Azerbaijan Private Section Activity Time and Cost JA Public Posting.pdf

JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND OPEN

COMPETITION (J&A)

TO: Jennifer Norling, Acting Agency Competition Advocate

FROM: Angelina Allen-Mpyisi, Director, Office of Governance and Economic Resilience

SUBJECT: Justification and Approval for Other than Full and Open Competition (J&A) for USAID/Azerbaijan’s Private Sector Activity 72011219C00001.

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:

This document was prepared by USAID/Azerbaijan’s Office of Governance and Economic Resilience (OGER) to modify the Private Sector Activity (PSA) with Cultivating New Frontiers in Agriculture (CNFA).

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

This is a request to approve a non-competitive modification of USAID/Azerbaijan’s PSA contract number 72011219C00001, adding federal supplemental funding in response to the global emergency caused by the war in Ukraine, to:

● Extend the period of performance by 12 months from September 18, 2024, to September 18, 2025, for activities as described in item 3 below.

● Increase the total estimated cost by up to $3.5 million from $15 million to $18.5 million.

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

PSA is a five year, $15 million contract awarded through full and open competition on September 18, 2019. This extension to the period of performance will enable the contractor to continue delivering specialized and essential services substantially similar to those being performed under the award’s statement of objectives (SOO). This extension will emphasize existing activities to develop a more diversified non-oil economy through initiatives that assist small and medium sized agribusinesses and farmers to grow with a specific focus on supporting Azerbaijan’s food security, diversifying the country’s agricultural exports, and supporting the development of the Trans Caspian trade and transit corridor. Specifically, details of the proposed changes are as follows:

Objective 1: Develop a more diversified non-oil economy through initiatives that assist small and medium sized agribusinesses and farmers to grow.

USAID’s objective under PSA is to support the increased diversification of the non-oil economy in Azerbaijan, specifically but not limited to the agricultural sector. The Activity is intended to assist small and medium-sized farmers in becoming commercially viable competitors in local or export markets. It also works with processors, traders, and cold storage operators to improve their adherence to international standards. The activity includes small capacity building grants in support of developing the agricultural sector and value chains in which the activity works.

The following continued and additional work is expected to be implemented during the remainder of implementation, including the proposed time and cost extension:

● In the existing award, PSA works with processors, traders, and cold storage operators to improve their adherence to international standards. PSA will prioritize this work and work to strengthen the competitiveness of Azerbaijani exporters throughout the remainder of the award.

● PSA has organized two trade missions for Azerbaijani exporters so far under the award. With extension funds, the Activity will organize additional trade missions, business-to-business meetings, participation in trade shows, and exhibitions in new markets in the Gulf Countries, Europe, and Asia on a yearly basis.

● PSA has organized one agricultural forum in the United States under the existing activity.

With the extension funds, PSA will aim to organize two agricultural forums each year in targeted states in the U.S. to improve business and academic linkages, promote bilateral U.S.

exports to Azerbaijan to meet growing demand for quality and modern agricultural machinery and inputs.

● PSA has conducted value chain assessments and supported fruit, vegetable, nut, and berry value chains. Similar to this work, the activity will conduct assessments of challenges and weaknesses in Azerbaijan’s wheat value chain and work with wheat producers, processors, and traders to improve the quality and quantity of wheat produced and processed in Azerbaijan.

● Under the existing award, PSA implements activities with the goal of increasing US exports to Azerbaijan. Under the extension, PSA will further focus on building Azerbaijan’s business linkages with U.S. wheat producers and exporters to develop sustainable partnership for potential U.S. exports of wheat, wheat seeds, and related science and technology to Azerbaijan.

● The Activity has an existing partnership between Oklahoma State University and Azerbaijan’s State Agrarian University and has developed a joint degree program. The extension will seek to further increase Azerbaijan’s academic linkages with relevant U.S.

universities, focusing on improving local research and scientific capacity to develop and select more productive wheat varieties.

● The Contractor currently executes Grants under Contracts under this activity, with an existing grants pool of $2,000,000 for supporting investments by producers, processors, and exporters in selected horticultural value chains to increase productivity and competitiveness of products and supporting women entrepreneurship. The extension increases this pool by $1,000,000 for grants to strengthen Azerbaijani exporters capacity and complement the technical assistance that will be provided.

Objective 2 – Improve the business environment for micro, small, and medium sized businesses.

PSA currently works with the SME development agency, the State Customs Committee, the State Tax Service, the Ministry of Agriculture, and several other Government of Azerbaijan Agencies to eliminate barriers to doing business, investment, and trade in Azerbaijan. With the extension funds, the Activity will continue this focus on implementing activities that will eliminate barriers, improve the environment, and increase the competitiveness of Azerbaijan as a transit corridor and trade hub.

In addition to the above expansions to existing activities, the proposed extension will include facilitation for improvements along the Trans-Caspian trade route to help Azerbaijan become a more attractive country for transit, as well as for investment by global traders, producers, assemblers, and logistics companies. This will include work with relevant local and international private, public, and non-governmental stakeholders to improve the competitiveness and attractiveness of this route through technical assistance to ports and border authorities to identify bottlenecks, eliminate administrative barriers, and introduce international best practices.

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

Pursuant to AIDAR 706.302-70(b)(5), full and open competition need not be obtained for “an award for the continued provision of highly specialized services when an 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:

PSA is USAID/Azerbaijan’s flagship economic growth effort. The goal of PSA is to utilize a partnership and co-investment approach to support a more resilient Azerbaijani economy and improve its business enabling environment. Supporting the non-oil sector; by improving the competitiveness of the private sector (with a special emphasis on agriculture) and reducing the administrative barriers that hinder the development of micro, small, and medium enterprises (MSMEs), will contribute to a more secure and sustainable Azerbaijani economy in Azerbaijan.

CNFA is a competent and valued USAID partner with nearly a decade of experience implementing agricultural programs in Azerbaijan. CNFA has a highly qualified team with the requisite technical knowledge in niche agricultural fields. As a result, CNFA has consistently demonstrated its ability to provide quality technical assistance to the Azerbaijani government and other beneficiaries; this is evidenced by the numerous requests for assistance PSA receives from government entities, such as expanding its horticultural focus areas, increasing the technical capacity of Azerbaijani farmers, and modernizing the pedagogy and technical knowledge of Azerbaijan’s leading agrarian university. Through its long tenure in Azerbaijan, CNFA has cultivated relationships with Azeribajani government entities that have been leveraged into current partnerships designed to advance the non-oil sector, particularly in agriculture and its ancillary sectors, through new market linkages, innovation, and modern production practices.

Azerbaijan is governed as an authoritarian regime, with a strict top-down approach, therefore working with the government requires approvals from the Presidential Administration, the highest level of government. Given the stringent political environment of Azerbaijan, it has taken numerous years of investment and diplomacy to reach the current state of trust and confidence between the contractor, the Azerbaijani government, beneficiaries, and USAID/Azerbaijan.

Through these existing partnerships it will be possible to expand interventions and the scope of the contract.

This level of partnership does not develop overnight. CNFA’s ability to operate as a trusted partner in Azerbaijan has taken years of careful planning, maneuvering, and collaboration. The operating environment in Azerbaijan is very sensitive and implementing partners are subject to high levels of skepticism and scrutiny by the Government of Azerbaijan. Indeed, CNFA’s registration progress (discussed further below) and establishment of an office in the country is quite an achievement, one which other awardees have failed to complete.

A new contractor (local or international) would not be able to replicate these partnerships within the required time frame and would significantly delay progress on achieving the Missions stated objectives and anticipated results. A full and open competition would not allow the Mission to meet the intended purpose of the Ukraine Supplemental funds, which is to immediately mitigate the fallout from Russia’s war in Ukraine, which has severely disrupted global food security, including the agricultural sector in Azerbaijan. The time and effort required to complete a competitive procurement, compounded by the time necessary for a potential new program to register, establish an office, and build the highly specialized relationships and trust with the Government of Azerbaijan and other stakeholders that CNFA already possesses would pose a significant loss of inertia and opportunity in the country and impair the fulfillment of foreign policy objectives and be inconsistent with the fulfillment of the foreign assistance program.

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].

In accordance with FAR 5.2, a Notice of Intent was posted on www.sam.gov, outlining the proposed extension and activities included in it. This Notice was posted on August 18, 2022, and provided interested parties with fifteen (15) calendar days to submit expressions of interest. No comments or expressions of interest were received in response to the Notice.

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

An independent government cost estimate (IGCE) has been completed using existing and historical costs under the existing project to estimate the cost to the government for this proposed modification. The Contracting Officer will use this and the existing activity’s historical expenditure information to make a determination about proposed costs. A cost analysis will also be conducted on proposed costs for the extension period.

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

The Mission considered the potential for other vendors to be able to perform the required work in light of the need for a rapid response to the impacts of Russia’s invasion of Ukraine in Azerbaijan, and found CNFA to be the only vendor capable of meeting the time constraints and other considerations, including building of partnerships and trust in the country, for implementation of this emergency funding. This conclusion is further confirmed by the lack of timely expressions of interest received in response to USAID’s Notice of Intent.

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

As mentioned in Item 5, given the political environment in Azerbaijan, all non-governmental organizations conducting business in Azerbaijan must be registered with the government as well as the specific projects that are implemented. Therefore CNFA as an entity must be registered and PSA, as an individual project, must also be registered, despite the fact that their programs are funded by USAID/Azerbaijan. Under the current USG-Azerbaijan bilateral agreement, programs funded by USAID should not require registration, however the government still demands registration.

CNFA is the only international contractor that has successfully begun implementation under an acquisition mechanism for USAID. Their registration remains in a pending status and even this progress has been hard won and required several years to acquire through constant diplomatic engagement. Through the trust built, partnerships established, and successes achieved to-date, CNFA has been able to implement activities and expand their footprint in the country in spite of this. Without registration, the threat of the government shutting down the program looms.

Conducting a full and open competition would severely hamper efforts to meet the objectives of the Ukraine Supplemental in responding to the fallout from Russia’s war in Ukraine in the remaining period of performance. A new contractor would be required to obtain registration, which can and does take months, if not years to acquire due to the very top-down nature of governance in Azerbaijan.

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

A Notice of Intent was posted on www.sam.gov on August 18, 2022, inviting expressions of interest in this proposed modification within 15 days of publication. No responses were received before the closing date of September 2, 2022.

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:

The Mission will consider full and open competition for any future requirements similar to the activities under this award. The time remaining before the end of the period of performance for this award provides ample opportunity to design and competitively procure a future program.

12. Technical or Requirements Personnel Certification:

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