SOLE SOURCE JUSTIFICATION Redacted.pdf

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SOLE SOURCE JUSTIFICATION

(FOR SAP PROCUREMENTS)

Contracting Organization: Pension Benefit Guaranty Corporation (PBGC) / Procurement Department (PD)

Requisition Number: RQ 23-24-000072

Procurement Action Type: Existing Contract Modification

Contract Number: 21C0023

Contractor Name or Brand Name Product: WhiteStar Advisors, LLC ("WhiteStar"), Direct Real Estate Management

Supplies or services to be procured:

Pension Benefit Guaranty Corporation (PBGC) Contract 16PBGC-21-C-0023, WhiteStar Advisors, LLC (WhiteStar) expires on February 29, 2024. The subject contract is a sole source contract to manage and liquidate the remaining direct real estate properties received from a terminated and trusted plan. As of the date of this docuemnt, there is one property left on the contract and the vendor is actively looking for buyer.

As of February 14, 2024, there is one remaining property that has not been sold and one LLC not dissolved.

Therefore, CID has a current need to add two option periods for this contract. Without these option periods, this property will risk a break in services provided by our vendor including the oversight and day-to-day management of the property.

The unsold property was previously owned by Gulf Publishing Company, however since the bankruptcy in April 2020, the property has been vacant and been on the market for approximately 3 years. In June 2023, Whitestar listed the property on an auction site but received no bidder. After the auction, the listing agent continues to market the property for sale. Despite continued efforts to engage the three previously interested parties from the auction, none have expressed serious intentions to move forward. However, in January 2024, the broker received several inquiries, with one notable interest coming from a hotel and restaurant supply group. They are scheduling a tour of the property in the upcoming weeks. In addition, WhiteStar also approached the City of Gulfport to see if they were interested in the property and was told not at this time due to budgetary constraints. Overall, the following are the main reasons why the property is still unsold: (1) The property was built for a specific use and has an atypical layout which can only attract certain buyers. (2) Inside the building still has a lot of heavy printing press machines which require additional clean-up cost for the potential buyers and (3) current market high interest rate.

Supplies: Quantity and estimated value of each item to be procured: OR Services: Period of performance and estimated value of each service to be procured:

Per the IGCE, the estimated cost of the two option period is $164,500. This is based on one remaining property that will need to be sold. The assumption is that this property will be sold in one of these two year option periods.

Option Year 2 cost assupmtion is $82,250 annual total. $20,000 is the monitoring fees, $12,250 of additonal compensation for the sale of the property. The compensation is 0.5% of the sale price which is based on the most recent valuation report. And optional $50,000 third party engagement to support required property maintenance if needed. Option Year 3 cost assumption is same as base year. Refer to the IGCE.

Total Estimated Value: $164,500.00

1. AGENCY AND CONTRACTING ACTIVITY

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

3. DESCRIPTION OF THE SUPPLIES OR SERVICES REQUIRED TO MEET THE AGENCY’S NEED

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Real estate services are prevalent and widely available and market research could certainly turn up hundreds, if not thousands of firms that would meet the requirements noted above. As such, it is certain that research would provide firms that could provide these services less expensively. Although it is CID’s belief that the fees that WhiteStar currently charges are reasonable, the rationale for the sole source contract is primarily non-financial, as noted below.

While these services can be provided by other firms, WhiteStar has managed these properties for a number of years, is formally authorized to act as the fiduciary and has full discretion over the assets, has numerous bank accounts already set up, and is already working towards sale of each the properties. Unwinding WhiteStar and inserting another manager would be time consuming, costly and problematic. Further, it is anticipated that the remaining property will be sold within the next two years.

If the PBGC embarked on a competitive process, it would certainly not be complete by Febrary 29, 2024, when the current contract expires. CID does have a special situations manager under contract that does manage real estate property for the PBGC, but it only acts as an agent to the PBGC,and does not act in a principal capacity. As such, it could not list its entity on the various bank accounts, and could not sign on behalf of the PBGC in the ongoing management of the property. This would require PBGC employees to be listed as authorized on these bank accounts, and to our knowledge, this is not possible. Although there would be oversight over the property, the day to day management of the property, cash flows, would create numerous logistical issues, and may result in the property being relatively unmanaged. Further, WhiteStar is currently in the process of selling the remaining one property and closing out the LLCs when the last property is sold.

Removing the firm would disrupt this process and likely push back any potential sales by months or longer.

During this period, there would be ongoing expenses that would offset any potential savings from changing contractors. For all these various factors, a sole source is the only reasonable solution for these assets.

Real estate services are prevalent and widely available and market research could certainly turn up hundreds, if not thousands of firms that would meet the requirements noted above. As such, it is certain that that research would provide firms that could provide these services less expensively. Although it is CID’s belief that the fees that WhiteStar currently charges are reasonable, the rationale for the sole source contract is primarily non-financial, as noted below. See further description above regarding these non-financial considerations.

Determination: A determination that the cost/price is fair and reasonable will be made by the Contracting Officer before the contract action is issued.

A Request for Quotation (RFQ) was sent to WhiteStar on January 29, 2024. WhiteStart offer was submitted on February 7, 2024. The proposed price is same as the original contract for the monitoring fee and commission fee percentage which CID believes to be resonsonable and acceptable.

4. AUTHORITY PERMITTING SOLE SOURCE PROCUREMENT

5. DEMONSTRATION THAT THE CONTRACTOR’S UNIQUE QUALIFICATIONS OR THE NATURE OF THE

ACQUISITION REQUIRES THE USE OF THE AUTHORITY CITED

6. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT QUOTATIONS/OFFERS ARE SOLICITED FROM

AS MANY POTENTIAL SOURCES AS PRACTICABLE

7. DETERMINATION BY THE CONTRACTING OFFICER THAT THE ANTICIPATED COST TO THE

GOVERNMENT WILL BE FAIR AND REASONABLE

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As noted above, market research would surely determine other market participants in this space that could provide the services at a less expensive rate. However, the particulars of how embedded WhiteStar is currently with respect to final liquidation of this remaining property and how difficult and logistically problematic it would be to install another provider would surely disrupt the ultimate liquidation of the assets and likely be more expensive in the long run.

See above.

Not applicable to Sole Source procurement.

CID will re-evaluate this if different capabilities are developed and or/mission requirements change.

I hereby certify that this Sole Source Justification, and all supporting data, are accurate and complete to the best of my knowledge and belief.

Program Office/COR

Date Signature Date

I hereby certify that this Sole Source Justification, and all supporting data, are accurate and complete to the best of my knowledge and belief.

Enter Name Contracting Officer

I approve this Sole Source Justification

Justification exceeds $700K but does not exceed $7M

Enter Name

8. DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AND THE RESULTS, OR A STATEMENT

OF THE REASON MARKET RESEARCH WAS NOT CONDUCTED

9. ANY OTHER FACTS SUPPORTING THE USE OF SOLE SOURCE

10. LISTING OF SOURCES, IF ANY, THAT EXPRESSED, IN WRITING, AN INTEREST IN THE ACQUISITION

11. A STATEMENT OF THE ACTIONS THE AGENCY MAY TAKE TO REMOVE OR OVERCOME ANY

BARRIERS TO COMPETITION BEFORE MAKING ANY SUBSEQUENT ACQUISITION FOR THE

SUPPLIES OR SERVICES REQUIRED

12. TECHNICAL OR REQUIREMENTS PERSONNEL’S CERTIFICATION

13. CONTRACTING OFFICER’S REVIEW OR APPROVAL

14. COMPETITION ADVOCATE’S REVIEW OR APPROVAL

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Competition Advocate