Exhibit 1 final - JA Compu-Link Bridge.docx.pdf

J&A Control No. 25-01

EXHIBIT 1 - JUSTIFICATION & APPROVAL (J&A)

FOR OTHER THAN FULL AND OPEN COMPETITION

UNDER FAR PART 6

1. Identification of the agency, contracting activity, and specific identification of the document as a “Justification for other than full and open competition.”.

a. Federal agency: The U.S. Department of Housing and Urban Development (HUD), Office of Housing, Federal Housing Administration (FHA), Office of Single-Family

Housing (SFH), Office of Single-Family Asset Management (SFAM).

b. Contracting activity: HUD, Office of the Chief Procurement Officer (OCPO), Office of

Western Field Contracting Operations, NFW

c. Specific identification of the document: This document serves as a “Justification for other than full and open competition” under the authority of 41 U.S.C. § 3304(a)(2) as prescribed by Federal Acquisition Regulation (FAR) Subpart 6.302-1, “Only one responsible source and no other supplies or services will satisfy agency requirements.”

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

a. Acquisition purpose and objectives. The National Servicing Center has a continuing requirement to perform a wide range of FHA Insured and Secretary-held first, and second, HECM note and mortgage loan servicing functions for the U.S. Department of

Housing and Urban Development (HUD). The purpose of this acquisition is to ensure continued contractor support while the Agency implements corrective action on the

Competitive award. The objective is to secure the services of a contractor to provide

FHA Insured and Secretary-held first, and second HECM note and mortgage loan servicing functions while avoiding a lapse in service.

b. Project background. Although primarily a mortgage insurer, FHA has occasion to become the holder of primary and subordinate mortgages as a result of its loss mitigation program, in conjunction with the discounted sale of foreclosed real estate, through assignment of HECM mortgages as well as other specialized loan programs. FHA

Insured HECM loans, commonly referred to as reverse mortgages, are designed to enable elderly homeowners to convert the equity in their homes to monthly streams of income and/or lines of credit. To guarantee continued payments to the borrower, should the lender fail to make the required payments, a second mortgage in HUD's name is executed and recorded subsequent to the first mortgage. FHA Assigned HECM loans are

FHA insured first mortgage loans in good standing, and upon reaching a specified threshold, were assigned to HUD for continued loan servicing for the remaining life of the loan. Before acceptance of assignment of the first mortgage, HUD ensures that there is clear title from the lender to HUD and that specific criteria have been met. Following assignment, monthly or periodic payments are made by HUD's Contractor to the

Docusign Envelope ID: AC387C9B-34D4-4E44-91DD-BD27A87D4D9B borrower. The Contractor also monitors the status of tax and hazard insurance payments as well as initiates foreclosure of the loan upon the death or non-compliance of the borrower.

Previous Contract:

A summary of the contract history is as follows:

The previous and existing contracts are described as follows: The Government separated the requirement and issued HECM Servicing solicitation, SBA requirement number 0811-16-

608292, and Secretary Held Servicing solicitation, SBA Requirement Number 0811-16-

606844. A follow-on contractor was awarded the contract based on a fully competitive 8(a) procedure and was ready to begin work on 7/14/2017 but had performance suspended as is typically required under a GAO protest. At that time the only firm able to do the work in the resulting emergency situation was the incumbent Contractor, Novad. A follow-on Sole

Source Solicitation #86614919R00001 was issued on 9/16/2019 and then cancelled on

1/13/2020 with the contract being unfulfilled as the proposal price was well above the IGCE.

The Government requested that both the Secretary Held Loan Servicing and the HECM requirements be removed from the 8(a) program to enhance competition and address performance issues that have historically plagued these requirements. The Secretary Held

Loan Servicing requirement was released from the 8(a) program on 6/23/2020 and the

HECM requirement was released on 7/1/2020. The competitive Secretary Held award was made on 5/3/21. A Bridge for the remaining HECM requirement was in place and a follow on FAR 52.217-8 Option was exercised, which expired on 4/17/2022. Another Bridge contract was awarded to the incumbent through 7/17/2022 with one Option that expired on

12/11/2022. On 09/01/2022, a new bridge contract was awarded to Compu-link to transition

HECM loan servicing from Novad Management Company to Compu-Link Corporation.

The new competitive HECM contract was solicited and awarded on 3/24/2022. The incumbent contractor, Novad, protested that award. On June 24, 2022, the Government notified the GAO that it had determined it would take corrective action to resolve the incumbent protest. The corrective action is in progress and will lead to the award of a one-year base period, followed by four twelve-month options. Due to the ongoing need for HECM loan servicing support by HUD, several short-term contract actions have been executed. This requested action is to provide short-term HECM loan servicing while the Technical Evaluation Panel (TEP) completes the corrective action. This will ensure continued loan servicing support while the TEP finishes its assessment.

The current servicing portfolio is made up of over 190,000 separate loans valued at over $55 billion as of the end of August 2024. HECM borrowers are made up exclusively of elderly citizens, who in many instances have turned to this loan product as a last resort to support themselves. HUD has an ongoing need for HECM loan servicing to facilitate HECM borrowers’ ability to receive their monthly checks timely, refinance their existing loans or apply and receive consideration for any type of restructure or loss mitigation.

NOVAD Management Consulting LLC

CONTRACT PERIOD OF PERFORMANCE TYPE

DU208WR-14-C-01 04/18/2014 to 09/29/2017 Contract

DU208WR-17-C-06 09/30/2017 to 10/17/2018 Bridge

86548B18C00004 09/30/2018 to 08/17/2019 Bridge

86614919C00003 08/18/2019 to 10/17/2020 Bridge

86614920C00002 10/18/2020 to 04/17/2022 Bridge

86614922C00004 04/18/2022 to 10/17/2022 Bridge

Compu-Link Corporation

CONTRACT PERIOD OF PERFORMANCE TYPE

86614922C00002 03/24/2022 to 03/23/2023 Base – Terminated

86614922C00005 09/01/2022 to 09/11/2023 Bridge

86614923C00006 09/12/2023 to 01/11/2024 Option

86614923C00006 01/12/2024 to 05/11/2024 Bridge

86614923C00006 05/12/2024 to 11/11/2024 Option

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

Project title. National HECM Loan Servicing Support

Project description. The National Servicing Center has a continuing requirement for professional, effective, and comprehensive loan servicing for HECM mortgage loans, notes, and security instruments while maintaining a high standard of customer service.

Specifics of the mortgage portfolio being serviced by the Contractor (Month of August

2024):

189,939 HECM loans

5,478 elderly borrowers receiving payments totaling $3,459,910.64

4,889 mortgage releases

Based on 2.b. above, the bridge contract is needed as any break in the service of the Loan Servicing

Contract will result in a negative impact to the Agency as elderly borrowers may not receive their monthly payments that support their income from the HECM assigned loans or access to their line of credit for unscheduled requests when an emergency arises, and they need funds immediately. Other risks include inability to timely issue satisfaction of mortgages (releases) when such requests for release are warranted due to payoff of a first or second mortgage held by the Secretary; the inability to perform collection activities that reduces the impact or risk to the FHA insurance fund; and inability to process lender requests when a borrower is refinancing their mortgage to prevent foreclosure.

This procurement will allow transition in and contract performance while taking corrective action the competitive procurement, which is in corrective action.

a. Scope, Magnitude, and Complexity of the Requirement.

Requirement type.

☒Service

☐Supply

☐Information technology (IT)

☐Construction

☐Architect-engineer (A & E) services

☐Design-build Other (specify): ____________________

Type of action.

☐New requirement

☒Follow-on

☐Other (specify): ______________________

Proposed contract/order type.

☐Firm Fixed Price (FFP)

☐Other fixed price___________________

☐Cost-Plus-Fixed-Fee

☐Other Cost Reimbursement (CR)

☐ Indefinite delivery or quantity, definite quantity, or requirement_______

☒ Hybrid (specify): Firm Fixed Price with Cost Reimbursement

☐ Other (specify):

b. Acquisition identification number. Requisition no. RCS-HU-2025-00027/ UPP: TBD

c. Total estimated dollar value and performance/delivery period. The total estimated dollar value of the bridge is $13,855,750.00. The total performance is for a 3-month base

(November 12, 2024, through February 11, 2025) with an available 9-month option period.

4. Identification of the statutory authority permitting other than full and open competition.

☒This acquisition is conducted under the authority of 41 United States Code (U.S.C.)

253(c)(1) as set forth in Federal Acquisition Regulation (FAR) 6.302-1. Title 41 U.S.C. §

3304(a)(2), as implemented by FAR 6.302-1, Only one responsible source and no other supplies or services will satisfy agency requirements.

☐This acquisition is conducted under the authority of section 4202 of the Clinger-Cohen

Act of 1996.

☐This acquisition is conducted under the authority of the Services Acquisition

Reform Act of 2003 (41 U.S.C. 428a).

☐This acquisition is conducted in accordance with 41 U.S.C. 1901 Simplified

Acquisition Procedures under the authority of 41 U.S.C. 1901 utilizing the procedures in FAR Subpart 13.5 - Simplified Procedures for Certain Commercial

Items.

5. Demonstration that the proposed contractor(s) unique qualifications or the nature of the acquisition requires use of the authority cited.

a. Name and address of the proposed contractor: Compu-Link Corporation (Celink)

3900 Capital City Blvd. Lansing, MI 48906-2147 (POC) Marion McDougal

b. Nature of the acquisition and proposed unique qualifications of the contractor(s).

The nature of the acquisition requires use of the authority cited because only the designated service will meet HUD’s needs as the contractor has unique qualifications to fulfil the requirement. HUD through the current contractor, Compu-Link, continues to provide ongoing HECM loan servicing support while the Agency implements corrective action for the competitive procurement. Because HUD needs continuous HECM loan servicing support, HUD must pursue a noncompetitive award. While historically, HUD has awarded noncompetitive actions for continued loan servicing to the incumbent

Novad, that contractor’s performance has been problematic. Compu-Link was awarded the competitive contract and, as the nation’s largest reverse mortgage sub-servicer, has the skills and resources needed to perform this mission critical activity. The limited availability of providers of the loan servicing needed limits HUD’s options in selecting a contractor to meet the existing business need. It is now necessary to award a short-term bridge contract to service HECM loans pending the completion of corrective action for the competitive procurement.

6. Description of the efforts made to ensure that offers are solicited from as many potential sources as practicable. Indicate whether a SAM.gov notice was or will be publicized as required by FAR Subpart 5.2 and, if not, which exception under FAR 5.202 applies.

A notice will not be published for the bridge contract as required by Subpart 5.2 due to the proposed action being made under FAR 6.302-1. The Contracting Officer shall post this justification on the Government-Point-of-Entry, known as SAM.GOV. The long-term HECM requirement is being competed.

7. Determination by the Contracting Officer that the anticipated cost/price to the

Government will be fair and reasonable.

The Government will evaluate the Contractor’s total price utilizing price analysis techniques in accordance with FAR 15.404-1(b). The estimated value for the contract action, based on the

IGCE, is $13,855,750.00. The $13,855,750.00 amount is based on the price of three months of loan servicing. The IGCE used this as the base amount and applied increases based on the current CPI and labor shortages. The contracting officer determined that the pricing for the short-term bridge contract was fair and reasonable.

Docusign Envelope ID: AC387C9B-34D4-4E44-91DD-BD27A87D4D9B http://sam.gov/ http://sam.gov/

8. Description of the market research conducted (see FAR Part 10) and the results, or a statement of the reasons market research was not conducted.

Market research efforts involved the following:

Queried the System for Award Management site (SAM), the electronic gateway of procurement information website at https://www.sam.gov/SAM/;

Queried Members of the National Reverse Mortgage Lenders Association (NRMLA) https://www.nrmlaonline.org/;

Analyzed the FHA-Approved Servicer List of HECM Servicers;

This requirement is for a specific, short-term bridge contract to service HECM loans pending corrective action in a competitive procurement. The market for loan servicing for the specific loan program needed is extremely limited. The loans to be serviced under this requirement arise from a HUD program with very specific and complex program requirements. The pool of HECM loan servicers is very small. In addition to HUD’s current HECM loan servicing contractor, there are only five (5)

HECM servicers that currently service these mortgages. Only one of the five commercial HECM servicers, only Compu-Link, responded to HUD’s request for proposals in solicitation no.

86614920R00007. The limited availability of providers of the loan servicing needed limits HUD’s options in selecting a contractor to meet the existing business need.

A break in service is not an option at this time with no other alternatives except re-procurement. HUD must pursue a short-term bridge contract to service HECM loans pending the completion of corrective action of for the competitive procurement.

9. Any other facts supporting the use of other than full and open competition.

The requirement covered by the option fulfills an existing Government need.

The base and option period will fulfill the existing need. The current contract vehicle is a bridge contract with a base that expires on 11/12/2024. This procurement will provide a short-term bridge to service the HECM loan portfolio pending the completion of corrective action for the competitive procurement.

A break in service is not an option.

The Contract is fixed priced performance based and represents the best acquisition strategy for the Government.

The price on the short-term bridge contract represents the best value to HUD.

The option was synopsized in accordance with Part 5 exempted by 5.202(a)(11) or other appropriate exemptions in 5.202.

Docusign Envelope ID: AC387C9B-34D4-4E44-91DD-BD27A87D4D9B https://www.sam.gov/SAM/;

https://www.sam.gov/SAM/;

https://www.nrmlaonline.org/;

10. Listing of sources, if any, that expressed, in writing, an interest in the acquisition.

None.

11. Statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the required supplies or services. The long-term requirement is being competed. As described in the narrative above, this bridge will ensure the continuation of service while corrective action is being taken in connection with the competitive procurement.

12. Program Office Certification. Certification that the portions of this justification that have been developed by the technical or requirements personnel, including supporting information and/or data verifying the Government’s minimum needs, schedule requirements and other rationale for other than full and open competition, are accurate and complete can be located at Part 1 of the attached form

HUD-24012 (07/2011).

13. Contracting Officer’s Certification. Certification that the justification for the proposed acquisition is accurate and complete to the best of the Contracting Officer’s knowledge and belief can be located at

Part 2 of the attached form HUD-24012 (07/2011).

14. Approval from the Competition Advocate (CA). Approval by the CA and CPO can be located at

Part 3 of the attached form HUD-24012 (07/2011)