Exhibit 1 - JA Celink Bridge.pdf

J&A Control No. 22-24

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 6.302-2, “Unusual and Compelling Urgency.”

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). These services are mission critical, and work performed by HUD staff is not an alternative as HUD is not staffed for this requirement.

There are no existing contracts within HUD that can satisfy the full duration of this requirement. There is no known in-house effort that could perform FHA Insured and Secretary-held first, and second HECM note and mortgage loan servicing functions.

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

“Source Selection Information – see FAR 2.101 and 3.104” For Official Use Only

J&A Control No.

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: 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 contract was awarded based on a fully competitive 8(a) procedure and the contractor was ready to begin work on 7/14/2017 but performance was 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 proposed 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 will expire on 10/18/2022. The new competitive HECM contract was awarded on 3/24/2022. That award was protested to the Government Accountability Office, and after an outcome prediction conference, the agency elected to implement corrective action. While the corrective action is completed, the Government must award a short-term bridge contract to service HECM loans pending completion of the competitive procurement.

A summary of the contract history is as follows:

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 4/18/2022 to 10/17/2022 Bridge

Celink

CONTRACT PERIOD OF PERFORMANCE TYPE

86614922C00002 3/24/2022 to 3/23/2023 Terminated

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

“Source Selection Information – see FAR 2.101 and 3.104”

Project description. The National Servicing Center has a continuing requirement for HECM loan servicing, Specifics of the mortgage portfolio being serviced by the Contractor (Month of March 2022):

156,172 HECM loans 4,225 elderly borrowers receiving payments totaling $2,178,002.29 996 mortgage releases, 2,769 payoff statements issued

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 unit rate

☐Cost-Plus-Fixed-Fee

☐Other Cost Reimbursement (CR)

J&A Control No. 22-24

☐ Indefinite delivery or quantity, definite quantity, or requirement_______

☐ Hybrid (specify):

☐ Other (specify):

b. Acquisition identification number. Requisition no. RCS-HU-2022-00131/ UPP-2022-

HU-00095

c. Total estimated dollar value and performance/delivery period. The total estimated dollar value of the bridge is $18,311,567.00. The total performance is for a 3-month base (September 9, 2022, through December 8, 2022) with an available 3-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) 6.302-2. Title 41 U.S.C. § 3304(a)(2), as implemented by FAR 6.302-2, Unusual and compelling urgency.

☐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

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

While it implements corrective action for the competitive procurement, and because it needs continuous HECM loan servicing, 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.

Celink 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. 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 Celink, 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.

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 5.202(a)(2) due to the proposed action being made under FAR 6.302-2. 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 $18,311,567.00. The $18,311,567.00 amount is based on the price of transition in and 3 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.

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;

Reviewed the offers that submitted proposals for ongoing competitive HECM Loan

Servicing procurement.

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 Celink, 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. HUD’s incumbent contractor’s performance was unacceptable on CPARS for prior contracts. HUD has lost its financial interest in some properties in the HECM portfolio because the incumbent has not performed its contractual obligations as required. Some borrowers reportedly have http://sam.gov/ http://sam.gov/ https://www.sam.gov/SAM/;

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

https://www.nrmlaonline.org/;

been unable to sell or refinance their HECM-secured properties because the incumbent contractor has not responded timely to their requests for information or action. 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 10/17/2022. 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)(2) or other appropriate exemptions in 5.202.

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

Celink

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).

“Source Selection Information – see FAR 2.101 and 3.104”