avoid situations which place a contractor in a position where: (1) its judgment may be biased because of past, present or currently planned interest, financial or otherwise, that the contractor may have on other work but would conflict with the work being performed under the proposed Performance Work Statement or (2) where the contractor’s performance of such other work may provide it with an unfair competitive advantage for the proposed Performance Work Statement. See FAR 9.5, Organizational and Consultant Conflict of Interests. HUD has identified two primary conflict of interest situations that can arise in the future due to work performed for the government under the Performance Work Statement: (1) future participation as a bidder or representative/consultant in an asset sale; (2) future work providing services in the financial asset services field. To avoid these and other conflicts, as a result, the Contractor awarded this Contract shall be subject to the following requirements and future contracting restrictions:

A. One-year Bar: For the period of one year, after the completion of this requirement, the following individuals and entities (either alone or in combination with others) will be ineligible to bid on any one or combination of assets, specific to this Performance Work Statement (PWS), that are subsequently included in an asset sale offered by HUD:

1. Any contractor, subcontractor, advisor or consultant (including any agent of the foregoing) who performed services for or on behalf of HUD in connection with any asset sale, for assets specific to this PWS, or any affiliate of any such contractor, subcontractor, advisor, consultant or agent (such as someone who performed loan servicing, program financial advice, credit scoring or credit rating);

2. Any individual that was a principal or employee of any entity or individual described in paragraph A. 1. above who performed services under this PWS at any time during which the entity or individual performed services for or on behalf of HUD in connection with any asset sale for assets specific to this Performance Work Statement; and

3. Any individual or entity that uses the services of any person described in paragraph A. 1. above in preparing its bid on any asset sale for assets specific to this PWS.

B. Other Contracts, Notice and Determinations: Any contractor, its subcontractors, partners and affiliates performing financial asset management services for HUD under this contract may not receive concurrent or subsequent contracts to provide services in which a possible conflict of interest may arise, at the sole discretion of HUD. The Contractor shall notify the Contracting Officer immediately in writing whenever the work under this contract conflicts with or potentially conflicts with the Contractor’s obligation to another entity or individual. The Contractor shall not proceed with the work in question until notified to do so by the Contracting Officer. The Contracting Officer shall make the final determination regarding appropriate action to take to address a conflict of interest.

C. Remedies: Failure to report a possible or actual conflict of interest to the Contracting Officer when reasonably apparent, whether prior to award or in performance of this contract, may be a cause for the termination of the contract, possible debarment from doing business with the government or whatever remedy may be appropriate.

D. Permanent Bar: HUD may issue subsequent contracts (or may have already issued contracts) for Asset Valuation, Program Financial Advice, Transactional Financial Advice, Due Diligence Services and Legal Advice in connection with one or more asset sales. Contractors, subcontractors, advisors or consultants (including any of their agents or affiliates) providing services for this contract will be ineligible to submit an offer, quote or perform work for the following contracts, if they include assets specific to this contract.

1.5.8 Restrictions

1.5.8.1 The Contractor may not participate as a bidder or as an advisor to a bidder on any other sales transaction involving the assets in this Project conducted by HUD for the life of this Contract and any extensions.

1.5.8.2 The Contractor shall disclose HUD confidential and proprietary data only at the direction and discretion of HUD.

1.5.8.3 HUD reserves the right at all times to approve the structure, size, timing, budget, composition, and any other aspect of the note sale.

C 2 DEFINITIONS, ACRONYMS, APPLICABLE DOCUMENTS/PUBLICATIONS

2.1 DEFINITIONS

Accepted Quality Levels (AQLs) The minimum acceptable quality levels (AQLs) as defined in C-7, Performance Requirements Summary.

Affiliate means, with respect to any specified Person, any other Person who or which, directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with such specified Person.

Agreement means this Conveyance, Assignment and Assumption Agreement and any exhibits and schedules hereto.

Basis Point (bp) is defined as one hundredth of one per cent (0.01 per cent), so 100 basis points (bps) is equal to 1 percentage point.

Business/Work Days Every official work day of the week which are days between and including Monday to Friday. This does not include public holidays and weekends.

Continental United States (CONUS) The 48 contiguous States and the District of Columbia.

Contractor A supplier or vendor awarded a contract to provide specific supplies or service to the Government. The term used in this contract refers to the prime.

Contracting Officer (CO) A person with authority to enter into, administer, and/or terminate contracts and make related determinations and findings on behalf of the Government. Note: the only individual who can legally bind the Government.

Control shall mean, as to any Person, the power, directly and/or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The term Controlled shall have a correlative meaning.

Defective Service A service output that does not meet the standard of performance associated with the Performance Work Statement.

Deliverable Anything that can be physically delivered according to the terms of the contract and may include items such as meeting minutes or reports.

FHA means the Federal Housing Administration, an administrative unit within the United States Department of Housing and Urban Development, and any successor there to.

FHA-Insured Loans means single-family FHA-insured mortgage loans that are either (a) owned and serviced by a Prior Servicer or (b) serviced (but not owned) by a Prior Servicer, but with respect to which the Prior Servicer is authorized by the holder to purchase such mortgage loans from, or submit Insurance Claims on behalf of, the holder.

Government Furnished Property (GFP) means property in the possession of, or directly acquired by, the Government and subsequently furnished to the Contractor for performance of a contract. Government-furnished property includes, but is not limited to, spares and property furnished for repair, maintenance, overhaul, or modification. Government-furnished property also includes contractor-acquired property if the contractor-acquired property is a deliverable under a cost contract when accepted by the Government for continued use under the contract.

Government Technical Monitor (GTM) is an individual designated by the Contracting Officer to assist in providing technical direction and monitoring performance under the contract.

Government Technical Representative (GTR) is an employee of the U.S. Government appointed by the Contracting Officer to perform contract administration activities in regard to technical issues. This individual has authority to provide technical direction to the Contractor as long as direction is within the scope of the contract, does not constitute a change and has no funding implications. This individual does NOT have authority to change the terms and conditions of the contract.

HUD means the Secretary of Housing and Urban Development or the Department of Housing and Urban Development, as applicable.

Inherently Governmental Functions are activities that require either the exercise of discretion in applying Government authority, or the making of value judgments in making decisions for the Government.

Insurance Claim means, with respect to any Mortgage Loan, the claim made by Prior Servicer for payment by HUD upon the assignment of the defaulted FHA-Insured Mortgage Loan.

Key Personnel means contractor personnel that are evaluated in a source selection process and that may be required to be used in the performance of a contract by the Key Personnel clause. When key personnel are used as an evaluation factor in best value procurement, offerors can be rejected if they do not have firm commitments from the persons that are listed in the proposal. Key personnel are also contractor personnel that cannot change without GTR/CO approval.

Legal Documents means, the participating servicer agreement (P-Servicer Agreement), conveyance assignment and assumption (CAA) agreement, and other similar legal documents, as determined during the note sales process.

Lien means any lien, Claim, mortgage, security interest, pledge, charge, servitude or other encumbrance of any kind.

Mortgage means the mortgage, deed of trust or other instrument, including any amendments or modifications, creating a lien on or ownership interest in a Mortgaged Property securing a Note.

Note means a mortgage note which is a promissory note associated with a FHA insured mortgage loan; it is a written promise signed by the borrower to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise.

Non-personal Services Contract A contract under which the personnel rendering the services are not subject, either by the contract’s terms or by the manner of its administration, to the supervision and control usually prevailing in relationships between the Government and its employees.

Performance Requirements Summary (PRS) A listing of the performance requirements under the contract that are to be evaluated by the Government on a regular basis, performance indicators for these requirements, performance standards for these requirement and surveillance methods to be used to determine if performance standards are met (and optionally, any maximum payment for meeting the acceptable quality level (AQL) and any deduction from payment for not meeting the AQL).

Performance Standard is the contractor’s performance level required by the Government. This is also known as the acceptable quality level (AQL).

Performance Work Statement (PWS) is a performance work statement for performance based acquisitions that describe the required results in clear, specific and objective terms with measurable outcomes.

Person means any individual, corporation, Limited Liability Company, partnership (general or limited), firm, joint venture, association, joint-stock company, trust, estate, unincorporated organization, governmental or regulatory body or other entity.

Physical Security means Actions that prevent the loss or damage of Government property.

Prior Servicer or Participating Servicer means, with respect to any Mortgage Loan, the participating FHA servicer from which the Mortgage Loan was assigned to HUD and from which the servicing for such Mortgage Loan will be transferred to the New Servicer.

Purchaser means the person or entity identified in the “Agreement” or identified as the winning bidder.

Quality Assurance (QA) Policies and procedures adopted by the Government to ensure that supplies and services acquired under Government contracts conform to the contract’s quality requirements.

Quality Assurance Surveillance Plan (QASP) A plan describing how the agency will survey, observe, test, sample, evaluate and document the contractor’s performance in meeting critical performance standards identified in the contract.

Quality Control (QC) All necessary measures taken by the Contractor to assure that the quality of an end product of service shall meet contract requirements.

Real Estate Owned (REO) means Mortgaged Property to which title has been taken as a result of a foreclosure, acceptance of a deed-in-lieu of foreclosure, or any comparable proceeding.

Reserve Price means the lowest price HUD is willing to accept for the loans it is selling.

Service Contract A contract that directly engages the time and effort of a Contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply.

Shall Used to express what is mandatory.

Subcontractor Any person , other than the prime Contractor, who offers to furnish or furnishes any supplies, material, equipment, or services of any kind under a prime contract or a subcontract entered into in connection with such prime contract, and any person who offers to furnish or furnishes general supplies to the prime contractor or a higher tier subcontractor. The Government does not have privity of contract with a subcontractor.

Success Fee means the compensation paid to the Contractor for overall management of the sales process and successfully executing the sale on Bid Day. It is calculated as a percentage of the unpaid principal balance recovered.

Work Week Monday through Friday, unless specified otherwise.

2.2 ACRONYMS

ACRONYM

DEFINITION

AQL

Acceptable Quality Level

ARF

Asset Review File

ASO

Asset Sales Office

CD

Compact Disc CFO or OCFO Office of the Chief Financial Officer of HUD

CO

Contracting Officer

COB

Close of Business

CPO

Office of the Chief Procurement Officer of HUD

DACA

Days After Contract Award

DASP

Distressed Asset Stabilization Program

FHA

Federal Housing Administration

EST

Eastern Standard Time (U.S.)

GFP

Government Furnished Property

GTM

Government Technical Monitor

GTR

Government Technical Representative

HUD

U.S. Department of Housing and Urban Development

HUDAR

HUD Acquisition Regulation

IPT

Integrated Project Team

LTV

Loan-to-Value Ratio

MARI

Mortgage Acquisition and Recovery Pilot

NTE

Not-to-Exceed

NLT

Not Later Than, or No Later Than

OCPO

Office of the Chief Procurement Officer

OGC

Office of General Counsel

OMB

Office of Management and Budget

PFA

Program Financial Advisor

PM

Project Manager

PPM

Project Planning and Management

PNA

Physical Needs Assessment

POC

Point of Contact

POP

Period of Performance

PPM

Project Planning and Management

QA

Quality Assurance

QASP

Quality Assurance Surveillance Plan

QCP

Quality Control Plan

QCR

Quality Control Review

REO

Real Estate Owned

SFLS

Single Family Loan Sale Program

SSA

Systems Security Administrator

TBD

To be determined

TS

Transaction Specialist

UPB

Unpaid Principal Balance

WSR

Weekly Status Report

WSU

Weekly Status Update

2.3 APPLICABLE REGULATIONS/MANUALS/DOCUMENTS/PUBLICATIONS:

Under the Debt Collection Improvement Act of 1996 credit agencies with over $100 million in loan assets are expected to sell delinquent loan assets that meet certain criteria. Additionally, the National Housing Act section 204(g) (12 U.S.C. 1710(g)), as amended by section 601 of the 1999 HUD Appropriations Act, authorizes HUD to conduct asset sales for defaulted FHA-insured single family mortgage loans. HUD has the authority to conduct single family whole loan sales or joint venture type loan sales. The National Housing Act section 204(a) (1) (A) (12 U.S.C. 1710(a) (A) also authorizes assignment of certain defaulted mortgages rather than conveyance of title to the property as part of the claims procedures. OMB Circular Number A-11, Part 5 Section 185.8(e) requires OMB approval of the note sales.

C-3 GOVERNMENT FURNISHED PROPERTY AND SERVICES. The Contractor shall ensure accurate control and accountability of all Government Furnished Property (GFP) in accordance with terms and conditions of this PWS and contract award. The Government will furnish, at no cost to the Contractor, the GFP and services shown below.

3.1 Government Services. The GTR will coordinate, through the Government Technical Monitor (GTM), the tasks of this requirement.

3.2 Facilities. The Government will provide a conference room located at 451 7th Street, SW, Washington, DC for weekly status meetings. The Government will also provide a bid day conference room for executing the auction on bid day. The specific conference room number and location within the building will be provided to the Contractor prior to the meetings and bid day.

3.3 Equipment. The Government will provide the following in the Bid Room:

Several phone lines;

One workstation with internet access and printing capabilities;

One screen projector The Government will provide the following in the Asset Sales Office:

One fax machine – the ASO fax number is (202) 708-2771

One black/white laser printer Use of one copier

3.4 Materials. On, or shortly after, the sale initiation day (approximately 10 weeks prior to the Bid Day), the government will provide a Loan List of the assets in the sale portfolio (to the extent that the files are available), and pertinent data for the notes being sold. Copies of required materials may be provided to the Contractor in hard copy or soft copy. All materials will remain the property of the Government and shall be returned to the GTR upon request or at the end of the contract period.

3.5 Quality Assurance (QA). The Government shall evaluate the Contractor’s performance under this contract in accordance with the Quality Assurance Surveillance Plan. This plan is primarily focused on what the Government must do to ensure that the Contractor has performed in accordance with the performance standards. It defines how the performance standards will be applied, the frequency of surveillance and the minimum acceptable defect rate(s).

3.6 Systems Access Authorization – Subject to any necessary security clearances, HUD shall grant the Contractor authorization to access the HUD information systems, described below in C.3.6.3. After receiving access to HUD information systems, the Contractor shall access the systems to retrieve data needed for relevant analysis.

3.6.1 Security Access – See HUDAR 2452.239-70.

3.6.2 Systems Security Administrator - The Contractor shall designate a Systems Security Administrator (SSA) no later than ten (10) days after the contract award Date. The Administrator shall use forms provided by HUD to initiate requests for user access to SAMS and/or other HUD systems and to request access modifications and deletions. The SSA shall certify that all staff have received instruction in system security issues, are familiar with the contents of the current version of HUD Handbook 2400.24 Rev. 2, Information Security Program.

3.6.3 Information Systems

3.6.3.1 Single Family Insurance System (SFIS) – The Single Family Insurance System (SFIS) is HUD’s primary system of record for insurance and claim payment status of all FHA insured single family loans. The Contractor may need to access the system for insurance and claim data.

3.6.3.2 Single Family Acquired Asset Management System (SAMS) – The Single Family Acquired Asset Management System (SAMS) is HUD’s primary system of record for tracking and accounting for properties acquired by HUD following payment of a claim for insurance benefits. Contractor shall need to access this system for recovery and other accounting data. Contractors may access a PDF version of the SAMS User's Guide at,