72012118C00002-09-CEP_Justification.pdf

USAID UKRAINE

FROM THE AMERICAN PEOPLE

JUSTIFICATION AND APPROVAL (J&A)

TO: Craig Riegler, Director, Regional Contracting Office

CC: Jennifer Norling, Agency Competition Advocate

FROM: Natalia Petrova, Project Management Specialist, Office of Economic Growth

DATE: September 6, 2023

RE: Contract No. 72012118C00002, USAID Competitive Economy Program

SUBJECT: Justification for Other than Full and Open Competition under the Expedited Procedures Package (EPP)

1. This document sets forth the facts and rationale justifying the use of other than full and open competition.

Approval is requested for the justification for use of other than full and open competition pursuant to the authorities under the Expedited Acquisition and Assistance Procedures (EPP) for Ukraine, Belarus, and Moldova, approved on March 6, 2022. Your approval of this J&A constitutes the justification for other than full and open competition as required by Tab l (D&F for the Authorization of Less than Full and Open Competitive Procedures in the Modification or Award of Contracts) of the EPP.

RECOMMENDATION

It is recommended that you approve this justification for the use of other than full and open competition pursuant to the Action Memorandum "Expedited Procedures Package (EPP) for Ukraine, Belarus, and Moldova" approved on March 6, 2022. Your approval of this J&A constitutes the justification for other than full and open competition as required by Tab l (D&F for the Authorization of Less than Full and Open Competitive Procedures in the Modification or Award of Contracts) of the EPP.

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

This is a request to approve a contract modification to increase the total estimated cost (TEC) of Contract No. 720 l 2 l l 8C00002, USAID Competitive Economy Program (CEP), implemented by Chemonics International Inc. (Chemonics or "the contractor"). The proposed modification, approved by Mission leadership on June 16, 2023 , will increase the TEC by $80,000,000 from $90,000,000 to $170,000,000, change the contract type from Cost Plus Fixed Fee (term) to Cost wachakzai Highlight wachakzai Highlight wachakzai Highlight wachakzai Highlight

Plus Fixed Fee (completion), and modify the scope of work to increase targets for certain sub-objectives and add new sub-objectives. Following this modification, the Mission intends to complete a full and open competition for the follow-on to this activity prior to October 2025.

Both activities may productively operate in Ukraine simultaneously.

Expeditiously providing assistance in as responsive a manner as possible takes priority over other options that would delay such assistance. The timeframe required by fully competitive award procedures, if followed, would not enable USAID to act in a manner consistent with U.S. foreign policy. In summary, the additional funding will allow USAID to increase its assistance in supporting Ukraine's business enterprises to reverse unemployment trends in Ukraine, reinvigorating tax payments by businesses and employees that have declined significantly, and increasing exports to Western markets in a manner not feasible via other competitive methods.

3. Description of the supplies or services required, including an estimated value.

Additional funding in the amount of $80,000,000 will allow USAID to develop and introduce reforms in the Government of Ukraine (GOU) that improve the business climate, including deregulating economic activities, and fostering a conducive environment for Ukrainian enterprises to continue business operations in domestic markets, assisting industries and SMEs to enter markets abroad to diversify their economic risks caused by the war, improving investment transparency, and developing the GOU export promotion capacity. To achieve these important purposes, four of the components of CEP are currently comprised of the following "supply side" component activity areas that fall into two distinct categories - those that promote the competitiveness of Ukraine's economy and its films, and those that increase Ukraine's capacity to export to global markets.

The general scope of technical activities has not changed. However, we expect the Contractor to achieve the new, additional measurable results outlined in the sub-objectives under Objective 2.

This addition builds upon the existing project framework by adding sub-objectives to the original Objective 2 as noted below in the revised scope of work. Nevertheless, a determination will be made after award if ADS 225 requirements are triggered.

The purpose of this revision of the CEP scope is to amend and expand the activities in the second component of CEP, to produce verifiable, sustainable results from within the parameters of the existing scope of work. Specifically, this newly revised scope calls for the contractor to work directly with competitive Ukrainian enterprises in order to:

• create and fill not fewer than 50,000 new, verifiable, jobs for Ukrainians and using multiplier-effects, demonstrate the generation of not fewer than 50,000 new, indirect jobs through CEP's refonn efforts;

• increase domestic production and exports of goods and services by Ukrainian firms by not less than $600 million;

• increase company-own financing by $20 million;

• increase job training, employability, and capacity building through job matching, career development services, and technical training curricula at technical schools;

• increase on-the-job training, employability capacity building through job-matching, improve HR functions at the enterprise level, increase aptitude to provide high-quality assistance to jobseekers and enterprises through public sector support, demonstrated by curricula upgrades, and career events organized.

4. Statutory authority permitting other than full and open competition.

AIDAR 706.302-70(b)(3)(ii) and 40 U.S.C. §113; see Action Memorandum entitled, Expedited Procedures Package (EPP) for Ukraine, Belarus, and Moldova, approved on March 6, 2022.

5. A discussion of the proposed contractor's unique qualifications or the nature of the acquisition that requires use of the authority cited.

In June 2023, USAID's Office of Economic Growth (OEG) made the determination to seek a modification to the award, as opposed to a new competition, due to the length of time needed to design, award, and begin implementing a new award. The process of design to award and start up implementing typically takes approximately at least 12, if not 18, months for major programs.

Based on 1) periodic reporting in March - May 2023 observing the progress of the war and impact to businesses 2) market reactions to Russian threats to pull out of the Black Sea Grain initiative (which happened in July 2023) and 3) collected economic data received that showed the over 25% drop in Q4 2022 in Ukraine's economy, OEG established that the demand for and potential for new jobs and other job-related results would far outstrip the capacity of CEP to meet them within the remaining period of performance and while a new program is developed, competed, and awarded (planned for award in late 2024 and the program is in early design to be informed by final results from CEP). USAID would not be able to meet these opportunities given the timeline required to put a new program into place without taking the action described in the revised scope of work. By taking advantage of CEP's current presence on the ground, strengthening the business sector through firm-level, buyer-led technical assistance will help reverse employment trends and increase exports to help prevent Ukraine's economic collapse due to Russia's ongoing military aggression. CEP can achieve U.S. foreign policy interests by delivering the project's results immediately and without logistical delays as it is positioned to immediately initiate this implementation in Ukraine for the following reasons:

a. Consistent Foreign Currency Balances: An increase in funding will allow CEP to seamlessly and immediately build upon the ongoing activities and efforts already initiated under CEP and effectively create new, urgently needed jobs in Ukraine and produce an additional $600 million in exports to global markets, which are indispensable for maintaining Ukraine's foreign currency balances during this unprovoked aggression and economic disruption. A further competition would unacceptably increase the risk of not generating enough market demand to support foreign current balances.

b. Immediate Re-orientation Support: Since CEP's inception in 2018, Chemonics has consistently demonstrated the essential capability to meet the immediate and imperative needs, in response to Russia's invasion in 2022, initiating activities that supported vital needs within the business community. Thousands of Ukrainian enterprises are reorienting their businesses to sell to non-Russian buyers but urgently need outside expert assistance to make this transition, or those businesses will quickly fall victim to the economic disruption caused by this conflict. Ukrainian businesses can easily meet price points required by buyers from the EU, but lack the specialized training and certifications needed to export into European markets. Thousands of other successful Ukrainian businesses were overnight shut off from their Russian input suppliers and now urgently need specialized assistance identifying alternative sources of input supplies and assistance modifying their business processes to incorporate these alternative supplies into their wachakzai Highlight supply chains. Without this immediate assistance, many such Ukrainian businesses will quickly cease to operate.

A new Contractor would require significant time and resources to establish itself in the current volatile and lethal operating environment in Ukraine - where there is an ongoing war - risking failure to provide much-needed timely assistance to the people of Ukraine.

Introducing a new team would disrupt much needed continuity and cost valuable time, the expenditure of which would impair foreign assistance objectives given the urgency of the current war~time environment. Disruption or delay of this continued assistance would put at risk billions of dollars of needed Ukrainian expo11s and thousands of Ukrainian jobs due to the risks and threats to Ukrainian businesses.

c. Duplication of Relationships with Key Stakeholders: Over the course of the past five years, Chemonics has achieved sustainable results and impact due to its close coordination with a broad range of Ukrainian stakeholders and beneficiaries at the national, regional, and municipal levels, as well as with USAID, implementing partners, and other donors. Since the start of the war, Chemonics provided assistance to the Ministry of Digital Transformation, the Ministry of Economic Development and Trade, the Export Credit Agency, the Ukraine Startup Fund, Entrepreneurship, and Export Promotion Office, including their participation at the international trade fairs , and export promotion events, launch of advantage Ukraine investment initiative championed by President Zelensky, promoting available finance instruments. A new implementer would not only duplicate existing relationships but need significant time to develop productive relationships with key stakeholders, losing valuable time needed to respond to critical needs arising from Russia's aggression.

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

Publication of a notice is not required per the determination at AID AR 705 .202(b ). Due to the urgent nature of the needed assistance to respond to the immediate economic disruption from wartime, it was not practicable to solicit offers from potential sources.

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

The Contracting Officer has determined that the anticipated cost to the Government will be fair and reasonable based on the IGCE saved in the file based on historical expectations for per-result costing, adjusted for war-time factors, in similar USAID programs.

8. A description of the market research conducted (see FAR Part 10) and the results or a statement of the reason(s) market research was not conducted.

No new market research was conducted. Chemonics was competitively selected through a full and open competition in 2018. The purpose of the proposed extension is to mitigate the effects of the war on the economy of Ukraine and specifically on Ukraine's privately owned, competitive businesses. Considering that the increase in activities must begin immediately to respond to wachakzai Highlight wachakzai Highlight wachakzai Highlight wartime needs and not impair foreign assistance objectives, it was deemed inappropriate to conduct market research.

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

USAID/Ukraine has determined that, due to the urgency of responding to the current situation in Ukraine, resulting from the Russian invasion, other than full and open competition utilizing the authorities provided in the EPP is necessary for quickly and effectively implementing the activities and meeting the foreign assistance priorities of the Agency and the U.S Government.

10. Sources, if any, that expressed, in writing, an interest in the acquisition.

The Mission determined to expand the existing CEP contract to address the additional requirements, so publication of a notice is not required per the determination at AID AR 705.202(b), and no sources submitted a written expression of interest in this acquisition.

11. The actions the Agency may take to remove or overcome any barriers to competition before any subsequent acquisition of the supplies or services required:

The Mission will continue to use full and open competition procedures whenever possible, including potential set-asides for small businesses.

12. Technical or Requirements Personnel Certification:

In accordance with FAR 6.303, I hereby certify that the technical statements included above and which form a basis for the justification are complete and accurate in accordance with the Expedited Procedures Package (EPP) for Ukraine, Belarns, and Moldova approved March 6, 2022 (attached).

clear 9/18/23

Natalia Petrova, Contracting Officer's Representative Date ------

13. General Counsel/RLO Clearance:

clear 9/18/2023 ---------Ma 11 ha Dye, Resident Legal Officer

14. Contracting Officer Approval

Cr~ ~ Ce-r 09/19/2.-3 Craig Rieger, Direcor, Regional Contrftcting Office

Date wachakzai Highlight wachakzai Highlight

CLEARANCE of Justification and Approval (J&A) for Other than Full and Open Competition for Contract No. 720121 l 8C00002, USA ID Competitive Economy Program

Drafted: Natalia Petrova, CEP COR

Cleared: Clear:

Christopher Abrams, OEG Clear

Paul Vaca, PRO clear

TDell, DMD Mission Competition Advocate

Date:

09/07/23

09/15/23

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