JEFO Final_Redacted.pdf

DEPARTMENT OF TRANSPORTATION

FEDERAL HIGHWAY ADMINISTRATION

Justification for an Exception to Fair Opportunity

1. Identification of the agency and the contracting activity.

Federal Highway Administration (FHWA), Office of Acquisition and Grants Management, 1200 New Jersey Avenue, S.E., Washington, DC 20590.

2. Nature and/or description of the action being approved.

This is a justification for an exception to fair opportunity to award a task order to Alvarez & Marsal Public Sector Services, LLC (“A&M”) under Indefinite Delivery/Indefinite Quantity (ID/IQ) Contract No. 693JJ319D000038. The task order associated with this justification will provide restructuring advisory services to assist the U.S. Department of Transportation (“Department”) in a potential sale of its ownership of certain illiquid financial assets.

This justification is prepared in accordance with the content requirements in Federal Acquisition Regulation (FAR) 16.505(b)(2)(B).

3. Description of the supplies or services required to meet the agency’s needs (including the estimated value).

The Build America Bureau (“Bureau”) administers the Transportation Infrastructure Finance and Innovation Act (“TIFIA”) program, which provides (secured) direct loans, loan guarantees, and standby lines of credit to borrowers seeking to develop major surface transportation infrastructure projects. The Department approves TIFIA loans to qualified borrowers and monitors the performance of the project, as well as project revenues pledged for the repayment of the loan until final loan maturity.

The Department previously approved a TIFIA loan for the SH 130 Segments 5&6 (“SH 130”) project. The TIFIA borrower later became insolvent and requested bankruptcy protection from its creditors, including the Department. A bankruptcy court subsequently approved a reorganization plan whereby the Department received indirect proportional equity interests in SH 130 Concession Company, LLC (the “Restructured Company”) and subordinated debt interests in an affiliate of the Restructured Company (collectively, the “Department’s SH 130 Assets”) – which has since been repaid – in exchange for its claims associated with the original TIFIA loan. The Restructured Company’s equity is not publicly-traded; therefore, the valuation of this equity must be based on significant due diligence of non-public, business proprietary information.

Under the planned task order, the Contractor will provide restructuring advisory services to evaluate the valuation of Restructured Company’s equity to assist the Department in assessing the potential sale of the Department’s equity interests.

As the sale of this equity would need to conclude within a few months, it is vital that the Department onboards an advisor with existing knowledge of the Restructured Company and the Department’s equity stake in this company, so they are able to expediently perform work, and allow the Department sufficient time to potentially engage in a sale of its equity interests. As well, a potential sale of the Department’s SH 130 assets will continue to require specialized expertise to ensure the Department maximizes the total value received by the Government.

This will be a new task order under A&M’s ID/IQ Contract No. 693JJ319D000038, with an anticipated period of performance of six months. The estimated value of this task order is

4. Identification of the exception to fair opportunity (see 16.505(b)(2)) and the supporting rationale.

The exception to fair opportunity utilized for this proposed action is FAR 16.505 (b)(2)(i)(B) – only one awardee is capable of providing the supplies or services at the required level of quality requires because the supplies or services ordered are unique or highly specialized. This order is a follow-on to two orders already issued under the contract 693JJ322F000076, which was competitively awarded, and 693JJ322F00221N, which was awarded on a sole source basis.

A&M was the Bureau’s restructuring services advisor on the task order 693JJ322F000076 issued under A&M’s IDIQ contract 693JJ319D000038 for the project titled “Valuation of SH130 Equity and PIK Note Facility”, as well as on the task order 693JJ322F00221N under the same contract. A&M’s work under the former task order required a valuation of the Department’s SH 130 assets, and under the latter task order, an analysis of an earlier proposed offer to sell these assets that was not consummated.

The work performed by A&M under the prior task orders provides A&M with prior expertise and knowledge of the Restructured Company, including risks and considerations related thereto, as well as key financial information. This advantage would result in significant time savings in respect of due diligence hours as part of a potential sale of the Department’s holdings in the Restructured Company. This expected time savings should result in a lower cost to the Department under the new task order and better position the Department to potentially sell the Department’s equity interests.

A&M has the specialized background knowledge required to protect the Government’s interest in the timeframe required.

Tasks from the prior A&M task orders include the following:

• Preparing a detailed list of information required from the Restructured Company (and the Department, as applicable) for A&M to begin its analysis.

• Reviewing audited financial statements, associated reports and forecasts, and other supporting documents related to the Restructured Company.

• Preparing valuation ranges and scenarios along with underlying key metrics.

• Preparing a report summarizing the outcome of the valuation analysis and developing a presentation to Bureau and Department leadership.

• Preparing a presentation that contemplated a proposed offer to sell the

Department’s stake in the Restructured Company and potential alternatives.

Due to A&M’s previous work under task orders 693JJ322F000076 and 693JJ322F00221N, the services performed under the proposed task order would rely upon the work previously performed by A&M and its familiarity of various public and non-public aspects of the Restructured Company. The efficiencies gained by awarding to A&M are necessary to meet the new task order’s intended period of performance.

Due to the unique circumstances and familiarity with the Restructured Company, A&M is the only capable source to meet the Government’s requirements.

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

The task order will be issued as firm fixed price task order. The order will be issued against an FHWA IDIQ contract, for which the labor rates and labor categories have previously been evaluated and determined to be fair and reasonable. The Government will review the proposal price to ensure the billing rates are consistent with the IDIQ approved labor categories and rates, as well if the price is complete and reasonable in relation to the task order requirements. The evaluated price will be based on a comparison to the Independent Government Cost Estimate, including positions and the level of effort proposed. The Government will also evaluate the price against historical prices paid for similar services to ensure the amount is fair and reasonable.

6. Other facts supporting the use justification.

A&M’s in-depth understanding of the of the Restructured Company makes them uniquely capable of providing these services at the level of quality necessary to meet the Government’s requirement. A new contractor would require extensive time to become familiar with the Restructured Company and perform at the desired level of quality to satisfactorily complete the tasks. No other Contractor would be able to provide restructuring advisory services for this project with the same economy and efficiency as A&M.

7. 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.

The unique circumstances associated with this project require a sole source task order.

However, the Government will continue to award as many competitive task orders as possible under its ID/IQs for these services.

8. Certification and Approval

The evidence and any supporting data which form a basis for the justification is complete and accurate.

Date Task Order Contracting Officer’s Representative Financial Policy Advisor Build America Bureau U.S. Department of Transportation

Date Contracting Officer Office of Acquisition and Grants Management Federal Highway Administration