M&M 3.5: Winners and Protests

Talking Points are all the rage these days in Washington, DC.  It is really no different at the Weaver Building.  The primary difference is that the Secretary of Housing and Urban Development (SECHUD) Shawn Donovan seems to have had a bit more common sense in whom he delegated certain tasks to.  More on point, the normally convoluted process of federal contracting is generally mired (at least to date within HUD) with low ball bidding and awards thereto, seems to have broken the mold a bit with respect to the Management and Marketing (M&M) 3.5.

One of the biggest risks which a Vendor has when contemplating a Protest to a Contract Awarded is whether or not the Contracting Officer (CO) and/or Director will hold a grudge for a Vendor issuing a Protest.  Accordingly, both sides agonize over whether or not to Protest in the case of the former and Award at a higher price point in the case of the latter.

There is an entire infrastructure dedicated to ensuring the I’s are dotted and the T’s are crossed.  Each Federal Agency has a Division dedicated to what I like to call Bureauspeak 101.  They go by many names; however, most are simply called the Procurement Law Division.

Recently, we were afforded the opportunity to speak with Sources, on condition of anonymity, to get a peak at what and how the process works.  In this unique case, we happened to gain a bit of insight into M&M 3.5 which has been in a holding pattern since December, 2011.  In a nutshell, we have a handful of Regions up for grabs.  One Region, 4S, quite assuredly is going to… the lowest bidder in my opinion.  The Regions of major contention, from what I can tell, are going to be 5D, 4S and 6S.  These three Regions are going to, quite possibly, be challenged as all Sources point to Awards going out to Vendors whom submitted higher bids.

To understand Awards, a person needs to first understand the Price Negotiation Memorandum (PNM).  The PNM generally gives the guidance as to how to implement Awards which are going to possibly be challenged.  It is similar to the  Price Competition Memorandum (PCM) in that the inner mechanisms of both directly impact both the US Government and the Vendor.  Accordingly, discussions thereto are what I refer to as the Talking Points.

Until now, it was a pretty mundane task for the US Government to defend against Protest a Contract Awarded to the Lowest Price Technical Value (LPTV).  I say until now as the Government Accounting Office (GAO) sustained a Protest along these lines.  Regardless, the lowest bid under LPTV probably won’t be challenged under 3.5 as there are bigger fish to fry with 3.7/3.8 and 4.0 coming with a Sources Sought as early as this Summer.  

I digress; you’re interests really surround whom I believe are going to be awarded 5D, 4S and 6S.  To understand the Awards I am predicting, one has to understand the Players.  Matt Martin, Matt Martin Real Estate, has been around for quite awhile.  I am not going to bore everyone with the details of his history; suffice it to say that he has offices in California, Pennsylvania, Texas and a Corporate Headquarters in Arlington, Virginia.  Martin also founded Sperlonga in 2011, to help address HOA Claims and Liens.  I feel fairly confident that Martin will be Awarded Regions 4D and 5D.  I believe there will obviously be Protests entered based upon the fact that I believe the runner’s up will argue that Martin’s pricing was above theirs.  While I am not going to discuss the pricing, let’s just say it is splitting hairs at best.

Many variables factor into why the US Government chooses to accept a higher bid over one which is lower.  Sometimes, less than three quarters of a percent is all that separates one from the other.  Variables such as:  fewer properties, fewer metropolitan areas and even base lining options all come into play along with performance ratings.

With respect to Region 6S my bet is on BLB Resources.  Susie and Rod Gaston have almost 10 years under their proverbial belts and asubstantial HUD servicing to boot.  I wager there will be a Trade Off Analysis (TOA) to justify such.  While Matt Martin may not be that upset, I would venture the guess that folks like BA Urban Solutions and Key Solutions may Protest.

At the end of the day, time will tell.  My Sources seem to have an honest interest in cleaning up the mess which HUD Contracting has become of late.  They, like I, feel that one of the biggest issues to date is the fact that the Contractors; the men and women whom are performing the services, are getting a raw deal.  The outcome of 3.5 and the fate of the Sources Sought and Awards with respect to 3.8 and eventually 4.0 may very well hinge upon this issue!  The reality is that there is NO justification for obscene profit margins while bankrupting Contractors.  I have little doubt that the scrutiny of both the Weaver Building and the ancillary HOCs will pay CLOSE attention to the process and Complaints which will undoubtedly issue from the boots-on-the-ground in the field.

I believe that the days of tossing some fictitious numbers together to fill up the Excel Spreadsheet are numbered.  I believe that, going forward, HUD is going to take a more proactive approach to evaluating the Contracts.  HUD 3.5 was issued in December, 2011, so it is merely an examination process of that which transpired beforehand.  Going forward, I would caution Vendors to look at several things.  First, today’s Contractors may VERY WELL be tomorrow’s Prime Vendors or Power Brokers.  Improvise, adapt and overcome because the only easy day was yesterday!

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