REO Case Mgmt - Exhibit 1 Beta.SAM.pdf

J&A Control No. 20-43

“Source Selection Information – see FAR 2.101 and 3.104”

For Official Use Only

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, 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”.

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

a. Acquisition purpose and objectives. The Office of Single-Family Asset Management

(SFAM) requires a Business Service Provider (BSP) to support their Real Estate Owned

(REO) case management needs via SaaS (Software as a Service). The objective is to secure the services of a Contractor to provide REO case management support services while avoiding the need for a transition in period or a lapse in services.

b. Project background. The Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA), insures more than $375 billion of real estate loans. The task of managing assigned loans and disposing of the real estate it under the purview of SFAM. In recent years, the workload--especially for loan management and real estate disposition- has been increasing. SFAM is comprised of two divisions, the National Servicing Center (NSC) and the Asset Management and

Disposition Division (AMDD). The AMDD is responsible for establishing policy for the servicing of FHA loans, and the management and marketing of HUD-acquired single-family properties. The scope of the policies that AMDD handles includes some property disposition functions escrow requirements, pre-payments, loss mitigation, and mortgage insurance claims. SFAM directly requires case management support services to fulfil their mission. As part of SFAM’s mission-essential functions, it must also perform property disposition tracking, reporting, and public facing retail listing/bid site for Real

Estate Owned (REO) property sales, which must be performed under all circumstances without any break in service.

The requirement is not new. The requirement is a follow-on to the existing contract, contract number DU100H-15-C-17. The contract was awarded for a base period of 1-year with four 1-year option periods and expires on September 29, 2020. The requirement was awarded to Yardi Systems, Incorporated on September 30, 2015 in the amount of

$44,202,838.00. Yardi Systems, Incorporated is a large business; the procurement was competed on an unrestricted basis. A total of six proposals were received from the last solicitation that resulted in the contract award.

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

a. Project title. Real Estate Owned (REO) Case Management Support Services.

b. Project description. The services provided 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 provided 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

The case management process allows for immediate (real-time) availability to complete a variety of portfolio management functions and also includes interfacing with all HUD approved internal application systems.

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-2020-00058/APP No.

APP-HU-2020-118. The proposed solicitation number is 86615620R00015.

e. Total estimated dollar value and performance/delivery period. The total estimated dollar value of the acquisition is $8,798,733.80. The total performance period is for 1-

Year (September 30, 2020 through September 29, 2021).

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 Inc, 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 Real Estate Owned (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. Examples of specialized and unique HUD specific enhancements 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 project started over 12-months ago and will take 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 with the additional constraints that there be no break in REO case management service and there be no transition-in period between vendors.

6. Description of the efforts made to ensure that offers are solicited from as many potential sources as practicable. Indicate whether a Beta.SAM notice was or will be publicized as required by FAR Subpart 5.2 and, if not, which exception under FAR 5.202 applies.

On January 15, 2020, a sources sought notice was posted on Beta.SAM. Six (6) capability statements were received as a result of the posting. The potential vendors’ names, locations, points of contact and the vendors’ capabilities to meet the government’s requirements in terms of performance, cost, schedule, and risk were assessed. The notice encouraged vendors to submit their capability statements for the requirement in an effort to re-procure the services. A total of six vendors submitted capability statements. A summary of each of the vendors responses who submitted capability statements are as follows:

• Quandis, Inc. – overall the vendor did not demonstrate technical expertise, technical approach, management approach or prior experience to meet the needs of this requirement.

• Micro Focus Government Solutions – overall the vendor did not demonstrate any technical experience; limited ability for a technical approach; no management approach and prior experience to meet the needs of this requirement.

• Andromeda Systems, Inc (ASI) – overall the vendor did not demonstrate any technical experience; limited ability for a technical approach; no management approach and prior experience to meet the needs of this requirement.

• Coresphere, LLC – overall the vendor did not demonstrate any technical experience;

limited ability for technical approach; no management approach and prior experience to meet the needs of this requirement.

• RV Global Solutions, Inc. – overall the vendor did not demonstrate any technical experience or technical approach; sufficient management approach; and no prior experience.

• Yardi Systems, Inc. – this vendor is the incumbent and had demonstrated technical experience, technical approach, management approach, and prior experience to meet the needs of this requirement.

After completion of the review of the capability statements it was determined that Yardi was the only vendor that demonstrated that they are fully capable of meeting the requirements identified in the PWS, including the constraints of no break in service and no transition-in period. Micro

Focus Government Solutions, Andromeda Systems Inc. and Coresphere LLC appear to have minimum technical capabilities that would meet some of the requirements identified in the PWS.

The remaining two vendors do not appear to have any technical experience or approach to meet the requirements identified in the PWS.

On August 21, 2020, a notice of intent to sole source to Yardi Systems Inc was posted on

Beta.SAM under 86615620R00015, with a closing date of September 8, 2020. The synopsis encouraged capable parties to submit their capability statements if they felt they could satisfy the subject requirement. The notice announced the sole source nature of the requirement and notified potential vendors that all responses received within 15 days from the date of the publication would be considered by the Government. Responders were asked to clearly and thoroughly defend any claims or assertions that attempt to refute the government’s claim. The notice also stated that information received would be considered for the purpose of determining whether to conduct a competitive procurement. No responses were received within the 15-day posting period to identify whether a qualified source existed that was more advantageous to the

Government.

7. Determination by the Contracting Officer that the anticipated cost/price to the

Government will be fair and reasonable.

I hereby determine that the anticipated price for this action will be fair and reasonable. The anticipated price for the acquisition is $8,798,733.80 for a period of 1 year. The Government will evaluate each line item price and the total proposed price to determine if the Offeror’s price is fair and reasonable utilizing price analysis techniques in accordance with the guidelines in FAR

15.404(2)(ii) “comparison of the proposed prices to historical prices paid by the Government for the same or similar items and (v) “comparison of proposed prices with independent Government cost estimates”. Because this is a commercial service, than cost and pricing data is not required;

however, the Government will request for other than cost and pricing data in order to understand the Contractor’s pricing methodology.

IGCE Current Contract Annually Average

$8,798,733.80 $8,840,567.60 $8,819,650.70

In comparing the proposed price to the IGCE and previous price, the government considers that a +/- 10% range from these benchmarks is what a prudent person would pay as this is not a significant deviation to cause concern and render the price not 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 was conducted by:

• Issuing a sources sought announcement in Beta.SAM;

• Publishing a notice of intent to Beta.SAM;

• Reviewing capability statements;

• Consulting with the acquisition team; and

• Contacting knowledgeable acquisition and program officials in Government and industry regarding market capabilities

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 December 31, 2020, 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. Based on the notice of intent issued on August 2020, no other sources expressed an interest in this proposed acquisition.

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 contract 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. Initially, all efforts were steered towards procurement of the long-term five-year contract through competition: however, with the unanticipated development of delays in the procurement of another critical system needed to interface with the P260, it will be catastrophic to the mission to undertake a phase-in of a new contract or to entertain a break in service. There are no actions that could have been taken to prevent only one responsible source being able to satisfy HUD’s needs. FHA/SFAM is wholly dependent on the unique services Yardi provides to perform HUD’s regulatory requirement to dispose of REO inventory. This bridge contract will give the Contracting Office time to procure a long-term follow-on contract on a competitive basis.

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 Competition Advocate/Approving Official. Since the action exceeds $700,000 but does not exceed $13.5 million, approval by the advocate for competition for the procuring activity can be located at Part 3 of the attached form HUD-24012 (07/2011).