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MEMO
#1043: Second Bids - 07/31/03
The
following Questions and Answers are provided to assist in
clarifying the second bid for debris removal requirements
identified in Mortgagee Letter 2003-05, issued April 4, 2003.
1. My
company uses a national field service provider company. Is
it permissible to use only my national field service provider
for both bids?
Each
bid must be provided by a separate contractor and both bids
must be separate and independent. The second bid is to be
an independent and competitive bid and must not be channeled
through the same source.
2. Then,
am I required to use two separate national field service providers
in order to get two independent and competitive bids?
No.
The mortgagee may obtain the second bid from any firm of their
choice, provided that the second bid is independent and competitive
and was not channeled back through the same national field
service provider.
3. Can
the national field service provider that I am using provide
me with names of companies that may perform debris removal
for the purpose of obtaining the second bid?
Yes,
The mortgagee should use all resources available including
referrals from peers, trade associations and even yellow pages
in obtaining the second bid since the lender remains accountable
to ensure that the two bids are both independent and competitive.
4. Can
the national field service provider that I am using order
the second bid?
Yes.
The national field service provider may order the second bid
for debris removal, however the completed bid must be submitted
directly to the mortgagee and not channeled back through the
national field service provider. This will ensure the bid
is independent and competitive.
5. What
is meant by "channeled"?
The
Department expects that the second bid is independent and
competitive and that there is no appearance that the entity
that provided the first bid altered its bid or provided information
to the second contractor regarding the property. The second
bid must be based upon an independent evaluation at the site
and not based upon information provided by the first contractor.
In addition, there must be no appearance of a conspiracy in
the development of the two bids.
6. Can
the field service provider obtaining the second bid meet the
primary contractor at the property site for access inside,
if necessary?
Yes.
The primary contractor can meet the secondary contractor at
the property for access. This will not always be necessary
as lock codes are the same in each region, and if a contractor
has previously done work on a FHA-insured mortgaged property,
he is likely to have the designated key.
7. Can
the second bid go directly to the management and marketing
(M&M) contractor?
Under
no circumstances may the mortgagee allow field service providers
or contractors to process and submit either bid directly to
the M&M contractor without the mortgagee's review and
approval of both bids. Both bids are the responsibility of
the mortgagee to ensure that each is independent and competitive.
The bids upon approval by the mortgagee, may then be forwarded
to the M&M contractor.
8. If
the second bidder is the lowest, how is that contractor compensated?
The
mortgagee will directly compensate the field service contractor
and under no circumstances may the compensation to the second
bid provider be channeled through the national field service
provider.
9. Will
there be an extension beyond June 20th for the implementation
of this part of ML 2003-05?
No.
This provision of ML 2003-05 will be effective June 20, 2003.
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