FIMA NFIP J A.pdf

U.S. Department of Homeland Security Federal Emergency Management Agency Acquisition Management Disision

:: FEMA

Date: August 29, 2011

Justification for Other Than Full and Open Competition

Pursuant to the requirements of the Competition in Contracting Act (CICA) as implemented by FAR Subpart 6.3 and in accordance with the requirements of FAR 6.303-1, the use of the statutory authority under FAR Subpart 6.3 is justified by the following facts and rationale required under FAR 6.303-2 as follows:

I. Agency and Contracting Activity.

Department of Homeland Security (DFIS), Federal Emergency Management Agency (FEMA), Federal Insurance and Mitigation Administration (FIMA), Risk Insurance Division, 1800 5. Bell St. (Crystal City Room 549) Arlington, VA 22202

COTR: hugh Sanders, phone 202-212-4736, e-mail

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

This Justification and Approval (J&A) seeks authority to increase the contract ceiling for Blanket Purchase Agreement (BPA) HSFEHQ-08-A- 1566 for Training Services for the National Flood Insurance Program (NFIP) from the present ceiling of $11.6 million to a new ceiling of $12.5 million. This BPA was competitively awarded on September 13, 2008 with a period of performance of one base period and four (4) one-year options. The total estimated cost of the proposed action is $999,990. The period of performance for the effort is 09 January 2012 through 08 May 2012.

3. Description of the supplies or ser ices required to meet the agency’s need.

The NFIP offers flood insurance coverage to homeowners, renters and businesses in return for local government commitment to sound floodplain management and related flood disaster mitigation efforts. The duties of FIMA in administering the NFIP include identifying communities with “special flood haiard areas,” issuing maps for those areas, helping communities meet floodplain management requirements, and communicating the benefits of flood insurance protection so that more mencans are reimbursed for flood damage through the insurance mechanism, rather than through Fedcrl disaster assistance funds

Sainletal SsL,ns Inc (foruall (icoLearning, mc), the cunent NI IP trainine cntracttr, provides a dedicated, highly responsive, nation ide team of expert professional flood Insurance trainers for the N F IP. I his training ensures that lenders, claims adjusters, and insurance agents throughout the Nation understand NFIP policies, practices and procedures in order to effectively comply v ith statutes, regulations, and the business of selling and servicing flood insurance policies.

The training contractor assists FIMA in meeting these goals by providing specially-tailored training on NFIP flood insurance policies and associated technical parameters in accordance with a Conuressional mandate outlined in the Flood Insurance Reform Act of 2004 (FIRA 2004).

Section 207 of FIRA 2004 requires all producers (insurance agents) selling flood insurance policies under the NFIP to be properly trained and educated about the NFIP to ensure they provide the very best service to their (and FEMA’s) clients. The Act directs the Administrator of FEMA, in cooperation with the insurance industry, State insurance regulators, and other interested parties to establish minimum training and education requirements for all insurance agents who sell flood insurance policies. The training contractor is required to provide a minimum of eighty-eight agent workshops a year. Last year, the contractor delivered one hundred and ninety-nine (199) agent workshops in order to meet the demand.

The NFIP, on behalf of FEMA, also conducts workshops and webinars on Program policies and procedures for mortgage lenders and claims adjusters. Lending compliance officers in lending institutions across the Nation rely on NFIP training to help them comply with Federal statutes and regulations with regard to every loan application they accept. The training helps them to successfully pass compliance audits without being charged civil monetary penalties for flood insurance violations. The contractor is required to provide a minimum of sixty (60) lender workshops a year. Last year, the contractor delivered forty-one lender workshops and thirty-seven (37) combination agent/lender workshops in order to meet the demand

FEMA requires all insurance adjusters handling NFIP claims to be annually certified. The adjusters must attend at least one NFIP adjuster workshop per year to retain their certification.

Under the training contract, the training provider is required to provide a minimum of twenty-four (24) adjuster workshops a year. Last year, the contractor provided fifty-two (52) claims adjuster workshops in order to meet the demand. Currently, there are no other training courses or workshops available in the marketplace that are approved to meet FEMA’s requirement.

The training contract has the following objectives:

• ON-SITE TRAINING & WORKSHOPS: Provide expert professional flood insurance training and development in instructor-led classroom situations. Workshops need to be held nationwide for insurance agents, claims adjusters and lenders. Classes will need approval to obtain Continuing Education Credits, Adjuster certification credits and the contractor supports the tracking of these credits, The contractor is responsible for the hosting of the classroom events, which includes finding a location for the on-site training.

• ONLINE TRAINING & SUPPORT: Develop and support the hosting of professional fl.ood insurance traini.ng to increase tie avaiiabiii.ty of NFI.]P training for users. Onii.ne training will be especially useful for disaster assi.star.Lce when agent and adjusters are i.n the field and need to look s.ome:thi.ng up qui.ckly.

• TRAINING MATERiALS: Produce state of the art flood insurance training materials, and instructor guides for the training of insurance agents, lenders, and claims adjusters on NFIP rules, policies and procedures.

• STATE DEPARTMENTS OF INSURANCE SUPPORT: Coordinate with the various State Insurance Departments to obtain continuing education credits for insurance agents who successfully complete NFIP training. Respond to questions from State Departments of Insurance regarding NFIP flood insurance training.

• SURGE CAPACITY: Provide surge capability for tlood insurance training of agents, claims adjusters, lenders and other entities (such as staff of impacted State Departments of Insurance) in post flood events.

4. Estimated value of the acquisition.

With the contractor’s estimated burn rate of $249,000/month, the current ceiling price of $11,600,000 is inadequate to support continued perfonnance beyond December 2011. The Federal Insurance and Mitigation Administration (FIMA) requires a total increase of the ceiling price by $999,990 from $1 1,600,000 to $12,599,990. The additional $999,990 is required to cover the transition period from January to May 2012, while this requirement is re-competed. If this finding is not provided the FEMA NFIP will not be able to provide the claims adjuster (face-to-face) training that take place annually from January through May, hence these adjusters will not trained in time for hurricane season.

5. Authority for acquiring the supplies or services on other than a full and open competitive basis.

[X] Authority is FAR 6.302-1, only one responsible source and no other supplies or services will satisfy agency requirements.

[ ] Authority is FAR 6.302-2, unusual and compelling urgency.

[ ] Authority is FAR 6.302-5, authorized or required by statute.

n Qualified Nonprofit Agencies for the Blind or other Severely Disabled— 41 USC 46-48c.

u Government Printing and Binding—44 USC 501.

n Sole source award under the 8(a) Program—l5 USC 637.

n Sole source award under the HUB Zone Act of I 997—IS USC 657a n Sole source award under the Veterans Benefit Act of 2003—15 USC 657f

[ ] Authority is FAR 8.4. brand name specifications or less than three sources are being considered under Federal Supply Schedule.

BACKGROUND: The National Flood Insurance Program (NFIP) had one large contract.

referred to as the Bureau and Statistical i\uent (BSA) contact, for manY years. This BSA contract encompassed many different functions: overall program support. financial System of Record. cal i center. outreach. trainin2, and iT systems support. The Department of Homeland Security determmed when the BSA contract was up fur renewal that the separate functions should be broken into separate contracts for small business competition. The Call Center.

Training, and IT systems were all broken into separate contracts and competed as small business set-aside contracts using FAR Part 19 procedures. This contract was awarded in September 2008 after only one responsive offeror was received. GeoLearning, Inc., was awarded a BPA with a one-year base period and four one-year (4) option periods of performances.

The increase of wide spread flooding, flood mapping changes being implemented and NFIP policy changes throughout the country, created an exceptional increase in the NFIP’s demand for training. The Risk Insurance Division discovered after award that the demand for NFIP training had not been properly estimated and the contract ceiling was not high enough to meet all FEMA regional-generated requirements. When estimating the training costs, FEMA only had the historical costs from when the contract had been one large contract, under the Bureau and Statistical Agent. When DHS broke up the functions of the BSA contract, all the functions were affected, but regional support stayed with the BSA and training became a separate contract. The cost effect of moving the functions to separate contracts was foreseen, but could not have been precisely estimated. The regional support staff was left with the BSA contract, leaving the Training contract to have higher than estimated travel, training and workshop costs, FEMA did the best possible job to estimate the contract ceiling but since this was the first training contract of its type for the NFIP, this was a difficult, if not impossible task.

The lack of competition was a contributing factor; the government was not able to look at different proposal prices, which would have assisted in raising a red flag that the government estimate was incorrect. Consequently, the NFIP training program experienced higher than anticipated costs and the burn rate accelerated as training demands increased.

JUSTIFICATION: SumTotal Systems Inc. is the only source capable of performing these services within the required timeframe. This action is necessary to transition the services onto a follow-on competitive requirement. Adjuster training that will need to take place from January through April, 2012. The incumbent contractor has the specialized capabilities to do this training where it will take a new contractor time to recruit staff with the necessary skill sets and train personnel required under the current contract. There are a limited number of individuals that are qualified to do this training. Moreover, adjuster training is set up at least four months in advance because space needs to be contracted for throughout the country, invitations and brochures printed and sent, and the $25 registration fee collected and processed. It is because of this and the need for adjuster training to be completed before hurricane season that a four month transition is needed. Conducting a competition for these interim services would result in interrupted services that are critical to the FEMA mission. As the incumbent, SumTotal Systems Inc., has an existing workforce already in place and is the only contractor that can ensure the continued performance of the required services without delays. This action is required to ensure continuity of services while a new contract is being competed on a full and open basis.

IMPACT: Currently, the NFIP Training contract is nearing its contract ceiling because of the demand from stakeholders and the urgent need for flood insurance training from knowledgeable experts. Without an increase in the ceiling, the contractor will no longer have operating funds.

F.nding the .NFIP traini.ng contract woul.d cause thousands of stakeholde.rs in the i.nsu.rance and:.

l.ending i.ndustries to have few or no options., and in. the case of insu.rance adjusters, no outlet for flood insurance training that is mandatory for them, .FEMA requires claims adjusters to have annual certification, which is only accomplished by attending one of these claims workshops.

The NFIP workshops offered by the NFIP training contractor are the only outlet for such claims workshops. If the contract is not continued, then the adjusters will lose their certification and there will be no fully-trained and certified adjusters to handle losses for the NFIP for the 2012 Hurncane season and beond Historically FEMA has prnsided this serice nithout interruption, and stakeholders depend on this training to meet their continuing education credits.

In addition. some insurance companies require certain flood insurance training (provided by FEMA) for their agents and claims adjusters. If FEMA does not have an experienced flood insurance training team in place to provide required training, then stakeholders will not be as well infonned and FEMA will experience increased Program turbulence such as a loss of policies, incorrectly rated policies, loss of Program credibility, and increased Program cost. Each NFIP policy written has an additional policy fee added that pays for FEMA NFIP fund 5 salaries and mapping. Without continual training by experts this funding could be negatively impacted resulting in reduced mapping and staff layoffs. In addition, an interruption of NFIP training will impact mortgage lenders because it’s highly unlikely that the lender community will be able to obtain timely NFIP updates of information impacting implementation of their Congressional mandate relative to the mandatory purchase of flood insurance should this contract be interrupted.

6. Additional supporting facts for the acquisition:

If this contract cannot be continued then the FEMA Regions and other NFIP stakeholders could see a delay before follow-on training services are acquired, transitioned and qualified training staffs are on-board to begin conducting training. The NFIP requires the claims adjusters to attend yearly training supplied by FEMA between January and April. If this contract is not in place to provide training for these adjusters, then during hurricane season, FEMA will not have certified adjusters to go out and look at claims. The monetary loss to the Government is difficult to estimate because, as a service, training is difficult to measure. The Program requires stakeholders to be informed and well-trained because of the impact they have on statutory compliance, NFIP policies, future mapping, staffing, flood insurance market penetration, customer service, and overall flood claim payments. The better these stakeholders are trained, the better they carry out NFIP requirements, the better American property owners are served through the flood insurance mechanism, and the less taxpayer support is needed for disaster assistance funding. The training contractor ensures the NFIP stakeholders in the field are provided with the most up to date program information possible. Interruption of this knowledge flow would be extremely detrimental to the NFIP and the Federal Government. It is extremely important that this training is presented by NFIP experts and they are not readily available in the market place.

The knowledge that is needed to train agents, lenders, and adjusters takes years to master and is a challenge for any training contractor to obtain.

Failure to increase the contract ceiling BPA l-ISFEHQ-08-A- 1 566 for Training Services, will seriously impact FEMA’s ability to meet its mission requirements. Work stoppage and delays in a number of requirements will result if the J&A is not approved. In order to ensure the continued performance of these highly critical services, the Government imist increase the BPA until a tollow—on contract is awarded.

7. Actions taken to removal of barriers to competition.

A tbllow on procurement will be competed to satisfy the EE\lAs long-term need for continued NFIP Training support. The estimated date of award is December 9. 2011. This will allow for a transition period in the event that the incumbent is not the winner of the acquisition.

I certify this requirement meets the Governnient’s minimum need and that the supporting data, which forms a basis for this justitication. is complete and accurate.

D te

Officers Technical Representative

PART II

1. Description of efforts made to ensure that offers arc solicited from as many potential sources as is practicable and listing of the sources, if any, which expressed, in writing, an interest in the acquisition. lAW with FAR Subpart 5,202(a)(1l), the proposed contract action is made under the terms of an existing contract that was previously synopsized in sufficient detail to comply with the requirements of FAR Subpart 52O7

2 ht’nV’pjQ846> with respeu to the current proposed contract action.

2. Market Research. Market Research was previously conducted before award of the BPA.

No additional market research was conducted, for the purposes of this J&A, because the BPA requirement was previously competed among sources. However, market research is already underway for the follow on competition.

3. Determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable, I have determined that the anticipated price(s) will be fair and reasonable based on the following: the Independent Government Cost Estimate and historical data.

Based on the estimated acquisition value identified above, I concur with and approve the above justification:

Ronald Ortega Contracting Officer

Date

\ eronica F. Key Mitigation Branch Chief

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Michael McCabe Office ofthe Cliie’ Counsel

7 . — ii

I Ii

1/

Date

PART II

I. Description of efforts made to ensure that offers are solicited from as many potential sources as is practicable and listing of the sources, if any, which expressed, in writing, an interest in the acquisition. lAW with FAR Subpart 5.202(a)(ll), the proposed contract action is made under the terms of an existing contract that was previously synopsized in sufficient detail to comply with the requirements of FAR Subpart 5.207

‘JLLiIJh. }— with respect to the current proposed contract action.

2, Market Research. Market Research was previously conducted before award of the BPA. No additional market research was conducted, for the purposes of this J&A, because the BPA requirement was previously competed among sources. However, market research is already underway for the follow on competition.

3. Determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable. I have determined that the anticipated price(s) will be fair and reasonable based on the following: the Independent Government Cost Estimate and historical data.

Based on the estimated acquisition value identified above, I concur with and approve the above justification:

Ronald Ortega Contracting Officer

Date

Date

Veronica E. Key Mitigation Branch Chief

Michael MCahe 0111cc ol the Chief Counsel l)ate

IjJiL

Albert B. Stigh Acting Competition Advocate