Logical_Follow-On_Justification_Moynihan_final.pdf

DEPARTMENT OF TRANSPORTATION

FEDERAL HIGHWAY ADMINISTRATION

JUSTIFICATION FOR AN EXCEPTION TO FAIR OPPORTUNITY

Contract Number: DTFH61-12-D-00025 Task Order Number: 0212 Modification Number: 0001

1. Identification of the agency and the contracting activity.

Federal Highway Administration Headquarters, Office of Acquisition and Grants Management, 1200 New Jersey Avenue, S.E., E65-101, Washington, DC 20590.

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

This is a justification for an exception to fair opportunity, for a modification to raise the ceiling of the subject task order. The task order is to provide legal advisory services to the Government for the “Moynihan Station Project,” a prospective loan under the Transportation Infrastructure Finance and Innovation Act (TIFIA) for a project that is to create a new inter-city rail hall in New York City.

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

The additional services required consist of legal services, specifically continuation of the “negotiation” tasking described in the task order. The estimated value of the additional services is $401,000. The period of performance for the task order is through August 31, 2017.

4. Identification of the exception to fair opportunity and the supporting rationale.

The exception to fair opportunity is that cited at FAR 16.505(b)(2)(i)(C): “The order must be issued on a sole-source basis in the interest of economy and efficiency because it is a logical follow-on to an order already issued under the contract, provided that all awardees were given a fair opportunity to be considered for the original order.”

Rationale: This modification is a logical follow-on to the base task order, because it is to continue legal services connected to ongoing negotiations between the Government and other parties, in connection with the “Moynihan Station Project” TIFIA loan. The scope of work remains identical to that of the base task order; however, a ceiling increase is necessary because the extent and duration of the negotiations required to complete the work effort are at this point estimated to substantially exceed that initially anticipated under the task order.

Additional unanticipated effort was and will be required due to the following:

• The original Task Order for this matter was signed in January 2017. It provided for a period of performance ending on August 31, 2017. It stated that the borrower for the TIFIA loan anticipated financial closing in the first calendar quarter of 2017 and also anticipated commencement of construction in the first calendar quarter of 2017. However, realistically it currently appears financial closing will occur at the earliest in June and possible early July. This increased period of performance will almost certainly require additional work effort on the part of the contractor, such as through an increased number of “turns” to review certain documentation, an increased number of status calls, and in general a lengthened need to engage in the negotiations task items.

• Based on the borrower’s anticipated dates for financial closing and commencement of construction as described in the original Task Order, the Contractor reasonably assumed that the project documentation was in near final form and was in a financeable form. Thus, the Contractor assumed their review would be limited to one or two drafts of the various documents and the time required for review, and their comments, would be relatively limited. In fact, the project documentation is still undergoing revisions and additions. As a result, the Government and the Contractor have often been reviewing relatively early drafts of the documentation and multiple drafts of most documents.

The Government and the Contractor have had significant comments on the documents. In addition, given the number of parties involved in this matter and the particular complexities of the transaction, the process of resolving differences has been a more complex and time-consuming process than anticipated. For example, instead of the standard one day-long meeting with all parties to negotiate the loan documentation, this transaction necessitated that the initial meeting on the documentation took two full days.

• Certain structural changes have been introduced to the originally anticipated arrangements. These changes have introduced new complexities necessitating consideration by the Contractor. The Contractor has expended significant hours reviewing and analyzing the alternatives proposed, as well as the detailed terms of the newly structured alternative.

• In addition, the sheer volume of the project documentation is significantly in excess of what both the Government and the Contractor anticipated at the time of award of the task order. At this time there are more than 75 project documents, compared to a much lower number originally anticipated (approximately 20 project documents). The substantially higher-than-usual volume of project documents are accompanied by the financing documentation, in particular the TIFIA loan agreement and related documentation, including extensive security documentation, and the customary closing opinions and other documentation. Most of these documents now exist and have been through at least one level of review, but all of which remain to be finalized. The Contractor’s assumptions at the time of their proposal were based on their prior experience, which was reasonable and indeed was one of the strengths of their initial proposal. This included a reasonable estimate for the number of project documents to be reviewed and discussed; however, neither the Government nor the Contractor had anticipated the degree of interim documents, or the extent of the transit and rail -related documents, or the myriad of other project and collateral-related documents.

The ceiling increase is necessary to enable the Contractor to complete the work associated with the labor hour task area, as described above. At this point, it would be extremely disadvantageous to the Government to competitively source a legal advisor to complete the remaining work. It is in the interest of economy and efficiency for the same Contractor to complete the negotiations work under this task order; introducing another Contractor to the effort would have a detrimental effect from an economy and efficiency perspective. The Contractor has an intimate knowledge of the history and scope of the negotiation process and all of the documentation related to this transaction, in particular the unique and complex structure of the collateral source (the private development PILOT revenues) and the high number of documents underpinning that structure, as well as all of the diligence document regarding the borrower and the project. The Contractor’s knowledge of this highly complex and unique structure is the result of a significant amount of review and analysis that would take significant time, at a significant cost, to replicate. Procuring new counsel would cost the Government far more than receiving continuous legal services from the Contractor. New counsel would have to expend significant time and effort becoming sufficiently familiar with this complex structure and the voluminous documentation thereof to ensure that the Government’s security interest in the collateral is adequately protected and that the Government has sufficient rights and remedies in the financing and security documents with respect to the borrower, the collateral, and the project. Any such ramp-up by a new contractor would come at a significant cost to the Government and would jeopardize (and likely impede) the Government’s ability to meet the timeline required by the borrower; any compromise in the time provided to a new contractor to familiarize themselves with this matter and the documentation would present a critical risk to the Government’s ability to sufficiently and adequately protect its interests in this transaction.

All awardees were given a fair opportunity to be considered for the original order.

5. Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The anticipated cost to the Government for this modification, $401,000 is considered fair and reasonable. This modification impacts the labor-hour component of the task order, and the anticipated cost corresponds to an expected increase in labor-hours (in various categories) multiplied by the labor rates in effect under the task order. These labor rates were approved at time of award as fair and reasonable. The proposed/accepted labor rates were achieved in a highly competitive environment—all seven awardees under the set of Indefinite Delivery, Indefinite Quantity (IDIQ) contracts were given a fair opportunity to compete.

6. Any other facts supporting the justification.

There are no other relevant facts supporting the justification, not otherwise included above.

7. A statement of the actions, if any, the agency may take to remove or overcome any barriers that led to the exception to fair opportunity before any subsequent acquisition for the supplies or services is made.

For subsequent acquisitions of legal advisory services under this set of IDIQ contracts, the Agency may consider providing ranges of labor hours as an advisory to the offerors, for the negotiations tasking. Experience has revealed that the nature of the negotiations work is often more protracted than initially expected/proposed by the contractors. Considering special factors (complexity, political sensitivity) that might warrant higher initial estimates/award ceilings would lessen the need for subsequent modifications using this logical follow-on justification. Additionally, in the future, the Government may consider the use of optional line items to allow for pricing of situations that might arise, such as the need for negotiations beyond the initially-anticipated period of performance end date.

8. The Contracting Officer’s certification that the justification is accurate and complete to the best of the contracting officer’s knowledge and belief.

Certification: ____________________________________________________________

Samantha Reizes, Contracting Officer Date

DETERMINATION

Based on the foregoing information, I hereby determine that the circumstances in FAR 16.505(b)(2)(i)(C) applies to the subject modification.

Samantha Reizes Date Contracting Officer Office of Acquisition and Grants Management Federal Highway Administration

APPROVAL

Pursuant to FAR 16.505(b)(2)(ii)(C), the ordering activity contracting officer’s certification that the justification is accurate and complete to the best of the ordering activity contracting officer’s knowledge and belief will serve as approval. No higher approval level is established in accordance with agency procedures. Therefore, see section (8) of this justification, above.

Samantha.Reizes Typewritten Text 5.2.2017