Justification - DG East Mod-9.pdf

TO: Jessica R. Faber, Contracting Officer, USAID/Ukraine

CC: Deb Broderick, Agency Competition Advocate

FROM: Cory Johnston, COR, Office of Democracy and Governance, USAID/Ukraine

DATE: July 19, 2024

RE: Modification to Contract No. 72012118C00006, USAID Democratic Governance East Activity

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 use of other than full and open competition, pursuant to the authorities under the Expedited Procedures Package (EPP) for Ukraine, Belarus, and Moldova, approved on December 4, 2023 (the initial EPP was approved by the Administrator on March 6, 2022). Your approval of this Justification and Approval (J&A) constitutes the justification for other than full and open competition as required by Tab 1 (Determination and Findings (D&F):

Authorization for Use of Other than Full and Open Competition in the Award or Modification 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, subject EPP for Ukraine, Belarus, and Moldova, approved on December 4, 2023. Your approval of this J&A constitutes the justification for other than full and open competition as required by Tab 1.

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

This is a request to approve a contract modification to increase the Total Estimated Cost (TEC) and expand the scope of Contract No. 72012118C00006, USAID Democratic Governance East Activity (DG East). The proposed modification will increase the TEC by $50,000,000, from $107,051,252 to $157,051,252. The current contract period of performance is through September 30, 2026 and would remain unchanged.

The original purpose of DG East is to promote inclusive civic identity, common civic values, and a unified Ukraine by addressing the divisive impacts of Russia’s aggression, cases of far-right wachakzai Highlight wachakzai Highlight wachakzai Highlight wachakzai Highlight wachakzai Highlight

J&A USAID/Ukraine DG East Activity

Ukrainian nationalism, and the consequences of ongoing armed conflict through increased citizen participation, improved service delivery and more responsive governance.

This contract modification will allow DG East to add a new third objective to the scope, “Strengthened economic recovery of liberated and frontline communities in Government of Ukraine (GOU)-controlled eastern and southern Ukraine.” Specifically, the additional funding will be split roughly equally between this new objective and the existing Objective 2, which will be focused on local government preparedness, response to ongoing war-related shocks, and strengthening of local government services. DG East will continue to implement activities currently funded/programmed under Objective 1 (“shared civic culture”), but no new funding will go towards these activities and this objective will phase out over the course of 2024-2025.

If approved, this pivot would allow DG East to expand efforts and to strengthen the economic recovery of liberated and frontline communities in GOU-controlled eastern and southern Ukraine.

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

A $50,000,000 TEC increase and an associated scope expansion would allow USAID to quickly respond to emergency needs and support government/civic preparedness and resilience to shocks. Given Russia’s destruction of roughly half of Ukraine’s electricity generation capacity and the likelihood of continued attacks, DG East has capacity and network to rapidly meet emerging needs in those communities most affected by Russian aggression. Specifically, $30,000,000 (60% of this TEC increase) would be reserved for the procurement of in-kind equipment, materials or services to enable local governments’ to maintain basic public services (e.g. water, heat, electricity) in the face of ongoing Russian attacks. This in-kind assistance would include procurement of equipment. This funding will be devoted to helping DG East’s local government partners prepare for and respond to crises, for example, through the provision of generators, plywood and building materials, or heavy equipment needed to make emergency repairs.

The remaining $20,000,000 will be divided between management costs and the expansion of the activity’s Grants under Contract (GUC) fund (to be determined during budget negotiations) to provide grants to local NGOs and private sector actors (farmers, entrepreneurs, veterans, small/micro businesses) in target areas in order to catalyze economic recovery in south/eastern Ukraine. The GUC may be used for both Objectives 2 and 3.

The Contractor will continue to respond rapidly to unanticipated opportunities and obstacles as they arise. Additional support to increase efforts to cover current and emerging war-related challenges within Ukraine will be provided under DG East’s objectives as outlined below:

Objective 1: Developing greater acceptance of a shared civic culture based on common values and understanding

DG East will continue operations with the existing budget, no new funding will go towards the activities under Objective 1.

Objective 2: Increasing participation to improve Ukraine’s governance and reform process and help resolve community problems

The following Objective 2 additional activities are illustrative and may include (but are not limited to):

● Procuring and delivering generators to ensure continuity of vital services in the most war-affected communities.

● Procuring and delivering plywood and other building materials to enable local governments to repair buildings damaged by shelling.

● Procuring and delivering heavy equipment (backhoes, loaders) to enable local authorities to repair damaged water supply and heating systems, roads, and buildings.

● Provide grants to enable partnerships between local governments and providers of childcare, psychosocial, rehabilitation and other services.

Objective 3 (new): Strengthened economic recovery of liberated and frontline communities in GOU-controlled eastern and southern Ukraine

Sub-Objective 3.1: Increased economic growth potential in liberated and frontline communities.

Sub-Objective 3.2: Increased integration of internally displaced persons (IDPs), veterans, women, and other underrepresented groups into economic opportunities.

The following Objective 3 activities are illustrative and may include (but are not limited to):

● Provide vocational training for highly demanded occupations such as plumbers, tractor drivers, builders, plasterers, electric welders, crane operators, and electricians.

● Procure equipment and grant to 40 businesses who are rebuilding and expanding operations.

● Assist smallholder women farmers to identify new market opportunities, create branding and marketing strategies, and promote products and services locally and globally. Provide grants of drip irrigation equipment, processing machinery, and technology for fruit and vegetable and cheese and milk processing to increase productivity.

● Organize entrepreneurship training for veterans and their family members. Provide small grants to veteran-owned enterprises.

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 on December 4, 2023.

The Determination and Findings (D&F): Authorization for Use of Other than Full and Open Competition in the Award or Modification of Contracts is included as Tab 1 to this document.

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

Chemonics began implementing DG East in September 2018. Following Russia’s full-scale invasion in February 2022, Chemonics was able to rapidly pivot, increasing its geographic focus from two oblasts to nine and dramatically increasing the procurement of equipment beyond what was envisioned in the original contract in order to help its local and oblast government partners respond to war-related emergency needs. For example, since the full-scale war started, DG East has procured and delivered more than 500 generators, 62 pieces of heavy equipment, and 20,000 sheets of plywood, and has equipped 45 IDP shelters and 138 bomb shelters.

Chemonics has demonstrated that it has the ability to rapidly procure items needed to respond to crises, while continuing to implement the other aspects of the activity related to civic engagement and strengthened governance processes.

Russia’s ongoing and increasingly targeted attacks on Ukraine’s civilian infrastructure and communities in eastern/southern Ukraine have not abated and are expected to continue into the foreseeable future, requiring USAID to maintain a capability to quickly and effectively extend both pre-positioned and emergency assistance to target populations in these areas. DG East has existing staff, relationships with local governments/civil society, and procurement networks that are uniquely positioned to expand and pivot to address ongoing war-related shocks, such as a rapid change in energy generation capacity, population displacement, and/or new social service needs. Helping Ukraine win the war, including through direct support to communities facing the brunt of Russia’s attacks, is the United States’ top objective in Ukraine.

With additional funding, Chemonics will be able to efficiently improve government service delivery, responsive governance, and nascent economic revitalization in target areas for the following reasons:

(i) Complementarity with Existing Programming: The new economic objective will complement USAID Ukraine’s agriculture activities AGRO and HARVEST by working with farmers whose operations are smaller (less than 10 hectares) than those two activities’ target beneficiaries. Likewise grants for businesses in the most war-affected communities and support for veteran entrepreneurs will help address the most important gap for businesses in frontline areas, the lack of access to finance, and will reach businesses that USAID’s largest business support programs do not target. With these new resources, DG East will also be able to build on pilot activities that OTI/UCBI has implemented, for example, by scaling up training for women in highly demanded skills.

(ii) Operations: Since the start of the full-scale invasion, DG East has proven to be highly capable at procuring and rapidly delivering a large quantity of equipment and materials to meet the urgent needs of the most war-affected communities, including generators, tents for IDPs, heating equipment, plywood, and much more. The activity has seasoned regional teams who have shown that they can deal with the unexpected demands brought by the war while also implementing the activity as designed.

(iii) Technical Expertise: DG East has seasoned regional teams with deep geographic and technical expertise, including in local government service provision and civic engagement.

Through grants to local NGOs, DG East can access additional technical expertise that it may need to implement economic activities under Objective 3.

(iv) Relationships with Key Stakeholders: Over five years of implementation, DG East has developed strong working relationships with local and oblast governments throughout the east and south, as well as with dozens of NGOs and local media organizations that it has supported.

DG East has also built productive relationships with national counterparts such as the Ministry of Reintegration of Temporarily Occupied Territories and the Ministry of Veterans Affairs.

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

Publication of a notice is not required per the determination at AIDAR §705.202(b). Due to the immediate need for assistance to respond to the economic disruption from Russia’s invasion and the protracted nature of the war, it is not practicable to solicit offers from multiple sources.

Frontline and near-frontline communities -- including several major economic hubs -- need to cope with ongoing Russian aggression and destruction while supporting and strengthening economic activity in their communities and regions.

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

The Office of Democracy and Governance prepared an IGCE for the DG East TEC increase and scope expansion, which serves as the original basis for budget approval. The estimated budget is based on historical costs for similar services. Upon approval of this justification, the Contracting Officer will request a proposal from the contractor for the additional work requested. The Contracting Officer will conduct a thorough cost analysis of that proposal, with the same level of rigor as used with competitive procurement, to ensure that the actual cost to the U.S. Government is appropriate, 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.

No new market research was conducted. Chemonics was selected as the DG East contractor through the full and open competitive procurement in 2018. Since the purpose of the proposed TEC increase is to respond to wartime needs, and hostility-related challenges in Ukraine, it is not feasible to select another contractor that would be able to undertake these activities given Chemonics’ ongoing operations in Ukraine, familiarity with the country context, its established relationship with key GoU counterparts and other stakeholders. Market research was conducted at the pre-solicitation stage for the DG East award and included in the Acquisition Plan for DG East.

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

USAID/Ukraine has determined that due to the urgency of responding to the current situation in Ukraine, resulting from the Russian invasion, 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 DG East 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 DG East contract to address the additional requirements, so publication of a notice is not required per the determination at AIDAR §705.202(b), and no sources submitted a written expression of interest in this acquisition.

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 proposed modification is a specific case based on the urgent need to respond to priority requests from the GOU and stakeholders to support partners and implement activities at the local, regional, and national levels during wartime and the post-war period. USAID/Ukraine is currently designing a new mechanism(s) that would receive supplemental USG funding for the associated technical assistance. The Agency intends that any subsequent or future support will be procured through full and open competition, 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 complete and accurate in accordance with the EPP entitled Expedited Procedures Package (EPP) for Ukraine, Belarus, and Moldova, approved on December 4, 2023 (attached).

Cory Johnston, COR Date

Cory Johnston Digitally signed by Cory Johnston Date: 2024.07.19 15:35:25 +03'00' wachakzai Highlight

13. RLO Clearance:

Gregory Marchand, Acting Resident Legal Officer Date

14. Contracting Officer Approval:

Jessica R. Faber, Contracting Officer Date

Attachments:

Tab 1- EPP for Ukraine, Belarus,and Moldova - Determination and Findings (D&F): Authorization for Use of Other than Full and Open Competition in the Award or Modification of Contracts

CLEARANCE of Justification and Approval (J&A) for Other than Full and Open Competition for Contract No. 72012118C00006, USAID Democratic Governance East Activity (DG East)

Drafted: Cory Johnston, COR DG East, ODG Deputy Director

CLEARANCES:

ODG – AHopper ok (7/17/2024)

INFO: DMD/MD

GREGORY ALAN

MARCHAND

(affiliate)

Digitally signed by

GREGORY ALAN

MARCHAND (affiliate) Date: 2024.07.19 15:59:36 +03'00'

JESSICA ROSE

FABER

Digitally signed by JESSICA

ROSE FABER

Date: 2024.07.19 16:05:27 +03'00' wachakzai Highlight wachakzai Highlight wachakzai Highlight wachakzai Highlight wachakzai Highlight wachakzai Highlight wachakzai Highlight