72012121C00001 HOVERLA J_A signed.pdf

JUSTIFICATION AND APPROVAL (J&A)

FOR EXPEDITED PROCEDURES PACKAGE

TO: Robert Parnell, Regional Contracting Officer

CC: Deborah Broderick, Agency Competition Advocate

FROM: Marat Kyurchevsky, Project Management Specialist, Office of Democracy and Governance

DATE: November 7, 2022

RE: Contract No. 72012121C00001, USAID Governance and Local Accountability (HOVERLA) Activity

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

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 to use 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 Justification and Approval (J&A) constitutes the justification for other than full and open competition as required by Tab 1 (Determination and Findings (D&F) Authorization for the Use of Other than Full and Open Competition in the Award or Modification of Contracts) of the EPP.

RECOMMENDATION

That you approve this justification for 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 1 (D&F for the Authorization for Use of Other than Full and Open Competition in the Award or Modification of Contracts) of the EPP.

2. Nature and/or description of the action being approved.

USAID/Ukraine seeks a contract modification to increase the total estimated cost (TEC) of Contract No. 72012121C00001, USAID Governance and Local Accountability (HOVERLA) Activity, implemented by DAI Inc. (DAI or “the contractor”) by $76,010,909 from $73,989,091 to $150 million and extend the period of performance (PoP) by 12 months from a contract end date of March 18, 2026 to March 18, 2027.

The additional ceiling will increase the likelihood of successfully achieving the key objectives of HOVERLA activity under the original Statement of Work (SOW). As a result of Russia’s full-scale war in Ukraine since February 24, 2022, the demand for HOVERLA-support efforts to assist the Government of Ukraine - both national and local - with response to the full-scale Russian invasion has increased. Such support includes emergency preparedness for potential additional Russian territorial gains, emergency response to consequences of the invasion, assistance for rapid recovery in the post-war period, and continuing to advance decentralization reform to promote local governance efficiency and citizen participation in local decision making.

If approved, this action would allow HOVERLA to significantly expand its support to strengthen local government capacity to function in the context of Russia’s full scale invasion, which has significatively complicated the operating environment and increased the scope and demand for services to citizens.

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

Below is a shortened description of the supplies and services required to meet USAID’s needs.

HOVERLA facilitates the creation of Ukrainian local governance systems and processes that are more self-reliant, accountable to citizens, inclusive and able to provide services. In addition to pursuing the original HOVERLA activity purpose, a $76,010,909 TEC increase would allow USAID to also quickly respond to emergency needs on the ground, assist Ukrainian governance institutions to provide basic emergency and on-going services and support Ukraine’s efforts to advance post-war recovery and reconstruction. HOVERLA will also support reforms required for Ukraine’s EU accession while helping the country avoid backsliding in democratic and decentralization reform.

In anticipation of Russia’s invasion, USAID amended HOVERLA’s implementation plan and realigned its budget to enable rapid emergency response efforts. As a result, the in-kind procurement budget planned for HOVERLA’s entire POP was committed within the first several months of the war. At the same time, the need for additional resources was clear, especially given Russia’s continued and concerted efforts to destroy Ukraine’s infrastructure (Note: according to the World Bank’s Rapid Damage and Needs Assessment, Ukraine’s reconstruction and recovery needs are estimated at $349 billion). As a result, USAID/Ukraine seeks a time and cost extension for HOVERLA.

The envisioned activities fall within the SOW’s original objectives. The TEC increase would enable HOVERLA to develop tools and approaches to respond to the GOU’s complex operational and strategic needs. Specifically, $10 million of the proposed $76,010,909 TEC increase would be used to expand the activity’s Grants under Contract Fund (GUC) to provide assistance to local NGOs, think tanks, local government associations, youth organizations, technical expert organizations, communication companies, and other potential grantees to catalyze partnerships among civil society, the public sector, and private sector. Additionally, $50 million would be used for in-kind assistance to local governance institutions to ensure emergency preparedness and uninterrupted service provision.

Additional support to increase efforts to cover current and emerging war-related challenges will be provided under HOVERLA’s three objectives as outlined below:

Objective 1: Ukraine's system of local self-governance is increasingly institutionalized and effective

Despite remarkable progress since 2014, Ukraine faces ongoing challenges to institutionalize its system of local self-governance. Ukraine’s full ratification of the European Charter for Local Self-Governance (the Charter) and obtaining status as a EU candidate country in June 2022 represent significant steps forward. However, Ukraine still must align all legislation on local government with the Charter and finalize decentralization reform, including by adopting constitutional amendments to ensure the process’ irreversibility.

Amending the Ukrainian constitution to ensure decentralization’s irreversibility must wait until martial law is lifted. Nevertheless, the GOU and other stakeholders can still lay the groundwork for their eventual adoption. Moreover, local government institutions face new legal and administrative challenges due to the imposition of martial law that require additional USAID support to ensure continuity of service. Additional USAID support will also allow continued advocacy for local governance and decentralization reform with Ukraine’s executive and legislative branches and help protect the interests of local governance under the condition martial law to prevent backsliding on reform.

Additional Objective 1 activities may include (but are not limited to) the following:

● Providing expert support to national and sub-national governments and state military administrations during martial law to ensure proper coordination of the state executive and local government powers in addressing the consequences of war.

● Assisting MCTD and relevant partner ministries and the VRU to develop legislation in the sphere of spatial planning, land zoning, urban planning, architectural and design norms to help ensure Ukraine’s recovery process proceeds in accordance with “build back better” principle.

● Providing MCTD and relevant partner ministries as appropriate with digital tools and GIS systems for data driven decision making.

● Providing communication support to the design and implementation of the recovery process.

● Providing expert legal and informational support to the State Emergency Service of Ukraine (SESU) to ensure timely and efficient provision of its services.

● Providing necessary assistance to the SESU so it is appropriately equipped to effectively perform its functions under the war and post war recovery period.

● Providing support with development of the legislative framework for community safety centers.

Objective 1 Additional Expected Results:

● Local governments are better informed and prepared to function under the changing legal environment of martial law.

● All elements of the Ukraine’s government system of wartime and post war period are in place, effective, and properly coordinated.

● Local self-governance oversight systems increasingly reflect EU candidacy requirements.

● Ukraine’s recovery and reconstruction process is supported with the necessary legislation to ensure high quality recovery in accordance with international standards and requirements.

● USAID and GOU government partners have necessary digital and GIS tools for municipal statistics, recovery and reconstruction, spatial and urban planning, and strategic decision making.

● The system of community safety centers is defined and regulated in Ukrainian legislation.

Objective 2: More self-reliant subnational governance

Decentralization reform has significantly increased the capacity of local governance. Before the war, however, local governance was still far from strong and sustainable. The ongoing war has weakened these capacities and strained local governments’ financial and human resources, even as war and martial law have imposed new responsibilities. Among these new responsibilities are:

ensuring repair of communal services damaged or interrupted by military actions; providing medical, social, financial support to those who suffered from war; improving the system of outreach regarding threats to human safety; providing a system of community shelters to protect citizens from air raids and shelling; providing immediate support to IDPs; ensuring IDPs’ long-term integration into local communities; and integrating relocated businesses and IDPs into economic life. The importance of improving municipal services—and harmonizing national legislation with European norms—has grown since Ukraine acquired EU candidate status in June 2022. Local governments have to deal with these new challenges in the context of severe budgetary expenditures and the constraints of martial law. Building local governance capacity and providing high quality services to ensure citizen satisfaction is at HOVERLA’s core, and USAID expects HOVERLA to increase assistance in the above and other emerging issues to assist local governments to provide effective and self-sustainable services.

Additional Objective 2 activities may include (but are not limited to) the following:

● Providing assistance in emergency preparedness and response to 65 selected partner communities procuring necessary equipment and supplies for winterization, damage liquidation, reconstruction, and recovery.

● Assisting newly liberated communities to provide emergency response and rapid recovery assistance and in procuring emergency goods and supplies.

● Providing small scale infrastructure repair to damaged public buildings to restore their functionality and to help government institutions to sustain service provision.

● Assisting partner communities to establish community safety centers.

● Assisting SESU to strengthen its capacity to perform its functions and provide services.

● Assisting SESU to develop guidelines for bomb shelters design and equipment.

● Procuring necessary materials and equipment to repair and equip community bomb shelters.

● Providing emergency response assistance to oblast military-civil administrations throughout Ukraine in procuring emergency goods and supplies.

Objective 2 additional Expected Results:

● The capacity of 65 selected partners and possibly some newly liberated communities to deal with emergency situations and manage the recovery process is improved.

● Public safety in partner communities is improved due to better organization and management of community safety centers and bomb shelters.

● Sub-national governments’ capacity to provide services is strengthened through development of necessary policies and procedures, design, engineering and architecture documentation developed and physical repair completed.

● IDP housing in partner communities is improved due to HOVERLA assistance in non-construction activities, such as providing necessary assessments, legal, engineering, architectural and construction support, as well as due to small scale construction and repair.

● SESU capacity to deal with emergency situations is increased due to improved procedures, guidance of public safety and equipment, systems, and digital tools improved.

Objective 3: Citizens play an increasingly influential role in local governance processes

Since the beginning of war and the introduction of martial law, stimulating citizen engagement in local governance processes has become more difficult as citizens shifted their civic engagement to humanitarian aid efforts for the Ukrainian Armed Forces, IDPs, and people in need. In the context of regular air raids, concern for public safety has also limited civic engagement. The imposition of martial law has also limited constitutional rights and freedoms which presents challenges to robust civic engagement. Traditional civic engagement tools such as public consultations are not prohibited but are limited in use during martial law.

Many CSOs across Ukraine have relocated within Ukraine or left the country. Those that remain have largely focused on the humanitarian crisis. CSOs are more actively cooperating with local authorities to meet the most basic and pressing needs of vulnerable beneficiaries, such as IDPs and persons with disabilities (PWDs). This increased cooperation presents an opportunity to strengthen joint action between local governments and CSOs on emergency response and service delivery efforts. This cooperation also lays a strong foundation to qualitatively increase community collaboration for local development during the war. It may also carry over to the post-war recovery period, when numerous public initiatives to assist the army will no longer be necessary.

Additional Objective 3 activities may include (but are not limited to) the following:

● Providing grants and/or necessary equipment to newly formed initiative groups, CBOs, CSOs as they assist vulnerable groups.

● Assisting newly formed initiative groups, CBOs, CSOs with their strategic planning and capacity building in the postwar period to enable them to effectively participate in the rapid recovery process of Ukrainian communities.

● Ensuring IDP integration into host communities through community cohesion activities aimed at overcoming antagonism and cross-cultural and language disagreements.

● Supporting improved dialogue between the public and local and national government to improve emergency response and the post-war recovery process.

Additional Objective 3 activities may include (but are not limited to) the following:

● Facilitate the institutionalization of the nascent war-time volunteer movement in partner communities to ensure it constructively contributes to Ukraine’s recovery process.

● Ensure newly formed CBOs and CSOs are strengthened and become sustainable stakeholders in the local community development landscape.

● Strengthen dialogue and cooperation between local citizens and their governments, leading to efficient emergency response, recovery, and community cohesion.

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

AIDAR 706.302-70(b)(3)(ii) and 40 U.S.C. §113(e)(2); see the “Expedited Procedures Package for Ukraine, Belarus, and Moldova” approved March 6, 2022. The D&F is attached to this file in Tab 1. The EPP can only be used for responding to the consequences of the Russian invasion of Ukraine and the rapidly fluctuating regional operating environment, as defined in paragraph 1 of the D&F (Tab 1). The most recent phase of Russian invasion of Ukraine begun on February 24, 2022 and therefore the class D&F applies to invasion response activities.

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

DAI brings to bear unique qualifications and expertise that warrant the use of the cited authority.

Its focus on data analysis, data-driven decision making, GIS solutions, and its significant experience in local governance, citizen engagement and community development in Ukraine are exemplary. Further, DAI’s proven, successful experience in building emergency preparedness capacity at the community level and providing emergency response uniquely positions it to bring the greatest degree of effectiveness and expertise in rapidly changing and varied local contexts.

As a result, USAID is confident that DAI will effectively and efficiently utilize additional funding which, when combined with extended POP, will enable it to provide necessary emergency response and recovery support to Ukrainian stakeholders through key periods of time.

Specific examples are listed below:

(i) Complementarity with Existing Programming: DAI is the current implementer of HOVERLA, and an increase in funding will allow DAI to seamlessly build upon its ongoing efforts.

HOVERLA’s purpose is to create Ukrainian local governance systems and processes that are more self-reliant, accountable to citizens, inclusive, and able to provide services to citizens. Its purpose will remain the same going forward, however, USAID requires HOVERLA to continue implementing complementary, emergency preparedness activities, a need brought on by Russia’s full-scale invasion. The need for the above-mentioned work will continue throughout wartime and through the post-war recovery and reconstruction. Therefore, additional activities planned under this extension expand the spectrum of assistance DAI provides under HOVERLA activity’s existing scope of work.

DAI has demonstrated the capacity to adjust programming to the changing needs on the ground rapidly and proactively. In anticipation of a potential Russia’s full scale invasion, per USAID COR request, DAI developed a HOVERLA emergency work plan. The plan enabled HOVERLA to procure emergency goods in a timely manner thereby demonstrating a high level of flexibility and ability to conduct and execute contingency efforts. To date, HOVERLA has spent $5.1 million on 34 emergency procurement activities benefiting seven partner oblasts and 65 municipalities. The municipalities delivered essential services to their citizens because of the goods HOVERLA distributed: power generators, water pumps, radio communication equipment, fire extinguishers, LED spotlights, water flasks, tents, electric kettles, power banks, IT equipment, printers, and laptops. In addition, a total of $9.3 million has been committed with an additional $9.1 million in the planning stage for commitment by the end of 2022.

In addition to developing an emergency work plan, HOVERLA ensured it built relationships with key stakeholders who would play a critical role in the plans implementation. For example, before the war, it established a partnership with the State Emergency Service of Ukraine (SESU), the lead, nationwide governmental emergency service provider. Once the Russian Army invaded, SESU became a key HOVERLA counterpart in the delivery of emergency response. Through HOVERLA, USAID supported SESU to promptly identify and deliver emergency goods as well as bolster SESU’s first-responder capacities which saved lives and mitigated impacts of Russia’s destruction.

The HOVERLA team coordinates with local government partners and SESU daily which enables HOVERLA to identify evolving emergency needs, develop contingency plans, and anticipate procurement needs. In the months ahead, HOVERLA, in coordination with USAID, will focus on ensuring partners are adequately prepared for winter. HOVERLA is prioritizing the procurement of mini-loaders to clear the roads of snow and debris, as well as generators and fuel vouchers. HOVERLA will also continue to build SESU’s institutional capacity through technical assistance in effective project management, executive leadership training, and the establishment of voluntary fire brigades in partner municipalities.

HOVERLA also continued to provide technical assistance to local governments. However, it adjusted the type and scope of the assistance since these local communities became war zones and/or heavily affected by conflict. Since Russia’s invasion began, the complexity of local service provision grew exponentially, in part due to dramatic demographic shifts. Almost overnight, the communities had to provide services to thousands of internally displaced people severely straining local systems. Simultaneously, local service provision capacities became degraded as many trained local governance officials either emigrated to other countries or joined the Ukrainian Armed Forces. Therefore, HOVERLA’s mandate to strengthen local governments’ capacities and develop an enabling environment for local economic development continues to be as relevant as before the war.

(ii) Operations:

HOVERLA was designed as a flexible rapid response mechanism capable of adjusting to unexpected events. However, the program was not designed to operate in conflict or conflict-affected zones. Therefore, the activity’s implementation has had to adjust to wartime realities, including a reassessment of security posture, approach, and requirements.

Russia's full-scale invasion brought numerous operational challenges which DAI has handled superbly and with minimal, if any, impact on the effectiveness or efficiency of services. DAI’s main office is in Kyiv and its regional offices are in Lviv, Lutsk and Poltava. Before the invasion, all were fully staffed with highly qualified international and local technical experts who had built strong relationships with key stakeholders. After the invasion, DAI relocated staff to safer places, enabling them to continue effectively implementing the contract. Many, including DCOP moved to Lviv, which quickly became the main office, partly due to greater personal safety but also because all HOVERLA partner oblasts at that time were located in western Ukraine. Although staff worked online from Ukraine or abroad, they effectively coordinated procurement and delivery of goods. In-person activities took place as-needed, mostly in Lviv. In the late summer, with increased security, the Kyiv office resumed in-person operations. Russia’s October 2022 attacks on Kyiv’s energy infrastructure, however, undermined these positive steps and brought insecurity and a lack of energy and internet services in Kyiv, causing DAI to return to online mode of operations. These adjustments were seamless and had no negative impact on implementation, providing further evidence of DAI’s ability to operate in fluid environments and make adjustments in the operational posture.

Despite these challenges, HOVERLA has expanded into four new oblasts, selecting 40 new partner communities in Zhytomyr, Rivne, Zakarpattya, and Odesa oblasts for a total of seven oblasts and 65 partner communities. DAI’s new regional teams are currently hiring staff to implement expanded operations.

(iii) Technical Expertise: DAI demonstrates a sophisticated understanding of the political, reform, and civic context in Ukraine, and includes feasible, innovative interventions to achieve expected results. DAI’s approach to decentralization and local governance reform as well as implementation principles are particularly strong and innovative. Its team has demonstrated an excellent grasp of the needs.

DAI recruited outstanding team for both long-term and short-term positions, which demonstrated industry-standard technical expertise in legislative process, decentralization reform, local governance system design, principles of the distribution of power between government levels, public financial management, budgeting, local economic development, service improvement, strategic planning, spatial planning, emergency procurement, and coordination. The high level of technical expertise is confirmed by positive feedback from recipients and professional stakeholders in the sector, including independent experts, other donors, Ukrainian officials.

(iv) Relationships with Key Stakeholders: Throughout HOVERLA’s implementation, DAI has developed strong relationships and partnerships with national government ministries and institutions (i.e., the Ministry of Communities and Territories Development, the Verkhovna Rada, the Ministry of Digital Transformation, the Ministry of Finance, the National Agency for Civil Service, the State Emergency Service of Ukraine, oblast state military administrations, local governments of consolidated territorial communities), civil society, and local private sector stakeholders to collaborate on key reforms and initiatives in Ukraine that are critical to successful local governance program implementation in wartime and post-war recovery period.

These relationships with key stakeholders give current HOVERLA implementer DAI a comparative advantage that exceeds the benefits of a competitive process encouraged by law and required by Agency policy. A new implementer is unlikely to have the breadth and depth of productive relationships with Ukrainian government counterparts and other key stakeholders, and would require considerable time to develop such relationships given the on-going, full-scale invasion.

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 AIDAR §705.202(b) as it is not practical under the circumstances. No efforts have been made to ensure that offers were solicited from as many potential sources as practicable because the needed services described herein are within the original scope of the contract’s current objectives. This requirement to meet the GoU’s needs is based on DAI's unique position and proven work under the current contract to enable rapid, responsive support to national and local governments in the emergency response and recovery process.

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

The Office of Democracy and Governance prepared an IGCE for the DAI time and cost extension, which serves as the original basis for budget approval. The estimated budget is based on historical costs for similar services. Upon approval of this justification, the Contracting Officer will request a proposal from the contractor for the additional work requested. The Contracting Officer will conduct a thorough cost analysis of that proposal, with the same level of rigor as used with competitive procurement, to ensure that the actual cost to the U.S.

Government is fair and reasonable.

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. DAI was competitively selected as the USAID contractor through the full and open competitive procurement in 2021. Since the purpose of the proposed TEC increase is to respond to the emergency situation in Ukraine and assist with a post war recovery process, it is not feasible to select another contractor that would be able to undertake these activities promptly given DAI’s familiarity with the country context, its established relationship with key GoU counterparts and other stakeholders. Market research was conducted at the pre-solicitation stage for the HOVERLA award and included in the Acquisition Plan for HOVERLA.

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 the most effective method for quickly and effectively implementing the additional activities under HOVERLA and representing the 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 HOVERLA contract to address the additional requirements, so publication of a notice is not required per the determination at AIDAR §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 for the supplies or services required:

The proposed modification is a specific case based on the urgent need to respond to priority requests from the GOU and stakeholders to address the emergency situation in Ukraine and assist with a post war recovery process. Any subsequent or future need of support will be procured through full and open competition, 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 complement and accurate in accordance with the

Expedited Procedures Package (EPP) for Ukraine, Belarus, and Moldova approved on March 6, 2022 (attached Tab 1- EPP D&F for the Authorization of Use of Other than Full and Open Competition in the Award or Modification of Contracts.).

Marat Kyurchevsky, Contracting Officer’s Representative

13. General Counsel/RLO Clearance:

Benjamin Schireson, Resident Legal Officer

14. Contracting Officer Approval:

Robert Parnell, Regional Contracting Officer

Marat Kyurchevsky Digitally signed by Marat Kyurchevsky Date: 2022.11.18 23:20:27 +02'00'

Benjamin Schireson

Digitally signed by Benjamin Schireson Date: 2022.11.18 16:44:48 -05'00'

ROBERT LEE

PARNELL IV (affiliate)

Digitally signed by ROBERT LEE PARNELL IV (affiliate) Date: 2022.11.23 10:36:02 -05'00'