Limited_Source_Justification-WIFIA_TO_POST.doc

LIMITED-SOURCES JUSTIFICATION FOR FEDERAL SUPPLY SCHEDULE PROGRAM

68HERC19Q0043

Upon the basis of the following justification, prepared in accordance with Federal Acquisition Regulation (FAR) 8.405-6(c), I, the Contracting Officer hereby approve the use of sources limited to fewer than those required in FAR 8.405-1, FAR 8.405-2, and FAR 8.405-3 pursuant to the authority of 41 U.S.C. 251 as implemented by 8.405-6(a)(1)(i)(B). This acquisition is conducted under the authority of the Multiple-Award Schedule Program (41 U.S.C. 251, et seq, and 40 U.S.C. 501).

1. Identification of the agency and the contracting activity.

The U.S. Environmental Protection Agency (EPA) Office of Water, Office of Wastewater Management, Municipal Support Division plans to award a limited source Task Order for services detailed in Paragraph 3.

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

The agency intends to award a task order with an estimated value of XXX, XXX against GSA contract number GS-00F-122CA with limited competition, to Summit Consulting, LLC (Summit). The anticipated Period of Performance will be from the effective date to April 30, 2020.

3. A complete description of the supplies and/or services required to meet the agency’s needs.

The Water Resources Reform and Development Act (WRRDA) authorized the creation of the Water Infrastructure Financing and Innovation Act (WIFIA) program to be administered by the Environmental Protection Agency (EPA). The program is designed to accelerate investment in our nation’s water infrastructure by providing long-term, low-cost supplemental loans for regionally and nationally significant water projects. The WIFIA program has received an appropriation for credit subsidy since Fiscal Year 2017, selected two rounds of projects, and closed 8 loans (as of April 2019).

As a federal credit program, the WIFIA program must comply with the Office of Management and Budget (OMB) Circulars A-11 and A-129. In addition, the WIFIA program structure and policies will need to conform to statutory and regulatory requirements and industry best practices for managing risk. To do that, the program must develop and maintain up to date robust policies and procedures will help ensure that the WIFIA program is effective in meeting programmatic objectives while providing adequate protection to the taxpayer.

The scope of this task order is intended to encompass a full array of technical support services for WIFIA that would allow successful development and implementation of this new program within EPA. Contractor support services will involve: developing and updating program policies and procedures; training on various topics related to the Federal Credit policies; updating the program’s A-123 Risk Assessment; supporting outreach efforts; assisting with project selection; supporting data and document management with the WIFIA SharePoint sit; updating the credit subsidy models to be compliant with OMB Circular A-11; validating subsidy model for transactions; supporting risk management; assisting with credit reform budgeting in accordance with the Federal Credit Reform Act; developing a Credit Program Risk Management Framework; developing Portfolio Management policies and loan re-estimate procedures; preforming loan re-estimates; and developing a standard WIFIA cashflow model.

4. An identification of the LSJ rationale, and if applicable, a demonstration of the contractor’s unique qualifications to provide the required supply or service.

FAR 8.405-6(a)(1)(i)(B), only one source is capable of providing the supplies or services required because the supplies or services are unique or highly specialized.

At the program’s inception, EPA looked for existing Agency contracts that were available to address the immediate need to initiate development of the WIFIA program. The Office of Water (OW) was able to find an existing contract that could provide the required technical support, but that contract had limited capacity to continue to support development and implementation of the program. Summit was the subcontractor that provided the technical support to EPA, in compliance with industry best practices, Federal credit guidelines, and other Federal regulations, to stand up the WIFIA program.

In May 2016, a sole source Blanket Purchase Agreement (BPA) (EP-BPA-16-C-0004; $X.X maximum value with maximum expiration date of May 2020) was awarded to Summit to continue its support for developing and implementing the WIFIA program. The single-award contract expired May 2018; the options were not exercised. The assistance Summit has provided to date includes advisory support for implementation of the WIFIA Program, the production of program documentation and operational protocols, the development of a credit subsidy model and a risk rating tool, support for letter of interest intake, review, data management, and notification during project selection, and the analysis of risk for individual transactions.

Since 2016, the WIFIA program has grown very quickly. In FY2017, the program received an appropriation for $25 million in credit subsidy allowing it to loan over $2 billion. With this amount, EPA selected 12 projects to apply for loans. In FY 2018, the program received an additional $55 million in credit subsidy allowing it to loan an additional $6 billion. EPA selected 39 projects to apply for loans. In FY 2019, its appropriation increased again to $60 million, which will result in about $6 billion in loans. On April 5, EPA announced the process for applying to receive a loan with the FY 2019 appropriation. The FY 2029 selection process will likely result in the selection of another 35-45 projects to receive loan. To date, 8 loan totaling over $2 billion have closed. Another 43 loans in the pipeline to be closed over the next approximately 18 months. The exponential growth of the program has resulted in an ongoing need for support in order to best serve applicants and provide efficient services.

As the program grows and loans are closed, the program moves into a new phase of development. A strong monitoring and risk management framework is needed to ensure that the program maximizes its achievement of policy goals within acceptable thresholds of risk. The Summit Team is needed to support the establishment of a program structure defined by clear lines of authority for the program’s accounting, budgetary, financial, and risk management functions. In addition, the size of the program requires the processes be continually updated and streamlined to efficiently select, negotiate, close, and monitor loans.

Additionally, in October 2018 WIFIA was amended by America’s Water Infrastructure Act (AWIA) of 2018. The amendment created a new program under WIFIA for State Revolving Loan Fund (SRF) programs. The new program is authorized to receive funding in 2020. Implementing this program in a short time frame with require updates to existing policy and procedures, guidance documents for internal and external audiences, and the credit subsidy model and risk rating tool.

Accordingly, Cincinnati Acquisition Division (CAD) and OW have been collaborating to develop a new task order that would provide continued technical support for the development and implementation of the WIFIA program and allow EPA to meet the deadlines established for this program. The recent amendment referenced above have created an even more critical need for this limited source task order and continued support by Summit. Any delay in the development and implementation of the program could prevent EPA from successfully meeting its deadlines.

In addition, Summit is the only source capable of providing the necessary support for the continued development and implementation of the WIFIA program, because the services required are very unique in nature and highly specialized. Congress does not frequently authorize new federal credit subsidy programs. There have been limited opportunities for contractors to gain experience assisting agencies in developing and implementing federal credit programs as WIFIA is only the third federal credit program to be developed since 2008. Moreover, EPA has never been authorized to establish a federal loan program, so EPA’s in-house expertise is very limited. Significant technical support is needed by the current contractor in order to ensure continuity and cohesiveness during the development this new program, and to ensure EPA is fully able to implement, properly monitor, and make adjustments as needed to the program once the initial framework has been created. EPA has done significant market research as noted below and has found Summit uniquely qualified to provide the services needed to ensure efficient and effective development and implementation of this critical program, especially in light of the deadlines discussed above.

The Agency conducted market research on the Federal Supply Schedule (FSS) vendors available for this task order and has found Summit possesses unique and highly specialized experience that is needed to fully develop and implement the WIFIA program. Summit has unique expertise with the Federal Credit Reform Act of 1990 and it has supported a number of Federal Credit programs since 2003. This includes the Department of Treasury CDFI Bond Guarantee Program and the Department of Energy’s Title 17 Loan Guarantee Program. These are the only two other Federal credit programs formed since the recession in 2008 whose programs reflect the requirements in the amended OMB Circular A129, “Managing Federal Credit Programs.” In addition, Summit has direct experience in designing credit models and A-129 compliant programs for other Federal agencies and has expertise in navigating the requirements of OMB. The Summit Team also has experience working with the Transportation Infrastructure Finance and Innovation Act (TIFIA) program (which Congress has requested EPA to model its program after), that covers multiple angles, including working with the office of the Secretary of Transportation to perform a loan programs review, and serving on the Department of Transportation’s (DoT) audit team as a credit subsidy expert. In addition, the Summit Team also has several years of experience working with the TIFIA program as a financial advisor evaluating requests for credit assistance, as well as structuring and negotiating term sheets and credit agreements for approximately 10 TIFIA applications. Finally, Summit’s Principal served at the Office of Management and Budget (OMB) as a credit policy analyst, where he gained experience in all areas of Federal Credit, including credit subsidy model development, credit-related training, and financial and budget analysis across at least 30 Federal Credit programs. This expertise and experience makes Summit uniquely qualified to allow the agency to obtain the needed technical support as quickly as possible to help EPA expeditiously develop and implement the WIFIA program.

Transferring to another contractor in the middle of development and implementation of the program would require the new contractor to learn the intricacies of Federal credit subsidy models, particularly the assumptions and calculations made for the WIFIA Program, during the development of the credit subsidy model and risk rating tool. The current timeline for development of the WIFIA Program does not allow for any learning curve associated with a new contractor. With a new program that is entirely novel to EPA, continuity in support is critical to ensure consistency with applicable statutory and regulatory requirements, industry best practices for risk management, guidance from applicable OMB Circulars, including A-11 and A-129, and other oversight guidelines. Continuity of support is equally critical to ensure the timely development and implementation of a comprehensive and cohesive credit program with internal consistency among all the components of the program, including the associated policies, procedures, criteria, risk management strategies and documentation thereof. In addition, continuity of support is critical to selecting projects for 2019 selection round quickly (within 90 days of the deadline), closing the 43 loans currently in the pipeline, and monitoring the 8 closed loans. More importantly, regardless of the critical nature of the timeliness of the program development, Summit is the only capable source to provide the necessary support for the continued development and implementation of the WIFIA program.

5. A determination by the ordering activity Contracting Officer that the order represents the best value consistent with FAR 8.404(d).

In accordance with FAR 8.404(d), GSA has already determined the prices of supplies and fixed-price services, and rates for services offered at hourly rates, under schedule contracts to be fair and reasonable. EPA will obtain a cost proposal from Summit in support of this effort and evaluate the proposed rates against the GSA schedule rates and the IGCE developed for this effort. Therefore, with the above evaluation, by placing an order against a schedule contract in accordance with FAR 8.405, the ordering activity concludes that the order represents the best value.

6. A description of the market research conducted among schedule holders, and the results of the research, or a statement why market research was not conducted. A statement must be made that the supplies and services are available from the FSS.

The services to be performed are available under the Federal Supply Schedules. Sources were reviewed under GSA Source 00CORP, The Professional Services Schedule (PSS), specifically SIN 520-13, Complementary Financial Management Services. There are 196 small businesses currently listed under SIN 520-13 on GSA eLibrary. In addition, the EPA met with potential vendors expressing interest in the WIFIA program. None of the vendors that met with EPA were interested in providing the technical support needed to develop and implement the WIFIA program. The vendors were interested in the other work that will be conducted via competitive procurements with CAD for financial analyst services, legal service and engineering services. None of the contractors with financial advisory service experience had experience with the actual development of a Federal credit subsidy program. The firms mainly had experience in evaluating creditworthiness, negotiating financial terms and conditions in credit agreements, and providing post-closing financial services. Therefore, the program made a determination to include them in the list of vendors for the financial advisory services contract to be procured competitively at a later date. EPA also contacted TIFIA program officials to discuss known sources of qualified vendors. In addition, EPA conducted a random sampling of the GSA schedule vendors to review the contractor’s capabilities, terms and conditions. After reviewing the GSA schedule vendors, conducting market research and holding discussions with TIFIA officials, the EPA found that Summit Consulting, LLC is considered to be uniquely qualified to assist EPA in the development of its new WIFIA program. No other sources were identified during EPA’s market research or through consultation with subject matter experts in the TIFIA program. Therefore, Summit was determined to be the only source capable of meeting the requirement at this time, due to the unique and highly specialized nature of the services required, and Summit’s unique qualifications and expertise to provide them, as described in Paragraph 4.

7. Any other facts supporting the limited source justification.

None

8. A statement of the actions, if any, the agency will take to remove or overcome any barriers that led to restricted consideration before any subsequent acquisition for supplies and services is made.

At this point, EPA knows of no other source with the necessary qualifications and expertise that could provide these services to fulfill this requirement for the development and implementation of the WIFIA program. However, the EPA will continue to conduct market research with potential vendors, conduct discussions with TIFIA program officials and monitor the market place to ensure that future contracts needed to support the WIFIA program are competed among qualified contractors.

9. The ordering activity Contracting Officer’s certification that the justification is accurate and complete to the best of the Contracting Officer’s knowledge and belief and evidence that the supporting data that form a basis for the justification have been certified as complete and accurate by technical/program personnel.

Certification

10. Contract Level Contracting Officer Representative:

I certify that the facts and representations under my cognizance, which are included in this justification and which form a basis for this justification, are complete and accurate.

____//signed//__________ _06/06/2019____

Alejandro Escobar, CL-COR Signature

Date

Contracting Officer:

I certify that this justification is accurate and complete to the best of my knowledge and belief.

___//signed//________________________ ____06/06/2019___________

Kathleen Rechenberg, Contracting Officer Signature Date

Level Above Contracting Officer:

I certify that the facts and representations under my cognizance, which are included in this LSJ and which form a basis for it, are complete and accurate.

___//signed//______________________

____06/06/2019_________

H. David Hincks, Service Center Manager Signature

Date

Reviews and Approvals

Activity Competition Advocate (if < $700K and > $13.5M):

For a proposed order or BPA with an estimated value exceeding $700,000, but not exceeding $13.5 million, the justification must be approved by the advocate for competition of the activity placing the order. This authority is not delegable.

I have reviewed this justification and find it to be accurate and complete to the best of my knowledge and belief. Since this LSJ does not exceed $13.5M, this review serves as approval.

____//signed//____________

__06/06/2019___________

Tommie Madison, Competition Advocate Signature

Date