JandA_TEC_increase_Mod4_FTA.pdf

JUSTIFICATION AND APPROVAL FOR EXPEDITED PROCEDURES PACKAGE

TO: Ethan Takahashi, USAID/Moldova Supervisory Contracting Officer

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

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

DATE: August 12, 2024

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, 2024. As documented below, the urgent need to implement economic recovery programming to mobilize technical, financial, and other resources quickly to respond to Russia’s invasion of Ukraine has only increased as the severity of the war and adverse effects on Moldova’s economic security have come into focus. 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

It is 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, 2024. 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 extension to Chemonics International, adding $7.7 million to increase the total estimated cost of the Future Technologies Activity (FTA), bringing the total FTA estimated ceiling from $52,824,597 to $60,524,597; and a 9-month time extension is also requested, extending the current award completion date from June 22, 2026 to March 22, 2027. This increase in cost and time is supported by $7.7 million from the $8.2 million SIDA gift funds and $2.5 mln EDGE funds. The SIDA funds will also help USAID address the funding shortfall in future years and facilitate a $7.7 million cost adjustment and a 9-month extension. Under this action, Chemonics International will expand its Economic Recovery and Resilience Program through FTA. The expansion would increase the FTA GUC component by $3.5 million and include additional funds in technical assistance to support new and urgent economic recovery programming to USAID’s targeted economic sectors: ICT, creative industries, digital media, light industry (textiles, apparel, and footwear), and precision engineering.

Under the proposed $7.7 mln TEC increase FTA will address economic shocks and increase resilience of Moldovan SMEs in key economic sectors that are critical currency earners for the Moldovan economy, supporting jobs for women and opportunities for youth. FTA will especially support Moldova’s more recent efforts to transition towards a more sustainable development pathway by channeling efforts towards promotion of digitalization and a green economy, as per SIDA requirements. This includes new interventions within the current FTA scope, while also adapting and expanding initiatives with a greater focus on resilience, crisis response and EU integration.

SIDA specifically requested that USAID/Moldova scale up the FTA Activity given the outstanding performance results to date and the satisfaction with the performance of the Contractor. An independent USAID Mid-term Evaluation of the FTA Activity conducted during FY24 concluded that the Activity is well on track in overachieving its programmatic goals and targets. SIDA further acknowledged that in their view adding funding to the existing FTA Activity is the most effective method for quickly and effectively supporting the GOM’s economic recovery and EU integration agenda, in line with both Swedish and U.S. Governments’ priorities. In addition, the Swedish government is also interested in increasing the trade collaboration with Moldova in areas such as the ICT- and textile/fashion sectors. To this end, under this TEC increase FTA will explore interventions that lead to increased trade with the Scandinavian/Baltic region.

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 support industries to overcome the loss of trade and logistical constraints, save jobs, and continue to increase trade with the EU. The Economic Growth Office prepared an IGCE in the amount of $7.7 million for the FTA modification, which serves as a basis for budget negotiation.

USAID proposes that FTA continue the ongoing economic recovery and resilience program, complementing and expanding its existing scope of work, as a critical response to the impact Russia’s war in Ukraine has had on the Moldovan economy and support Moldova’s European integration goals. Under the proposed $7.7 mln TEC increase, FTA plans to address economic shocks and increase resilience of Moldovan SMEs in key economic sectors that are critical currency earners for the Moldovan economy, supporting jobs for women and opportunities for youth. FTA will especially support Moldova’s more recent efforts to transition towards a more sustainable development pathway by channeling efforts towards promotion of digitalization and a green economy. This includes new interventions, as described below, while also adapting and expanding initiatives with a greater focus on resilience, crisis response and EU integration.

The new illustrative interventions under the expansion – which will be flexible and tailored to changing conditions in the context – include:

● Supporting STEM skills and Future of Work for youth inclusive opportunities: supporting Expected Result 2.4 FTA will provide technical assistance and strategic guidance to scale the Future Classroom and the newly launched Model School initiative, in partnership with the Ministry of Education and Research.

This effort aims to promote the integration of innovative learning technologies, particularly in rural areas where educational resources are often limited. Additionally, FTA will continue to support the Future Professions programs, including bachelor's and master's degrees. This strategic focus on digitalization and technical innovation in education is essential for Moldova, especially considering that every second student in the country does not meet the minimum competency levels in reading, literacy, mathematics, or science. Furthermore, the university student population has halved over the past decade. By enhancing Moldova's education system with modern technological approaches, the country can jump-start its future, build a talent base to fill the jobs of tomorrow, and create significant economic opportunities. These initiatives are critical in reversing the educational decline and equipping students with the skills necessary for a dynamic global economy.

● Supporting Access to Green Finance and Alternative Investment Funds for SME growth:

supporting Expected Result 2.4 FTA will bolster the development of Moldova's local climate finance ecosystem. This includes capacity building for local banks and financial institutions to adopt Environmental, Social, and Governance (ESG) principles and access climate funds. Efforts will also focus on enhancing the Green City Lab and initiating AgroTek Park to advance the digitalization and greening of agriculture.

Additionally, FTA's support will facilitate the rise of alternative finance players like MDCF Impact Capital and the Fagura peer-to-peer digital lending platform. The integration of green and alternative finance is vital for Moldova’s EU integration, as it aligns with the EU’s emphasis on sustainable development and innovation in financial services, thus promoting economic growth that is environmentally responsible and aligned with broader European standards.

● Advancing digitization, innovation, and the startup ecosystem: supporting Expected Result 2.1 and 2.5 FTA will not only continue but also expand its essential support to partner business associations and Innovation Centers. This expansion aims to enhance their scale and sustainability. FTA may also extend its partnership network beyond existing legacy organizations to include new entities like Cahul InnoTek Center, thereby ensuring regional impact. Additionally, FTA will leverage business associations, Innovation Centers, and other support organizations to build economic resilience and aid EU integration efforts. The involvement of these local partners is crucial for Moldova's EU integration as they foster localization and economic development by enhancing innovation capacity, aligning business practices with EU standards, and promoting sustainable economic practices. The partner business associations and Innovation Centers include:

Startup accelerators: XY Partners, Dreamups, YEP Moldova, Startup Moldova, Green City Lab Innovation Centers: Artcor Creative Industries Center, Mediacor Digital Media Center, FabLab prototyping hub, ZIpHouse Fashion Design Hub, Nortek Regional Innovation Center, TechZone engineering center, GLIA Impact Hub for women entrepreneurship, Cybercor National Institute for Cybersecurity Innovation Business Associations: Small Business Alliance (AIM), ATIC National Association of ICT Companies, APIUS Moldova Light Industry Association, AFAM Moldova Association of Women Entrepreneurs, COR Creative Industries Association, ACETI Regional IT Association, APIP Manufacturers Association

● Supporting cybersecurity resilience and skills: supporting Expected Result 2.1 and 2.2 FTA will support the development of the newly launched Cybercor National Institute for Cybersecurity Innovation, ensuring it can deliver educational programs across various sectors. This includes government institutions such as the National Cybersecurity Agency, critical infrastructure, private sector entities, and university students.

● Scaling national SME support programs with Governmental partners for advancing inclusive development, digitalization, and green transition goals: supporting various Expected Results under Objective 2.

FTA will continue to expand national SME support programs in collaboration with key governmental partners to advance inclusive development, digitalization, and green transition goals. These programs, which leverage funding from the Government of Moldova, the private sector, and other donors, aim to achieve joint goals and ensure nationwide coverage. The core programs involved are listed below:

o Digital Innovation and Technology Startup Program with ODA Organization for Entrepreneurship Development o Bridge Program to boost trade with EU with Organization for Entrepreneurship Development

(ODA)

o Moldova Innovation Technology Park for boosting IT sector competitiveness and investment o EVO app for digitization of government services with National E-governance Agency o Future Technologies in Agriculture co-funded jointly with Agency for Digitalization and

Modernization of Agriculture (ADMA) o Creative Moldova Program with Ministry of Culture and National Center for

Cinematography

● With $2.5 mln funding from EDGE, establish the Moldova Capital Fund (MDCF): supporting Supporting Access to Green Finance and Alternative Investment Funds for SME growth:

supporting Expected Result 2.4 FTA will help establish the first Moldovan-owned private impact equity and mezzanine fund – Moldova Capital Fund (MDCF) – which would provide impact equity capital and revenue finance debt to high-potential yet underserved SMEs, including women-led businesses, for projects in alternative energy, sustainable agriculture, smart manufacturing, recycling, and climate change adaptation. Specifically, the MDCF will:

o Engage with business, investors, and foundations to form catalytic public-private partnerships;

o Push the private sector to invest in places of great need and to do so ethically, responsibly, and inclusively;

o Encourage businesses to create more meaningful impact, including by becoming less resource intensive, adapting to a changing climate, and encouraging the recruitment of women and historically marginalized communities as suppliers; and o Work to revitalize job creation and scale up SMEs.

● Add $3.5 mln to the FTA’s Grant Fund of $15 million to provide emergency response grants to SMEs in targeted sectors to prevent economic backsliding and boost trade with the EU - In light of war-induced economic shocks, USAID believes that it is necessary to scale up the SME-level grant support due to the vulnerabilities affecting the Moldovan economic sectors. To stabilize the economy and boost SMEs affected by the energy, logistics and market disruption shocks, USAID will add $3.5 mln to the FTA SME Grants Program ($2.5 mln from EDGE funds and $1mln form SIDA funds), 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. 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, 2024.

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 economic recovery programming in Moldova.

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 activity 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 existing FTA activity, and speed Moldova’s recovery from 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. 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 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, thus creating a sense of reliance and trust for the outcomes. CPAR reports outlining 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.

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 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 Government’s interest to capitalize upon the current successful programming being implemented by Chemonics through FTA instead of designing and procuring a new award.

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 FTA implementation, which serves as the original basis for budget approval. The proposed FTA $7.7 million cost increase will be funded with $5.2 mln SIDA contribution funds and $2.5 EDGE 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 or identical supplies/services or previous USAID Contracts); shared and discussed personal knowledge in procuring services of this type; searched the DEC to review and use relevant information; reviewed Internet resources. Since Chemonics is uniquely qualified to implement FTA, and the TEC increase for this activity will begin immediately responding to activity needs, it is not feasible to conduct an open solicitation to select a contractor that would be able to rapidly implement these activities, given FTA’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 given the nature of the work to be performed, it would be in the Government’s interest to capitalize upon the current successful programming being implemented by Chemonics through

FTA.

Our market research determined that the small business community does not have an organization with the capacity to quickly respond and implement the requirement, due to the complexity and scale of the FTA program and the proposed expansion, though consideration will be given to small business subcontracting.

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

USAID/Moldova has determined that, due to the urgency of responding to the current situation in Moldova resulting from the Russia’s war in Ukraine, other than full and open competition utilizing the authorities provided in the EPP is the most effective method for quickly and effectively implementing the additional activities under FTA and representing the priorities of the Agency and the U.S Government.

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

The Mission determined to expand the existing FTA contract to address the new requirement so 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 Mission will continue to use full and open competition procedures whenever possible, including potential set-asides for small businesses.

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 complement and accurate in accordance with the Expedited Procedures Package (EPP) for Ukraine, Belarus, and Moldova approved March 6, 2024 (attached).

Rodica Miron, Project Design Team Leader Date

13. RLO Clearance:

Michelle McLeod, 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.

Ethan Takahashi, Regional Contracting Officer Date https://drive.google.com/file/d/1BNhSGDgVnE6Y8bvK27dvXuOgY0IGY02n/view?usp=drive_link