12RADA21C0001 P00009 Sole Source JA.pdf

ADDENDUM

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United States Department of Agriculture Justification for Other than Full and Open Competition

Federal Acquisition Regulation (FAR) Part 6.3

Total Estimated Value including options: $4,049,175.81

Period of Performance including options or all ordering periods: April 7, 2021 – December 31, 2023

1. Identification of the agency requesting office and the contracting activity.

Requesting Office: United States Department of Agriculture (USDA), Rural Development, Rural Utilities Service, Electrical Program

Contracting Activity: United States Department of Agriculture, Rural Development, Procurement Management Office, Regional Acquisition Division.

2. The nature and/or description of the action being approved.

USDA/RD awarded a sole source contract (12RADA21C0001) on April 7, 2021, in accordance with 41 U.S.C. 3304(a)(2), as implemented by FAR 6.302-2, titled “Unusual and compelling urgency.” On April 4, 2022, issued a modification to extend the period of performance for the non-severable services for an additional year pursuant to 41 U.S.C. 3304(a)(1), as implemented by FAR 6.302-1, titled "Only one responsible source and no other supplies or services will satisfy agency requirements."

USDA/RD has a critical and immediate need to extend this contract to secure loans made by the Federal Financing Bank (FFB) and guaranteed by the Rural Utilities Service (RUS) (hereinafter RUS/FFB loans) to Brazos Electric Power Cooperative, Inc.

The litigation of this bankruptcy case has not progressed as anticipated, and it is the opinion of the USDA’s legal counsel that an additional nine months of services will be required for resolution in the case. This justification amends the previous justification, and a modification will be issued to increase the period of performance of the non-severable services through December 31, 2023 and increase the award amount by $150,000.00.

3. A description of the supplies or services required to meet the agency’s needs (including the estimated value).

The purpose of this requirement is to assist in securing the RUS/FFB loan with Brazos Electric Power Cooperative, Inc. The contractor is providing financial/restructuring advisory and appraisal/evaluation services to assist in retaining the security of the RUS/FFB loan and retaining receipts upon the loan. Services include evaluation of all the assets securing the RUS/FFB loans and an in-depth analysis of the financials of Brazos Electric Power Cooperative, Inc. to ensure maximal recovery for RUS. The current contract value is $3,899,175.81 and the modification to increase the value of the contract by $150,000.00 will result in a total contract value of $4,049,175.81.

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4. The statutory authority permitting other than full and open competition.

41 U.S.C. 3304(a)(1), as implemented by FAR 6.302-1, titled "Only one responsible source and no other supplies or services will satisfy agency requirements."

5. A statement demonstrating the unique qualifications of the proposed contractor or the nature of the action requiring the use of the authority.

As part of their duties over the course of the past 2 years under the contract, A&M provided technical expertise, analysis, and recommendations relating to: the valuation of the assets securing RUS loans, analysis of the company’s cash flow, analysis of Debtor-In-Possession (DIP) financing proposals, analysis of ERCOT, analysis of company’s financial derivatives and hedging obligations, and formal expert report as to valuation and testimony. Their expertise and experience were extremely beneficial to both the RUS as well as its legal representation, including attorneys from the Department of Justice and the USDA Office of General Counsel. In addition, analysis and recommendations provided by A&M have been critical to RUS and legal counsel during the course of the ongoing legal proceedings.

The bankruptcy is now entering its final phase. Brazos exited Bankruptcy in December of 2022, but still has requirements it must meet under the terms of its court approved exit plan. The most critical of these terms is the requirement that Brazos must sell all its generation assets and become a strictly transmission and distribution electric cooperative (removing future generation risk for the “new” Brazos). RUS/FFB loans financed these generation assets and RUS has a vested interest in ensuring that Brazos receives the highest market value reasonably available, since the sales proceeds will be applied to pay outstanding RUS debt related to these assets. A&M is closely monitoring the appraisal and offers received by Brazos for the purchase of its generation assets and continues to provide RUS its analysis and recommendations. Until this sale is approved and closes, there continues to be a risk of additional litigation.

Given the unique qualifications A&M has, its knowledge of Brazos & ERCOT, and the numerous additional parties involved, its extensive knowledge of this complex bankruptcy case, and, most importantly, the potential $1.8 billion financial risk RUS faces, it is imperative that A&M’s contract be extended. A&M has gained extensive and unique knowledge of the parties and issues involved.

A reopening of the contract to competition would lead to delays at this critical juncture and negatively impact the Government’s ability to fully and quickly respond to this dynamic and complex case and would place RUS at greater risk of financial loss.

6. A description of efforts made to ensure offers are solicited from as many potential sources as is practicable.

None. As described in the above paragraph, there is only one source available to satisfy the agency’s needs. Changing the financial/restructuring advisory and appraisal evaluation service vendor at this time would lead to delays at this critical juncture and negatively impact the Government’s ability to fully and quickly respond to this dynamic and complex case and would place RUS at greater risk of financial loss.

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7. A determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The rates provided by A&M have been compared to rates previous paid by the Government with the inclusion of an appropriate escalation rate. The provided have been determined fair and reasonable by the Contracting Officer and documented within the Price Negotiation Memorandum.

8. A description of the market research conducted and the results or a statement of the reason Market Research was not conducted.

No change from original justification.

9. Any other facts supporting the use of other than full and open competition.

No change from original justification.

10. A listing of the sources, if any, that expressed a written interest in the acquisition.

None

11. A statement of actions, if any, the agency may take to remove or overcome any barriers to competition if subsequent acquisitions are anticipated.

Due to the unique nature of this procurement and A&M’s extensive knowledge of the current case obtaining competition for continued support of this critical need is not feasible. If the Government determines this service will be required for other litigations the USDA/RD will research establishing Blanket Purchase Agreements (BPA) and/or Indefinite Delivery Indefinite Quantity (IDIQ) contract awarded based on competition.

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Certifications & Approvals

Supporting data that form the basis for and included in this justification are certified accurate and complete.

James Elliott Director of Operations Rural Utilities Service – Electric Program

The information contained in this Justification for Other Than Full and Open Competition is certified accurate and complete to the best of my knowledge and belief.

Jerrod Schleis Contracting Officer

Advocate for competition for the procuring activity. The approval level has not changed from original J&A. In accordance with PGI 406.304 subsequent approval is not required.