Secretary Carson Cannot Sell The AM Contract Will The FSM Be The Same?

When Should Negative Performance Be Considered By HUD?

The US Department of Housing and Urban Development (HUD) is experiencing extreme push back from the Realtor community when it comes to contracting. The latest HUD Management and Marketing (M&M) Asset Manager (AM) Solicitation has already had eight amendments. Additionally, the original Solicitation response date has been extended. The HUD M&M Field Service Manager (FSM) has had several Sources Sought issued and instead of meeting timelines for implementation of a Solicitation, opted to issue out non competitive awards. And insiders are stating that what Secretary Ben Carson has to offer isn’t worth even filling the paperwork out for.

This is neither a Republican nor Democrat issue. Since the inception of the M&M program, it has been rife with improprieties and has had no ability to properly implement oversight.

The ten thousand foot overview is that, for years, the HUD M&M program has been plagued with fraud, waste, and abuse. A simple search of the HUD Office of the Inspector General reports makes clear that there are serious problems. Moreover, though, with the appointment of Cathy Baker as the M&M Director, it has only become worse.

Let’s take BLM Companies, a former HUD M&M FSM Prime Vendor. As early as 2017, HUD began issuing multiple OIG reports attesting to, “BLM Companies LLC Failed To Ensure That It Protected and Preserved HUD Properties Under Its Field Service Manager Contract.” Citing HUD OIG Report 2017-FW-1011, as well as HUD OIG Report 2017-CH-1011, it should have been self evident that this firm was incapable of properly protecting HUD assets and safeguarding US taxpayer monies. Here are several quotes respectively,

During the audit period, BLM held 7 of 18 HUD field service manager contracts throughout the Nation. […] BLM did not comply with its HUD area 1D field service manager contract.  Observations of properties assigned under the contract had a 71 percent failure rate. […] We recommended that HUD require BLM to repay more than $8,000 in ineligible costs and support or repay approximately $489,000 in unearned property management and inspection fees.  We further recommend that HUD require BLM to implement an effective quality control system to ensure it complies with its contract, putting an estimated $891,000 to better use.

BLM did not provide property preservation and protection services in accordance with its contract with HUD and its own requirements.  Specifically, it did not ensure that it performed adequate initial services before recently acquired HUD-owned properties were promoted to ready-to-show status.  BLM also did not ensure that HUD-owned and custodial properties were maintained in accordance with its contract with HUD.  As a result, HUD lacked assurance that BLM maintained the properties in a manner that preserves communities and the value of the properties.

And even after HUD attempted to give BLM Companies a pass, based upon their negative performance, BLM Companies challenged it. Did HUD push the issue; did HUD go ahead and formally report BLM Companies for their inability to perform upon the contract? No. HUD simply set them up to bid on the HUD M&M FSM 3.12 soon to be released. So, how does HUD square the business as usual with respect to its responsibility to the US taxpayer?

Recently, Baker gave a pass to BLM Companies, Innotion Enterprises as well as Purdy Enterprise with respect to negative performance upon the HUD M&M FSM contract. All but Purdy Enterprise have HUD OIG reports issued upon them. None of the Prime Vendors were performing to HUD standards. In this I mean that HUD was forced to move those contracts — at increased costs — to other Prime Vendors. And instead of properly barring those companies from bidding again, they were all patted on the back and will be allowed to potentially win new awards under the HUD M&M FSM 3.12. One is curious how the HUD M&M program has been run, for years, as these former Awardees were simply patted on the back and left without an official blemish on their records. A simple search of the FAPISS database reveals that none of the aforementioned companies have any official sanctioning and yet all of them were not re-awarded due to negative past performance.

A Senior HUD Official, speaking on condition of anonymity, had this to say with respect to the matter,

[…] I can disclose that any contractors who did not have FSM 3.8 or 3.10 options renewed, that the rationale was specifically based on negative past performance. I can also say that any 3.10 contractors who either had options exercised or received additional areas through realignment were performing at least at the satisfactory level or higher under their existing contracts. That, in at least general terms, should give you an idea of which contractors have been performing well vs. those that have not.

Tomorrow, Foreclosurepedia sits down and speaks with firms about the future of the HUD M&M program.


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