ID11190012_-_FBO_J&A.pdf

General Services A,drninistration National Capital Region (i\CR)

JUSTIFICATION AND APPROVAL

JUSTIFICATION FOR OTHER AND FULL AND OPEN CON,IPETITION

The General Sen'ices Administration (CSA) makes this Justificntion and Approval (J&A) for Otlier Than Full and Open Competition pursuant to the authority in Federal Acquisition Regulation (FAR) 6.302.

l) Identification of agenca' and contracting activitl, and spccilic identilication of the documcnt as a "Justification for other than full and open competition."

Agencl': Genera!Scr-r,fcc's Adninistrstion Federa I A cq uis i t ion.9cn'ices (FA S) Nationsl Cnpital Region NCR) Assisted Acquisitiart,Sen'ices Divisiott l{'-as hi ngtott. DC 2 A407

Agting in support of:

The Departnrcnt af Housing and {Jrban Development Afiice af the Chief Procut.enent Affcer

Contracting Activi$': General.len'lces Adninistratiau F er{ crn ! A cq uis i I i an.Serl,icEs N{ttionnl Ccpit*l llegiort C an t rac ti ttg Divrsiorr II'ashingtott, DC 2A407

0n behalf ofi f,/ ^t n/Cfi A s s i s t e d A c q u i s i t i o tt,Sen'iccs I) i v i s i o n

Program Namc: Loan Accounting System (LAS) Operations and l\Iaintenance Support

ID: IDI1190012

The purpose of this "JustificationJbr other tlnn.{u{lnnd open contpetitian " is to arvard a nerv contract, on a sole source basis, to Nortridge Software" LLC (Nortridge) for the procurement of licensing, softrvare upgrades, operations and maintenance support for HUD's Loon Accounting System {LAS), The LAS is comprised of Nortridge's proprietary Commercial Off the Shelf (COTS) Nortridge Loan Softrvare {NLS) configured rvith HUD's business requiremcnts and fi nancial application intertlces.

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2) Nature and/or description of action being approved

The purpose of this justification is for the issuance of a sixty-month sole source contract for one ( I ) twelve ( l2) month base period and four (4) twelve { l2) month option periods thereafter to Noftridge. This rvill be a Firm Fixed Price contract. Nortridge will provide unintemrpted and continuing support for LAS products (APP-Q-Z018-021) (RCS-Q-ZO18-00091). Norfridge is the software manufacturer and sole authorized provider of licensing, software upgrades, patch fixes and modifications for NLS.

3) A description of supplieslservices required to mect Agency's need.

Prccure the licensing, software upgrades, operations and maintenance support services required to sustain LAS, ensuring the LAS system remains fully operational. Software maintenance eflorts include Corrective Maintenance, Troubleshooting User Support, Steady State Maintenance Level 2, Technical Support, Operational Support, Routine System Checks/Coop;

Project Management, Transition In/Out and Optional tasking. NLS is critical to the overall mission because of its ability to interface with other major HUD financial applications. The total estimated period of performance may be April 3A,2Ol9 through April 29, 2024 in the event all option years are exercised. The total estimated amount should all options be exercised is $1,526,194.25

4) Identification of the Statutory Authority Permitting Other Than Full and Open Competition

This request is authorized under citation 4 l U.S. Code g 3304(aX I ) "Use of Non-Competitive procedures" as implemented by FAR 6.302-l(a)(2){ii)(B) "Only One Responsible Source and No Other Supplies or Services Will Satisfu the Agencies Requirements."

LAS is a HUD mission critical system comprised cf Nortridge's proprietary Commercial Off the Shelf (COTS) Nortridge Loan Softrvare (NLS) configured with HUD's business requirements and financial applicaticn interfaces. LAS currently services over 3,500 active loans in the Section 201 Flexible Subsidy and Section 202 Elderly & Handicapped portfolios and over 8,000 active receivables in the Section 236 Excess Rental Income and Section 236 Miscell aneous portfolios.

Nortridge, as the incumbent, and the manufacturer of NLS loan software has the professional skills sets required to maintain LAS, and they have in-depth knowledge of HUD's business practices surrounding the application of LAS. Awarding a sixfy-month contract (Base plus four option periods) to Nortridge would be most beneficial to the govemment. At this time only Nortridge trained employees possessing the technical training and qualifications with the NLS software are authorized to access, change or modifu the NLS software. Nortridge presently holds all proprietary rights to the software and allows no other commercial vendors to access, sell, license, or modify their soflrvare.

5) Dcmonstration that the Proposed Contractor's Uniquc Qualifications or the Naturc of thc Acquisition Rcquires Usc of thc Authorih, Citcd

Sycn'icu'

LAS is currcntly comprised of Ncrtridge's Softrvare's proprietary Nortridge Loan System |NLS) software, version 4.9.3. LAS is a HUD mission critical system. The NLS softn,are currently utilized by HUD has been modified over a period of l0 years to address unique HUD busirress requirements. NLS currentiy interfaces rvith trvo intemal I{UD mission critical systems and the Department of Treasury's Pay.Gov system. Each NI-S interface rvas developcd exclusively for HUD to support tlie prnprietary nature of the interfacing systerns.

&.ackgrorrnd

LAS is a ttiission critical application. The LAS NLS sotiriarc platf-onn maintains FiUD's loan porlftilio iuf'onnation l'or l{i Loan Prograrns. rvith a corntrincd polt{blio of orcr l?,000 lcans.

tliat ltavc a c*nrbinccl r,'alue of Sl.i Biliion dollars. Thc systcn: nraintiiins thc loan atnortl./irtion schcdulcs. gcncmfcs thc montltl-i'intcrcst and prirrcipal arnounts due: applics collcctions tc thc interest and prirtcipal atnounts due and illl cxcess arnounts arc rccordcd in thc prnjcct ioarr sttspcnsc account. n*LS uscs a simplc intercst calculation fernnula to calculatc intcrcst lor non atnortizerl loans and estalrlislrcs thc intcrcst antount along rvith thc principal aurounts rluc for thcsc ilpcs of loans" C'oll{rctions for thcsc loans arc rcccircd rir intcrlacc from P]99 l-lUD PaSr.gov Corntnott Servicc {I-{PCS) rvltich iutcri'accd fionr th* "l'rcrsur3' Pay.Coi Svstcur" as u cll a-s, an irrtcrlacc rvith .467 t-inc of'{'rcdit Control Systcm. NLS allor.vs lroth Ft. lVorth r\ccounting Ccntcr (FWAC) and Hcadquartcrs Accoirnting kionitoring and Analt'sis Dir isii:n TAMAD) to cnter rcccipts ol'dircct chcck payrncnts ftr thc loans.

IIUD's 1,AS !haltcnsg

Nortridgc, ns thc sofin'arc nrauufacturer, holds allproprictary rights to thc sofiirarc and allo*s no otlier commcrcial lcnder to sell, lrcensc or rnodify tircir sofiu arc.

HUD anticipatcs that tltc procurcrncnt antl irriplcmcntation of ncu'corrmcrcial {COTS} loan sol'tnarc platfonn lbr LAS r,rould rcquirc ot lcast 24 monltrs. The J4-lncnth irnplcrncrrtation timc rcrluired ftlr a ncu COTS loan accounting soli*ar-c platfonn rrtruld incluclc, at a rrrinintLrm:

l. Sofirvarc installation arrd contiguralion u'ithin thc HUD infiastructurc

3. Dcsign. clct clopnrcnt attd cstablrshmcnt o I' thc data basc lbr thc ncu CO'I'S. arrd misratlonufthcdatatotltcncrr databnscplattbrrn(rrhctlrcrSQL.orOraule).

,i. Dcrcloptncttt and testins of interfuccsofirrarc. rcqurrcd to inlcrlacc uitlr othcr I-ll,'D financial application:

-1. Soti*arc mocliliuation: rctluiisrl to nrcct DL'l)drtlncut tu;rcticrrral and rr-portrng rcrlr-rire rttcrttr

5. S;'stcrrr tcsting.

6. lndependent Validation and Verification (lV&V) testing,

7. User Acceptance testing (UAT), and

8. Operation in parallel rvith the prior appiication ssftrvare to cnsurc thc complete operational abilitics of the nerv COTS softrvare.

Thcoriginalimplementationcost{brNLS,includinginterfcceso{ilvarc,wasSl9l,050.00- The complcte implementation took l6 months 14i4:'05-7,'3 l106).

in addition to the aforementioned 8 steps, HUD lvould need to cnsure the nerv COTS rvould operatc lvithin HUD's inlrastructure and rnet all technical and security requirements. Presently, NLS interfaccs rvilh multiple HUD applications, r.vhich allorvs HUD to cornply rvith CongressionaIy mandated financial managernent legislation and directivcs; provide adequate stervardship of funds in accordance with Ccnerally Accepted Accounting Principles, and accurately account and repcrt on loan and collection actir.ity. Without the NLS softrvare and the support provided by Nortridge, HUD rvould be unable ablc to accuratcly maintain the cver l?,000 loans managed by NLS. This would greatly impact HUD's ability to obtain a clean financial audit.

HUD needs to postpone the competitive procurement of a replacement for the "Nortridge Loan System" (NLS) COTS SaaS that HUD lras built its current "A? I Loan Accounting System (LAS)' application on becausc HUD is currently in thc process of rnigrating its financial applications to an Enterprisc Financial Management Solution as part of its Financial Systern Transformation initiative. As part of this iniriative, HUD's current priority and investment focus is on subsidies modernization, and modemizing of HUD's disbursement system as integral tc the disbursements of subsidies, g.ants and loans. These two projects rvill extend over the next trvo years, and rvill establislr a new disbursemeni system with subledger capabilities. Upon completion of this tlvo year cffort, HUD rvill be positioned to fbcus on the modernization of its loan disbursement and management processes by leveraging thc new disburscmcnt and subledger system to eitl:er incorporate the LAS system's Ioan accounting functionality, tnd''or recornpete thc COTS platform and SaaS support for its LAS application through an open procurctnent rvith the updated requirenrent for better integration rvith its modernized Enterprise Financial Management Solution.

To recotnpete tlte current LAS SaaS COTS platform before tliis modernization is completed rvould rcquire llUD to pay for {and acccpl the risk of} migrating its LAS application trvicc -once to a nerv COTS softrvare package and SaaS vendor supporting the legacy requirements of HUD's currert financial systems infrastructure, and again in trvo years to a third COTS softrvare packagc and SaaS vendor bettcr suited to thc requircments of HUD's modernized Enterprise Financial Management inliastructure.

6) A description of efforts made to ensurc that offers are solicited from as many potential sources as is practicable, including whether a notice was or will he publicized as required by Subpart 5.2 and, if not, rvhich exception under 5.202 applies

A Request for Information was published for the sole source action to determine the availability of other commercial loan seruicing software's per FAR Sub Part5.2.

7) A Determination by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable

In accordance with FAR 15.40a-1@)(2)(v), "Proposal analysis techniques", the Contracting officer will determine fair and reasonableness based on the IGCE founded on historical pricing for the same or similar services, and rates negotiated by GSA that were determined to be fair and reasonable.

8) A Description of the Market Research Conducted and the Results or a Statement of the Reason Market Research was not Conducted

The market research performed included internet research to identiSr vendors that had specialized experience with NLS so{lware, the capability to provide software licensing, upgrades, fixes/patches, and operations and maintenance support. No qualified vendors, other than Nortridge, were identihed as a result of these internet searches.

A Request for Information was published for the sole source action in order to determine the availability of other commercial loan servicing software platforms per FAR Sub Part 5.2. Two responses were received to the Request for Information (RFI) from small business vendors:

1. Superior Information Technologies LLC, Minority-Owned SDB

2. Rudram Engineering, 8a Certified SB

Each vendor submitted a capability statement. Neither vendor offered a loan servicing COTS software application. Both vendors did offer development and support services for LAS. Each vendor demonstrated a wide array of core competencies standard for supporting development and maintenance services, though neither demonstrated experience with a loan servicing or other financial application or loan servicing COTS. Superior Information Technologies demonstrated competencies in Geographic Information systems (GIS), Business Intelligence (BI), business analysis, database design and offered to assist in developing and maintaining LAS. Rudram demonstrated competencies in software development, data analytics and intelligence. However, neither vendor demonstrated the required experience with Nortridge Loan Software (NLS) or the capability of providing NLS software licensing, upgrades, fixes and modifications as required in the Performance Work Statement.

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

Nortridge is the manufacturer and sole distributor of NLS. The most recent published Sources Sought notification requested vendors responding to the requirements in the Performance Work Statement (PWS), Task 5.1 Steady State Maintenance Levels I arrd2, demonstrate an ability to provide the NLS Annual Licensing, software upgrades, patches, enhancements and fixes. None of the vendors submitting responses demonstrated the ability to meet that requirement. No other vendors are authorized to market, sell or maintain NLS. All software upgrades, patches and fixes must be manufactured, released and supported by Nortridge. A software maintenance agreement with Nortridge will be required until HUD migrates these loans to another software platform.

HUD has researched several altematives to continue loans and receivables management transactional processing to the Department in the absence of NLS. Implementation of a new loans and receivables management system to replace NLS that meets all Federal financial management requirements would be expected to take at least 30 months based on HUD's market research. For this alternative, during the absence of NLS (minimum 30 months), HUD would perform manual transactional processing using MS Excel spreadsheets and emailing to ARC for recording in the core accounting system, Oracle Federal Financials.

Presently, NLS interfaces with multiple HUD applications, which allows HUD to comply with Congressionally mandated financial management legislation and directives; provides adequate stewardship of funds in accordance with Generally Accepted Accounting Principles, and accurately accounts and reports on loan and collection activity. Additionally, without the NLS software and the support provided by Nortridge, HUD would be unable able to accurately maintain the over 12,000 loans managed by NLS. This would greatly impact HUD's ability to obtain a clean financial audit and cause significant delays in meeting agency mandates.

10) A listing of the sources, if any, that expressed, in writing, an interest in the acquisition.

The following small business vendors expressed an interest, in writing, in this acquisition:

1. Rudram Engineering, 8a Certified SB

2. Superior Information Technologies, LLC, Minority Owned SDB

The two listed vendors listed above did not demonstrate the required experience with Nortridge Loan Software (l.{LS) or the capability of providing NLS software licensing, upgrades, fixes and modifications as required.

11) A Statement of the Actions, if Any, the Agency May Take to Remove or Overcome Any Barriers to Competition Before Any Subsequent Acquisition for the Supplies or Services Required

In accordance with OMB M-I8-i2, Implementation of the Modernizing Government Technology Act, the Office of the Chief Information Office (OCIO) is conducting a roadmap for the Chief Financial Officer (CFO). This roadmap includes the modernizationapproaches and priorities for FY2019 andFY2020. This entails a review of the Current State and Future State for all CFO applications. The functional and technical assessments will be conducted to determine the disposition for each application (Sustain, Enhance, Modemize or Decommission) to align with HUD's future state architecture comprised of enterprise services, business services (domain-based services), and enterprise COTS platforms that are shared across many of HUD's plogftlms.

Prior to the exercising of an option, the Government will assess rvhether Nortridge has established agreemenls rvhich rvill allow other commercial vendors to access, sell. license, or modiS the NLS; and at that time, determine feasibility to compete the requirement. lf Nortridge were to enter into such an agreement rvith an outside softrvare vendor u'ithin the ncxt five years, that vendor could protentially provide LAS support per next solicitation period. In addition, the Govemment has identified in its Financial System Transformation Initiative, tlte timeline for the competitive procurement, as the completion of its financial applications rnigration to an Enterprise Financial Management Solution. At the completion of the inigration.

HUD rvill be positioned to fbcus on the modemization of its loan disbursement and management processes by leveraging the neu'disbursement and subledger system to either incorporate the LAS system's loan accounting functionality. and,or recompete the COTS platform and SaaS support fbr its LAS application through an open procurement, This rvill allon,for an updated requirement and better integration lvith its modemized Enterprise Financial Management Solution.

Based on HUD's analysis to reccmpete as part of the Financial System Transformation Initiative, the total cost for a new system is $ l9.l M. This includes the implementation and Operatians & Maintenance of the new loans and receivables management system. The anticipated timeframe for implementing a competitive environment for tlre nerv LAS is as follorvs:

04.'2019" 04r?021 Loan program - maintaining stcady state

04;2021 - I0i202l Business requirements and process definition

I 1.2021 * 01j2022 Technical solution deycloped

A2|2OZ2 "- 08i2022 Procurement activities AgiZAzZ * 08i2023 Development

09J2023 * I1i2023 UserTesting |2i2O23 * 01 J2024 ProductiorlDual operations

03 j2024 Tum off Nortridge Loan System

Technical Certification This is to certifu that the portions of this justification that have been developed by the undersigned technical personnel, including supporting information and;or data verifying the

Covernment's minimum needs, schedule requirements and other rational for other than full and

-#*sDstc Project Manager Assisted Acquisition Sen'ices Division

Fage 7

Contracting Officer Certifi cation The contracting officer's signature certifies that this justification document is accurate and complete to the best of my knowledge and belief and determine on the basis of the findings above that using other than full and open competition approach is in accordance with the requirements and is in the best intErest of the Government (FAR 6.303-2(aXl2)).

Contracting Officer Contracting Division zz f =ur Date

/rt/^,r

Approval

Competition Advoeate

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