JOFOC_Risk_Management.pdf

Justification for Other Than U.S. Department of Housing

Full and Open Competition and Urban Development Office of the Chief Procurement Officer

PART I - PROGRAM OFFICE RECOMMENDATION

I recommend the use of other than full and open competition for the acquisition of descrlbe services or supplies]

An outline database subscription used in the review of hosDialt oerfprmance for risk management.

Negotiations should be conducted with the following source(s) y [provide names, addresses and points of contact; continue on separatE sheets as needed]: 5unvtConsuIthg CCC

Attn AJbst Cs. 715 7th Str..t 5LII 14, Wssthnsjon DC 202407.53C0

The estimated cost of this acquisition is: $ 428.436.84 The statutory exception which allows this use of other than full and open competition is [select one]:

I Only one responsible source and no other supplies or services will satisfy agency requirements -41 USC 3304 (a)(1) (see FAR 6.302-1)

Unusual and compelling urgency - 41 USC 3304 (a)(2) (see FAR 6.302-2) El Industrial mobilization; engineering, developmental or research capability; or expert services - 41 USC 3304 (a)f3) (see FAR 6.332-3)

Authorized or required by statute - 41 USC 3304 (a)f5) (see FAR 6.302-5) Public interest (NOTE: requires Secretarial approval and Congressional NotificatIon) -41 USC 3304 (a)(7) (see FAR 6.302-7) A description of the circumstances that support the use of the above statutory authority is attached and included as Exhibit 1 to this justification.

Program Office Certification. I certify that the information contained in this justification is accurate and complete to the best my knowledge and belief.

Head of Program Office [nameJ Title/Name of Office:

Vance T. Morris Associate General Deputy Assistant Secretary for Housing (Acting) ire: rte: I For additional Information contact:

‘f/’d/ /9

CONTRACTING OFFICER REVIEW’AND CERTIFICATION

Provide addWonalJustificalion and comments here. Continue on back as needed.

Contracting Officer Certification.

I certify that the information contained In this justification is accurate and complete to the best of my knowledge and belief.

Stur

/ ó/jorj Previous ed tion unusable P e 1 of 2 form1iUD-2401 2 (07/2011)

JUSTIFICATION FOR OTHER THAN FULL & OPEN COMPETITION:

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

WASHINGTON, DC 20410-3000

OFFICE OF CHIEF PROCUREMENT OFFICER

JUSTIFICATION FOR OTHER THAN FULL & OPEN COMPETITION:

TITLE: Risk Management Analysis Services

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

Agency: Department of Housing and Urban Development (HUD)

Contracting Activity: Department of Housing and Urban Development (HUD) Office of Chief Procurement Officer (OCPO)

451 7th Street, Room 5256 Washington, DC 20410

Program Office: Office of Housing-Federal Housing Commissioner Office of Healthcare Programs

451 7th Street S.W. RM 6264 Washington, DC 20410

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

Request approval for a sole source award to Summit Consultant to provide hospital specific Risk

Management Analysis Services that is used in the financial review of hospital performance and more importantly to identify and monitor troubled hospitals which are at risk of default. This is a Firm Fixed

Price contract. The type of funding to be utilized is 0183.

(3) A description of the supplies or services required to meet the agency's needs (including the estimated value).

The Office of Healthcare Programs (OHP) has a contract with Summit Consulting LLC (Summit) to provide risk management analysis services. As part of the contract, Summit provides essential analytical reports and risk management tools that are used by OHP to monitor its $7 billion portfolio of hospitals. The contract and related services are a central component of OHP’s asset management for hospitals. Summit’s services are critical in the financial review of hospital performance and more importantly the services are used to identify and monitor troubled hospitals, which are at risk of default.

Given the portfolio exposure risk, a break in service will adversely impact OHP’s ability to identify and intervene in potential defaults.

The period of performance is from April 1, 2019 through September 30, 2019.

Estimated values $428,436.84.

(4) An identification of the statutory authority permitting other than full and open competition.

The statutory authority is 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.

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

The Office of Healthcare Programs (OHP) had a contract with Summit Consulting LLC (Summit) to provide risk management analysis services. This contract with Summit expired on October 14, 2018.

As part of the contract, Summit provided essential analytical reports and risk management tools that were used by OHP to monitor its 17 high risk hospitals with an Unpaid Principle Balance (UPB) $1.7 billion. The average unpaid principal balance for each hospital is approximately $100 million. The Summit contract and related services are a central component of OHP’s asset management toolbox.

Summit’s services are critical in the financial review of hospital performance and more importantly the services are used to identify and monitor troubled hospitals, which are at risk of default. The current break in service is adversely impacting OHP’s ability to identify and intervene in potential defaults to our hospital portfolio that has large unpaid principle balances ranging from the tens of millions to hundreds of millions of dollars. OHP relies on the financial data and reporting tools provided by Summit to review financial performance trends of each hospital in the portfolio. Having access to these financial performance trends is critical in identifying troubled and high risk/ high default probabilities. This affects the Program’s ability to respond immediately and effectively to proactively manage the risks associated with these large hospital mortgages potentially resulting in catastrophic defaults for the agency.

Summit Consultant LLC has successfully demonstrated the ability to provide the required services under contract DU100R-14-C-02 and possesses the required staffing resources without a significant ramp-up period or additional costs. Summit Consultant, LLC allows OHP staff to rapidly deploy staffing resources to conduct site visits, attend board meetings, and conducted intense reviews of weekly cash flow statements to assist with and prevent defaults.

Summit is already set up with Moody’s to perform the work and a new contract would take 6-8 month to begin work.

Specifically, OHP requires continued access to the following risk management tools and services provided by Summit.

Moody’s Risk Analyst. Summit will need to maintain the subscription, provide system administration, maintain the data, and provide user support. Account Executives rely on Risk Analyst to input monthly and quarterly financial data for all hospitals in the portfolio. Risk Analyst provides the basis for management reports, which are reviewed by leadership. Without these reports, management will not have a comprehensive view of the hospital portfolio. In addition, is used to populate the Online Property Integrated Information Suite (OPIIS). The Office of Risk Management relies on OPIIS data to monitor the Office of Housing’s credit risk.

Moody’s RiskCalc. Summit will need to maintain the subscription, provide system administration, maintain the data, and provide user support. RiskCalc provides the hospital-specific probability of default or Estimated Default Frequency TM calculations for each portfolio hospital. These calculations inform watch list decisions and intervention strategies for the portfolio hospitals.

Portfolio Management Dashboard. The Portfolio Management Dashboard (PMD) is the reporting platform used to visually display the summary data in Risk Analyst. The PMD is an interactive web application created and maintained by Summit. It allows Account Executives and OHP management to interact with the financial data, ensure that the data is entered into Risk Analyst correctly, and review financial performance trends. The PMD also runs our risk rating calculations and generates reports that are provided to the FHA Commissioner’s office and the Office of Risk Management.

Develop ad hoc risk management and asset management reports. Summit routinely provides on demand analytical reports based on hospital and program data. These reports are critical in answering risk related questions and addressing operational challenges.

Additionally, based on historical performance data and OHP’s technical knowledge of the requirement, the average ramp-up period for a new contractor is approximately 6 months. The Performance Work Statement (PWS) also requires the contractor to maintain fully staffed personnel equipped with and capable of providing the specific risk management tools, data analysis, and data accessibility functionalities.

Notwithstanding the above, Summit Consultant, LLC also has a staff who are currently “PIVed” (Personal Identity Verification) qualified and able to assume all required key personnel roles and responsibilities to perform immediately. This is an advantage to the Government since the average time to complete HUD’s PIV Security process for new contractor employees is 45 days.

In addition, OHP is in the process of procuring new services. It will take approximately six months to transition in the new service once it has been awarded. During this transition period, we will need to maintain the Risk Management Analysis Services.

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

The Office of Healthcare Programs, Office of Hospital Facilities is in process of awarding a new contract. A Sources Sought was issued on FedBizOpps August 6, 2018 and closed on August 13, 2018. Twelve vendors submitted proposals. The new contract is estimated to be awarded no later than September 2019.

(7) A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

Prior to the issuance of any contract award, the Contracting Officer will conduct a price analysis to sufficiently to determine the overall price represents a fair and reasonable price to meet the Government's needs.

(8)A description of the market research conducted (see Part 10) and the results or a statement of the reason market research was not conducted.

A Source Sought was posted on FedBizOpps August 6, 2018 and closed on August 13, 2018.

Twelve sources responded with their capability statements. The scope of services for this contract is a subset of the services in the Integrated Underwriting and Asset Management solution; therefore, the responses to the new requirement were used to assess the firms’ capability to meet the contract’s requirements. The unanimous conclusion of OHP Subject Matter Experts’ assessment was that of the 12 vendors only Summit Consulting, LLC, and Moody’s Analytics were capable of performing services needed.

(9) Any other facts supporting the use of other than full and open competition, such as:

The Summit Consulting, LLC contract expired on October 14, 2018 and only had a 60-day transition-out period. Therefore, there is a critical need to obtain an award to the Summit Consulting, LLC contract to mitigate the increasing negative impact of the current lapse in service until the new contractor transitions in. Summit has the necessary tools, processes, and personnel to continue providing the required and critical support services to OHP reliably. Summit’s unique qualification in providing the adequate staffing mix and required services illustrates not only the best value to the Government, but also the ability to maintain the essential technical and personnel expertise to deliver outstanding performance and reliability under this very important contracting effort.

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

Sources Sought:

In addition to Summit Consulting, the 11 other vendors who responded to the Sources Sought are listed below.

Vendor Name Location POC Socio- economic Category

Capability

AXIS

Management Group, LLC

McLean, VA Pratick Reddy SDB, WOSB Not capable

FI Consulting Arlington, VA Karen Miller SB Not capable

Kingston Ward Advisory Group, Inc

Orange Park, Fl Patricia Ward WOSB Not capable

Moody’s Analytics Washington, DC Greg Robinson LB Capable Consummate Computer Consultants Systems, LLC

Arlington, VA

Charles Thomas

SDB

SBA 8(a) Exit:

7/1/2014

Not capable

Mortgage Assistance & Acquisitions Group, LLC

Washington, DC Frederick Douglas SDB Not capable

Murano Corporation

Research Triangle Park, NC

Sree Rajagopalan SDB Not capable

Pyramid Interactive, LLC

Springfield, VA Charles Harris WOSB, SDVOSB Not capable

Thomas & Herbert Consulting LLC

Laurel, MD Rodney Thomas SDVOSB Not capable

VAAS

Professionals, LLC

Atlanta, GA Steve Julal SDB Not capable

Cornerstone Enterprises, LLC

Byram, MS Curtis Robinson SBA Not capable

A notice of Intent to award a Sole Source to Summit Consulting was issued February 7, 2019.

(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.

A notice will be publicized in FedBizOpps to ensure the maximum extent practical competition will be achieved for the re-competition of this acquisition.

(12) Contracting officer certification that the justification is accurate and complete to the best of the contracting officer’s knowledge and belief.

See HUD-24013, Part 2, Contracting Officer’s Determination and Certification.