Approved MFA J and A.pdf

JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND OPEN

COMPETITION (J&A)

TO: Deborah Broderick, Agency Competition Advocate

FROM: Nuku Kumaga, Development Assistance Specialist, Economic Growth Office, USAID/Ghana - Contracting Officer’s Representative

SUBJECT: Justification and Approval for Other Than Full and Open Competition (J&A) for The USAID supported, Feed the Future Mobilizing Finance for Agriculture (MFA) Activity.

1. This document sets forth the facts and rationale justifying the use of other than full and open competition, in accordance with AIDAR 706.3

“(5) An award for the continued provision of highly specialized services when awarded to another resource would result in substantial additional costs to the Government or would result in unacceptable delays”.

This document was prepared by the USAID/Ghana Economic Growth office for the Mobilizing Finance in Agriculture (MFA), contract number 72064120C00003 which is being implemented by Palladium International LLC.

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

This is a request to approve use of AIDAR 706.302-70(b)(5) and not obtain full and open competition to increase the total estimated costs (TEC) of contract number 72064120C00003.

This award was competitively awarded in October 2020 with a four-year period of performance and a TEC of $18,998,292.20. There have been no non-competitive extensions nor ceiling increases since the award was made.

This proposed TEC increase will mitigate the effects resulting from the current macroeconomic crisis in Ghana, as elaborated in Section 5, below and preserve the gains made through the activity. Specifically, the proposed contract modification will do the following:

1. Extend the period of performance and completion date by 1 year from October 26th, 2024 to October 26th, 2025;

2. Increase the total estimated cost of the award by $6,000,000 from $18,998,292.20 to $24,998,292.20; and

3. Expand and develop innovative ways of increasing access to fertilizer for smallholder farmers during the crisis period.

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

Access to finance is a major hindrance to the growth of micro, small, and medium agricultural enterprises (MSME) in Ghana. To address this constraint, USAID/Ghana initiated the Feed the Future Ghana Mobilizing Finance in Agriculture (MFA) Activity. MFA is a $18.99 million, four-year contract (two-year base period, with two one-year option periods) that aims to increase the availability of commercial financing for selected agricultural value chains to facilitate capital investment and promote trade. MFA has achieved tremendous success and the Ghana Mission is extremely satisfied with the results so far, which include enabling $190M in lending to feed value chains for over 25,000 Agribusiness. The sustainability of these results is in danger due to shifting financial needs and priorities because of the current macroeconomic crisis in Ghana. To counteract the current economic situation, under the proposed modification, the MFA Contractor will do the following.

1. Support Market Normalization: The contract modification will focus on expanding partnerships with qualified financial intermediaries (FI’s) mainly through relief grants to provide services to base of the pyramid actors to mitigate the lingering economic impacts of the COVID-19 pandemic and the current market disruptions caused by inflation and currency depreciation. MFA will support production and processing in the maize, soybean, cowpea, groundnut, shea, mango, and pineapple value chains to ensure local food security and increase the country’s foreign exchange through export. This will ameliorate the immediate and near-term impacts of the debt crisis while addressing the long-term need to spur private sector investment to drive economic growth and employment in northern Ghana.

2. Intensify Mobilization of New Sources of Capital: expand existing support to help a larger pool of agribusinesses obtain financing through the delivery of business advisory services (BAS), using performance-based incentives to facilitate financing for agribusinesses.

3. Expand the Supply of Agricultural Finance: provide additional technical assistance (TA) and smart incentives to current and new FI’s within the current implementation zone to expand agricultural financing despite the increased risks and costs associated with the current macroeconomic conditions.

4. Expand Strategic Partnerships to Expand Access to Finance to the Smallest Actors: expand structured partnerships between FI’s corporations, anchor firms and other actors to create new business models that increase smallholder and microenterprise access to affordable finance.

5. Support Access to Fertilizer: Ghana is reliant on imported fertilizers, the price of which has increased by more than 200% since 2020. MFA will increase smallholder farmer access to fertilizer by expanding overall input credit, introducing tailored input-financing schemes, and linking financial institutions to agribusinesses and smallholder farming groups seeking capital.

MFA will continue to support input dealers like WARC Africa who are able to get inputs like fertilizer to farmers at lower prices due to their superior relations with input producers.

The proposed modification of $6 million to the MFA contract will support sustained livelihoods and food security by ensuring agricultural production is sustained in an exceedingly difficult financial time, by continuing to support financial institutions who are braced to face difficult times themselves due to a proposed Debt Exchange program under which the Government of Ghana will delay payment of interest on government bonds. The increase will also ensure availability of strategic grants to pivotal aggregators in the northern region envisaged to have a positive impact on more than 100,000 small scale farmers. Given the current macroeconomic crisis in Ghana and the progress that has been made with access to finance it is imperative that additional time is provided to help all stakeholders navigate the uncertain future and ensure the gains already made are not eroded.

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

Agency for International Development Acquisition Regulation (AIDAR) exception at AIDAR 706.302-70(b)(5); “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.”

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

Ghana is in the midst of its worst macroeconomic crisis in 20 years: the World Bank projects debt to GDP to increase to more than 100% in 2023. The country’s credit rating has plummeted and is no longer investment grade. As a result, the Ghanaian cedi depreciated 40% against the dollar during the 2022 calendar year, making it the second worst performing currency in the world.

Under these conditions, finance to sustain the operations of firms which reinforce USAID/Ghana Feed the Future activities is critical, but heightened credit-risk makes financial institutions (FIs) hesitant to lend. Increased and continuous support to FIs is needed to maintain the gains attained through the interventions made by Palladium/MFA and other USAID/Ghana activities to date. It is on this premise that we seek a modification to the contract to enable Palladium to intensify support during this macroeconomic crisis.

Palladium is in a unique position to provide the assistance required as they are the only implementing partner on the market that can respond within the timeframe needed. Palladium has existing modalities of engagement with approximately 20 financial institutions and intermediaries which can be used to carry out expanded activities in a matter of weeks. Full and open competition will unduly delay critical interventions required in the Mission’s geographic zone of influence impacting not just MFA beneficiaries but other beneficiaries across the entire Feed the Future zone of influence. A delay would put all other USAID/Ghana agricultural investments at risk since, without finance, farmers and agribusinesses will need to scale back or discontinue agricultural operations.

The technical assistance provided by Palladium is specialized work that requires relationship-building, buy-in, and trust from multiple stakeholders. Palladium has the working relationships and existing agreements with the requisite stakeholders– financial intermediaries, agribusinesses, relevant government counterparts– to expand their work. It took Palladium two years to get to this position, and it is not reasonable to expect another firm to reach this point fast enough to be relevant in the rapidly deteriorating economic conditions. This is especially true when one considers the seasonality of agricultural work and the single planting season in northern Ghana. Without financing in advance of the 2023 planting season, a whole year’s harvest would be lost. USAID therefore needs to capitalize on the momentum established by Palladium to ensure continued work without gaps.

The Contractor’s performance has been impressive and has served as a benchmark for other Feed the Future(FTF) activities in Ghana. The Contractor has consistently implemented their annual work plans on-schedule and within budget while achieving or exceeding the majority of their annual targets, despite local and global contextual difficulties.

Based on factors discussed above, an exception to full and open competition under AIDAR 706.302-70(b)(5) is justified.

6. Description of the efforts made to ensure that offers are solicited from as many potential sources as practicable, including whether a notice was publicized as required by

FAR 5.2 [AIDAR 705.2].

A notice of intent for other than full and open competition of this contract modification action was posted on sam.gov on December 22, 2022, through January 7, 2023 in accordance with AIDAR 706.302-70(c) seeking any expressions of interest from potential offerors. No offerors came forward nor were any comments received as a result of this notice by the deadline.

The CO will make the J&A document available publicly within 14 days after award on the sam.gov website.

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

The estimated $6 million for the TEC increase is fair and reasonable and is based on the expected level of effort for technical assistance and expected staffing patterns and associated costs with ramping up interventions. USAID/Ghana has historical costs from prior invoices under this contract during implementation of livelihood support and electronic monitoring.

USAID/Ghana will conduct a detailed cost analysis of Palladium’s offer during negotiations of this modification to award at a fair and reasonable price.

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

The MFA contract was awarded to Palladium through full and open competition in 2020. The recent competitive process provided sufficient information about the relevant market players to make an award. The proposed modification intends to intensify or scale-up what is already being implemented by the contractor.

Market research indicates that other sources, including both international and local entities, neither have the capability and knowledge to carry out these specialized services nor the capacity to mobilize rapidly ensuring no break in assistance or delay in producing deliverables under the contract given the current economic crisis in Ghana.

A category management search on gsaadvantage.gov did not reveal any products or services that could be used to eliminate redundancies, increase efficiency, and deliver more value and savings from the Government's acquisition programs. Additionally, USAID does not have a buy-in to an established award or a Task Order under an established IDIQ that can carry out these specialized services.

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

The modification is precipitated by the current macroeconomic crises in Ghana. If not adequately addressed, the current situation will lead to increased food insecurity, poverty, and malnutrition in the short to medium term.

By issuing this modification USAID will facilitate steady access to finance which will allow farmers and agribusinesses to maintain operations through this period of crisis, while also providing support to financial institutions to maintain the progress made by the MFA Activity.

In considering how to facilitate that access to finance, USAID/Ghana took into consideration two criteria: 1. Capability, knowledge and past performance to carry out the additional activities required to tackle the impact of the crises; and 2. Capacity to mobilize rapidly and start producing required deliverables in a timely manner to avert food crises in the short to medium term.

Based on those criteria, USAID/Ghana concluded that it was in the best interest of the mission and the public to extend the contract of Palladium under the current MFA activity. Contracting another partner will result in substantial cost to USAID/Ghana and substantial delays.

Without the modification, improvements in livelihoods as a result of the MFA activity may be lost as beneficiaries are not yet at a point to recover from the prevailing unforeseen crisis and may relapse to even worse situations if further additional relief is not provided. Additionally financial institutions will require further capacity building to equip them to navigate the unprecedented fiscal conditions currently unfolding in the sector in Ghana.

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

USAID/Ghana posted a notice of intent for other than full and open competition of this contract modification on sam.gov on December 22, 2022. There were no offers received nor any comments were received by the deadline on January 7, 2023.

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:

USAID/Ghana intends to acquire future procurements through full and open competition and potentially set aside for small businesses.

12. Technical or Requirements Personnel Certification:

In accordance with FAR 6.303, I hereby certify that the technical statements included above and which form a basis for the justification are complete and accurate.

Nuku Kumaga, Date Contracting Officer’s Representative

13. Contracting Officer Certification:

In accordance with FAR 6.303, I hereby certify that the justification is accurate and complete to the best of my knowledge and belief.

Amy Larsen, Date Regional Contracting Officer

14. Approved:

Deborah Broderick Date Agency Competition Advocate

Nuku Kumaga Digitally signed by Nuku Kumaga Date: 2023.02.14 08:53:02 Z

Amy H Larsen Digitally signed by Amy H Larsen Date: 2023.02.14 12:12:08 Z

DEBORAH RYAN

BRODERICK (affiliate)

Digitally signed by DEBORAH RYAN BRODERICK (affiliate) Date: 2023.02.14 11:35:14 -05'00'

Internal Agency Clearances:

As required, see ADS 302.3.4.5 and Exceptions to Competition Guide (https://pages.usaid.gov/M/OAA/exceptions-competition] and Mission Delegation of Authority

Name USAID/Ghana Role Signature Date

Paul Pleva Director, EGO PMP 19-Jan-2023

Greg Butler RLO JGB 2/13/2023