The Fix Is In: Why HUD Doesn’t Want Small Business Participation – DU204SA-13-R-0004

One of the most basic lines of communications between the US Department of Housing and Urban Development (HUD) and prospective Small Business is the Federal Business Opportunities website portal.  This Portal is used by almost ALL US Government Agencies for the Solicitation of Contracts big or small.

Why Small Business Doesn’t Respect HUD

Recently, HUD announced one of the largest Management and Marketing (M&M) Contracts in recent memory (30+ States).  It is generally referred to as the HUD M&M 3.8 Solicitation which is a Field Service Management (FSM) Contract.  Springing out of nowhere, the news first broke here on Foreclosurepedia. Overall, it has been received with lukewarm reception based in part upon the overall perception that HUD Contracts are generally slanted to favor Companies whom underbid by millions of dollars and never held accountable for Service Contract Act (SCA) provisions.  Since HUD M&M 3.0 it has been impossible for the intent of Congress to ensure Small Businesses are able to participate in HUD contracting as HUD Senior Level Officials turn a blind eye to obvious Conflicts of Interest and reality budgeting.

How HUD Has Proven It REALLY Doesn’t Want Small Business To Bid

Not to be outdone in the world of perception, Lewis Boggan of the Atlanta HUD M&M Office decided to issue a Special Notice for the Extension of the Sources Sought on HUD M&M 3.8.  The major problem is that Boggan posted the Special Notice off by itself with absolutely NO WAY for any interested parties to know about it!!!  Simply look at the links of the HUD M&M 3.8 Solicitation vs. the Special Notice Link.  Several people contacted both Boggan and the M&M Director, Craig Karnes, about this and have been greeted with deafening silence.

Who’s Looking Out For The Taxpayer

Business As Usual seems to be the attitude of Secretary of  HUD (SEC HUD), Shaun Donovan.  The link portrays him more like a man concerned with his hair than the affairs of the Nation.  The reality is SEC HUD Donovan needs to be doing it better than his predecessors.  Let’s not bullshit around previous SEC HUD Office Holders, including Alfonso Jackson, haven’t exactly been a shining beacon of light with respect to appropriately applying taxpayer money.

The Fall Out

SEC HUD Donovan would be wise to step off the Movie Set for a bit and maybe place a call or two down to the Atlanta HOC.  What many do not know is that the HUD M&M is burning down while the Emperor fiddles.  Scandal after scandal have been plaguing the HUD M&M Atlanta HOC.  A simple walk down the HUD Office of the Inspector General’s files shows a veritable list of skeletons which HUD attempts to keep hushed up.  We broke story after story dealing with these.  MILLIONS OF TAXPAYER DOLLARS squandered under the HUD M&M Director’s leadership which resulted in RAISES being issued!  Not a good application of taxpayer dollars.  When combined with the HUD M&M tacitly allowing the possibility of discrimination against homosexuals, African Americans and Muslims and Police Powers to be issued to A2Z Field Services (A2ZFS) it is no wonder why legitimate Small Businesses are nervous about attempting to enter into the fray.

Statistics Do Not Lie

The most recent HUD M&M Contract, the HUD M&M 3.6, had 102 interested vendors.  Under the M&M 3.6 there were 118 prospective vendors; however, only 102 seemed to make the data transfer.  Under HUD M&M 3.8 there are only 32 or 38 depending upon how you want to interpret the latest and now closed Sources Sought.  Remember, that either Boggan forgot to add the Solicitation number or perhaps he DID NOT!  No automatic Notification of Extension which thins out the herd.  What many folks are NOT seeing is that when juxtaposed to the HUD M&M 3.7, an Asset Management (AM) Contract, you will notice that HUD M&M 3.8 is purposefully left with large territories with 6 – 7 huge state swaths.  HUD M&M 3.7, on the other hand, is divided up smaller with 1 – 3 state area coverage.  My theory?  HUD M&M Director Craig Karnes saw the low participation coming; I believe he calculated this. Now, whether or not his Marching Orders came from On High or from within the Private Sector I do not know if this pans out to be the case.  For the record, I am not the only person whom believes this.  Several Industry Professionals concur.

If there is low participation HUD M&M is allowed to make the Contract Unrestricted.  That means that Contracts normally earmarked for Small Business now open up for the entrenched National Order Mills.  Karnes would ultimately be able to brag about the savings on Lowest Price Technical Value (LPTV) while crucifying the Contractors in the field.  Wouldn’t be the first time either.  Turning both blind eye and ear to violations of Service Contract Act (SCA) allegations has been the hallmark of HUD M&M over the years.  Why not continue down the same road; who gives two shits about the Contractors anyway as they are expendable.  Taxpayer funds?  Hell, time and again, HUD M&M accepts bids they categorically know are unsustainable!

The Aftermath

Director Karnes and SEC HUD Donovan both know where this is heading.  The recent HUD Office of the Inspector General’s (OIG) Joint Report on Federally Owned or Overseen Real Estate Owned Properties issued in May, 2013, tells the tale of a veritable tsunami of homes approaching HUDs shores,

As of September 30, 2012, HUD held 37,445 REO properties while the GSEs held 158,138. In addition, the “shadow inventory”—residential loans at least 90 days delinquent—totaled 1,708,033 properties, roughly 8.7 times the size of
the HUD and GSE REO inventories combined. Even a fraction of the shadow inventory falling into foreclosure could considerably swell HUD and GSE inventories of REO properties.

Either Director Karnes or SEC HUD Donovan (or perhaps both) are asleep at the helm and are bordering dereliction of duty.  To continue to allow National Order Mills to skirt the Service Contract Act and apply cut throat pricing to Contractors will continue to contribute to the shoddy work and the continued deterioration of the HUD Real Estate Owned (REO) Property Inventory.  Director Karnes and SEC HUD Donovan are playing a game of chicken which appears, prima facie, to be run by the Private Sector.  Let us NOT forget that the specter of Probes has hung over HUD for decades now; preferential treatment and kickbacks to the Lords of HUD in exchange for turning of the blind eye.

One might ask where are the the Contractors being represented?  Neither the National Association of Mortgage Field Services (NAMFS) nor the National Property Preservation Guild (NPPG) seem to have an opinion.  While Rome burns down, the band plays on.  The Contractors, as usual, are left out in the Cold by Organizations whom could care less about the status quo.  The problem is that HUD M&M 3.8 will dictate the landscape of the Property Preservation Industry for years to come!  As opposed to the politically correct drivel; the safety of silence, both have a vested financial interest in the outcome of HUD M&M 3.8 if they truly represent the interests of their Membership.  To state otherwise would be to say that neither the NAMFS nor NPPG wish for their Membership to make more money.

Ladies and gentlemen, now is the time to contact your Senators and Congressmen with respect to the unregulated and seedy underbelly of Property Preservation with respect to HUD.  Ultimately, Director Karnes and SEC HUD Donovan are going to insure that you, along with the taxpayers, are going to fund the juggernaut of the Private Sector.  There are no winners when the Will of the People is at the mercy of Greed.

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One Response to "The Fix Is In: Why HUD Doesn’t Want Small Business Participation – DU204SA-13-R-0004"

  1. Chief Operations Officer  July 11, 2013 at 11:12

    I think we’re looking at the entire NE and MW being given to the PKs and A2Zs of the world, which for many reasons is sad, unfortunate, and unnecessary.

    Also, now that I think of it, if HUD made the areas smaller, like they did in 3.6 and 3.7, they would have invited more competition. In other words, some potential offerors surely saw the size of these territories, said to themselves, “I can’t cover all 7 of those states,” and then walked away from the opportunity. This of course feeds my suspicion that they want these contracts to go to unrestricted competition and a LPTA war.

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