Justification and approval _AID-OAA-M-17-00007.pdf

JUSTIFICATION AND APPROVAL (J&A)

TO: Gwendolyn Ruffin, Contracting Officer

FROM: Sharon Hester, Middle East Bureau, Office of Technical Support

DATE: May 20, 2020

RE: Middle East Economic Growth Contract (MEG), GS00F303CA; AID-OAA-M-

17-00007, implemented by The Pragma Corporation (Pragma)

SUBJECT: Justification for Other than Full and Open Competition under the Expedited Procedures Package for Responding to Outbreaks of Contagious Infectious Diseases

We request approval of this justification for use of other than full and open competition pursuant to the authorities under the Expedited Procedures Package for Responding to Outbreaks of Contagious Infectious Diseases (the “Expedited Procedures Package”), approved on March 24, 2020. Your approval of this J&A constitutes the justification for other than full and open competition as required by Tab 1 (“Determination and Findings (D&F)/Authorization for the Use of Other than Full-and-Open Competition in the Award or Modification of Contracts”) of the Expedited Procedures Package.

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

This is a request for an increase in the Total Estimated Cost of MEG from $70,000,000 to $110,000,000.

b. A description of the supplies or services required to meet USAID’s needs (including the estimated value).

The severity of the COVID-19 crisis on the worldwide economic situation cannot be overstated, and USAID economic officers in Middle East/North Africa (MENA) countries are already revising economic programs to meet host country economic issues that are arising out of the crisis. In fact, in the immediate and near future, it is likely that most, if not all, USAID/MENA economic programming will be designed or re-programmed to meet COVID- 19-related economic issues. MEG is a well-positioned tool for addressing the critical economic issues arising in the MENA region as a result of COVID-19. MEG is a rapid-response, buy-in mechanism that is available to ME missions and the ME Bureau for conducting economic and financial management assessments and diagnostics, program design and evaluation, as well as pilot projects. MEG provides state-of-the-art tools and knowledge management for critical economic issues facing the MENA region. As such, an expansion of its availability is urgently needed in order to respond to rapidly changing, in-country circumstances that are occurring in MENA countries due to the economic impacts of

COVID-19.

As a result of the COVID-19 crisis, MENA countries are facing severe economic turbulence at both the governance level and the private-sector level. At the governance level, Ministries of Finance are facing fiscal constraints with levels of revenue diminishing due to GDP contractions, yet at the same time, expenditures related to health issues are increasing. Line ministries, especially Ministries of Health but others as well, are facing the imperative to quickly plan and revise health budgets and re-program funds to meet the COVID-19 crisis. Central banks are facing COVID-19-induced pressures related to monetary stability and liquidity, as well as helping to stabilize the commercial banking sector.

USAID will ensure that as Pragma engages in the COVID-19-related work, Pragma will seek every opportunity to collaborate with the private sector, new local and underutilized partners, and community and faith-based organizations (see section (i) below).

Examples of COVID-19 Effects in MENA Region

COVID-19 is disrupting MENA economies through border closings, curfews, mandated business closings, travel restrictions, social distancing, and other measures that are crippling economic activity. These measures cause disruptions in supply chains, have eliminated the tourism industries on which many MENA economies depend (Egypt, Jordan, Tunisia, Morocco), and are causing businesses to lay off employees (all MENA countries). Moreover, COVID-19 has resulted in reduced investment and capital flows (all MENA countries).

In all MENA countries, large firms and SMEs are laying off employees, increasing already-high unemployment, and SMEs are often too small to survive lack of revenue for very long. Small entrepreneurs are facing economic collapse and will lose daily household income (all MENA countries); supply chain disruptions are occurring in all MENA countries; financial markets are volatile with huge stock market drops (Egypt, Tunisia). All MENA economies have high reliance on remittances from abroad and these remittance flows have slowed.

MENA countries are experiencing reduced public revenue and increased public expenditure (particularly for public health and to support the economy and social services); the slowdown in trade has reduced Egypt’s Suez Canal revenue. Some countries are facing increased and possibly unsustainable public debt (Lebanon, Tunisia); Government-backed emergency funds are being set up for upgrades to health infrastructure and to support affected economic sectors (e.g., Morocco).

Strong economic cross-border links with neighboring countries are disrupted (e.g., Iraq ties with Iran). Internally displaced persons and refugees in countries such as Syria, Libya, Lebanon and Jordan have lost livelihoods. Prolonged disruption of economic activity will be economically catastrophic for millions of people in all MENA countries.

Examples of potential areas of focus are the following:

• Responses to the devastating economic supply and demand shocks to the private sector that are associated with the COVID-19 crisis. These include disruption in supply chain networks, the decline in export revenues in key foreign exchange-generating sectors (such as tourism), and the closures of a plethora of local businesses which are already impacting output levels across the MENA region. These contractionary effects are being reinforced by the reduction in aggregate demand inevitably associated with social-distancing policies, loss of wage income, likely reductions in remittance inflows, and imploding investor expectations.

• Re-positioning economic governance frameworks and competitiveness eco-systems coming out of the COVID-19 crisis in a manner which helps them recover quickly and even place themselves on an elevated poverty-reducing growth curve over the medium-term.

• Addressing the key macro-structural governance and economic competitiveness themes which must be effectively addressed in order to buffer the immediate fiscal and financial sector pressures and response needs associated with the COVID-19 crisis.

• Helping Ministries of Finance in MENA countries to formulate fiscal response strategies which help address immediate fiscal resource and expenditure needs associated with the COVID-19 crisis.

• Assistance to Ministries of Health in MENA countries in formulating strategies and budgets to address COVID-19.

• Assistance to central banks in MENA countries in addressing immediate impacts of

COVID-19 on banking liquidity, foreign exchange, and reserves through macro-financial response strategies.

• Expand financial intermediation levels as necessitated from the COVID-19 crisis by assisting central banks in promoting flexible regulatory oversight and innovative financial service delivery approaches (including mobile financial service networks).

• Designing strategies for private sector recovery and competitiveness “repositioning” initiatives that mitigate the immediate impact of the COVID-19 crisis on investment and employment. This will include an intensive focus on the application of innovative approaches related to information and communications technology which initially help mitigate the disruptive impact of the COVID-19 crisis on both supply and demand channels.

• Facilitating next-generation trade/investment hub operations in the MENA region due to value-chain repositioning opportunities associated with the COVID-19 crisis.

• Furthering Clear Choice economic opportunities and mitigating backsliding in programmatic areas affected by COVID-19.

The COVID-related work is a logical expansion the work already completed under the MEG contract. The original order was placed in accordance with the applicable Federal Supply Schedule ordering procedures in FAR Subpart 8.4 and was not issued under sole-source or limited-source procedures. The work that will be funded under the ceiling increase is critically important to combatting the COVID-19 crisis. A lapse in contract funding, with the resulting loss in programing, would hamper the Agency’s ability to address the economic effects of COVID-19 in the ME region.

The estimated value of these services and products is $40,000,000. It is difficult to predict demand for the use of MEG, particularly for MENA non- or limited-presence countries, due to the inherent instability and volatility of the MENA region. The unprecedented and dramatic nature of the COVID-19 crisis introduces further unpredictability.

c. Identification of statutory authority permitting other than full and open competition.

AIDAR 706.302-70(b)(3) and 40 U.S.C. §113(See the “Expedited Procedures Package at p.3 of Tab 1 (D&F)). The Expedited Procedures Package can only be used for an Infectious Disease Outbreak which fits within one of the definitions on pp. 1 and 2 of the D&F. The COVID-19 outbreak was declared a Public Health Emergency of International Concern by the World Health Organization (WHO) on January 30, 2020 (Item 1.1 on p.1 of the D&F), and therefore the class D&F applies to this COVID-19 emergency response activity.

d. A discussion of the proposed contractor’s unique qualifications or the nature of the acquisition that requires use of the authority cited.

The exceptional circumstances from which this request arises is the COVID-19 pandemic which requires broad and immediate responses. Pragma is the only contractor able to respond rapidly to this broad array of economic growth needs. Pragma can provide, in an expedited manner, top-notch technical assistance in economic areas, both at the governance and the private-sector levels, both of which are urgently needed due to the COVID-19 crisis. Given Pragma’s work under MEG in the ME region during the past several years, this firm is particularly well placed to quickly assess needs and develop responses to the dramatic economic consequences of COVID-

19. Moreover, it is not feasible to solicit other firms due to the urgent nature of the crisis.

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

An advance notice is not appropriate or reasonable pursuant to AIDAR 705.202(b)(1). Further, it is not practical to solicit other sources due to the immediate need for these services. Pragma has extensive recent involvement in the ME region through the MEG contract. Pragma has long-standing experience and relationships in most of the USAID's ME countries and specializes in economic governance and private sector programs. Moreover, under MEG’s Knowledge Management Program, Pragma is already poised to address the key economic issues in the Middle East, and these will be the same issues that are exacerbated by the COVID-19 crisis.

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

The contracting Officer (CO) will evaluate the contractor's proposed cost against the independent government cost estimate and historical costs. The CO will further ensure the contractor’s budget is realistic and reflect a clear understanding of the requirements. The planner’s independent government estimate is included in the file.

g. 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.

Market research was not conducted. Given the urgency of this requirement in response to the COVID-19 crisis, it is not feasible to identify another contractor that would have the capacity to quickly take on this broad scope of work.

h. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition.

Publication of a notice is not required per AIDAR §705.202(b)(1), and no sources submitted a written expression of interest in this acquisition.

i. A statement of the actions, if any, USAID may take to remove or overcome any barriers to competition before any subsequent acquisition of the supplies or services required.

In this urgent response to the COVID-19 outbreak, USAID will intensify efforts to build the technical and institutional capacity of local organizations as well as small U.S. firms to participate in key activities, including as sub-contractors, when feasible. I USAID will ensure that Pragma seeks opportunities to devolve an activity to local organizations for direct implementation. It is anticipated that strengthening their capacity will expand the pool of potential offerors for future small procurements and enable wider competition among local organizations. Examples are the following:

Local bankers’ associations: COVID-19 will create a widespread, acute need for working capital among SMEs and entrepreneurs due to mandated business closures and reduced consumer demand.

Many start-ups and SMEs will be facing bankruptcy and laying off of employees. MEG will work with local bankers’ associations to develop the expertise for commercial banks to make working capital loans to SMEs and entrepreneurs based on practices such as cash flow projections and trade finance. Currently, banks in ME countries do not have this expertise and do not lend to SMEs or entrepreneurs. At the same time, bankers’ associations can help commercial banks in working with

SMEs, that might otherwise default, to reschedule loan payments, thereby stabilizing the entire commercial banking system.

Business support organizations: Local non-governmental organizations (NGOs) will be formed or strengthened to serve as business support groups that can provide advice to entrepreneurs and SMEs on business plans, budgeting, marketing and other business strategies that will help small businesses to stay afloat during and immediately after the COVID-19 crisis.

Private sector firms: Such firms will be trained to re-position themselves to respond to the COVID- 19 crisis. For example, manufacturing companies may restructure processes to produce personal protective equipment. USAID can build the capacity of private sector firms to train educators in how to teach in a virtual classroom (a MEG project is already engaged in this in Yemen as a result of COVID-19). Private firms can be trained in the cleaning/disinfecting of local currency on behalf of central banks (this is already ongoing in some countries).

Civil society organizations and private sector firms: Such organizations that engage in public outreach will be supported in their capacity to produce economic messages.

Universities; Educational organizations will be used for data and sector analysis and for conducting research on specific topics.

Required Certification

While Contracting Officer is the Approving Official based on the authority given under the Expedited Procedures Package, because this package was approved by the Administrator on the basis that full and open competition would impair foreign assistance objectives and be inconsistent with the foreign assistance program pursuant to Section 706.302-70(b)(3)(ii) of the AIDAR, a separate Contracting Officer certification, normally required per AIDAR 706.302- 70(c)(1), is not subject to this requirement.

The requirement for technical certification provided for in FAR 6.303-1(c) is fulfilled through the signature of the Technical Officer below certifying the specific supporting data for this J&A as accurate and complete.

RECOMMENDATION

It is recommended that, based on the discussion above and the Technical Officer’s certification below, you approve this J&A pursuant to the Expedited Procedures Package, including the Technical Officer’s certification, which will constitute the justification for other than full and open competition as required by Tab 1 of the Expedited Procedures Package (D&F/“Authorization of Less than Full-and-Open Competition in the Award or Modification of Contracts).

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