J and A for Exception to Fair Opportunity under Energy Secure Armenia.pdf

This document is brought to you by M/OAA/ACTS to support USAID’s A&A workforce.

JUSTIFICATION FOR AN EXCEPTION TO FAIR OPPORTUNITY

TO: Rebecca White, Activity Competition Advocate, Deputy Mission Director, USAID/Armenia

FROM: Andrew Golda, Task Order Contracting Officer Representative, Economic Growth

Office, USAID/Armenia

SUBJECT: Justification for an Exception to Fair Opportunity

1. This document sets forth the facts and rationale justifying an exception to fair opportunity, in accordance with FAR 16.505. This document was prepared by the Economic Growth Office of USAID/Armenia.

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

This is a request to approve a contract modification to increase the total estimated cost and add new work to the Energy Secure Armenia contract (Contract 7200AA19D00029/72011122F00001), a cost-plus-fixed-fee reimbursement type task order implemented by Tetra Tech ES Inc. The period of performance will not be extended.

The task order for this activity was awarded competitively to Tetra Tech ES on June 23, 2022, with a Total Estimated Cost of $9,888,896.76 and a period of performance from June 23, 2022, to June 23, 2027. The task order was modified non-competitively on September 13, 2023, to 1) increase the total estimated amount of the award by $850,000 and to 2) modify the scope to include additional activities. The modification increased the Total Estimated Cost of the task order by $850,000 to $10,738,896.76.

This modification will increase the Total Estimated Cost of the task order by $5,000,000 from $10,738,896.76 to $15,738,896.76. With the additional funding, Tetra Tech will provide technical assistance and other services to 1) accelerate key electricity projects that would increase the use of renewables and reduce Armenia’s dependence on Russian and Iranian natural gas; 2) test and scale energy efficiency project that reduce natural gas usage; and 3) increase Armenia’s resilience to energy sector related emergencies through contingency planning and tabletop exercises.

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

With the additional work, the contractor will directly respond to the Government of Armenia’s (GOAM) requests to the U.S. Government for support in the energy sector to mitigate malign economic influence as Armenia attempts to diversify its geopolitical relationships.

The proposed modification will add interventions that will:

1. Accelerate project timelines for key electricity sector projects that reduce Armenia’s dependency on natural gas.

2. Secure additional financial resources available for critical electricity sector projects through update technical and economic analyses.

3. Develop and test scalable energy efficiency interventions with community, public sector and private sector entities.

4. Analyze cost-benefits of specific energy efficiency interventions to reduce gas dependency.

5. Mobilize technical and financial resources necessary to scale energy efficiency interventions.

6. Form an energy sector emergency planning group.

7. Develop and conduct tabletop exercises of energy sector emergencies.

8. Create and practice “implementation ready” contingency plans.

The overall estimated cost of the additional work is $5,000,000.

The proposed TEC increase and the additional work to be ordered through this modification were shared with the IDIQ COR on November 27, 2023, who provided concurrence and confirmed that there was sufficient ceiling remaining in the IDIQ.

4. Identification of the exception to fair opportunity (see 16.505(b)(2)) and the supporting rationale, including a demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the exception cited.

Urgency – FAR 16.505(b)(2)(i)(A), fair opportunity to all other IDIQ holders need not be obtained when “the Agency’s need for the supplies or services is so urgent that providing a fair opportunity would result in unacceptable delays.”

In this case, modifying the existing Task Order to increase the total estimated cost and add additional technical assistance, as described in section 3, will allow the U.S. Government to provide urgent services to support the Armenian energy sector as the GOAM seeks to diversify its geoeconomic relationships away from Russia. Providing fair opportunity would result in an inability to provide these services during critical winter months when demand for energy generated from Russian-provided gas is highest.

Gas is a critical component of Armenia’s energy sector and is an important energy source for residential heating, transportation, and electricity generation. Not having its own hydrocarbon resources, Armenia is completely dependent on imported natural gas, of which approximately 85% is provided by Russia with the remainder coming from Iran. As Armenia perseveres on a path of democratic reforms, greater integration in the European Union and diversification of its geopolitical relationships, there is significant concern from that GOAM and the U.S. government that Russia may use geoeconomic levers in the energy sector, including the natural gas supply, to compel Armenia to abandon its path putting at risk the stability of the remaining democratic country in the region.

In September 2023, the Prime Minister approached the U.S. Government with an urgent request to support Armenia’s energy sector in the event of a disruption of Armenia’s gas supply. USAID conducted a rapid assessment of Armenia’s energy sector vulnerabilities and developed a series of recommendations to 1) strengthen Armenia’s energy security in the short and medium term including supporting GOAM efforts to develop and implement contingency plans, 2) expedite medium-term options for greater electricity trade with Georgia, and 3) reducing or replacing natural gas usage through energy efficiency measures.

USAID/Armenia is currently in the process of designing a new energy activity which is scheduled to be awarded in the first quarter of FY 2025. Adding these recommendations to the design would result in an unacceptable delay in being able to provide the requested assistance, as it is most likely that Russia will use energy-related levers during the coming winter when Armenia’s reliance on natural gas is highest; the window to expedite projects for greater electricity trade with Georgia is small; and energy efficiency measures would need to be implemented quickly to achieve benefits.

USAID/Armenia’s existing Energy Security Armenia activity is in its second year and has an overarching goal to bolster the country’s energy security by promoting a shift to renewable energy sources, furthering power market liberalization and trade, and promoting greater energy efficiency. The additional work will involve engaging with counterparts that the existing activity has established relationships with and is closely aligned with the contract’s existing interventions, which will enable the contractor to quickly provide the required services.

Procuring a new contract for the additional work through full and open competition or an IDIQ will result in a substantial delay in providing the critical assistance should Armenia’s gas supply be disrupted. First, the Contractor is already working with respective institutions within the GOAM, including the Ministry of Territorial Administration and Infrastructure, Electricity Market Operator, Electricity System Operator, and select communities. The GOAM would have few options to ensure reliable electricity should the gas supply be disrupted. This vulnerability is more acute in the upcoming winter months when gas and electricity usage is highest. Second, a new contractor performing under a new contract will require a significant period of time to obtain the detailed knowledge of the vulnerabilities of Armenia’s energy system and the requirements of the GOAM to address these vulnerabilities, which is knowledge that the existing contractor already has. This delay of the U.S. Government’s inability to respond to the GOAM’s request would be unacceptable given the urgent need for the additional work as well as given the status of the current bilateral relationship between the Armenian and U.S. governments, given the fluid geopolitical context of Armenia’s geographic location.

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

An independent government cost estimate (IGCE) was completed using existing and historical costs under the existing project to estimate the cost to the Government for this proposed modification. The Contracting Officer (CO) will use this and the existing activity’s historical expenditure information to make a determination about proposed costs to ensure they are fair and reasonable. The CO will also require the contractor to submit certified cost and pricing data.

6. Other facts supporting the use of exception to fair opportunity:

Tetra Tech ES Inc. is highly qualified and uniquely positioned to implement the additional work proposed for the expansion of the Energy Secure Armenia contract, particularly given that more than three years remain in the contract’s period of performance. The contractor continues to meet project targets and receives positive ratings on key performance reports. The contractor has continuously demonstrated a keen technical understanding of Armenia’s energy sector and the fluid geopolitical environment.

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:

No barriers to competition are foreseen to any subsequent acquisition. The agency intends to compete future requirements through fair opportunity either via full and open competition or potentially under a USAID/Washington IDIQ.

8. Technical or Requirement Personnel Certification

In accordance with FAR 16.505(b)(2)(ii)(B)(9), I hereby certify that the technical statements included above, which form a basis for the justification, are complete and accurate.

Andrew Golda Date Technical Office Representative

9. Contracting Officer Certification

Based on the exception to a full and open competition provided under FAR 16.505(b)(2) and the justification provided above, I hereby certify that the justification is accurate and complete to the best of my knowledge and belief.

Sascha Kemper Date Contracting Officer

10. Approving Official Determination

I have determined that FAR 16.505 (b)(2)(i)(A), as described above, appropriately applies to this order.

Rebecca White Date Activity Competition Advocate

Andrew Golda Digitally signed by Andrew Golda Date: 2023.12.01 16:03:32 +04'00'

Sascha Kemper Digitally signed by Sascha Kemper Date: 2023.12.01 16:38:39 +04'00'

[STAND ALONE PAGE]

1. Clearance

Date

___12/21/2023_________ Date

Ali Nader Digitally signed by Ali Nader Date: 2023.12.08

___________________________11:48:17 +04'00'__________ Ali Nader Resident Legal Officer

2. Clearance

__Cleared_______________________________ Deborah Broderick Agency Competition Advocate

APECS - M/OAA/E - Summary Page

*APECS ID: APC2416

*Package Name: Chris Frost: J&A No. 24-022 - Armenia - Energy Task Order

*Description: FAR 16.505(b)(2)(i)(A) - Urgency – Request for a $5m TEC increase in response to a Government of Armenia request for immediate assistance. No POP extension requested.

New TO to be competed in 2025

*File link to review:

https://drive.google.com/drive/folders/1Qt6bYKCrV_hHZFIGwOjjowNWWPgnJr1E?

usp=drive_link

Action summary *M/OAA/E Division Chief / wli@usaid.gov - Clear (15-Dec-2023) --Comments:

*M/OAA ACTS Deputy Director / dbroderick@usaid.gov - Clear (21-Dec-2023) --Comments:

Action record URL:

https://script.google.com/a/macros/usaid.gov/s/AKfycbxDs6JSBoxwEJq5KA1ME0IBai u1G4KWpQYH0nGhrvw9toZ0DYvS79gQmMmXkKyGXicaw/exec?PID=APC2416

Generated by APECS on December 21st 2023, 9:55:45 am ET