Justification and Approval for Commercial Justice Activity Contract No. 72016719C00001.pdf

JUSTIFICATION AND APPROVAL (J&A)

FOR OTHER THAN FULL AND OPEN COMPETITION

DATE: August 9, 2022

TO: Deborah Broderick, Agency Competition Advocate (ACA)

FROM: Zana Berisha, Contracting Officer’s Representative (COR), USAID/Kosovo, Democracy and Governance Office

SUBJECT: Justification and Approval for Other than Full and Open Competition (J&A) for a funded extension of the Contract No. 72016719C00001, “Commercial Justice Activity” (CJA), with Dexis Consulting Group

1. This document sets forth the facts and rationale justifying the use of exception to competition, in accordance with AIDAR 706.302. AIDAR 706.302-70(b) permits other than full and open competition “when it would impair or otherwise have an adverse effect on programs conducted for the purposes of foreign aid, relief, and rehabilitation.” AIDAR 706.302-70(b)(5) further states that use of this authority is appropriate for “[a]n award for the continued provision of highly specialized services when award to another resource would result in . . . unacceptable delays.”

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

This is a request to approve the use of other than full and open competition for a contract modification to increase the ceiling of Contract 72016719C00001, known as Commercial Justice Activity (CJA or Activity), by $4,800,000 from the current Total Estimated Cost (TEC) of $7,934,338 (inclusive of maximum award fee) to a revised TEC of $12,734,338 (inclusive of maximum award fee) and extend the Activity’s period of performance by two (2) years, from the current end date of February 18, 2024 to February 18, 2026. The TEC increase and extension of period of performance allow USAID/Kosovo to capitalize on the momentum in Kosovo around institutionalizing effective commercial justice systems and rely on deep and substantive relationships built in the course of the current commercial justice activity.

The original contract was awarded to Checchi and Company Consulting, Inc (Checchi) using full and open competition on February 15, 2019, with a period of performance ending February 18, 2024. Dexis Consulting Group (Contractor) acquired Checchi in February 2020 and acquired this contract as an asset. The acquisition of Checchi represents a change of ownership, not a change in the day-to-day management of the company. A Modification to the contract has been processed reflecting the executed novation agreement.

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

The CJA aims to increase transparency and predictability in commercial dispute resolution, reduce opportunities for corruption and dispel misconceptions and unfounded perceptions of businesses and the public about the existence of corruption in the sector. Significant political instability, with several elections and multiple (four) governments being formed in the first three years of the Activity, and restrictions due to the COVID 19 pandemic, caused unexpected difficulties in project interventions. Despite these roadblocks, the Contractor has built close and cooperative relationships between the government and private businesses, garnered broad-based political support for the establishment of the Commercial Court and gauged the interest of all stakeholders for a prompt and successful functionalization of the Commercial Court.

With a contract extension and expansion of scope to carry out additional interventions, the Contractor will focus on providing technical assistance for building the functionality of the commercial justice system while also focusing on solidifying the achieved results and on sustainability of interventions.

As a natural continuation of the establishment of the Commercial Court, the Contractor will provide its technical assistance in the following new activities:

Functionalization of the Commercial Court

The flagship intervention of this Activity is providing assistance for the establishment of a Commercial Court, designed to address significant shortcomings in how the current judicial system resolves commercial cases. To ensure the implementation of new and innovative interventions of this reform effort - critical to anti-corruption, rule of law, and improving the investment climate in Kosovo - and avoid backsliding caused by potential time and relationship gaps between two separate activities, the CJA’s scope would be expanded to work on (among others):

- digitalization of court services, such as but not limited to, introduction of online payments, conducting online hearings, electronic summons, communications, automatic notifications, enhanced case tracking mechanism and automated internal management;

- development of a service-oriented and people-centered justice mentality at the court by reforming personnel assessment process, developing managerial skills for Court leadership to ensure efficiency and effectiveness of services provided to citizens, transparency, accountability, and professionalism;

- capacity and expertise development through training and mentoring for the new judges, personnel and the Legal Unit of the Court, to address the current challenge of the lack of expertise among legal professionals; and

- support adoption of harmonized laws to close the gaps in the current procedural legislation.

Functionalization of Court-related Alternative Dispute Resolution

The Contractor successfully carried out a range of interventions to increase the use and knowledge of mediation and arbitration as methods for alternative dispute resolution (ADR), aimed at relieving the courts’ case burden and providing additional pathways for case resolution.

The Contractor’s contractual obligations requiring increased knowledge of and use of ADR have been fulfilled and exceeded. With the new commercial legislation and institutions, the critical need of professionalizing, understanding and promoting ADR specifically for commercial disputes requires the Contractor’s focused attention and expertise. The expansion of the Contractor’s scope will include:

- special trainings for judges and the personnel of the Commercial Court on the role of the court in arbitration and, in particular, the enforcement of arbitration agreements and the recognition of arbitration awards to alleviate current challenges in arbitrability and enforcement of awards; and

- development of commercial mediation referral infrastructure and knowledge at the Commercial Court, including special processes and automation, case tracking, online mediation, and specialized advanced-level trainings to mediators and lawyers on commercial mediation.

The interventions will be compliant with the guiding principles in the original scope of work of this Activity, and are aligned with the Gender and Inclusive Development Analysis for the USAID/Kosovo Accountable and Effective Governance Institutions Project as well as the principles of USAID Gender Equality and Women Empowerment Policy.

In line with the areas described above, under the proposed 24-month extension, the Contractor will provide critical services to complete the establishment of the Commercial Court and further advance commercial alternative dispute resolution mechanisms.

The additional cost of this extension is estimated at a value of $4,800,000. All the planned interventions would be market-driven and targeted.

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

AIDAR 706.302-70(b) permits other than full and open competition “when it would impair or otherwise have an adverse effect on programs conducted for the purposes of foreign aid, relief, and rehabilitation.” AIDAR 706.302-70(b)(5) further states that use of this authority is appropriate for “[a]n award for the continued provision of highly specialized services when award to another resource would result in substantial additional costs to the Government or would result in unacceptable delays” (emphasis added).

5. A demonstration of the proposed contractor’s unique qualifications or the nature of the acquisition that requires use of the authority cited:

This contract was awarded through a full and open competitive bidding process. Although local sources were able to bid, no local sources applied for this Activity so a direct award to a local organization was not possible.

The CJA is the only major donor activity working on strengthening the judicial aspect of commercial law and working with both businesses and government institutions to address the private sector’s judicial and legislative needs. The Contractor is also the only one in Kosovo that provides specialized services crucial for advancing commercial judicial reform as demonstrated by Kosovo’s 2010-2025 Rule of Law Strategy which envisions improvement of court operations dealing with commercial matters, reduction of delays in court proceedings, reduction of opportunities for corruption, increase of public confidence in the courts, increase of utilization of E-justice tools, ensuring efficient delivery of court documents, streamlining court administration, supporting the establishment of a legal advisors unit and judicial assistants career path, and promoting judicial transparency. The Contractor is uniquely qualified to continue work under the proposed extension specifically due to its extensive network with all relevant institutions, the momentum that interventions are at currently; and the trusted reputation it has built among all actors in the commercial justice area. In addition, a new award would result in lost momentum that took three years to build, requiring prolonged delays while a new awardee attempted to build those same relationships, eroding trust of these institutions because of such a change, delaying implementation and potentially losing momentum altogether, and all at significant additional costs to the U.S. government.

A direct award to a local contractor was not considered due to the lack of capacity and sufficient expertise of any local firms to fully command and manage the complexity and scope of such an Activity based on market research.

6. Description of the efforts made to ensure that offers are solicited from as many potential sources as practicable, including whether a notice was or will be publicized as required by Federal Acquisition Regulation (FAR) 5.2 [AIDAR 705.2].

As required by FAR 5.201, on March 7, 2022, a notice of intent for this proposed action was publicized for 15 days in SAM.gov, in an effort to ensure that offers were solicited from as many potential sources as practicable. No sources expressed interest and no responses were received for this action by the response date of March 25, 2022. Additionally, as required by FAR 6.305, the justification will be made publicly available on SAM.gov within 14 days of signing the modification, and will remain posted for a minimum of 30 days.

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

The Contracting Officer, by signing this document, certifies that the estimated costs to the U.S.

Government, as required by the independent government cost estimate, for the award under the subject contract represents the best value to the Government and that such an acquisition is appropriate and reasonable. In addition, upon approval of this justification, the Contracting Officer will request full technical and cost proposals from the Contractor for the additional work.

The Contracting Officer will conduct a thorough cost analysis of that proposal, with the same level of rigor as used with a competitive procurement, to ensure that the actual cost to the Government is fair and reasonable.

8. Description of the market research conducted, and the results or a statement of the reasons market research was not conducted:

No new market research was conducted because of the logical relationship of the support, i.e.

extension of services from the same contractor and the same technical advisors and consultants that have provided assistance for the Commercial Justice Activity project since its inception.

The contractor implementing Commercial Justice Activity, was selected based on a full and open competitive procurement process in 2017. The size/volume of the proposed modification will not change the nature of the original competition and SOW.

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

The extension of Contractor’s highly specialized services is required to meet Kosovo’s Stabilization and Association Agreement (SAA) requirements agreed upon with the EU as a precondition for further advancement towards EU membership. The SAA requires Kosovo to consolidate the rule of law and administration of justice (re-confirmed by the EU Strategy for the Western Balkans) by strengthening the independence, impartiality, and accountability of the judiciary and judges, and adequately preparing them for cooperation in … commercial matters.

Priorities related to improvements in the business environment are among the largest components in terms of the policy scope covered by the Stabilization Association Agreement (SAA), National Programme for Implementation of the Stabilization and Association Agreement (NPISAA) and Economic Reform Program (ERP). Further, the European Reform Agenda (ERA) Pillar I calls for Good Governance and the Rule of Law and identifies rule of law as one of the biggest challenges for Kosovo, with a number of recurring issues, including corruption. One of the identified interventions under ERA is the reinforcement of the capacity of the Economic Departments in Courts. Moreover, the ERA calls for promotion of foreign direct investments, and the SAA requires that Kosovo properly implement and enforce existing law and future legislation. These requirements align with all proposed objectives.

Supporting Kosovo’s European integration process and strengthening the rule of law are central goals and objectives of the U.S. Mission, including USAID/Kosovo. Unacceptable delays or an interruption of established provision of services in USAID judicial reform assistance via CJA would significantly and negatively impact USAID’s and the U.S. Mission’s ability to achieve key objectives. Thus, if US assistance is delayed, Kosovo’s ability to enact and implement key EU-required reforms will be impaired, as will the U.S.’ ability to meet its foreign policy objectives in the country.

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

As required by FAR 5.201, on March 7, 2022, a notice of intent for this proposed action was publicized for 15 days in SAM.gov, in an effort to ensure that offers were solicited from as many potential sources as practicable. No sources expressed interest and no responses were received for this action by the response date.

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:

All subsequent requirements for similar goods and services will be procured through full and open competition.