J A_176-C-10-00004_final.pdf

JUSTIFICATION AND APPROVAL

TO: R. Clark Pearson, Contracting Officer

THROUGH: Jean Horton, Agency Competition Advocate

FROM: Laura Gonzalez, Private Enterprise Officer

DATE: August 12, 2013

SUBJECT: JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND

OPEN COMPETITION (J&A)

1. This document sets forth the facts and rationale justifying the use of other than full and open competition, in accordance with AIDAR 706.302-70(a)(2). In particular, AIDAR 706.302-70(b)(5) stipulates that “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”.

This document was prepared by Laura Gonzalez, Contracting Officer’s Representative, USAID/Central Asian Republics (CAR) for the United States Agency for International Development; specifically for a contract awarded by USAID/ Central Asian Republics.

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

This is a request to approve a time extension and an increase in the total estimated cost of Contract # AID-176-C-10-00004 to Tetra Tech ES Inc. (contractor). The total estimated cost of the award will increase to $19,286,766 from $17,144,381, an increase of $2,142,385. The contract time extension will be for 12 months, from September 30, 2013 to September 30, 2014.

Under this action, the contractor will continue to provide support for the establishment of market-based, electric power trade in Central Asia via the Regional Energy Security Efficiency and Trade program (RESET).

In accordance with ADS 302.3.4.1, a J&A is required for modifications of existing contracts if there is a cardinal change to the contract, such as an increase to the total estimated cost of the award, or an extension of the period of performance.

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

Following a full and open competition, USAID/CAR awarded the contract to Tetra Tech in 2010.

The contract period of performance is September 30, 2010 to September 29, 2013. The contract ceiling price is $17,144,381. The contract has been obligated up to the ceiling amount. Of the obligated amount, $13,479,220 has been expended or allocated, leaving a pipeline of $3,665,161.

The estimated additional cost to extend the contract for 12 months is $2,142,385.

USAID is supporting the construction and sales of electricity through a transmission line between Central Asia and South Asia, known as CASA-1000. To achieve this objective, USAID requires technical assistance and logistical support be provided to the four countries participating in the CASA-1000 project, through support for the CASA-1000 Secretariat. Specifically USAID requires the following services:

Support the Executive Director of the Secretariat of the CASA project to lead the project’s definition and development phase;

Sponsor the quarterly meetings of the project’s Joint Working Group in Almaty;

Provide capacity building for the countries’ working groups with an emphasis on legal, technical, commercial, contractual, pricing, project governance, and operational aspects of cross-boundary power trades; and

Assist the countries’ working groups to address and resolve specific technical and legal issues and concerns.

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

The USAID Acquisition Regulation (AIDAR) Subpart 706.302-70(a)(2) permits other than full and open competition when this would impair or otherwise have an adverse effect on programs conducted for the purposes of foreign aid, relief, and rehabilitation. In particular, AIDAR 706.302-70(b)(5) stipulates that “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:

Nature of the Acquisition USAID/CAR just recently learned that it will receive significant 2012 recovery money.

ASIA/SPO has asked that USAID/CAR use the recovery funds to support Almaty Consensus-related projects, namely trade and energy. RESET is USAID/CAR’s only regional energy project and is the primary vehicle for carrying out the Almaty Consensus’s energy goals. In addition, although energy is the Almaty Consensus’s second highest priority sector after trade, until a few months ago USAID/CAR was anticipating nearly no regional funds for energy for 2013 and beyond, which is why the RESET award was set to end in September 2013. However, with Washington’s increased focus on regional integration of Afghanistan, the Almaty Consensus work has become more high profile, as it is aimed at providing support for regional integration of Afghanistan, and USAID/CAR is now expecting to receive an increase in funding for energy in 2014 and 2015. As a result, USAID/CAR is now designing a new regional energy program that will build on RESET’s successes and continue to advance the objectives of the Almaty Consensus. Given that USAID/CAR had not been expecting these energy funds, it will still be in the design process when RESET is scheduled to end, September 30, 2013. USAID/CAR therefore plans to extend the RESET contract for 12 months in order to bridge the gap until the new project is designed and competed. A TEC increase is likewise needed to fund the extension and the intensification of CASA support efforts that RESET is now undertaking.

Contractor’s Unique Qualifications In 2011, USAID instructed Tetra Tech to take over support for the CASA-1000 Secretariat. In prior years, the Secretariat had been managed by the World Bank; during that time the

Secretariat was inactive and the CASA project was stalled. As a result of Tetra Tech’s taking over management of the Secretariat including paying the salary of the Executive Director, the Secretariat has substantially advanced the CASA project. Since 2012, the financing gap for CASA has decreased from nearly $500M to approximately $175M, and three of the four CASA countries have signed the Joint Resolution on Project Principles which serves to keep the financing institutions’ funds committed to CASA.

The Secretariat has achieved this great progress in a short time due to the contractor’s unique approach to CASA-1000. Under Tetra Tech’s management, the Secretariat is proactive, encouraging active and informed participation by the CASA member countries’ working groups.

The Secretariat invests time and effort to ensure that the country working groups understand and are comfortable with each step in the CASA planning process. This is to ensure that the member countries truly buy into CASA at the working level; that they understand the costs and benefits of the project for their countries, and can articulate them to their superiors at their respective Ministries of Energy. In this way, the initiatives of the Contractor significantly increase the likelihood that CASA will become a reality.

For example, in January 2013, Tetra Tech created the CASA legal subcommittee on the request of the Pakistani working group members. The legal subcommittee is composed of the working groups’ legal advisors. Guided by the Executive Director, the legal subcommittee closely examines the myriad draft legal agreements that must be negotiated and signed before CASA reaches financial close. In past months, the contractor also provided the countries’ working groups with temporary legal and commercial advisors until the World Bank-funded CASA advisors were hired.

In their dealings with the working groups, the Executive Director and other Tetra Tech employees serve as neutral third parties. They provide technical assistance to the working groups to understand the complex project structure and all the various legal agreements, to position the working groups as strongly as possible to negotiate for the best possible power deals for their countries. The result of these efforts is an extremely high level of trust and communication between the working groups and the Executive Director and staff.

In addition to its support for CASA-1000, Tetra Tech has also made numerous contributions to advancing the goals of regional energy trade and cooperation. It co-sponsored regional policy dialogue on renewables and energy efficiency with the international energy agency and CAREC, and participated in CAREC’s energy sector coordination meetings in Bangkok. The contractor also developed a new approach in Central Asia for sharing data among regional information systems for both energy and water resource management, and held a workshop on modern power markets among other activities.

The following are examples of country-specific accomplishments:

In Kyrgyzstan, Tetra Tech is working with the Kyrgyz Ministry of Energy’s State Department on Regulation to help strengthen the Regulator’s legal authority, develop new tariff methodologies, enhance transparency and design a complete set of regulatory rules and procedure;

In Kazakhstan, the contractor presented to Kazakhstani and regional officials the potential economic benefits of modernizing Kazakhstan’s wholesale power market;

In Tajikistan, Tetra Tech provided training for working groups developing major new cross border transmission lines; and

In Turkmenistan, it held seminars on power sector planning for power personnel.

Impairment to Foreign Aid Program Due to the time sensitivity of the CASA-1000 efforts, an interruption between the RESET project and the next energy intervention would be extremely damaging to USAID’s efforts in this area. If USAID were to have a gap of service during the design and procurement of the new regional project, USAID would cease and need to completely reestablish the relationships between the country working groups and the new Secretariat from scratch. The gap between the old project winding down and the new project starting up would result in lost momentum, and potential loss of financing commitments from the World Bank and the Islamic Development Bank, as well as substantial additional costs to the government to reanimate CASA-1000, as it would cease to continue without USAID support. In order to restart these processes and get them to current levels, a new USAID contractor would need to provide an additional 6 to 9 months of effort at current spending levels to get USAID back to where it currently is, which would be approximately another $1 million on top of what would otherwise be needed to continue USAID support.

As mentioned above, the timing of the extension is also a crucial factor in the success of CASA- 1000. CASA-1000 is now at a critical point in its progress. Construction must begin by the end of 2014 for CASA to be financially viable and to ensure expected hydropower availability during the next 15-20 years will occur as scheduled. Over the next 12-18 months, CASA will need to close the $170 million funding gap and the member countries will need to sign the bilateral power purchase agreements before construction of the line can begin. To achieve these objectives, the contractor will need to maintain its approach to managing the Secretariat, and the relationships and trust it has cultivated. Another time-sensitive consideration is to ensure that the World Bank and the other financing institutions do not exit the project. In December 2013, the World Bank will present CASA for review by its board of directors. The board will determine whether the World Bank should maintain its commitment to the project. Project momentum will need to continue with no decrease in the effort expended to convince the World Bank to keep its funding in the project. The Secretariat is and will be a key driver of this momentum.

6. Description of the efforts made to ensure that offers are solicited from as many potential sources as practicable, including whether a notice was or will be publicized as required by Federal Acquisition Regulation (AIDAR 705.002).

Following a full and open competition, USAID/CAR awarded the contract to Tetra Tech in 2010.

USAID/CAR will compete a new mechanism to provide a continuation of activities after the end of the current contract. USAID/CAR will publicize the notice for this extension and increase in the estimated cost of the award in accordance with FAR 5.201. Similarly, the finalized J&A will be posted according to the requirements of 302.3.4.1(c) and FAR 6.305. This J&A will be published 15 days prior to the anticipated date of contract award, and any responses received will be reviewed and considered.

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

Prior to awarding the modification, the Contracting Officer will review the proposed costs and make a determination as to whether the costs are fair and reasonable.

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

This action is a request to approve a time and cost extension of an existing contract by 12 months. Market research will be conducted during the design phase for the next mechanism.

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

Due to the time sensitivity of the CASA-1000 efforts, an interruption between the RESET project and the next energy intervention would be extremely damaging to USAID’s efforts in this area. If USAID were to have a gap of service during the design and procurement of the new regional project, USAID would cease and need to completely reestablish the relationships between the country working groups and the new Secretariat from scratch. The gap between the old project winding down and the new project starting up would result in lost momentum, and potential loss of financing commitments from the World Bank and the Islamic Development Bank, as well as substantial additional costs to the government to reanimate CASA-1000, as it would cease to continue without USAID support. In order to restart these processes and get them to current levels, a new USAID contractor would need to provide an additional 6 to 9 months of effort at current spending levels to get USAID back to where it currently is, which would be approximately another $1 million on top of what would otherwise be needed to continue USAID support.

As mentioned above, the timing of the extension is also a crucial factor in the success of CASA- 1000. CASA-1000 is now at a critical point in its progress. Construction must begin by the end of 2014 for CASA to be financially viable and to ensure expected hydropower availability during the next 15-20 years will occur as scheduled. Over the next 12-18 months, CASA will need to close the $170 million funding gap and the member countries will need to sign the bilateral power purchase agreements before construction of the line can begin. To achieve these objectives, the contractor will need to maintain its approach to managing the Secretariat, and the relationships and trust it has cultivated. Another time-sensitive consideration is to ensure that the World Bank and the other financing institutions do not exit the project. In December 2013, the World Bank will present CASA for review by its board of directors. The board will determine whether the World Bank should maintain its commitment to the project. Project momentum will need to continue with no decrease in the effort expended to convince the World Bank to keep its funding in the project. The Secretariat is and will be a key driver of this momentum.

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

No sources have expressed interest in this acquisition since 2010 when originally competed.

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:

No barriers to competition are foreseen for the next mechanism which will be fully competed.