Ginnie Mae's $98M contract for hosting and payment services awarded to Bank of New York Mellon without competition

Contract Overview

Contract Amount: $97,962,566 ($98.0M)

Contractor: Bank of NEW York Mellon (THE)

Awarding Agency: General Services Administration

Start Date: 2019-01-01

End Date: 2021-02-28

Contract Duration: 789 days

Daily Burn Rate: $124.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: HOSTING MIGRATION; POOL PROCESSING AGENT / CENTRAL PAYING AND TRANSFER AGENT (PPA/CPTA), AND OPERATIONS AND MAINTENANCE SERVICES IN SUPPORT OF THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GINNIE MAE)IGF::OT::IGF

Place of Performance

Location: NEW YORK, NEW YORK County, NEW YORK, 10007

State: New York Government Spending

Plain-Language Summary

General Services Administration obligated $98.0 million to BANK OF NEW YORK MELLON (THE) for work described as: HOSTING MIGRATION; POOL PROCESSING AGENT / CENTRAL PAYING AND TRANSFER AGENT (PPA/CPTA), AND OPERATIONS AND MAINTENANCE SERVICES IN SUPPORT OF THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GINNIE MAE)IGF::OT::IGF Key points: 1. The contract's value of $97.96 million over its period of performance raises questions about cost-effectiveness given the lack of competition. 2. Awarding a significant contract without a competitive process limits the government's ability to secure the best possible pricing and service. 3. The absence of competition is a key risk indicator, potentially leading to inflated costs and reduced innovation. 4. This contract supports critical financial operations for Ginnie Mae, highlighting the importance of robust oversight. 5. The services provided are essential for the functioning of mortgage-backed securities markets, impacting a broad range of stakeholders. 6. The contract's duration of 789 days suggests a need for ongoing, specialized services.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids. Without a comparison to market rates or other similar contracts awarded through competition, it's difficult to definitively assess if the $97.96 million represents a fair price for the hosting, payment processing, and operations services provided to Ginnie Mae. The absence of competition inherently limits the government's leverage in price negotiation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach bypasses the standard procurement process where multiple vendors would submit proposals, allowing for price and service comparisons. The justification for a sole-source award typically involves unique capabilities or circumstances, but without further details, it's difficult to ascertain the specific reasons for not seeking competitive bids.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as the government may not benefit from the cost savings and efficiencies that typically arise from a competitive bidding process.

Public Impact

The primary beneficiaries are the Government National Mortgage Association (Ginnie Mae) and its operational partners, ensuring the smooth functioning of mortgage-backed securities. Services include critical hosting, payment processing, and operational support, vital for the financial markets. The geographic impact is national, supporting the U.S. housing finance system. The contract has implications for the financial services sector workforce involved in these specialized operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and reduced value for taxpayer funds.
Sole-source awards can stifle innovation by not encouraging vendors to offer more competitive solutions.
Transparency regarding the justification for the sole-source award could be enhanced.

Positive Signals

The contract supports essential government functions related to mortgage-backed securities, contributing to financial market stability.
The selected contractor, Bank of New York Mellon, is a large, established financial institution with significant experience in these types of services.
The firm fixed-price contract type provides cost certainty for the government.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the IT services industry. The market for such services is vast, encompassing cloud hosting, payment processing, and operational support for large financial institutions. Ginnie Mae's need for these services is tied to its role in securitizing FHA, VA, and other government-insured mortgages. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature and sole-source award, but IT services for financial operations represent a significant portion of federal IT spending.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large financial institution, it is unlikely to directly benefit the small business ecosystem in terms of prime contracting opportunities. The focus is on the capabilities of the incumbent large contractor.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve contract officers, program managers within Ginnie Mae, and potentially the Inspector General's office for any financial irregularities. Transparency is limited by the sole-source nature of the award. Accountability rests with the Bank of New York Mellon to deliver the contracted services as per the firm fixed-price agreement, and with GSA to manage the contract.

Related Government Programs

Federal Housing Administration (FHA) Mortgage-Backed Securities
Government National Mortgage Association (Ginnie Mae) Operations
Financial Services IT Modernization
Payment Processing Systems
Cloud Hosting Services

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency
Sole-Source Award Justification Unclear

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $98.0 million to BANK OF NEW YORK MELLON (THE). HOSTING MIGRATION; POOL PROCESSING AGENT / CENTRAL PAYING AND TRANSFER AGENT (PPA/CPTA), AND OPERATIONS AND MAINTENANCE SERVICES IN SUPPORT OF THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GINNIE MAE)IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is BANK OF NEW YORK MELLON (THE).

Which agency awarded this contract?

Awarding agency: General Services Administration (Federal Acquisition Service).

What is the total obligated amount?

The obligated amount is $98.0 million.

What is the period of performance?

Start: 2019-01-01. End: 2021-02-28.

What is the specific justification for awarding this contract on a sole-source basis to The Bank of New York Mellon?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. Specific justifications for sole-source procurements are typically documented in a Justification for Other Than Full and Open Competition (JOFOC). Common reasons include the existence of only one responsible source capable of providing the required services, urgent and compelling needs where competition is not feasible, or when the services are a continuation of previous work where a new competition would be detrimental. Without access to the JOFOC for this specific contract, the precise rationale remains undisclosed in the provided data. However, for critical financial infrastructure like Ginnie Mae's payment and hosting systems, continuity of operations and specialized expertise are often cited factors.

How does the $97.96 million contract value compare to similar Ginnie Mae or other federal agency contracts for hosting and payment processing services?

Direct comparison is difficult due to the sole-source nature of this award and the specific combination of services (hosting, payment processing, operations). Federal contracts for cloud hosting can range from tens of thousands to billions of dollars, depending on scale, security requirements, and duration. Payment processing contracts also vary widely based on transaction volume and complexity. Ginnie Mae's unique role in the mortgage market means its requirements might differ from agencies procuring general IT services. However, a $98 million contract over approximately two years for these critical functions suggests a substantial investment. Without competitive benchmarks, assessing value for money is inherently challenging. Future contracts for similar services, if competed, would provide a clearer picture of market pricing.

What are the potential risks associated with awarding a contract of this magnitude without competition?

The primary risk of awarding a contract without competition is the potential for paying a higher price than would be achieved through a competitive process. Without competing bids, the government loses the leverage to negotiate the best possible terms and pricing. This can lead to reduced value for taxpayer money. Additionally, a lack of competition can stifle innovation, as vendors may have less incentive to develop cutting-edge solutions if they are guaranteed the contract regardless of performance or cost-effectiveness. There's also a risk of vendor lock-in, where the government becomes dependent on a single provider, making future transitions more difficult and potentially costly. Transparency and accountability can also be diminished.

What is the track record of The Bank of New York Mellon in providing similar services to the federal government?

The Bank of New York Mellon (BNY Mellon) is a major global financial services corporation with extensive experience in custody, asset servicing, payments, and technology solutions. It has a long history of serving financial institutions, including government entities. While specific details of its federal contract performance history are not provided here, BNY Mellon is known for its robust infrastructure and expertise in handling large-scale financial transactions and data management. Its involvement with Ginnie Mae suggests a level of trust and capability deemed necessary for these critical operations. Agencies often rely on established financial institutions for such sensitive and complex services.

How does the duration of the contract (789 days) impact the assessment of its value and risk?

A contract duration of 789 days (approximately 2 years and 2 months) is a moderate term for IT and financial services. For a sole-source award, this duration means the government is committed to this provider for a significant period without the opportunity to re-evaluate market options or potentially secure better pricing through competition. This extended commitment increases the risk associated with the initial assessment of value; if the initial pricing was not optimal, the government is locked into that cost structure for the duration. However, for critical operational services like Ginnie Mae's, a stable, longer-term contract can also provide continuity and reduce disruption compared to very short-term or frequently re-competed contracts, which can be costly to manage.

What are the implications of the 'Computer Systems Design Services' NAICS code (541512) for this contract?

The North American Industry Classification System (NAICS) code 541512, 'Computer Systems Design Services,' indicates that the primary purpose of this contract is the design, development, integration, and implementation of computer systems. This broad category encompasses a range of activities, including IT consulting, systems integration, and custom software development. For Ginnie Mae's contract, it suggests that BNY Mellon is responsible for ensuring the underlying computer systems supporting hosting, payment processing, and operations are designed, configured, and maintained effectively. This code is appropriate for services that involve tailoring IT solutions to meet specific organizational needs, which is characteristic of complex financial operations.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: ID11170052

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Bank of NEW York Mellon Corporation (UEI: 051550713)

Address: 101 BARCLAY ST, NEW YORK, NY, 10286

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $169,672,146

Exercised Options: $97,962,566

Current Obligation: $97,962,566

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $3,782,000

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline