A06-JOFOC-Airline Expert_Redacted.pdf

Sole Source Justification

In Accordance with FAR 6.302-3(a)(2)(iii)

1. Identification of the agency and contracting agency:

Contracting activity Customer agency

U.S. Department of Labor U.S. Department of Labor

Office of Acquisition Services Employee Benefits Security Administration

200 Constitution Avenue, N.W. Office of Enforcement Room S-1407 200 Constitution Avenue, N.W.

Washington, D.C. 20210 Washington, DC 20210

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

This justification authorizes and approves the issuance of a purchase order to Kirkland Messina Inc. (UEI:

MQ6UJKW88CZ3) 11150 Santa Monica Blvd., STE 700, Los Angeles, CA, 90025 for one 12-month base period and two 12 month option periods.

The U.S. Department of Labor, Employee Benefits Security Administration (“EBSA”), Office of

Enforcement, is requesting a sole source procurement to acquire expert witness support services to aid in its investigation and anticipated litigation involving the Western Global Airlines, Inc. (“WGA”) Employee

Stock Ownership Plan (“ESOP”) and whether it purchased employer stock at a price exceeding fair market value, in violation of the Employee Retirement Income Security Act of 1974 (“ERISA”).

EBSA may ask the expert to complete up to three separate tasks. In Task 1, EBSA will ask the expert to analyze and give, based on his independent professional judgment, an opinion of whether the ESOP paid more than fair market value for WGA Class B stock and whether WGA could have reasonably expected to service all existing and incurred obligations in connection with the Transaction. The expert’s opinion will include an assessment of valuation and fairness opinion, assessment of the reasonableness of the value range proffered by given the terms of the Transaction, assessment of the Transaction price and the value of the company at that time, and an estimate of losses or damages (if any). The expert shall provide a written analysis of his opinions.

Should it become necessary, EBSA will ask the expert to complete Task 2 after consulting with PBSD and complete a written report in compliance with Federal Rule of Civil Procedure 26(a)(2)(B), and any applicable local court rules, that sets forth the expert’s opinions, factual assumptions, conclusions, and reasons for those opinions (Report). As part of completing that Report, the expert shall prepare, using his independent judgment, a draft report (with supporting exhibits) for PBSD to review, and the expert may revise its draft Report before issuing a final Report. The expert shall review the reports or conclusions issued by expert witnesses for defendants. The expert also shall confer with PBSD about issues for a possible rebuttal report and, if needed, shall issue a rebuttal report based on the expert’s independent judgment.

If necessary, the Department will ask the expert to complete Task 3, in which the expert shall prepare for and give trial testimony regarding his opinions and analyses stated in his Report and any related reports or opinions. The expert’s trial testimony will include necessary attendance at trial and related travel. The expert shall consult with PBSD on preparation for an examination at trial of opposing expert witnesses and fact witnesses for the defendants.

3. Description of supplies/services required to meet the agency’s needs (including the estimated value):

a. Description:

The Expert shall provide expert support services to assist the Department with its investigation of the WGA ESOP. The Expert shall (1) reach an opinion based on the expert’s independent judgment regarding the value of the company at the time of the transaction, (2) determine losses, if any, (3) assess settlement offers,

(4) prepare a written report in compliance with Federal Rule of Civil Procedure 26(a)(2)(B), and (5) review the opposing fiduciary expert, prepare and produce a rebuttal report, prepare for and provide expert deposition testimony, attend and assist at depositions of the opposing fiduciary expert, and prepare for and testify at trial.

b. Estimated Value:

The proposed dollar amount for this request is estimated to be This includes travel costs.

Base Period: Direct Labor Costs:

Option Period I: Direct Labor Costs:

Option Period II: Direct Labor Costs:

Other Direct Costs:

4. An identification of the statutory authority permitting other than full and open competition:

This justification is being conducted under the Federal Acquisition Regulation (FAR) Part 6, subpart

6.302-3(a)(2)(iii)—To acquire the services of an expert or neutral person for any current or anticipated litigation or dispute.

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

This procurement requires expert support services to determine the fair market value of a minority interest in a cargo airline company. Given the time-sensitive nature of the case, the expert support services must be able to work quickly and efficiently and have sufficient resources to assist in producing analyses and reports that are clear, understandable, and timely delivered to the Department. Kirkland

Messina, Inc was selected because of extensive experience as an investor in cargo airline companies and related assets, experience in operating businesses similar to WGA, and willingness to perform work on this matter at reasonable rates, and within a short time frame.

6. A description of efforts to obtain competition to ensure that offers are solicited from as many potential sources as practicable, including whether a notice was or will be publicized as required by subpart 5.2 and if not, which exception under 5.202 applies:

Per FAR 5.202(a)(10), proposed contract actions made under FAR 6.302-3 are exempt from the solicitation requirements of FAR 5.201. Therefore, a notice will not be publicized.

7. A determination by the contracting officer that the anticipated cost to the government will be fair and reasonable:

It is determined that the anticipated cost for this requirement, with hourly rates ranging from for

Partner; for Associates, for Analyst for the services being provided, are fair and reasonable. This is based on market research and in review and comparison of a similar expert contract with an hourly rate of $

8. A description of market research conducted (part 10) and the results or a statement of the reason market research was not conducted:

The results of market research have determined that the Government's needs can be met by Kirkland

Messina, Inc. Kirkland Messina, Inc. provides financial services and advice in connection with leveraged recapitalizations and restructurings, including ESOP transactions. founder and president, has personally advised on numerous ESOP transactions and valuations of aviation-related entities. He was selected for this assignment based on his ERISA experience, demonstrated ability to serve as a testifying witness, and his knowledge of the aviation industry.

Vendors 1 – 7 listed below were interviewed around August 2023 under a different contract for the same case, which was subsequently cancelled. Vendors 1 – 7 declined further consideration or were unable to provide services needed.

# Vendor Name Position

01 Airline Strategy Group CEO

02 Ascend

Head of Valuations

03 Huron Consulting Valuation Managing Director

04 MBA Aviation Senior Vice President, Forecasting & Modeling

05 World Bank Air Transport Independent Expert

06 Kroll Managing Director, Expert

Services

07 Deloitte Transactions &

Business Analytics LLP

Vendors 8 – 11 were interviewed in February 2024 as part of a replacement contract after the previous expert (Deloitte) withdrew due to a professional conflict.

# Vendor Name Position

08 BDO Managing Director, Valuation &

Capital Market Analysis

09 KPMG Senior Manager, Economic and Valuation Services

10 Casco Bay Partners LLC J

Principal

11 Carlisle Creek Capital, LLC

Principal