SFIS JOFOC Exhibit 1 - Redacted.pdf

J&A Log #20-17

EXHIBIT 1

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

Single Family Insurance System (SFIS/A43), Single Family Insurance Systems – Claims (SFIS-C/A43C), Title 1 Insurance and Claims (TIIS/F72)

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: U.S. Department of Housing and Urban Development (HUD) 451 7th Street SW, RM 5184 Washington, DC 20410

Contracting Activity: Office of Chief Procurement Officer, Headquarters

Program Office: Office of the Chief Information Officer (OCIO)

2. NATURE AND/OR DESCRIPTION OF THE ACTION BEING APPROVED

A six-month contract extension to contract 86615319C00009 is requested to maintain Operation and Maintenance service for the Single Family Insurance System, Single Family Insurance System – Claims, Title 1 Insurance Systems and Claims systems.

Method of contacting: Contract Modification Type of contract: Hybrid-Firm Fixed Price and Labor Hour Type of funds: This contract action will be funded with Information Technology (IT) funds.

3. A DESCRIPTION OF SUPPLIES/SERVICES REQUIRED TO MEET THE

AGENCY’S NEED (INCLUDING THE ESTIMATED VALUE)

Contractor support is required for Operations and Maintenance (O&M) and Development, Modernization and Enhancements (DME) services for the Single Family Insurance System (SFIS/A43), SFIS-Claims Subsystem (CLAIMS/A43C) and Title I Insurance and Claims (TIIS/F72) systems.

Performance Period: 3/29/2020 through 09/28/2020 Estimated Total Dollar Value: $961,840.12

4. IDENTIFICATION OF THE STATUTORY AUTHORITY PERMITTING

OTHER THAN FULL AND OPEN COMPETITION

FAR 6.302-2, Unusual and Compelling Urgency – 41 U.S.C. 3304(a)(2)

5. A DEMONSTRATION THAT THE PROPOSED CONTRACTOR’S

UNIQUE QUALIFICATIONS OR THE NATURE OF THE ACQUISITION

REQUIRES USE OF THE AUTHORITY CITED

As the incumbent, Pyramid Systems, Inc. located at 2677 Prosperity Ave. Ste. 700 Fairfax, VA 22031, has extensive experience in successfully providing expedited and efficient support services under the past and existing HUD contract. PSI has demonstrated an in-depth knowledge of HUD's IT infrastructure, inclusive of a clear understanding of HUD's single-family modernization standards. Only this contractor can meet this requirement due to the lack of time available to make a new contract award by March 29, 2020. In addition, only this contractor can meet the current Operations and Maintenance Support needs of the Single-Family Insurance System, Single Family Insurance System – Claims, Title 1 Insurance Systems and Claims systems because they possess the unique knowledge, skills and abilities. This Contractor also possesses the unique technical capability to perform support of this complex legacy system that has 42 separate system interfaces associated with it and a multitude of downstream system impacts. The requirement is essential because the SFIS systems are major and mission critical applications and are the authoritative source for Single Family and Title I insurance program information and related financial data.

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

NOT BE PUBLISHED AS REQUIRED BY SUBPART 5.2 AND IF NOT,

WHICH EXCEPTION UNDER 5.202 APPLIES

As required by the FAR Subpart 5.2, a notice will be publicized in beta.sams.gov (formerly Federal Business Opportunities site, www.fedbizopps.gov.)

7. A DETERMINATION BY THE CONTRACTING OFFICER THAT THE

ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND

REASONABLE

The Contracting Officer will make a determination that the anticipated cost to the government will be fair and reasonable based on the Independent Government Cost Estimate (IGCE) founded on historical pricing for the same or similar services and on the negotiated direct labor rates under the current contract.

http://www.fedbizopps.gov/

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

The competitive acquisition for a follow-on contract is currently underway. The original market research was conducted by the COR on 6/28/2017 for the competitive acquisition. HUD conducted market research by searching the internet and posting an RFI on 5/24/2017. Twelve small businesses responded with interest in this requirement. Additional market research was not conducted for this 6-month extension.

9. ANY OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL

AND OPEN COMPETITION

There are no other alternatives than to provide continued support through the requested contract extension. The impact of a break-in-service would result in immediate halted support for three critical systems. SFIS (A43) is a mixed financial system that provides the calculations for monthly billing. Monthly bills are calculated in A43 and sent to approximately 7,000 active lenders. Lack of contractor support for A43 could endanger HUD’s ability to generate proper monthly bills for over 6.5 million loans and collect insurance premiums for $1 billion monthly. The current contractor provides support of these systems by:

Performing numerous manual functions and processes pertaining to the nightly batch run applications.

Possessing the necessary system access and having undergone the PIV process to have that required access.

Possessing the required knowledge of the applications and the knowhow to research and correct any problem that occurs immediately.

Being present to answer the phone at 2 AM, respond and correct issues when the A43C nightly cycles conflict with other system interfaces which cause the system to come to a halt. The current vendor possesses the knowledge to correct those frequent issues immediately.

Being present to answer daily inquiries from the Program Staff Office and mortgage lenders regarding various topics that require a response normally within one to two business days.

A lack of system support for A43 would have a definitive impact on the safety for HUD’s underserved borrower population, to include low income, elderly, families, and the disabled. The data in A43 is used by A43C to validate the claims data presented in A43C – if A43 tables/processes are not functioning, neither is A43C. A43C provides data to SAMS and by extension P260. SAMS assigns Field Service Managers to HUD acquired properties based on the claim data supplied by A43C. If A43C does not provide that data, the properties are not secured, and HUD will suffer financial losses if the properties are damaged.

Similar to A43 and F72, A43C support also has an impact on the safety for HUD’s underserved borrower population. The risk of injury, danger, or loss of life increases because if affordable housing mortgages and loss mitigation options are not available, then borrowers will be without housing. A43C is necessary to provide the mission critical function of Single Family Claim payments and contractor support is needed to accomplish this mission critical function.

In FY 2019, SFIS – Claims (A43C) processed more than $7 billion in Single Family claim payments to FHA Approved lenders. Single Family claim payments are disbursed daily, which in turn impacts the housing market and the American economy. Claim payments return funding to the housing market to be used for new loan originations. Without the contractor support, these claims would not be processed.

Title II of the National Housing Act provides insurance on mortgages for borrowers who otherwise might not be able to own their home. Moreover, a break-in-service puts at risk:

More than 125,000 loss mitigation options worth $1.5 billion, assisting with keeping at risk borrowers in their home.

More than 67,000 home disposition claims worth $5.8 billion, providing needed funding for new loan originations.

Without contractor support, the loss mitigation options, and home disposition claims would not be funded.

According to a Mortgagee Letter issued August 29, 2019, there are changes required now within the Loss Mitigation Disaster Partial Claim submission process in A43C, to support borrowers in Presidentially Declared Natural Disaster Areas. Without contractor support, these required changes the vendor will work with the program office to make, will not be made and any systemic problem will cause the claim payment process to come to a halt.

Additionally, these three systems A43, A43C and F72 are legacy systems hosted on the IBM mainframe. A break-in-service would immediately result in a lack of support for these systems that directly impact Housing’s IT Modernization project. Housing and OCIO are currently executing an overall modernization of systems and Congress has appropriated $20 million to fund this effort. Supports for the underlying systems, A43, A43C directly impact this development effort. A break-in-service will delay development on the modernization project due to the lack of integration support and can potentially delay key deliverables to the mortgage industry and undermine the project plan and milestones shared with OMB and Congress.

These systems are the authoritative source for Single Family and Title I insurance program information and related financial data. These systems produce reports and files which are then transmitted or entered into FHASL, FHA’s financial system. The contractor is responsible for developing and providing these reports and files to FHA for entry into FHASL. If this contractor support is not continued past the current end date of the contract, FHA, and subsequently HUD, may be unable to meet its financial reporting obligations which may have a negative impact on FHA’s and HUD’s audit opinion.

There is no estimated cost duplication for this contract

10. A LISTING OF SOURCES, IF ANY, THAT EXPRESSED, IN WRITING,

AN INTEREST IN THE ACQUISITION

No sources have expressed, in writing, an interest in this contract extension.

11. A STATETMENT OF 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 competitive acquisition for the re-compete of support services for SFIS is currently ongoing. Contract award is anticipated in 3rd Quarter FY 2020.

12. CONTRACTING OFFICER CERTIFICATION THAT THE

JUSTIFICATION IS ACCURATE AND COMPLETE TO THE

CONTRACTING OFFICER'S KNOWLEDGE AND BELIEF

See certification at Part 2, Form HUD-24012