JOFOC_ Aug2025 v2 final signed_Redacted.pdf

IRS Form (Rev. 6/21)

IRSAP 1006.3

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

(JOFOC)

FAR SUBPART 6.3

I recommend the use of other than full and open competition for the acquisition of the following supplies or services. If this acquisition is to be made with only one source or a limited number of sources, negotiations will be conducted with the indicated proposed supplier(s).

1. IDENTIFICATION OF THE AGENCY AND CONTRACTING ACTIVITY:

Agency: The Department of the Treasury (Treasury), Office of the General Counsel (OGC) and Office of Capital Access (OCA) Contracting Activity: Office of the Chief Procurement Officer (OCPO), Treasury Acquisition Division

2. NATURE/DESCRIPTION OF THE ACTION BEING APPROVED:

This justification is for the issuance of an out-of-scope modification without full and open competition to contract 2032H324C00017 to acquire legal advice and expertise services from Morrison and Foerster LLP (Morrison) for the Department of the Treasury, OGC and OCA.

Modification of the contract is necessary due to OGC’s urgent need for the same types of legal support services identified in the contract with respect to the Emergency Capital Investment Program (ECIP) established under section 522 of the Consolidated Appropriations Act, 2021 (CAA), which is managed by OCA, to be provided with respect to two additional pandemic-related programs managed by OCA: (a) the loan program established under Division A, section 4003(b)(1), of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (4003 Loan Program) and (b) the Payroll Support Program established under Division A, Title IV, Subtitle B of the CARES Act, the Payroll Support Program Extension established under Division N, Title IV, Subtitle A, Sections 401-412 of the CAA, and the Payroll Support Program 3 established under Title VII, Subtitle C, Section 7301 of the American Rescue Plan (ARP) Act of 2021 (collectively, the PSP Program). In furtherance of its mission to promote the strength of the U.S. economy, Treasury implemented the 4003 Loan Program for aviation companies and businesses critical for maintaining national security under section 4003 of the CARES Act, as well as the PSP Program for aviation companies, as authorized under the CARES Act and continued in the CAA, and

ARP.

Legal expertise and advice is required to administer the 4003 Loan Program and the PSP Program, manage the assets of both the 4003 Loan Program and PSP Program, and prepare documentation related to loans and other Treasury investments.

IRSAP 1006.3

Spirit Airlines bankruptcy filing and potential filings by other PSP note issuers and certain borrowers in the 4003 Loan Program, as a result of the impending loan maturities, there is an urgent need for assistance regarding complex matters of bankruptcy law, including drafting and reviewing bankruptcy court filings, negotiating with debtors and other creditors, and advising Treasury on optimal approaches for maximizing taxpayer returns. The proposed source has the needed experience, skills, resources, and capacity for this work as evidenced by prior engagements, including in large, complex bankruptcies. OGC is confident that Morrison has the needed experience, skills, resources, and availability to successfully perform under the current contract.

Treasury has an unusual and compelling urgency to procure immediate legal support services for two principal reasons. First, all remaining 4003 Loan Program loans mature in October and November 2025 and a number of these loans are in default and face risk of nonpayment at maturity. Second, as OCA manages approximately $14.5 billion in principal amount of PSP notes, which are largely performing, OCA has become aware, as noted recently in media reports, that one of the PSP note issuers, Spirit Airlines, is considering declaring bankruptcy this year, which will require immediate restructuring advice and expert negotiation with Spirit’s bankruptcy estate to preserve as much taxpayer value as possible from the approximately $136.3 million in principal of Spirit’s PSP notes. Any delay will result in greater taxpayer losses from any of the 4003 loans that are not repaid at maturity and the PSP notes of any issuers that commence bankruptcy cases, undermine the government’s efforts to support the aviation industry and national security businesses, and frustrate the purpose of the CARES Act, CAA, and ARP. It is imperative that this contract modification be awarded for Morrison to perform these services to prevent substantial risk to the government and taxpayer losses.

Due to unanticipated factors as described above, additional legal services are urgently required under the current contract in order to continue to facilitate the successful execution of these programs and Treasury’s mission. Treasury requires Morrison’s legal expertise and advice on matters in which Treasury currently lacks in-house technical expertise, and it is imperative that this contract be modified as proposed to avoid potentially significant taxpayer losses.

B. DESCRIBE THE EFFORTS TAKEN TO ENSURE OFFERS WERE SOLICITED FROM AS MANY

POTENTIAL SOURCES AS IS PRACTICABLE, INCLUDING WHETHER A NOTICE WAS OR WILL

BE PUBLISHED AS REQUIRED BY FAR SUBPART 5.2 AND, IF NOT, WHICH EXCEPTION UNDER

FAR 5.202 APPLIES.

The proposed contract action is made under the conditions described in 6.302-2 as the Government has an unusual and compelling urgency to procure immediate legal support services. Adhering to the time periods specified in 5.203 would result in substantial risk to the government and taxpayer losses as detailed above. Therefore, due to the urgency of this requirement, a notice will not be posted in accordance with exception under FAR 5.202(a)(2).

In accordance with FAR 6.305 this Justification will be made publicly available no later than 30 days after award.

C. DETERMINATION THAT THE ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND

REASONABLE.

Treasury has a history of contracting for legal services and will utilize historical data to ensure the rates established in the anticipated contract are fair and reasonable.

IRSAP 1006.3

D. DESCRIBE THE MARKET RESEARCH THAT WAS CONDUCTED AND THE RESULTS OF THAT

SURVEY. IF ACTIONS WERE TAKEN BY PROCUREMENT PERSONNEL TO SATISFY THIS

REQUIREMENT (SUCH AS A GPE SOURCES SOUGHT SYNOPSIS), PLEASE SPECIFY.

Extensive market research was conducted in advance of awarding Contract 2032H324C00017. Treasury published an RFI in February 2023 to identify potential sources with the capacity to undertake the work required to fulfill the original Performance Work Statement (PWS) that supports ECIP. Treasury received one response to the RFI, from a firm that was a sole proprietor with one employee and had been in business for one year. It had no prior experience with the ECIP or any similar programs and the prior experience submitted in response to the RFI did not involve any securities work, complex transactions, work with banks or other financial institutions, negotiations with banking regulators, or any of the other capabilities required for this award.

In March 2023, Treasury published a Request for Information (RFI) on SAM.gov under Sources Sought Notice 2032H323N00007. The RFI specially asked for interested parties capable of completing the work for the PSP Program and the 4003 Loan Program and Treasury received no responses.

In October 2023, OGC undertook additional market research for the ECIP contract and developed a list of seven firms initially considered to potentially have the capacity to undertake the work required under the contract. All of these firms are large businesses determined to be actively registered in SAM. OGC contacted all seven firms, and was able to meet with five of them to introduce the required legal services.

In November 2023, Treasury posted a Request for Information (RFI) / Sources Sought Notice (Sources Sought Notice FY24ECIP) through SAM.gov to determine whether there were other law firms, and particularly any small business firms capable of fulfilling Treasury requirements. The RFI closed in December 2023. Treasury received eight responses. Five of the responses were from large businesses and three from small businesses. Each response was reviewed by Treasury staff, including experienced attorneys in OGC and an ECIP Program Manager. It was determined that none of the responding small businesses had sufficient capacity to undertake the work required to support the ECIP Program and the volume of transactions Treasury anticipated under the contract.

Following these efforts, the solicitation for RFP #2032H324R00006 was issued in February 2024 for full and open competition. When the solicitation was issued, OGC again reached out to the firms that had indicated potential willingness to provide the legal services to let them know about the posting of the RFP.

The RFP closed in March 2024; however, Treasury received only two responses, including one from Morrison. After receipt of proposals the one additional offeror became nonresponsive to all communications regarding the RFP and their submission. Therefore, the second offeror was deemed ineligible for award and given no further consideration. In July 2024, Morrison was awarded Contract 2032H324C00017 with a base period start date of August 1, 2024.

Based on the historical limited interest from capable law firms to support these programs, it is not expected that responses from additional potential sources can be obtained in a timely manner. Therefore, due to the urgent need for support Treasury is seeking to leverage existing capabilities and expertise to the maximum extent practicable and this contract has been identified as an available existing vehicle to assist with satisfying the immediate need for support.

IRSAP 1006.3

E. DESCRIBE ANY OTHER FACTS TO SUPPORT THE JOFOC.

N/A

F. LIST SOURCES, IF ANY, THAT EXPRESSED, IN WRITING, AN INTEREST IN THE ACQUISITION.

No additional sources have expressed interest.

G. LIST THE ACTIONS THE BUREAU WILL TAKE TO REMOVE OR OVERCOME ANY BARRIERS TO

PROMOTE THE COMPETITION ON ANY SUBSEQUENT ACQUISITIONS FOR SIMILAR SUPPLIES

OR SERVICES.

The government may require legal services for the relevant programs beyond the term of this acquisition.

Should any additional legal services be required beyond the contract period, the government will conduct new market research to determine if full & open competition is possible.

H. STATEMENT THAT REQUIREMENT DOES NOT RESULT FROM A LACK OF PLANNING OR THE

EXPIRATION OF FUNDS.

This requirement does not result from a lack of planning or expiration of funds. Treasury needs a highly capable law firm to protect its interests and maximize taxpayer recovery for troubled loans in the 4003 Loan Program and potential bankruptcy filings by PSP recipients or 4003 loan borrowers.

IRSAP 1006.3

O

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E. SENIOR PROCUREMENT

EXECUTIVE (Name & Title)

[ ] APPROVE

[ ] DISAPPROVE

(Signature)

(Phone No.)

(Date)

NOTE: Each review must be preceded by lower level approval(s). For example, actions over $75 million require all approvals.

IN NO CASE WILL AN INDIVIDUAL SIGN MORE THAN ONE APPROVAL LEVEL.