Logical_Follow-On_Just._Merch_Bridge_TO_0001_Mod_0003_finalsigned.pdf

DEPARTMENT OF TRANSPORTATION

FEDERAL HIGHWAY ADMINISTRATION

JUSTIFICATION FOR AN EXCEPTION TO FAIR OPPORTUNITY

Contract Number: DTFH5316D00013 Task Order Number: 0001 Modification Number: 0003

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 “Merchants Bridge Rehabilitation Project,” in connection with a prospective loan under the Railroad Rehabilitation and Improvement Financing (RRIF) Program. The project is to rehabilitate a railroad bridge over the Mississippi River near St.

Louis.

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 $225,000. The period of performance for the task order is to be through December 31, 2018.

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 “Merchants Bridge Rehabilitation Project” RRIF 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:

• Through no fault of the Government or the Contractor, it has taken much longer than anticipated to develop a mutually agreed structure for the RRIF Loan and the related security and collateral package, which has increased the amount of labor hours required of the Contractor due to the continuance of the regular (often twice weekly) conference calls to discuss loan structure topics and general Project status, as well as the protracted discussions and exchange of documentation on the same. It is also anticipated that there will be significant additional time needed to negotiate the key terms of the RRIF Loan Agreement due to the significant feedback from the equity owners. The additional time and effort devoted to loan structuring issues was not anticipated and did not result from any shortfall in the Contractor’s performance.

• The Contractor has expended more hours than anticipated in reviewing and analyzing the construction contract due to (i) several rounds of review and comments to ensure inclusion of certain revisions, and (ii) structural changes that have been introduced in the midst of the Contractor’s review.

• When work on the Task Order began, it was anticipated that the RRIF Loan would be executed in the first or second quarter of 2018. It is now expected that the RRIF Loan will be executed later in the year. As a result of these changes and other changes related to the overall financing structure (and new documentation arising as a result), Contractor will need to review and comment on additional documentation from the Borrower, in addition to preparing issues lists and participating in conference calls with the Government, the Borrower and the owners to discuss any issues and communicate comments from the Government and the Contractor regarding the same. This work stream will require additional time and effort from the Contractor.

• Coordinating and reaching consensus with the equity owners has been, and will continue to be, a time intensive exercise due to the number of parties (and their advisors) involved and also due to the separate documentation negotiation needed for each owner. We anticipate that there will be a significant amount of time needed to discuss and address specific questions and concerns raised by each equity owner, and negotiate and draft final terms and conditions for each owner’s documentation

• Through no fault of the Government or the Contractor, work on the RRIF Loan Agreement itself has not commenced (even though the ceiling price has almost been reached). To date, it has not been practical to ask the Contractor to draft the RRIF Loan Agreement itself given that the key terms have yet to be agreed upon by the parties. Substantial time and effort will be required to draft, negotiate and finalize the RRIF Loan Agreement.

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. The Contractor has an intimate knowledge of the history and scope of the months’-long process to date (in particular, the unique and complex structure of the payment source for the loan and the security structure), and all of the documentation related to this transaction that they have prepared and the diligence documents regarding the borrower and the project. 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. New counsel would require extensive time to read and understand the collection of documents already reviewed in order to get up to speed to complete the negotiation and drafting process, complete the remaining tasks, and 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 and the security. Further, the Contractor’s knowledge of the commercial agreements made (and not made) in principal and not yet documented is essential in properly documenting the transaction and ensuring the Government’s interests are adequately protected and accurately documented. A new contractor would not have the requisite knowledge of the prior dealings leading from the task order issuance to date, in order to economically and efficiently complete the work under the order. Procuring new counsel would cost the Government far more than receiving continuous legal services from the Contractor. As such, it is in the best interest of the Government to raise the labor hour ceiling and have the Contractor complete the work under the Task Order.

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, $225,000 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 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

9. Evidence that any supporting data that is the responsibility of technical or requirements personnel (e.g., verifying the Government’s minimum needs or requirements or other rationale for an exception to fair opportunity) and which form a basis for the justification have been certified as complete and accurate by the technical or requirements personnel.

Certification: ____________________________________________________________

Cortney Arnold, Contracting Officer’s Representative 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.