JandA_for_EPP_CO_SIGNED.pdf

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JUSTIFICATION AND APPROVAL FOR EXPEDITED PROCEDURES PACKAGE

TO: Suzanne H. Johnson, USAID/Moldova Contracting Officer

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

FROM: Marina Vardanyan, Contracting Officer Representative, Moldova Energy Security Activity (MESA)

DATE: February 5, 2024

RE: TEC Increase of Moldova Energy Security Activity (MESA) Task Order 72011722F00002, under the Expedited Procedures Package (EPP) for Ukraine, Belarus, and Moldova

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 the use of other than full and open competition for a sole source cost and time extension of the Moldova Energy Security Activity (MESA) pursuant to the authorities under the Expedited Acquisition and Assistance Procedures for Ukraine, Belarus, and Moldova, approved on March 6, 2022 (the EPP). As documented below, the urgent need to implement programming to mobilize technical, financial, and other resources quickly to respond to Russia’s latest invasion of Ukraine has only increased as the severity of the war and unprecedented adverse effects on Moldova’s economic security have come into focus. Of particular note are Russia’s recent full-scale, overt attacks to fully degrade the overall energy infrastructure in Ukraine, rendering Moldova’s energy (and political) situation much less secure and in critical need for improvements to the national transmission system.

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.

RECOMMENDATION

Recommended 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 modification of Task Order 72011722F00002 (under Contract 7200AA19D00029) with Tetra Tech ES, Inc. (“Tetra Tech”) to broaden the scope by incorporating new tasks and introducing new work in two stages, Stage One ($50 million) and Stage Two ($35 million) and extend the contract by six months and 26 days from March 4, 2026, through September 30, 2026. Financially, the modification to the Task Order will involve an increase in the TotalEstimated Cost of $85 million (from $59,785,325 to $144,785,325) to facilitate the extended implementation of the Moldova Energy Security Activity (MESA).

As referenced above, the current Scope of Work is expanding to incorporate Moldova’s grid stabilization using a staged approach with an allocated total budget of $85 million. Stage 1 will involve a proof-of-concept battery storage and flexible generation, with a budget of approximately $50 million. During stage 1, Tetra Tech is expected to provide a turnkey installation of a Battery Energy Storage System (BESS) and internal combustion engines to stabilize and improve the flexibility of the Moldova transmission grid. This will include, but is not limited to, activities such as design, permitting, environmental reviews, training, procurement and installation of the equipment and handover of a fully operational system to the designated Government of Moldova agency. Furthermore, the turnkey installation will also include all connections, foundations, housing, and other ancillary work needed to provide a complete frequency control and balancing system that is fully operational upon completion of the work.

Once Stage One is completed and accepted by the Contracting Officer, a written approval will be issued to proceed with Stage 2 for battery storage and flexible generation.

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

The severity and pace of Russia’s full-scale invasion of Ukraine, the profound, negative knock-on effects on the economy, and the increasingly dangerous and unpredictable operating environment in the region have escalated Moldova’s need for improved electric transmission system stability. Russia’s concerted attacks to fully degrade the overall electricity infrastructure in Ukraine have impacted Ukraine’s ability to provide electricity for frequency reserves and balancing needs in Moldova, which has forced Moldova to seek emergency solutions elsewhere.

However, while the immediate needs under emergency conditions are being met, a more sustainable solution is needed for Moldova’s energy-secure future. The Government of Moldova and the business community agree that energy security and more frequency reserves in the power sector are a high priority, as evidenced by recent discussions between senior USAID and Moldovan leaders (e.g., Moldovan Prime Minister and the USAID Administrator, Minister of Energy and DAA, meetings with private companies, and others).

Under its original scope and total estimated cost (TEC), the MESA is expected to strengthen Moldova’s energy security by improving physical and market integration with Europe; enhancing energy efficiency; adding domestic power generation; and diversifying the country’s natural gas supply. USAID seeks to use the MESA project to provide frequency reserves to address the immediate and urgent needs of Moldova’s transmission grid and to accelerate Moldova’s ability to meet EU requirements for integration into the EU electricity markets. Various categories of frequency reserves function on different timescales, from seconds to several hours, all of which are needed to improve the flexibility and stability of Moldova’s transmission grid. The common equipment used for frequency reserves include BESS, combined with gas turbines or internal combustion engines.

The work of the frequency reserves installation consists of two stages. Stage 1 will involve a proof-of-concept battery storage and/or flexible generation project, with a budget of approximately $50 million. MESA/TetraTech will address technical, legal, market, and other challenges, laying the groundwork for subsequent stages.

Given the estimated implementation timeline for Stage 1, USAID/Moldova will require additional time to evaluate the project and make recommendations for future work in Frequency Control and Reserves. Parameters and timelines for Stage 2 will be determined through consultation between USAID/Moldova and other stakeholders such as Technical Support Office/Energy and Infrastructure.The decision to start implementation of Stage 2 will be based on acceptance of the results and outputs received after completion of Stage 1 and only after a “notice to proceed” from the USAID Contracting Officer. This will be contingent upon availability of funds. Should USAID’s Contracting Officer provide a “notice to proceed” for Stage 2, the Task Order will be modified to obligate the funds under Stage 2.

At this time, USAID/Moldova is confident that the needs for the Moldova transmission system are much greater than USAID will be able to fund. However, this modification will unlock more investments from other donors and the private sector.

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

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

Technical Expertise: In the intricate realm of Moldova's power system, part of the Ukraine-Moldova load frequency control block, specific responsibilities lie with the transmission system operator. Their task is to maintain frequency reserves. Unfortunately, the Ukrainian transmission system has faced instability since the Russian military aggression began, hampering its capacity to provide these crucial reserves.

Upon the request of USAID, the MESA activity, implemented by Tetra Tech Inc., swiftly adapted to address pressing concerns outlined by the Government of Moldova. Remarkably, this was achieved while remaining dedicated to MESA's core objectives, previously described.

Tetra Tech has recently demonstrated its remarkable technical prowess through various initiatives:

● Supplying emergency generators and equipment to safeguard critical infrastructure.

● Transposing EU rules and regulations into Moldovan legislation by amending the law on

Natural Gas, legislation related to compulsory oil stocks, and developing New Electricity Law and regulations, a pivotal step toward Moldova's integration into the EU energy network (ENTSO-E and ENTSO-G).

● Crafting strategic documents for the Ministry of Energy, such as Moldova's Energy Strategy 2050, the National Energy and Climate Plan, the Ten-Year Network Development Plan, and initiatives geared toward increased energy efficiency measures.

● Promoting the development of renewable energy sources (RES) and increasing domestic generation, and opportunities for private investors in the RES sector, including completion of the wind energy zones study and a roadmap to facilitate the deployment of wind energy in Moldova.

● Assisting Moldova's Transmission System Operator, Moldelectrica, in modernizing its IT infrastructure, strategic planning, and capacity-building endeavors.

● Supporting the regulatory authority, ANRE, in implementing regulatory reforms and independent governance of the sector, and building capacity on tariff setting, renewable energy incentives, and implementation of EU rules and legislation related to energy market monitoring and oversight.

● Conducted a grid flexibility study that identified the immediate needs and in the future terms.

Since the start of MESA, Tetra Tech has displayed its agility and drawn upon its extensive experience to swiftly adapt to the changing environment and demands resulting from the war in Ukraine. The Government of Moldova heavily relies on MESA’s top-tier technical expertise. In addition, Tetra Tech’s experience in the region, including in Ukraine, brings confidence in its ability to coordinate and implement crafted regional solutions.

Another high-priority area where the Government of Moldova leans on MESA’s technical expertise pertains to the necessity for expanded support to expedite Moldova's progress following the emergency synchronization with European Network of Transmission System Operators for Electricity, or ENTSO-E. Accelerating integration with European energy markets and establishing frequency reserves are vital for meeting the ENTSO-E requirements, and safeguards against potential disruptions, reminiscent of those experienced in November 2022 due to Russian threats in the region.

The swift installation of frequency reserves is imperative for improving the flexibility of Moldova's power grid and fortifying its energy sector's security. Tetra Tech is well-positioned to continue providing invaluable technical assistance in this sphere. Therefore, owing to the contractor's responsive work with the Government of Moldova and other energy counterparts, addressing both immediate needs and longer-term development goals, MESA is uniquely positioned to expand U.S. Government energy security technical assistance to Moldova during this crucial juncture.

Operational experience: Tetra Tech has amassed a wealth of contextual knowledge crucial for overall program implementation. This includes processes, schedules, projected results, performance indicators, targets, and project costs related to the proposed interventions. Tetra Tech's stewardship of MESA has demonstrated the contractor's adeptness in navigating the dynamic landscape of Moldova's energy sector and the broader regional context. It has maintained exceptionally close communication with the Government of Moldova, USAID, and other donors ensuring responsiveness to evolving sectoral needs.

Tetra Tech possesses unique capabilities that it has cultivated through its resilient implementation of MESA, especially during challenging times. Building a team with the requisite expertise in Moldova has been a time-consuming endeavor for Tetra Tech. It is operating at maximum capacity, equipped with the necessary staff, expertise, and collaborative relationships with the Government of Moldova to engage effectively in the areas earmarked for MESA expansion.

Tetra Tech has nurtured a valuable network of contacts within the government and the private sector, encompassing opinion leaders, influencers, and change champions. Its ability to identify reform advocates, deliver results, and forge partnerships in ongoing MESA activities, combined with their broader experience in achieving desired outcomes, positions the company well to extend and expedite support for Moldova's enhanced energy security and recovery from the regional crisis.

Until now, MESA's staff has consistently demonstrated proactive engagement and a high level of professionalism, particularly when advocating complex reforms, even during challenging political periods in Moldova. Tetra Tech's Home Office and the appointed Chief of Party have remained responsive to the needs of USAID, the Government of Moldova, other donors, and the private sector. This responsiveness has fostered reliable relationships and effective engagement with counterparts, garnering recognition and support from public officials in advancing USAID objectives and achieving desired outcomes.

Delays in the installation of frequency reserves could jeopardize not only Moldova's energy stability but also its broader geopolitical aspirations. Staging a competition to procure the additional services needed for the purpose would add many months onto this process and is not warranted given the performance of Tetra Tech so far. Given the multifaceted, high-profile nature of this role and its centrality to U.S. foreign policy objectives in the region, a cost extension to the Tetra Tech-implemented MESA award is justified to address this urgent need effectively.

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

The USAID/Moldova mission conducted research and collected cost information from several equipment suppliers. No efforts have been made to solicit other offers for these services, given the current implementer’s unique qualifications for performing this activity and the unacceptable delays that competition would cause at this time. These additional services from Tetra Tech are of critical need during the ongoing economic and security crises triggered by the war in Ukraine. Therefore, 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 successful programming being implemented by Tetra Tech through MESA.

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

USAID/Moldova’s Economic Growth Office completed a market survey, obtained price information from equipment vendors, completed an IGCE, and consulted with USAID’s engineering and infrastructure division regarding the costs for the TEC Increase of the MESA Task Order. The bulk of the costs are for equipment, including battery energy storage systems and internal combustion engines that commercial manufacturers will source, while other costs are minor by comparison and at the agreed cost caps in the IDIQ. The Contracting Officer has made a determination that the anticipated cost to the Government will be fair and reasonable based on Bloomberg Energy Storage System Cost Survey 2023 and other pricing information received from subject matter experts.

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.

Tetra Tech was competitively selected as the MESA contractor under the Energy IDIQ II procurement in March 2022. Since Tetra Tech is uniquely qualified to implement MESA, and the TEC increase for this activity will begin immediately responding to wartime energy needs, it is not feasible to conduct an open solicitation to select a contractor that would be able to rapidly implement these activities given MESA’s ongoing successful operations in Moldova -- the established relationships with crucial Government of Moldova counterparts and other stakeholders and the extensive familiarity with the country’s context. USAID determined that the Mission's rapidly fluctuating environment and urgent needs require an expedited award process, as per the EPP authorities. Nonetheless, USAID/Moldova did conduct market research based on the data provided by the Bloomberg NEF report for the Energy Storage Cost Survey for 2023 and data provided by Investments in Development Energy Assets (IDEA), USAID/Moldova buy-in to USAID E&E contract.

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

The current situation in Moldova related to energy security resulting from Russia’s invasion of Ukraine is growing in severity and remains quite unpredictable. The EPP authority is the most effective method for quickly and effectively having the equipment installed to advance the priorities of the USAID/Moldova Mission and Agency.

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

No additional sources were solicited, and no sources expressed interest in this requirement.

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:

The Agency intends to use competitive procedures for further energy infrastructure projects.

These projects are expected to be procured through a competitive process sometime in late 2024.

12. Technical or Requirements Personnel Certification:

In accordance with FAR 6.303, I hereby certify that the technical statements included above, and which form a basis for the justification are complete and accurate in accordance with the EPP entitled Expedited Procedures Package (EPP) for Ukraine, Belarus, and Moldova approved March 6, 2022 (attached).

__________clear___________________________ ____1/30/24__________________ William Trigg USAID/Moldova Economic Growth Office Director

4. General Counsel/Resident Legal Officer Clearance:

___clear subject to edits____________________ _____2/9/24__________ Martha Dye Supervisory Resident Legal Officer for Ukraine, Belarus, and Moldova

5. Contracting Officer Approval:

Suzanne H. Johnson Contracting Officer for USAID/Moldova