72012121D00001_72012121F00002 SOERA J_A_signed.pdf

JUSTIFICATION AND APPROVAL (J&A) ACTION MEMORANDUM

DATE: June 23, 2022

TO: Robert Parnell, Regional Contracting Officer

CC: Deborah Broderick, Agency Competition Advocate

FROM: Andriy Nesterenko, COR

RE: IDIQ No. 72012121D00001, State-Owned Enterprise Reform Activity (SOERA); Task Order 1 No. 72012121F00002

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

We request approval for use of other than full and open competition pursuant to the authorities under the EPP for Ukraine, Belarus and Moldova, approved March 6, 2022 (EPP). Your approval of this 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.

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

This is a request to approve а contract modification to (1) increase the Maximum Contract Ceiling (MCC) for the single-holder IDIQ No.72012121D00001, State-Owned Enterprise Reform Activity (SOERA) by $61,000,000 from $39,000,000 to $100,000,000; and (2) increase the Total Estimated Cost (TEC) for Task Order 1 (TO 1) under this IDIQ, TO No.72012118C00003, implemented by Deloitte Consulting LLP (Deloitte) (estimated cost plus fixed fee) by $21,025,581 from $8,974,419 to $30,000,000 and extend the period of performance (POP) of TO1 by two years from April 25, 2024 to April 25, 2026, resulting in a revised POP of April 26, 2021 to April 25, 2026. The revised TO POP will be five years in total.

The SOERA IDIQ was awarded to Deloitte as a single IDIQ-holder through a full and open competition on April 23, 2021 with an MCC of $39,000,000, a five-year ordering period from April 26, 2021to April 25, 2026, and a seven-year POP from April 26, 2021 to April 25, 2028.

TO 1 was awarded to Deloitte on April 23, 2021 with a TEC of $8,974,419 and a three-year POP from April 26, 2021 to April 25, 2024. The current IDIQ POP has sufficient room for this modification and does not need to be extended.

The proposed changes would allow USAID to continue its assistance to the Government of Ukraine (GOU) in exercising effective management of state and municipal assets to sustain a wartime economy and ensure a swift and transparent reconstruction at the war’s end. SOERA will continue to assist the GOU to maintain critical infrastructure and provide essential services through SOEs, municipality-owned enterprises (MOEs) and other forms of public property, while ensuring that public property is transparently managed, leased, and privatized given the increased risks in the current context, through the war and reconstruction. The extended period of performance under TO1 will ensure USAID’s ability to provide uninterrupted support to the GOU for the next two years.

b. A description of the supplies or services required to meet USAID’s needs, including the estimated value.

Russia's invasion of Ukraine has devastated Ukraine’s economy and displaced millions. The role of the state sector, including SOEs and MOEs, has significantly increased during wartime and is critical to Ukraine’s ability to withstand Russia’s aggression while surviving economically. SOEs and MOEs not only provide vital services to Ukrainians and maintain critical infrastructure, but they have also become the real backbone of Ukraine’s wartime economy. While large privatization and corporate governance reforms will be postponed until peacetime, it is absolutely essential that USAID continues to support the GOU and Ukraine’s public sector in meeting wartime challenges and performing their essential functions. The purpose of this modification is to adjust the IDIQ ceiling and TO1 scope accordingly to meet these development needs.

IDIQ: Ceiling Increase The proposed increase to the maximum contract ceiling for the SOERA IDIQ will not result in immediate commitment of additional funding, but will provide USAID/Ukraine with an additional flexibility to quickly mobilize necessary resources through new task orders to quickly meet critical assistance needs of the Ukrainian government during the wartime and postwar reconstruction periods.

A new Implementation Area 5 will be added to the IDIQ to account for the increased focus on public sector governance and asset management and the additional efforts on improving GOU management of public assets to sustain a wartime economy and ensure a swift and transparent reconstruction at the war’s end. While SOE sector reform including privatization and corporate governance remain key objectives of the activity in particular during the post-war reconstruction and economic development phase, in addition to that the activity will address the GOU’s overall ability to effectively manage Ukraine’s public sector both in wartime and during peace including strengthening public finance and economic planning, maintaining and developing critical infrastructure, and strengthening utilization of public assets to provide essential services to population and businesses. The activity will help the GOU exercise effective public asset management through SOEs, municipality-owned enterprises (MOEs) and other forms of public property to ensure that public assets are transparently managed, leased and privatized given the increased risks in the current context, through the war and reconstruction. In addition, the activity will provide technical assistance and in-kind support to critical SOEs/MOEs/groups of SOEs/MOEs in delivery of core services and/or new responsibilities in response to the war/reconstruction period.

TO 1: Ceiling Increase and Time Extension

The proposed ceiling increase and extended POP for TO 1 will allow the current implementer, Deloitte, to continue critical technical assistance to help the GOU and other stakeholders strengthen public sector governance and ensure effective crisis management of state and municipal assets to help sustain a wartime economy and ensure a swift and transparent reconstruction at the war’s end. SOERA will assist the GOU to transparently maintain critical infrastructure and provide essential services through SOEs, municipality-owned enterprises (MOEs) and other forms of public property.

While SOE privatization and corporate governance will remain key objectives of the activity, albeit deprioritized for the period of active Russian hostilities, the scope of SOERA will be expanded to focus on the GOU’s ability to effectively manage Ukraine’s public sector, including strengthening public finance and economic planning, maintaining and developing critical infrastructure, and providing essential services to the population and businesses.

The TO 1 statement of work (SOW) components will be modified as described below:

Component 1: SOE Mapping, Information, and Strategy will include additional assistance to assess damages to state, municipal, and private property and develop new/maintain existing databases/state registers , including those for seized Russian property. Assistance will be provided to the Ministry of1

Economy to strengthen its economic analysis, planning, and forecasting to better plan for the optimal share of the public sector in Ukraine’s economy.

Component 2: Establishing Reform Coordinating Mechanism and Strategic Communications will not change.

Component 3: Reviewing and Improving SOE Policies, Legislation, and Regulations will include directions to prioritize specific war/reconstruction policy and legislation development.

Component 4: Facilitating SOE Privatization will include assistance related to all types of public property/assets and additional assistance to MOEs on leasing and privatization with an increased use of electronic platforms for privatization and lease of public assets. In addition, the Contractor will be requested to empower SOEs/MOEs to transfer assets to relocating businesses, through simplified privatization and lease procedures, and to make them available for IDP needs .

Component 5: Improving Corporate Governance and Management of SOEs will assist selected SOEs/groups of SOEs/State entities that manage groups of SOEs to improve their performance and contribution to Ukraine’s economic growth and reduce opportunities for corruption.

A new component 6: Providing Emergency Response and Recovery Preparation to the GOU and key SOEs will be added to help the GOU and critical SOEs meet their critical sustainment, service delivery and recovery needs in wartime and during the reconstruction phase. This will include:

● Developing new systems/procedures/processes for the GOU to seize, manage, operate, account for, and dispose of confiscated Russian property in Ukraine.

● Assisting the GOU (through SPFU and MOE) to manage, assess, account for, lease, and dispose of state/municipal property while meeting specific needs of the war and reconstruction periods.

● Supporting critical SOEs in wartime and during the reconstruction phase to meet their critical sustainment, service delivery and recovery needs.

● Mobilizing teams of experts and embedded advisors to state and municipal bodies responsible for public property management, public expenditures and finance management, fiscal policy development and implementation, and national economy reconstruction and development, to provide necessary organizational, legal, technical, administrative, and other support including subject matter expertise, to help the GOU sustain a wartime economy and ensure a swift and

1 These include: Unified Register of State Property, the Register of Concessions, Leases, etc. SPFU is the designated keeper of these records.

transparent reconstruction at the war’s end.

● Provide technical assistance and capacity building to the GOU to plan for, use, monitor, verify and account for international funding, such as direct budget support transfers, received by the GOU from international governments and donors.

● Providing institutional and logistical support to USAID/Ukraine while it operates from Poland and is short-staffed (if requested).

c. Identification of statutory authority permitting other than full and open competition.

AIDAR 706.302-70(b)(3)(ii) and 40 U.S.C. §113; 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 commenced on February 24, 2022 and therefore the class D&F applies to invasion response activities.

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

Deloitte, as the current implementer, is uniquely positioned to most effectively and efficiently conduct the proposed activities and to provide timely technical assistance essential to Ukraine during and after the war with Russia. The proposed ceiling increase and time extension will allow Deloitte to seamlessly build upon existing TO1 activities and efforts. In particular:

● The SOERA IDIQ was awarded to Deloitte as a single IDIQ holder through a full and open competition. All new or modified task orders under this IDIQ are already precompeted and must be awarded to Deloitte.

● The proposed revisions to the IDIQ do not change its overall purpose to help the GOU reform the SOE sector. These revisions are needed to adapt to the drastically changed current operational environment and to allow USAID to pivot accordingly. The increased focus on public sector governance and asset management, and the additional efforts on improving GOU management of public assets to sustain a wartime economy and ensure a swift and transparent reconstruction at the war’s end represent a natural and justified extension of the scope to respond to new challenges.

● Under TO 1, Deloitte has already mobilized a team of mostly Ukrainian experts and subcontractors, with the capacity and the relationships with Ukrainian stakeholders, to advance technical assistance goals. Deloitte’s experts have been working with Ukrainian stakeholders for more than a year to support critical reforms, and have made significant inroads in improving Ukraine’s public sector performance and accountability. Providing Deloitte with additional time and funding will allow USAID to preserve and build upon its substantial investment in the SOE sector, which is especially critical in the current circumstances. SOERA is an ongoing, established activity that leverages a deep knowledge of the Ukrainian public sector and established relationships with government institutions, civil society, international partners (e.g.the IMF, the World Bank, the EU, etc.) and the private sector.

● Deloitte has been providing high quality technical assistance on a number of complex, politically sensitive issues that require uninterrupted support to ensure operational continuity and financial sustainability of the public sector. In doing that, Deloitte has developed strong relationships and partnerships with government organizations and other stakeholders to collaborate on key objectives of the activity. The inevitable disruption of transitioning to a new implementer may result in unacceptable impacts for Ukraine. For example, Deloitte has been the main source of international support to the State Property Fund (SPFU), the Ukrainian government agency responsible for privatization, state property management, corporate governance, lease, and valuation -all essential public sector functions critically important for economic development and performance. SOERA’s assistance has been essential to helping SPFU relocate its operations and vital state property databases and registers after the outbreak of war.

Ensuring that SPFU and the Ministry of Economy’s officers can continue working with these known experts provides the greatest likelihood of continuous reforms in the public property sector, and will improve the SPFU’s ability to manage critical infrastructure and provide essential services in the changed context.

These reasons underscore why the current SOERA implementer, Deloitte, is uniquely positioned and has an overall comparative advantage to continue this activity with increased funding and extended time to provide critically needed technical assistance and training essential to Ukraine’s response to Russia’s invasion. The benefits of Other than Full and Open Competition under the EPP outweigh the policy preference for a full and open competitive process. A new implementing partner will likely not have the same extent of productive relationships with GOU counterparts and other stakeholders and would require significant time to develop relationships given the ongoing war and difficulty to establish a presence in Ukraine necessary to develop such partnerships.

e. 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). Due to the immediate need for assistance to respond to the economic disruption from Russia’s invasion, it is not practical to solicit offers from potential sources. This requirement to meet the GOU’s needs is based on Deloitte’s unique position and proven work under the current contract to deliver rapid, responsive support for SOE pivots before and during the war.

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

The estimated budget is based on historical costs for similar services. The Contracting Officer (CO) has determined that awarding this TEC increase and POP extension to Deloitte will be at a substantially reduced cost and duration in comparison to competitively procuring a new contract. A new implementing partner would require significant additional time and resources to establish itself, processes, relationships, and trust, particularly in an active conflict environment, with new and displaced stakeholders, beneficiaries, and qualified staff, the imposition of martial law, and fluctuating space availability and costs. It would cause unnecessary delay and significantly higher costs, risking backsliding on results achieved to date.

By signing below, the CO determines that the anticipated costs will be fair and reasonable, in accordance with FAR 15, and in accordance with FAR Part 44 in the case of subcontracts, and in the best interest of the USG. The CO will review Deloitte’s detailed proposed costs for expansion and conduct a thorough cost analysis of the proposal, with the same level of rigor as for a competitive procurement, to ensure that the actual cost to the U.S. Government is fair and reasonable.

g. 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. Deloitte, the contractor implementing SOERA, was competitively selected through fair opportunity in 2021. Since the purpose of the proposed extension is to mitigate the effects of Russia’s war on Ukraine, it is not feasible to select another шющcontractor to undertake these activities given Deloitte’s familiarity with the country context and established relationships with key GOU and private sector counterparts. As noted above, substantial monetary and time investments have been made to develop the necessary relationships and processes to effectively build the stakeholder capacity. It would be unacceptably difficult and time-consuming for a new contractor to obtain the required skills and capabilities to provide this critical assistance.

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

USAID/Ukraine has determined that, due to the urgency of the current situation in Ukraine, 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 SOERA and representing the priorities of the Agency and the U.S Government.

i. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition.

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.

j. A statement of the actions, if any, USAID may take to remove or overcome any barriers to competition before any subsequent acquisition of the supplies or services required.

The original award was procured using fair opportunity procedures under full and open competition. The proposed cost extension will provide technical assistance to cope with the immediate impacts of Russia’s invasion. Deloitte is providing a fast and flexible response and is well-positioned to promptly detect, and effectively respond to, needs in the public sector by drawing on their expertise and country-level knowledge.

RECOMMENDATION

It is recommended that you approve this justification for use of other than full and open competition pursuant to the “Expedited Procedures Package (EPP) for Ukraine, Belarus and Moldova” approved 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 of Less than Full and Open Competitive Procedures in the Modification or Award of Contracts) of the

EPP.

Encl. Tab 1- EPP D&F for the Authorization of Less than Full and Open Competitive Procedures in the Modification or Award of Contracts.

CERTIFICATION:

The requirement for technical certification at FAR 6.303-1(c) is fulfilled through:

a. The signature of the Technical Officer below certifying the specific supporting data for this J&A; and

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

The Contracting Officer is the Approving Official based on the authority given under the EPP.

However, a separate Contracting Officer certification is not required per AIDAR 706.302- 70(c)(1).

Technical Officer:

I hereby certify that the supporting data which form a basis for the justification are complete and accurate to the best of my knowledge and belief.

Confirm June 23, 2022 Andriy Nesterenko Date Contracting Officer Representative

APPROVAL:

Robert Parnell Date Contracting Officer

CLEARANCE:

Cleared 06/23/2022 Mark Hyland Date Resident Legal Officer

Robert Parnell

Digitally signed by Robert Parnell Date: 2022.06.24 09:50:08 +02'00'