Exhibit 1 JA REO Case Mgmt Services Bridge.pdf

J&A Control No. 22-16

“Source Selection Information – see FAR 2.101 and 3.104”

For Official Use Only

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

Program Operations, NP, FHA/Housing Support Division.

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)(1) 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. SFH/SFAM has a continuous need for Real Estate

Owned (REO) case management services past March 2022. SFAM requires a Business

Service Provider (BSP) to support their REO case management needs via SaaS (Software as a Service). The purpose of this acquisition is to ensure continued contractor support while the long-term reprocurement is being processed. The objective is to secure the services of a Contractor to provide REO case management support services while avoiding a lapse in services.

b. Project background. As the largest home insurer of single-family homes in the U.S., HUD administers programs that provide housing, community development assistance, and work to ensure fair and equal housing opportunities for all. The Office of Housing

(HSNG) serves as the HUD program that oversees the FHA, the largest mortgage insurer in the world. As of September 30, 2021, FHA had active insurance on more than 7.8 million single family forward and reverse mortgages, with a total unpaid principal balance of more than $1.2 trillion. The FHA regulates housing industry business and oversees the key business area of Single Family Housing which is supported by the

Office of Single Family Housing (SFH). Within SFH is SFAM which is comprised of the

Servicing and Loss Mitigation Division and the Asset Management and Disposition

Division. SFAM performs property disposition tracking, reporting, and hosting of its public facing retail listing/bid site, HUD Home Store, for HUD REO single-family properties. Since 2010, over 700,000 properties with an aggregate claim amount of over

$101 billion dollars have been processed under this requirement. This is an average of

62,967 properties and $4.9 billion in sales volume per year. In addition, over $4.2 billion dollars in Contractor invoices have been processed since 2010. There are currently over

17,000 FHA servicers, HUD Contractors, and HUD staff subscription users who manage

HUD REO properties via the current web-based SaaS subscription. HUD has over 54 million attachments stored in 18 terabytes in system data warehouse space. The current

Contractor’s hardware configuration has more than 100 web servers designated for HUD.

Approximately 250,000 attachments are uploaded by MCM, AMs and FSMs, monthly.

As part of SFAM’s mission-essential functions, it must also perform property disposition tracking, reporting, and public facing retail listing/bid site for REO property sales, which must be performed under all circumstances without any break in service. The previous and existing contracts are described as follows:

• Previous Contract: The contract was previously solicited on an unrestricted basis under solicitation no. DU100H-14-R-0002. Six (6) proposals were received in response to the solicitation. The previous contract, DU100H-15-C-17, was awarded on September 23, 2015, to Yardi Systems, Incorporated for a base period of 1-year with four 1-year option periods. The contract was awarded as an

Indefinite Delivery Indefinite Quantity (IDIQ) contract with a total ceiling of

$34,044,720.00. The contract was modified 11 times which consisted mainly of administrative modifications, to include ceiling increases. Although the contract expired on September 29, 2020, the contract ceiling increased to $36,383,182.73.

A summary of the contract price is as follows:

Description Performance Dates LIN Type Total

Base September 30, 2015 - September 29, 2016 IDIQ/FP $6,798,944.00

Option 1 September 30, 2016 - September 29, 2017 IDIQ/FP $8,052,560.74

Option 2 September 30, 2017 - September 29, 2018 IDIQ/FP $7,255,104.64

Option 3 September 30, 2018 - September 29, 2019 IDIQ/FP $7,147,922.28

Option 4 September 30, 2019 - September 29, 2020 IDIQ/FP $7,128,651.07

Total $36,383,182.73

• Current Contract: The current contract, 86615620C00006, was awarded to Yardi

Systems, Incorporated on September 30, 2020, on a sole source basis and was for a period of 1-year. The contract was awarded as a hybrid Firm Fixed Price (FFP) and Cost Reimbursable (CR) Line Item Numbers (LINs)) in the amount of

$8,427,971.32 (63.41% was FFP and 36.59% was CR). A bridge memo and

Justification and Approval (J&A) were approved for this action. The 6-month option to extend services was exercised on August 19, 2021 and increased the total contract value to $12,704,113.78. The current contract expires on March 29, 2022. A summary of the contract price is as follows:

Description Performance Dates LIN Type Total

Base September 30, 2020 - September 29, 2021 FP/CR $8,427,971.32

52.217-8 September 30, 2021 - March 29, 2022 FP/CR $4,276,142.46

Total $12,704,113.78

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

a. Project title. REO Case Management Support Services.

b. Project description. SFH/SFAM has a continuous need for Real Estate Owned (REO) case management services past March 2022. SFAM requires the services of a Contractor that will assist with the analysis, management and operational procedures associated with the Single-Family disposition process. These services include providing a web-based online subscription with the ability to have SFAM specific workflow processes. The case management support services will serve as the primary process for HUD staff and its business partners to send, receive, distribute, analyze, maintain, and manage information relative to the following HUD specific case management and workflow tracking processes, such as:

• Pre-conveyance compliance

• Post-conveyance property management

• Disposition strategies

• Retail REO

• Contractor monitoring

• Report capabilities, and

• Help desk services

Based on 2.b. above, the bridge contract is needed to allow for a proper competitive process and for a transition in and out period. It would take about five (5) to six (6) months to complete the competitive process. With the current contract expiring on March

29, 2022, it is vital that a bridge be put in place prior to this. Without the bridge, there will not be sufficient time to complete the procurement process which entails releasing the solicitation by the 2nd week of February 2022, receiving proposals by March 31, 2022, completing evaluations by April 15, 2022, negotiating, if necessary, awarding by mid-June 2022, and starting the transition in and out period by July 29, 2022. A transition period is needed from July 2022 through September 2022 as is a contingency should the long-term procurement not be awarded, in July 2022, due to unavoidable circumstances.

Hence, the inclusion of option periods on this bridge. This bridge award will ensure there is no break in service as the solicitation/award process continues. This bridge award will also allow for a successful transition between vendors without any break in service.

c. 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)

Time & Materials/Labor Hour

Indefinite delivery or quantity, definite quantity, or requirement_______

Hybrid (specify): FFP with CR Line-Item Numbers (LINS)

Other (specify):

d. Acquisition identification number. Requisition no. RCS-HU-2022-00061/APP no.

APP-HU-2022-089/Solicitation no. 86615622R00006.

e. Total estimated dollar value and performance/delivery period. The total estimated dollar value of the bridge is $10,704,476.00. The total performance period is for 6-month base (March 29, 2022, through September 29, 2022) with three 2-month option periods.

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)(1), 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: Yardi Systems Incorporated, 430 S

Fairview Ave, Goleta CA 931173627

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 SFAM’s needs as the contractor has unique qualifications to fulfil the requirement. SFAM through the current contractor, Yardi System Inc, utilizes the services of the P260 application, to exchange and update property disposition status and track disbursements. The P260 application is a major application providing mission-essential functions, such as property disposition tracking, reporting, and public facing retail listing/bid site for REO property sales, which must be performed under all circumstances without any break in service. The P260 application, provided by Yardi, fulfills mission-essential functions which must be performed under all circumstances without any break in service. The P260 currently interfaces with SAM, another HUD system. The P260 has been customized overtime and without the customizations, the

SFAM will not be able to receive the needed services to meet its mission. Some of the specialized and unique HUD specific enhancements to the P260 which cannot be fulfilled by another contractor in the short amount of time are as follows:

• The system is currently being enhanced to accommodate SFAM unique and innovative concepts in tracking the Single-Family Disposition Waterfall (SFDW) that includes Claims Without the Conveyance Title (CWCOT) properties. This project encompasses the sharing of data between Mortgagee and Servicer industry partners, HUD’s Mortgagee Compliance Monitor (MCM) contractor, the HUD

National Servicing Center (NSC) for compliance review and HUD’s Quality

Assurance Surveillance Plan (QASP). This service takes approximately one year to be fully developed and the testing phase with a select few mortgagee/Servicer(s) eventually drafting new Mortgage Letter to implement nationwide.

• The P260 application has implemented several unique concepts and services that are HUD specific. Examples include SFAM online e-NAID application for all

Payee types receiving payments from HUD, real-time online transactions to validate/match with IRS Taxpayer Identification Number (TIN), and Principle

Broker license verification all integrated with E-signature workflow when approved.

• The P260 application includes a public facing REO property listing site with unique workflow and rules for a sealed bid acceptance and contract ratification process. Sales contracts with national and localize addendums have been integrated with DocuSign E-signature with LexisNexis Risk Solutions, to provide security, compliance, and knowledge base authentication (KBA) method called

“ID Check” to ensure strong signer authentication.

• The P260 application implemented geographical mapping for Opportunity Zones for tracking and reporting purchase of HUD REO single family properties. In addition, HUD Revitalization Areas and Asset Control Areas have specific requirements to support HUD’s mission in providing quality affordable homes.

• A P260 application modular for Federally Declared Disaster Areas has employed geographical location, tracking, monitoring, and reporting for Single Family REO properties.

It will take a new contractor months to develop and customize their application and a transition period of about 90 days will be required to onboard. These alternatives would leave SFAM with a lapse in service that would have negative/critical operational and financial consequences detrimental to the mission of HUD. As such, services are available from the incumbent, Yardi Systems, Inc., for the continued utilization of the

P260 major application with the customized features that can help meet HUD’s regulatory requirements for FHA/SFAM property disposition, tracking, reporting, and public facing retail listing/bid site for REO properties sales. Yardi is the only firm that can meet SFAM’s REO case management needs past March 29, 2022, through September

29, 2022. Additionally, Yardi is the only firm that can provide continued services through the transition-in period after an award has been made through a competitive process for the long-term award.

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 SAM.gov notice was publicized on December 8, 2021 as required by FAR Subpart 5.207. The notice was widely disseminated through SAM.gov and announced that all responses received within 10 days from the date of publication of the synopsis will be considered by the

Government. All responses to the notice were to clearly and thoroughly defend claims or assertions that attempt to refute the government’s stance. The notice closed on December 18, 2021, and to date, no responses or inquiries have been received.

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 $10,704,476.00 and will be used as the primary basis of analyzing the Contractor’s price to determine if it is fair and reasonable. Therefore, I hereby determine that the anticipated price for this contract action will be 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:

• Issuing a notice of intent to sole source on sam.gov.

• Reviewing data from previous acquisitions;

• Reviewing published data from the web;

• Consulting with the acquisition team, knowledgeable acquisition, and program officials in government and industry regarding market capabilities

The notice of intent to sole source was synopsized on December 8, 2021 on SAM.gov and closed on December 18, 2021. The notice complied with all the requirements of FAR Part 5.207. The notice of intent to sole source announced the used of FAR Subpart 6.302-1 under the authority of

41 U.S.C. § 3304(a)(1). Because there were no responses or inquiries received; the Contracting

Officer concluded that the market research efforts corroborate the government’s stance that an award to any other contractor, other than the incumbent, is not a feasible nor an optimal solution.

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

• The P260 application provided by Yardi is SFAM’s sole means of obtaining case management services which are used by HUD staff, contractors, mortgagees, and loan servicers. Currently, P260 has over 15,000 active users that are processing over 5,500 active REO cases and over 6,000 Home Equity Conversion Mortgage (HECM) custodial properties. In addition, there are hundreds of thousands of cases that come in and out of pre-conveyance status and are being tracked in P260.

• Without the P260 application, Single-Family will not be able to process or sell HUD’s

REO inventory. This would have a significant negative impact on not only the FHA

Mutual Insurance Fund, but also the communities across the country that have REO and

HECM custodial properties. In addition, the P260 application has a bi-directional interface with the Office of Finance and Budget’s Single-Family Asset Management

System (SAMS) to exchange and update property disposition status and track disbursements.

• Currently, due to the COVID-19 National Emergency, there is a foreclosure moratorium that has caused a significant decrease in REO claims and acquisitions. During the first six months of fiscal year 2020, HUD was averaging 1,770 properties per month. Since the moratorium was put in place HUD has averaged only 1,137 acquisitions (64.2%). When the moratorium expires on September 30, 2021, SFAM anticipates a rapid significant increase in REO claims and HUD acquisitions. This evidences the dire need for the services to continue without a break in service.

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.

As described in the narrative above, this bridge will ensure the continuation of the P260 application which provides mission-essential functions that must be performed under all circumstances without any break in service. Efforts are simultaneously being split between this bridge as well as with the long-term five-year competitive procurement. Delays (i.e., approval of the FITARA memo, program and OCPO differences in whether to pursue a competitive or sole source acquisition, the uncertainty of transitioning to the FHA catalyst, securing a .gov website for HUDHomeStore.com, and OCPO staffing shortages and competency issues), not attributed to the Contracting Office or Officer, have resulted in the need to exercise this option. It will be catastrophic to the mission if services with Yardi Systems Incorporated are not continued from

March 29, 2022, through September 29, 2022.

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).