Redacted_J A_Aug_27.2015.pdf

JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND OPEN

COMPETITION (J&A)

TO: Deborah Broderick, Agency Competition Advocate (ACA) and Approving Officer

FROM: Ira Frydman, Office of Economic Growth (OEG), USAID/KEA

THROUGH: Andrew Read, Acting Director Office of Economic Growth (OEG), USAID/KEA

DATE: July 13, 2015

SUBJECT: Justification and Approval for other than Full and Open Competition (J&A) under AIDAR 706.302-70(b)(5) for Kenya Feed The Future Innovation Engine (KFIE) Activity, Contract No. AID-623-C-12-00001

1. This document sets forth the facts and rationale justifying the use of other than full and open competition, in accordance with AIDAR 706.302-70. The request meets the requirement that “An award for the continued provision of highly specialized services when award to another resource would result in substantial additional costs to the government or would result in unacceptable delays.” This document was prepared by USAID/KEA Office of Economic Growth (OEG) for the KFIE activity.

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

This is a request to approve a contract modification to expand the scope and increase the total estimated cost (TEC) of Contract AID-623-C-12-00001 – Kenya Feed the Future Innovation Engine (KFIE), implemented by Land O’ Lakes (LOL). The proposed modification will (1) increase the total estimated cost by $4,581,856, from the current $13,236,483 to $17,818,339, and

(2) expand activities under the contract. The period of performance and completion date remains the same. The rationale for reopening negotiations to increase the TEC, as indicated in the attached Independent Government Cost Estimate (IGCE), is to:

a. Allow LOL to take over the management of 3 newly identified stage II sub-grants at $1,409,356, each and 3 stage 1sub-grant transitioning to stage II at amounts not exceeding $500,000 per grant.

b. Allow LOL to take over the management of one potential stage II sub-grant transitioning to stage III at an amount not exceeding $750,000.

c. Incorporate additional support activities and associated costs, as proposed by LOL, necessary to implement this additional responsibility and/or other arrangements needed to ensure the integrity of the core business model.

Under this action Land O’Lakes will assume the procurement and grant management responsibility of all new stage II and/or stage III innovations as well as those entities progressing from existing stage I and stage II sub-grants. This additional responsibility of managing stage II sub-grants and stage III sub-grant is estimated by OEG to require $3,659,356, both for seed capital and short term technical assistance. In addition, LOL would require an estimated $922,500 to cover additional support activities and associated costs.

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

Similar to a venture capital fund, KFIE uses competitive and open processes to identify agriculture and nutrition innovations with the greatest potential for large and sustainable impacts.

KFIE provides targeted financial and technical assistance at different stages of the entrepreneurial life cycle with the objective of enabling the adoption of these innovative approaches by target populations throughout Kenya. A key objective of the Innovation Engine is to help innovations become fully sustainable in the market place.

KFIE has so far identified and facilitated ‘grant’ awards to 14 innovations: 13 at stage I (below a $100K seed capital threshold) awarded and managed by LOL and 1 stage II grant (below a $500K seed capital threshold) as a USAID direct award. This progress was achieved through a series of open and competitive calls, resulting in a total of over 500 applications relating to innovations in agriculture and nutrition from both within and outside Kenya. A total of 43 applications were shortlisted and the respective innovations champions delivered in-person pitches to KFIE’s Investment Advisory Committee (IAC) throughout the period. As a result the IAC and USAID approved funding for 14 innovations.

KFIE has finalized the fourth and last wave of innovation solicitation under the program. In this round, the innovation engine received 133 initial proposal submissions of which 23 were short listed – 11 at the proof of concept stage (stage I), 10 at the pilot/rollout stage (stage II) and 2 at the transition to scale stage (stage III).

Management burden of direct awards

Under the existing SOW, stage II and stage III innovations are to be procured and managed directly by USAID, with LOL providing short-term technical assistance only. At present, one stage II innovation is managed directly by USAID via a direct award mechanism while LOL manages 13 Stage I grants under contract. As a result of the recent wave IV solicitation process, 3 new stage II innovations were identified for USAD funding. In addition, at least 3 stage I innovations are expected to progress to stage II level, thereby increasing the total number of stage II grants to 6 over the life of the program. In addition, at least 1 stage II grant is expected to progress to stage III during the KFIE implementation period.

However, the additional management burden that would result from future USAID direct awards has become a critical challenge for the Office of Economic Growth (OEG). Hence, OEG proposes that for the remainder of KFIE’s period of performance, LOL assumes the procurement and grant management responsibility of all new stage II and stage III innovations as well as those progressing from existing stage I and stage II sub-grants. This additional responsibility of managing 3 stage II grants and 1 stage III grant is estimated by OEG to require up to $3,659,356, both for seed capital and short term technical assistance. In addition, LOL would require an estimated $922,500 to cover additional support activities and associated costs.

This increase in scope will permit USAID to retain the right to engage in the innovation identification process and reviewing and approving the implementation of the short-term technical assistance. Moreover, the proposal has to be carefully considered to avoid any potential conflict of interest emanating from the dual responsibility assumed by LOL with regards to the stage progression determination role and the broader grants management responsibility.

Financial resources required for new Stage I grants USAID and LOL assess that KFIE’s current budget would only permit funding of 3 additional stage I awards, if the average grant size to date of $70,000 holds constant. Given the recent IAC recommendation to fund 3 stage one applications, LOL will use funds under their current approved budget to support the 3 new stage I innovations. Under the current wave IV solicitation process, three new stage I innovations were identified for USAID funding. Hence, LOL will provide the necessary short-term technical assistance to only the new identified stage I innovations.

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

This request is made given that the current contractor is in the best position to implement the additional activities without adverse effect, unacceptable delays or substantial additional costs to the government. AIDAR 706.302-70(b)(2) permits other than full and open competition when such competition “would impair or otherwise have an adverse effect on programs conducted for the purpose of foreign aid, relief and rehabilitation.” Further, AIDAR 706.302-70(B)(5) authorizes “An award for the continued provision of highly specialized services when award to another resource would result in substantial additional costs to the government or would result in unacceptable delays. LOL is uniquely situated and qualified to perform these activities in the most cost effective and timely manner; as evidenced by its unique relationships with innovators Real IPM and Wanda Organic which have been actively taking research to the marketplace. Similarly, on the technology aspect, ALIN and AMTECH are employing scientific knowledge to attack practical problems, including the development of tools, processes, and techniques. KFIE is the flagship of the Mission under the current CDCS and is well into the extremely successful implementation of various innovations under this award. Award to another entity would result in interruption of the ongoing innovation; causing delays in implementation and additional cost to the US Government (USG).

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

Per the requirement of AIDAR 706.302.70(B)(5), LOL is the only Contractor with the specialized skills to undertake the expansion of activities without substantial additional cost and unacceptable delays. KFIE is an innovation platform with unique capability to maximize the impact of high profile USG initiatives, such as Feed the Future. Unparalleled to any other mechanisms, KFIE identifies and fosters highly-innovative and game-changing business ideas through a combination of seed capital and tailor-made short-term technical assistance. This creative blend of financial and technical assistance enhances the prospect of innovative ideas to be commercially viable.

Despite being a fairly new mechanism, KFIE has attracted large volume of applications in the last four rounds of calls for innovation carried out since its launch three years ago, thus confirming the hypothesis that it can serve as a critical mechanism to maximize the development impact of USG intervention not only in agriculture but in other interrelated sectors, such as energy, that are key drivers of economic growth.

Over the last three years LOL built extensive networks partnering with public institutions and private enterprises that are critical for effective implementation of the Kenya Feed the Future Innovation Program. LOL’s diverse portfolio and engagement with interrelated sectors such as agriculture and energy has made the development of the radar screen - an innovation prospects that cut across various themes and updated periodically enabling LOL to engage with various innovation stakeholders steadily – a successful venture within a reasonable period of time. It would take a significant amount of time and resources for any other organization to develop anything similar. Moreover, over the last two years, LOL achieved high-level of efficiency in sourcing and vetting viable innovations, making USG investment in any new organization for a similar service imprudent both from time and cost perspectives.

Apart from identifying viable innovations, LOL has proven its grant management capability of 13 stage I grants under contract over the last 16 months by providing a wide range of tailor made short term technical assistance. Preliminary findings of the ongoing stage progression assessment indicate that 3 out of 6 initial cohorts are likely candidates for meeting the stage progression criteria. In addition to the commercial viability and feasibility of the innovations at a proof of concept (stage I) level, other key metrics that constitute the stage progression criteria include organizational and financial management and communication strategy. The fact that preliminary findings indicate that 3 of the 6 stage I innovations are likely to meet the stage progression criteria supports this conclusion, further reinforcing OEG’s confidence in LOL’s ability to undertake the proposed grant management responsibility of Stage II and Stage III grants.

Moreover, LOL has long established partnership with USAID/Kenya having implemented various successful agricultural development interventions, including the Kenya Dairy Sector Competiveness program which came to end in April, 2013. Over this period, LOL has demonstrated strong technical leadership making tangible contributions leading to the formation of more organized and service-oriented dairy industry. An example of such contribution was the establishment of an innovative e-diary portal, which is now serving as a one-stop shop for all stakeholders by enabling easy access to key service delivery information pertaining to the dairy sub-sector in Kenya. This portal is currently being scaled-up to cover the entire East Africa region.

The above mentioned highly specialized works and experiences makes LOL particularly suitable to undertake the task of identifying and scaling innovations that have the potential to transform the agriculture sector in Kenya. It has taken LOL considerable time and creativity to develop a viable radar screen of innovation prospects that can be put to use almost immediately, thereby preventing unnecessary delays and duplication of cost if the award was to be competed.

Therefore, USAID/Kenya believes that procuring the services through another contract would impose substantial additional costs, as described above, and cause an excessive loss of time because there is a contract in place with USAID whose scope allows for the additional required services. Further, a direct award to a local Contractor was not considered as they are not privy to the implementation of the project, which itself is a vehicle for the capacity development of local organizations and businesses. USAID/KEA’s understanding of the current market indicates that no local organization has the capacity to carry out the services in the same manner, quality or to the same extent envisioned in the original KFIE award or the planned expansion.

6. Description of the efforts made 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 Federal Acquisition Regulation (FAR) 5.202 [AIDAR 705.002].

The contract with Land O’Lakes for the KFIE program was competitively sourced as required by FAR 5.202 [AIDAIR 705.002]. Further, per FAR 5.201 and AIDAR 706.302-70(c)(1) a pre-solicitation notice was published on FedBizOpps. Any expressions of interest received will be considered.

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

The Contracting Officer has determined that awarding this TEC increase to Land O’Lakes will be at a substantially reduced cost and duration in comparison to holding a new full and open competition. As the current Contractor for the KFIE program, LOL has established processes, systems and mechanisms to effectively implement the innovations within the proposed two years.

A new contractor would require additional time and money to establish itself in the market and put operational systems and processes in place thereby causing significant unnecessary delay and additional cost and management burden on the Mission. Based on these comparisons the CO has determined that the anticipated costs of engaging the same Contractor to accomplish the expanded activities to KFIE is fair and reasonable. By signing below the CO determines that the anticipated costs will be fair and reasonable, and in the best interest of the USG. Prior to signing the award modification, detailed proposed costs for the expansion will be reviewed by the CO.

8. Description of the market research conducted, and the results or a statement of the reasons market research was not conducted:

Market research was conducted for this activity. The results of that research revealed that LOL has a unique ability to provide the services currently required. The KFIE Project was awarded through a full and open competition. Since contract award, LOL has proven an efficient implementer with unique capability that has developed through KFIE and other engagements with USAID/W. Other service providers that have been engaged in similar initiatives including the Development Innovation Ventures and Partnering for Innovation do not have exclusive focus on Kenya, but more importantly, they lack the expansive network that LOL has established through the development of KFIE radar screen of innovation prospects and critical actors across the agriculture sector value chain in Kenya. As such, LOL is engaged in highly specialized work that would take substantial resources and time to find and or develop in the marketplace.

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

USAID/Kenya and East Africa believes that procuring the services through another contract would impose unnecessary costs as described above and cause excessive loss of time. The KFIE contract presents an existing mechanism with an efficient and uniquely situated partner; uniquely capable to immediately provide the additional required services. Reasons cited above document why no other source could practicably compete for the interim requirement.

10. Sources, if any that expressed an interest, in writing, in the acquisition:

A synopsis pertaining to the proposed additional activities was be publicized in fbo.gov. Any responses received will be considered.

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:

If any subsequent requirements beyond the scope and the duration of this award are needed, the action will be competed in a full and open competition.

12. Technical or requirement personnel certification:

In accordance with FAR 6.303.2(b), I hereby certify that the technical statements included above and which form a basis for the justification are complement and accurate.

Ira Frydman Technical Office Representative/COR Date

Contracting Officer Certification:

I hereby certify that the justification is accurate and complete to the best of my knowledge and belief.

Caroline Bertolin Contracting Officer Date

Approved / Disapproved

Tina Dooley-Jones Date

Deputy Mission Director

Justification and Approval for Limiting Sources for a cost extension Contract No. AID-623-C-12- 00001 for Kenya Feed the Future Innovation Engine Implemented by Land O’Lakes (LOL).

Approved / Disapproved

_____________________________________ Date_________________________ Deborah Broderick Agency Competition Advocate and Approving Officer