A02.14 SSJ under the SAT - Credit Rating Agency Subscription - Fitch - SAM.docx

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SOLE SOURCE JUSTIFICATION FOR ACTIONS UNDER THE

SIMPLIFIED ACQUISITION THRESHOLD IAW FAR 13.106-1(b)(1)(i)

1. Contracting Activity: The United States Army Corps of Engineers (USACE), Humphreys Engineer Center Support Activity (HECSA)

2. Description of Action: Approval is requested for a new Firm-Fixed price contract for the Corps Water Infrastructure Finance Program (CWIFP) to purchase credit rating subscription services using Civil Works funding from the Water Infrastructure Finance and Innovation Act (WIFIA) account (096 X 3139).

3. Description of Supplies/Services: CWIFP must purchase a subscription from Fitch Ratings, Inc. for their product entitled Fitch Ratings PRO (for 2 users), which provides in-depth analysis and research on the creditworthiness, financial health, and credit risk assessments of entities rated by Fitch along with sector trends and market developments. Fitch Ratings Pro provides full access to Fitch Ratings research and data to include issuer-specific reports, sector outlooks and macroeconomic commentary beyond the Fitch-rated universe. In addition, access to Fitch Ratings PRO is through a web-based platform and would not require software to be downloaded on a government laptop, reducing network cyber concerns.

Period of Performance/Delivery Date: The contract will include a base year of twelve (12) months with four (4) option years of twelve (12) months, totaling sixty (60) months, totaling an approximate contract value of $xxx,xxx.xx.

4. Authority Cited: 10 U.S.C. 2304(C)(1) or 41 U.S.C. 253(C)(1) as implemented in FAR 13.106-1(b)(1)(i)

5. Reason for Authority Cited: Contracting officers may solicit from one source if the contracting officer determines that the circumstances of the contract action deem only one source reasonably available (e.g., urgency, exclusive licensing agreements, brand-name or industrial mobilization). Fitch Ratings PRO is a proprietary credit ratings and research platform developed and maintained solely by Fitch Ratings, Inc. and is not available through any other vendor or distributor. CWIFP provides federal credit assistance in the form of secured (direct) loans or loan guarantees for eligible water infrastructure projects. The program is actively processing three (3) loan applications and anticipates receiving an additional thirteen (13) applications by September 2025. Fitch Ratings PRO provides actionable, transparent, and integrated credit analytics with quantitative and qualitative assessments that will directly enhance the speed, accuracy, and defensibility of CWIFP’s credit risk assessments and loan underwriting process. While there are other credit rating agencies, the following reasons necessitate the use of Fitch Ratings PRO:

1. Specialized Public Finance and Infrastructure Coverage - Fitch is known for highly detailed, robust credit reports that include extensive sector-specific insights and forward-looking credit risk assessments on public finance, infrastructure and project finance. Fitch Ratings PRO provides a distinct analytical approach and sector specialization that is not directly comparable to its competitors. CWIFP applicants are municipalities or utility districts that issue revenue bonds, which is a key area of Fitch expertise.

2. Transparent Credit Ratings aligned with Federal Risk Standards - Fitch offers distinct and transparent methodologies for rating infrastructure projects that consider the unique financial structures, risk-sharing mechanisms, and long-term contractual frameworks common to government-backed projects.

3. Superior Tools for Portfolio and Risk Monitoring – Fitch Ratings PRO offers advanced portfolio credit risk analytics, which will provide CWIFP with critical information needed throughout the loan life cycle from underwriting to loan monitoring. Fitch Ratings PRO also includes scenario analysis tools for stress-testing loan performance under environmental or fiscal stress, a key part of CWIFP’s due diligence process for loan execution.

4. Cost-Effective – Fitch Ratings PRO is more competitively priced. It is also used by other federal entities, such as EPA’s WIFIA program and USDOT’s Build America Bureau.

5. Neutral Market Positioning - Although its global market share is smaller compared to Moody’s and S&P, Fitch is often seen as a tie-breaker when ratings diverge, adding a valuable perspective. Maintaining an objective position when evaluating projects that involve significant public safety implications is important to CWIFP.

6. Efforts to Obtain Competition: A Notice of Intent to sole source this requirement will be posted per FAR Subpart 5.2, and any bids or proposals shall be considered.

7. Actions to Increase Competition: CWIFP will continue to evaluate products from other vendors in the market to determine whether a comparable product is produced in the future, prior to any award. At the current time, no other products will meet program requirements as described in Section 5.

8. Market Research: The CWIFP team reached out to counterparts at the EPA’s WIFIA loan program and the Office of Strategic Capital’s (OSC’s) loan program to find out if they have subscriptions to any rating agencies. EPA advised that they had subscription contracts with Fitch, S&P and Moody’s. OSC has a sole source contract with S&P for a much more extensive data and analytics package than what CWIFP requires. OSC also has a contract with Moody’s. CWIFP received presentations from Fitch and S&P on their potential offerings and received informal pricing information from Fitch, S&P and Moody’s. The CWIFP team will continue strategic market research efforts and will evaluate other solutions if identified through the Notice of Intent.

9. Interested Sources: To date, Fitch Solutions, S&P and Moody’s have all expressed interest. Any proposals received shall be reviewed and evaluated.

10. Other Facts: CWIFP requires borrowers to submit a preliminary rating opinion letter from a Nationally Recognized Statistics Rating Organization (NRSRO), and prior to loan execution, the borrower must submit at least one final rating opinion letter. These ratings assess the borrower’s overall creditworthiness and indicate the level of risk to the government for entering into a loan agreement with the borrower. Ten agencies are currently registered as NRSROs. S&P, Moody’s and Fitch are considered the top three NRSROs, and they issue 55%, 34% and 10%, respectively, of the total credit ratings for government securities, which represents CWIFP’s primary applicant type of municipal borrowers. As part of the preliminary application, CWIFP’s prospective borrowers included copies of their prior credit ratings. Of the sixteen prospective applicants, eight (8) referenced prior ratings from Fitch, which indicates a high probability that applicants will use Fitch for their final rating letter required for closing their CWIFP loan.

11. Fair and Reasonable Cost Determination: I hereby determine that the anticipated price to the Government for this contract action will be fair and reasonable, based on market research and to an Independent Government Cost Estimate. Per FAR 15.403-1(b)(3), certified cost and pricing data is not required.

David A. Kaplan Procuring Contracting Officer

12. Contracting Officer Certification: I certify that this justification is accurate and complete to the best of my knowledge and belief.

Approval

Based on the foregoing justification, I hereby approve an award of a fixed price contract to Fitch in the amount of $xxx,xxx.xx on an other than full and open competition basis pursuant to the authority of FAR 13.106-1(b)(1)(i), subject to availability of funds, and provided that the services and property herein described have otherwise been authorized for acquisition.

David.A.Kaplan@usace.army.mil

Prepared by:

Bart Dziadosz Contract Specialist Bartholomew.Dziadosz@usace.army.mil

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(Source Selection information - See FAR 2.101 and 3.104-4)