A06 FAR 6.302_JOFOC SP Global Market Intelligence.pdf

United States Department of Agriculture Justification for Other than Full and Open Competition

Federal Acquisition Regulation (FAR) Part 6.3

1. Identification of the agency and the contracting activity.

The United States Department of Agriculture (USDA), Procurement Operations Division (POD).

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

The USDA Foreign Agricultural Service (FAS) requires bank and country risk analyses subscription services. USDA FAS proposes to award a contract on a basis other than full and open competition and negotiate a sole source, firm fixed-price contract for IQ Capital Pro subscription services to S&P Global (S&P) using their Library of Congress (LOC) Federal Library and Information Network (FEDLINK) IDIQ contract (LCFDL24D0025).

3. A description of the supplies or services required to meet the agency’s needs (including the estimated value).

The Risk and Asset Management (RAM) branch reviews and approves limits for foreign countries and foreign banks for the Commodity Credit Corporation’s export credit guarantee programs. The Risk and Asset Management Branch (RAM) requires subscription access to an online web-based platform that provides a comprehensive database of banks' financial statements, credit ratings and news intelligence worldwide. The online platform should provide standardized formats to make it easy to compare banks worldwide across geographies, sectors, and perform peer comparison without manual calculations. The online database should be able to provide at a minimum the following information on each bank.

1. PROFILE

2. COUNTRY RATINGS

3. BANK RATINGS

4. CREDIT RATING AGENCY NEWS

5. BANK HEADLINE NEWS AND PRESS RELEASES

6. SECURITY, STOCK PRICE AND CREDIT DEFAULT SWAP (CDS) SPREADS INFORMATION

7. BALANCE SHEET/INCOME STATEMENT

8. RATIO ANALYSIS

9. LIST OF SUBSIDIARIES

10. LIST OF SHAREHOLDERS

11. NAME BANK MEMBERS ON THE BOARD OF DIRECTORS

12. NAME BANK MANAGERS

13. PEER ANALYSIS REPORT

14. OWNERSHIP ACROSS ENTITIES

15. DOCUMENT DOWNLOAD CAPABILITIES

16. INITIATING NEW BANK COVERAGE

The estimated subscription cost for the base year is $85,000.00.

Option Year 1: $89,250 Option Year 2: $93,713 Option Year 3: $98,398

Option Year 4: $103,318.00 Total Estimated Value: $469,679.00

The period of performance consists of a base period of 12 months and four 12-month option periods.

4. The statutory authority permitting other than full and open competition.

41 U.S.C. 3304(a)(5), as implemented by FAR 6.302-5, titled "Authorized or required by statute."

5. A statement demonstrating the unique qualifications of the proposed contractor or the nature of the action requiring the use of the authority.

S&P is the only entity that provides the necessary subscription to IQ Capital Pro and the information on the 16 items listed above for the required banks and nonbank financial institutions. S&P also provides the necessary bank coverage, unlike the other two vendors researched which do not provide comprehensive bank coverage in one or more of the following countries: Armenia, Mongolia, and Nepal, where RAM currently has eligible banks participating in the program, or the vendors have other limitations.

S&P covers more than 56,000 bank and non-bank financial institutions in the world. This broad coverage is important because RAM analyzes approximately 100-110 banks across Latin America, Africa and the Middle East, and Asia. S&P is the only vendor who has the ability to add banks to its platform upon request, typically within three days from when the request was initiated. This is significant because without the timely addition of a bank, RAM cannot evaluate the bank for a credit limit and the opportunity for U.S. agricultural commodity export sales could be lost, compromising the agency’s mission to promote U.S. agricultural exports. S&P provides in depth financial industry intelligence for banks, non-bank financial institutions and subsidiaries. S&P’s global coverage offers a single source for all financial institution documents collected from company websites, regulatory bodies, and stock exchanges. Due to S&P’s wide range of available information, RAM can review the following information on one database: balance sheet data; income statements; detailed credit quality information including problem loans, impairments, and provisions; regulatory capital information such as Core Tier 1; total capital; risk weighted assets and corresponding capital; and other ratios that are used to analyze a bank’s financial condition and risk for a credit limit in the GSM program. This saves RAM time and resources as employees can access the information from one source rather than being forced to access multiple sources. S&P’s platform also offers company and industry level news, financials, ratings, documents, and excel models through this same single source. Additional documents such as annual, quarterly, and interim reports; earnings information; and other press releases are also available, saving RAM time and resources. More significantly, having company and industry news available from multiple sources on a daily/weekly basis enhances the likelihood that RAM analysts will more quickly identify issues that pose greater default risk for a bank. This will therefore allow analysts to act by seeking more information from the bank and/or reduce/cancel the bank’s limit altogether. Credit ratings by the major credit rating agencies (S&P, Moody’s, and Fitch) are included on this platform and allow RAM to benchmark against other ratings. S&P provides Credit Default Swap (CDS) rates over time for sovereigns so that RAM can examine how the market perceives the risk in the country. This could affect the analysis of country risk and bank risk under the GSM program. Finally, this service allows for customized spreadsheets for peer analysis (comparing one bank’s performance to its peers). The information provided is comprehensive and establishing a peer group is straightforward and does not require the analyst to devote significant time creating a peer group.

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

The FEDLINK program is authorized by statute, as such, the exception in FAR 5.202(a)(4) applies to this requirement and notice will not be publicized.

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

The contracting officer determines that the anticipated price will be fair and reasonable based on prior acquisition history (FAR 15.404-1(b)(2)(ii)). The estimated base year subscription reflects a 5% increase from the prior year’s subscription, which is consistent with economic conditions and industry standards.

Additionally, the rates in the S&P Global FEDLINK IDIQ have been previously determined to be fair and reasonable at the contract level.

8. A description of the market research conducted and the results or a statement of the reason Market Research was not conducted.

Market research was conducted to identify the availability of sources on the LOC FEDLINK. The incumbent was identified as a continued contract holder under the program and the contract was awarded for its specific services unique to this company. No other contractors on FEDLINK provide these specific services.

RAM researched 2 vendors, Bloomberg and BankFocus (Moody’s). Only S&PGMI fully met FAS’ requirements. In addition, RAM has three subscriptions with Fitch, IHS, and Refinitiv (Worldcheck).

RAM is very familiar with their services due to other subscriptions. These vendors provide similar/related services but are not sufficient on their own for RAM analytical needs. They have supplemental information but not the information (i.e., financial ratios, news updates, peer analysis tool) that RAM needs and receives from S&PGMI.

RAM researched 2 vendors, Bloomberg and BankFocus (Moody’s). Only S&PGMI fully met FAS’ requirements. S&PGMI provides comprehensive bank coverage covering all of RAM’s current banks and has the ability to add banks if needed, offers ease of use and no technical barriers (i.e., Bloomberg’ subscription would require installation of software and a ‘widget’ to access their data which IT is unlikely to support). Both Bloomberg and BankFocus have gaps in their coverage, specifically with banks in Armenia, Mongolia and Nepal, or do not have coverage for a non-bank financial institution.

As noted, RAM has been using subscription services for many years (since 2015) and is familiar with the marketplace. For example, a small business is unlikely to be able to provide this type of service, as it requires overseas coverage of foreign banks across a wide geographic region (Africa, Middle East, Asia, Latin America). A substantial team is required to gather the financial statements and annual reports for the information database. Furthermore, there has been consolidation in the marketplace and, as a result, there are fewer vendors than there were in previous years.

Bloomberg Bloomberg services offer access to company data. The ‘company’ data for RAM’s needs are data for foreign financial institutions, specifically, balance sheet and income statement data and financial ratios.

Based on a demonstration provided by Bloomberg in a February 20, 2024, virtual meeting, their data appear to be current and can be downloaded into an Excel spreadsheet. Bloomberg provides ownership information and offers a ‘deep dive’ on board members/key players. There are charts on Credit Default Swap (CDS) spreads which RAM uses as an indicator of default risk. Data can also be downloaded into a format to create dashboards. Documents are translated into English. Training to use the services is provided. Bloomberg has templates which can also be customized by the analyst to create Excel spreadsheets and Power Point presentations. Bloomberg has a 24/7 Help Desk. However, this subscription would require installation of software in addition to a ‘widget’ to use the data in Excel. This is unlikely to be approved by IT as it would require installing external software on U.S.

government computers. This would also incur additional fees on the contract. Bloomberg services are also not financial institution focused. Data on smaller and emerging markets appear to be weaker.

Bloomberg does not have data covering Armenian banks--currently three Armenian banks are participating banks in the export credit guarantee programs. There also does not appear to be coverage for two additional banks in the program: one in Nepal and one in Mongolia. It is not clear whether Excel downloads can be saved and stored for use by other analysts or shared with the Director.

Bloomberg indicated it could add a new bank if requested but could not say definitively how long this might take. FAS requires new banks to be added within 3 days of notice received.

BankFocus (Moody’s) Moody’s interface looks modern and appears to be easily navigable. Based on a demonstration provided by BankFocus on Janaury 8, 2024, BankFocus provides coverage on most of the current financial institutions approved for the export credit guarantee but does not provide coverage for a participating non-bank financial institution. They offer a map feature showing where the branches of banks are located. This is useful for seeing the geographic reach of these institutions. Bank contact information and descriptions are available. The analyst can click on a number and see the source of the data. There is a peer group listed, and one can see the financial ratios of the peer group. Parent company and corporate structure information is also available. There is the ability to download financial statements, presentations, and other documents, and documents are translated into English.

Moody’s has help centers in India, the U.S., and the U.K. that can help with adding new banks and correcting data. The subscription monitors Office of Foreign Assets and Control (OFAC) and other sanctions lists. The list is updated frequently. This feature resembles World Check, another subscription service that focuses on sanctions. However, unlike S&P, aggregate country data and news updates and services are not available with the BankFocus subscription. This is a significant shortcoming as ongoing country and news updates are needed to monitor economic and financial developments which could affect a bank’s ability to repay a guaranteed loan under the export credit guarantee programs.

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

None.

10. A listing of the sources, if any, that expressed a written interest in the acquisition.

No other sources expressed written interest in the acquisition.

11. A statement of actions, if any, the agency may take to remove or overcome any barriers to competition if subsequent acquisitions are anticipated.

FAS will continue to review the market for new vendors capable of providing the required subscription access. A Request for Information will be posted prior to any future awards.

Certifications & Approvals

Supporting data that form the basis for and included in this justification are certified accurate and complete.

Rita Carleton Director, Risk and Asset Management Branch

The information contained in this Justification for Other Than Full and Open Competition is certified accurate and complete to the best of my knowledge and belief.

Nnenna Njoku Contracting Officer