FTA_JandA_EPP Document signed 04 25 2022 (1).pdf

JUSTIFICATION AND APPROVAL FOR EXPEDITED PROCEDURES PACKAGE

TO: Robert Parnell, Regional Contracting Officer

CC: Deborah Broderick, Agency Competition Advocate, USAID/M/OAA

FROM: Rodica Miron, Future Technologies Activity (FTA) Regional Contracting Officer

Representative

DATE: April 1, 2022

SUBJECT: Justification for Other than Full and Open Competition under the Expedited

Procedures Package (EPP) for Ukraine, Belarus, and Moldova

1. This document sets forth the facts and rationale justifying the use of other than full and open competition.

Approval is requested for the justification for use of other than full and open competition pursuant to the authorities under the Expedited Acquisition and Assistance Procedures (EPP) for Ukraine, Belarus, and Moldova, approved on March 6, 2022. Your approval of this Justification and Approval (J&A) constitutes the justification for other than full and open competition as required by Tab 1 (D&F for the Authorization of Less than Full and Open Competitive Procedures in the Modification or Award of Contracts) of the EPP.

RECOMMENDATION

We recommend that you approve this justification for use of other than full and open competition pursuant to the Action Memorandum “Expedited Procedures Package (EPP) for Ukraine, Belarus, and Moldova” approved on March 6, 2022. Your approval of this J&A constitutes the justification for other than full and open competition as required by Tab 1 (D&F for the Authorization of Less than Full and Open Competitive Procedures in the Modification or Award of Contracts) of the EPP.

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

This is a request to approve a cost increase to Chemonics International, adding $20 million to increase the total estimated cost of the Future Technologies Activity (FTA); a time extension is not required. Under this action, Chemonics International will expand to include an Economic Recovery and Resilience Program as an additional component of FTA. The expansion would increase the FTA Grants Under Contract (GUC) component by $9 million (to an estimated $15 million total) and include an additional estimated $11 million in technical assistance to support new and urgent economic recovery programming to USAID’s targeted economic sectors: ICT, creative industries, light industry (textiles, apparel, footwear, and leather), and precision engineering.

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

Through current programming under FTA, USAID focuses on enhancing the competitiveness of Moldovan transformative sectors, including, but not limited to, light manufacturing, Information and Communication Technology (ICT), precision engineering, creative industries, and digital media production, and to improve the country’s integration with western markets in these sectors. The proposed cost increase would allow USAID to partner with the Government of Moldova (GOM) on national SME support programs and leverage emergency response grants to SMEs in the targeted sectors to prevent economic backsliding and protect Moldova’s development gains. USAID will scale up support to partner Business Associations and Centers of

Excellence in targeted economic sectors to enable export market diversification and promotion, improve trade enabling environment and achieve enhanced access to the EU markets. The Economic Growth Office prepared an IGCE in the amount of $20 million for the FTA modification, which serves as a basis for budget negotiation.

USAID proposes an expansion of FTA’s scope by adding new economic recovery and resilience interventions, including:

1. Prioritizing Access to Finance and Investment to Reduce Risks and Access Markets

With its increased risk profile due to the war, many of the potential regional and local investment funds that could be open to Moldovan companies are putting their plans on hold or pulling back entirely. Coupled with rising inflation, increased operational costs – especially energy costs – and increased risk, access to finance will be a critical constraint for Moldovan firms in the coming months and years. FTA could work jointly with finance and government partners to relieve the financial pressure on Moldovan firms to ensure they are not set back by the war and regional crisis and can instead continue to invest in their own businesses and grow.

a) Facilitate SME access to emergency finance and investment mechanisms by partnering with the GOM and regional investment funds.

FTA will explore TA support to Local or Regional Investment Funds for

Moldovan SME Economic Recovery and Regional Growth - Moldova currently does not have any investment funds. With the increased risk profile due to the war, regional and local investment funds that could be open to Moldovan companies are putting their plans on hold or pulling back entirely. With rising inflation, increased operational costs, and increased risk, access to finance is becoming an even more critical constraint for Moldovan firms. USAID could work with finance and government partners to buy-down the risk of working and investing in Moldova and relieve the financial pressure on Moldovan firms to ensure they are not detrimentally set back by the war and regional crisis and can instead continue to invest in their own businesses and grow. By providing TA support to facilitate the entry on the Moldovan market of a local or regional fund, FTA could offset the risk profile for investors and incentivize continued investment in Moldova and the region. USAID through FTA could provide TA support to incentivize a TA facility mechanism for a pool of SMEs in the FTA sectors. Such an approach could incentivize investors to move forward with planned investments and provide new avenues to finance for Moldova firms.

TA support to the SME Development Crisis Response Fund - USAID, through FTA, will explore providing TA support to the GOM SME Development Crisis

Response Fund that would provide immediate relief for access to finance issues for firms, helping them to avoid bankruptcy and make payments on loans in the face of growing interest rates. The fund would offset the interest rates and currency exchange risks on SME loans from commercial banks. FTA could explore providing technical assistance for designing a specific SME financial product for the FTA served sectors.

2. Boost the resilience of Moldova SMEs by reducing their reliance on traditional energy sources and by subsidizing green energy adoption costs - USAID will support the establishment of an SME Energy Resilience Program that would encourage energy efficiency, renewable energy, alternative energy, and green production practices in SMEs across Moldova. This is critical in the face of rising energy costs – both globally and specifically in Moldova – and will be necessary for Moldovan firms to reduce their reliance on traditional energy sources and remain competitive in the future. With FTA’s funding and additional technical assistance, this program could reach thousands of SMEs across sectors and ensure their resilience and increase their efficiency.

3. Expand FTA’s Grant Fund to $15 million (from the current $6 million) to provide emergency response grants to SMEs in targeted sectors to prevent economic backsliding and boost trade with the EU - USAID recently increased the level of assistance for competitiveness away from firm-level support to a facilitative approach centered on support through Centers of Excellence and Business Associations. In light of the crisis, USAID believes that it may be necessary to shift back to SME-level grant support due to the vulnerabilities affecting the Moldovan economic sectors which could lead to major collapses across industries. In order to stabilize the economy and boost SMEs affected by the energy, logistics and market disruption shocks, USAID could launch an SME Emergency Grants Program, as well as scale up its grant support to partner Business Associations and Centers of Excellence in targeted economic sectors to support industries to overcome the loss of trade and boost economic ties with the EU.

This support would help SMEs offset the negative consequences of the economic crisis and rising prices for energy resources and inputs.

4. Establish a Moldova Innovation Program - Under the FTA GUC Fund, USAID could set up a ‘Moldova Innovation Program’ to increase the economic competitiveness of Moldova in digital innovation, green technologies, and sustainable industrial production systems across sectors and industries. To ensure its viability and timeliness, USAID through FTA could invest $3-5 million in this program – conceived as a grant program for SMEs – to encourage the growth of firms investing in the technologies and practices of the future. This program will not just focus on immediate recovery but on sustainable long-term growth in a rapidly evolving global economy where energy costs, supply chain disruptions, and natural disasters must be met with new technologies, digitalization, sustainability, and creativity. No GUCs would be provided to partner government entities.

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

AIDAR 706.302-70(b)(3)(ii) and 40 U.S.C. §113; see Action Memorandum entitled, Expedited Procedures Package (EPP) for Ukraine, Belarus, and Moldova, approved on March 6, 2022.

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

The unexpected aggression and rapidity of Russia’s invasion of Ukraine and the increasingly dangerous and unpredictable operating environment in the region have escalated USAID’s need for rapid and flexible programming in Moldova. Approximately 400,000 Ukrainians have already fled to Moldova, overwhelming its resources and infrastructure, and creating a critical and urgent need to stimulate a sustainable and inclusive recovery, with a focus on the Moldovan economy.The use of the EPP authority for using less than full-and-open competitive procedures for FTA expansion will allow the Mission to expeditiously implement the additional activities in as responsive a manner as possible, supporting reforms and programs to stimulate economic recovery.

Chemonics is in a unique position to be able to leverage the capabilities of the ex isting FTA activity, and speed Moldova’s recovery from COVID and the regional security crisis and serve the longer-term goals of enhancing the competitiveness of the Moldovan transformative sector including, but not limited to, light manufacturing, Information and Communication Technology (ICT), precision engineering, creative industries, and digital media production, and to improve the country’s integration with Western markets in these sectors. Chemonics is well positioned to take on an expansion of activities under FTA to realize recovery and resilience efforts, while at the same time continuing to focus on longer-term economic growth.

Results of market research conducted during the original procurement of the FTA activity show that there are other contractors with the potential skills required, but there are none with existing skills that match the unique capability that Chemonics has developed by implementing the FTA and the previous Moldova Competitiveness Project over the past seven years in the challenging political and economic environment in Moldova. The currently imposed regional travel and logistical constraints would further delay the mobilization and launch of a new award within the required timeframe to provide the responsive support that is needed in this new environment.

Chemonics has developed a valuable network of contacts in the government and with the private sector, opinion leaders, influencers, and change champions. Chemonics’ ability to identify reform champions, achieve results, and build partnerships under current FTA activities together with their broader experience in achieving desired results will allow them to expand and expedite support for Moldova recovery from the regional crisis.

Building trust within the institutions of government and the private sector, as well as recruiting staff with sufficient expertise in Moldova, has taken Chemonics considerable time. Chemonics already has the staff in place with the appropriate expertise and relationships with the GOM to work in the areas considered for FTA expansion. The locally-hired staff demonstrated professionalism and proactive engagement, when promoting complex reforms, even in difficult political environments that Moldova has passed through. Chemonics’ COP and Home Office were responsive to USAID, GOM, and private sector needs, creating a sense of reliance and trust for the outcomes. CPARS records and high ratings reflect how Chemonics has effectively engaged counterparts, allowing the activity to gain recognition and support from public officials to advance USAID objectives, are available on file for reference.

Chemonics has accumulated a wealth of contextual knowledge, best practices, and relationships that will be necessary to act quickly on the response, resiliency, and reform challenges and opportunities that emerged, and are continuing to evolve, as a result of the Ukrainian crisis which is impacting Moldova.

6. A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable.

No efforts have been made to solicit other offers for these services, given the current implementer’s specialized knowledge of this activity, and unacceptable delays that competition would cause at this time. As this is a modification of an existing award and these additional services are of critical need during the ongoing economic and security crises triggered by the war in Ukraine, no attempt has been made to solicit proposals from other sources. In considering the current expansion, USAID determined that given the nature of the work to be performed, it would be in the U.S. Government’s interest to capitalize upon the current successful programming being implemented by Chemonics through FTA.

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

The Economic Growth Office prepared an IGCE for the FTA cost increase, which serves as the original basis for budget approval. The proposed FTA $20 million cost increase will be initially funded with $5,012,520.28 of FY20 funds (funds were notified through the CN 46 cleared on 12/22/20) and $824,368.72 Swedish International Development Cooperation Agency (SIDA) contribution funds. The Contracting Officer will conduct cost analysis on the cost proposal to ensure costs are fair and reasonable.

8. A description of the market research conducted (see FAR Part 10) and the results or a statement of the reason(s) market research was not conducted.

USAID/Moldova/EG conducted market research using a series of procedures. The design team reviewed historical acquisition information (review of recent market research results for similar

13. General Counsel/RLO Clearance:

Benjamin Schireson, Regional Legal Officer Date

14. 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.

Robert Parnell, Regional Contracting Officer Date