MnM JA 15July2020.pdf

JUSTIFICATION AND APPROVAL (J&A)

TO: David Arnett, Contracting Officer

CC: Agency Competition Advocate ( justificationsanda@usaid.gov and outbreak_EPP@usaid.gov )

FROM: Judith Kitivo, Contracting Officer’s Representative, Feed the Future Tanzania Mboga na Matunda

DATE: July 14, 2020

RE: Feed the Future Tanzania Mboga na Matunda activity contract

#AID-621-C-17-00001

SUBJECT: Justification for Other than Full and Open Competition under the Expedited Procedures Package (EPP) 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 EPP 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 EPP.

This document was prepared by the USAID/Tanzania Economic Growth Office for the Mboga na Matunda (MnM) activity (#AID-621-C-17-00001) awarded in January 2017.

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

This requests your approval to modify the MnM agreement to: 1) increase the TEC by $4.75 million, from $20,227,276 to $24,977,276; and 2) extend its current end date from June 30, 2021 to June 30, 2022. The one year extension will enable MnM to re-establish the disrupted input supply chains, revive business to business linkages, strengthen delivery of required extension services, reorganize production clusters, and re-establish links to markets. The current end date will allow MnM to fully engage during the upcoming “short rains” planting season (June- September). However, MnM will enter the close-out phase early in 2021 and have minimal presence during the main “long rains” planting season. The long rains will be the first main growing season after the pandemic and based on the current situation it is anticipated that farmers and businesses will require a strong presence to recover. A new activity would not have sufficient time to establish the relationships with farmers and businesses that MnM has developed and consequently, programming would suffer during a critical phase of recovery from COVID-19.

mailto:justificationsanda@usaid.gov mailto:outbreak_EPP@usaid.gov

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

The COVID-19 pandemic has caused significant secondary impacts, specifically in the agriculture sector, which has created additional horticulture development needs that USAID seeks to address. In Tanzania, horticulture was immediately impacted through disruptions in supply chains and markets, business to business relationships, access to inputs and financial services, and delivery of extension services. Many of USAID’s private sector partners are already experiencing shortages in their inventories, and limitations in their supply chain due to international suppliers from Europe and Asia cancelling shipments into Tanzania. Ninety percent of inputs are imported in Tanzania and key inputs, including fertilizers, seeds, and agrochemicals are already experiencing serious shortages, shipping delays, and increased transport costs. Shipping delays require importers who typically bring in a 30 day supply of products to look ahead 3-6 months. This additional cash outlay drains liquidity from the system and forces companies to prioritize cash transactions rather than the normal process of deferred billing. This situation disadvantages local enterprises that do not have the same access to finance as their international competitors. Small businesses and farmers, especially those in rural areas, are further disadvantaged by the fact that with limited supplies, importers prioritize large accounts and input suppliers prioritize accounts with larger farms.

Worldwide travel restrictions have devastated Tanzania’s tourism industry, which represents a large market outlet for horticulture farmers selling to hotels. Decreased freight movement has disrupted exports of Tanzanian horticulture products forcing growers to sell on the local market at reduced prices. When a few cargo flights resumed operations the unit cost was extremely high leading to a very minimal profit margin and disappointments to investors. It will take time and resources to re-establish these markets and production hubs. Farmers are currently cash poor due to current market disruptions and will require increased support to get back to previous production levels.

MnM implements a private sector driven approach, working with businesses who provide inputs and those who purchase produce. The activity organizes and develops producer groups and links them to products and services to promote a consistent supply of high quality products. MnM works in the southern highlands, an area with underdeveloped production potential. In 2019, MnM’s partners sold $82 million worth of goods and services. The network of over 400,000 individual farmers and relationships that MnM has developed with private sector partners over the past two and a half years are assets that could be used to assist through this difficult period. Under this time and cost extension MnM will continue their current interventions which would not be possible with the current end date and TEC level.

To address the negative effects resulting from COVID-19 to the horticulture subsector, the activity will put strategic efforts in the following areas.

Input Supply

MnM will work with input providers to strengthen their distribution networks and ensure sufficient stock is distributed to village based agrodealers serving rural farming communities.

MnM will link rural agrodealers together to aggregate demand. The activity will further link these groups to large urban based wholesalers. MnM will re-establish, maintain and link their large network of producer groups to these rural agrodealers to ensure that demand exists for improved agricultural inputs.

Business to Business linkage

MnM will foster village and ward level business to business networking opportunities that were previously gaining momentum but suddenly interrupted by the pandemic. Businesses providing farm services were increasing as produce volumes increased prior to the pandemic.

Demand was on the rise for services such as spraying, field preparation, input provision, seedling production, transportation, aggregation and others. Support to these businesses will be important as MnM works on a parallel track to increase production.

Extension Services

MnM will address existing gaps with public and private extension workers. Extension workers need to increase the number of farmers (increase acreage and production volumes), and increase quality and productivity of horticultural commodities for companies, buyers and service providers to have the profit incentive to reach these farming communities with their products and services. MnM will train extension workers (public and private) on modern farming practices, and how to effectively mobilize and train large numbers of farmers. MnM will also link extension workers, farmers and off farm businesses (agro dealers, processors, exporters, larger farms, service providers, etc.) to catalyze transactions (business deals) between these stakeholders.

Access and Dissemination of Data

To improve smallholder farmer access to inputs, markets, and services, MnM is working with farmer clusters to collect and organize horticulture production information within and among each cluster. Data aggregators who are cluster based have been identified and supported with data collection tools. Data aggregators are community members with an interest in developing this activity into a money-making service. This data aggregator uses the consolidated volumes to be planted or harvested to attract large volume buyers, input companies, finance institutions, and service providers. The larger volumes, together with the fact that this aggregator organizes the harvests or deliveries reduces the transaction costs for private companies and makes service delivery attractive. MnM will continue to train the data aggregators, develop business to business linkages, and strengthen private sector ties with the production zones being developed. This process was disrupted by COVID-19and will need to be re-started in subsequent growing seasons.

Farmer Aggregation

One of the most important components of USAID’s agriculture work is to aggregate small and medium scale rural farmers. Aggregating into large groups allows farmers to access larger volume markets and purchase inputs and services in bulk. Aggregation also makes information dissemination more efficient leading to greater technology adoption. Together, this results in lower prices for inputs, higher prices for produce through more stable markets and more consistent supply of the necessary volumes and quality of produce. Due to COVID-19, farmers have not been able to congregate to share harvest and planting data and link to buyers and goods and service providers. MnM will re-establish these groups to provide them with a wide range of services that should allow them to recover more quickly from the effects of the pandemic.

Access to Finance

In response to the lack of value chain finance caused by COVID-19, MnM will expand efforts to increase access to financial services through its partnerships. MnM will target capital flow to input suppliers, growers, buyers, processors and other value chain actors as needed. The activity will provide business development services (BDS) to small and medium sized enterprises to develop business plans and bankable loan applications. MnM will create linkages between financial institutions and their rural private sector partners. Use of the Development Credit Authority managed through Amana Bank will receive priority when linking to financial institutions.

Market Access

Lastly, MnM’s Market Facilitation Team will develop new interventions to re-establish disrupted markets under the hotel initiative and markets for export crops. Many of MnM’s production groups sold exclusively to hotels which is a niche market requiring stringent quality control. This market completely disappeared when flights stopped and these growers did not receive the premium for their produce. MnM will continue its partnership with the Tanzania Horticulture Association to ensure that smallholder farmers are able to engage in export markets.

USAID anticipates that this work will require an additional $4.75 million and twelve (12) months to complete. At the end of this period, USAID will procure another horticulture activity under a free and open competition to further develop Tanzania’s horticulture sector.

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 for Responding to Outbreaks of Contagious Infectious Diseases” approved March 24, 2020. The D&F is attached to this file in Tab 1. The EPP can only be used for an Infectious Disease Outbreak, as defined in paragraph 2 of the D&F (Tab 1). The COVID-19 outbreak was declared a Public Health Emergency of International Concern by the World Health Organization on January 30, 2020 and therefore the class D&F applies to COVID-19 emergency response activities.

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

The broad range of effects of COVID-19 across the horticulture sector have left many USAID partners vulnerable to negative economic and health impacts. Tanzania’s horticulture industry is nascent and an unexpected shock such as the current pandemic could be catastrophic. It is impossible to put a new mechanism in place in a timely manner to deal with these negative impacts. However, the MnM activity is already operational, successfully meeting targets and has spent years developing a network of partnerships that can immediately be leveraged to recover from the current disruptions. A new IP would need to establish relationships with stakeholders throughout the horticulture sector including large numbers of farmers, the private sector and GOT. The time required to establish these relationships would result in a gap in programming during the main growing season in 2021.

This is a critical period when farmers normally have the greatest need for assistance and it is expected to be greater next season due to COVID-19. Leveraging established relationships is the best way to support the recovery of Tanzania’s horticulture sector.

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

The EG Office is already in the design phase for a new horticulture activity which will be set to begin when MnM ends. As such, a Request for Information (RFI) has already been posted for the new activity. The Mission received no responses from US small businesses. No local partners responded with capacity to manage an activity of this size. Thus, the Mission doesn't have confidence that a quick award to a local partner would be possible or yield the types of results needed to help farmers at the scale that MnM is capable. TAHA is a local subawardee under this award and will continue to be a key part of implementation during the extension period. However, TAHA alone does not have the ability to cover the geographic and technical scope needed to be reached under this extension.

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

The Contracting Officer will make a fair and reasonable determination by using the IGCE and historical costs associated with the activity. Since the Economic Growth Office has years of actual costs associated with this activity, they can generate an accurate IGCE for which to compare the contractor’s proposed budget for the extension period.

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 solely for this extension. However, the Economic Growth Office has already started conducting market research for the next generation horticulture activity. Through a Request for Information issued for the new activity, USAID received a high number of responses. But none of the respondents have the experience to provide the immediate support required under this extension. Thus, given the urgency of this requirement in response to the COVID-19 crisis it is not feasible to select another contractor who is familiar with the breadth and scope of the work to be undertaken.

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

No sources submitted a written expression of interest in this extension (see response in section G).

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 to participate in key activities, as it is anticipated that strengthening their capacity will expand the pool of potential offerors and sub-partners for future procurements and enable wider competition among local organizations. A next generation horticulture activity is already being designed and will be procured using full and open competition following the completion of the MnM activity.

RECOMMENDATION

It is recommended that you approve this justification for use of other than full and open competition pursuant to the “Expedited Procedures Package for Responding to Outbreaks of Contagious Infectious Diseases”, 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 (D&F for the Authorization of Less than Full and Open Competitive Procedures in the Modification or Award of Contracts) of the EPP.

Encl. Tab 1 - EPP D&F for the Authorization of Less than Full and Open Competitive Procedures in the Modification or Award of Contracts.

CERTIFICATION:

The requirement for technical certification at FAR 6.303-1(c) is fulfilled through:

a. The signature of the Technical Officer below certifying the specific supporting data for this J&A; and

b. The D&F Authorization for the Use of Other than Full-and-Open Competition in the Award or Modification of Contracts under the Expedited Procedures Package for Responding to Outbreaks of Contagious Infectious Diseases” approved on March 24, 2020. (attached in Tab 1).

The Contracting Officer is the Approving Official based on the authority given under the EPP. However, a separate Contracting Officer certification is not required per AIDAR 706.302-70(c)(1).

Technical Officer:

I hereby certify that the supporting data which form a basis for the justification are complete and accurate to the best of my knowledge and belief.

_Andrew Read via e-clearance___ ___06/08/2020__________ Technical Officer Date

APPROVAL:

__DArnett via e-clearance____________ _14 July 2020_____ Contracting Officer Date:

CLEARANCE:

JGButler via e-clearance 7/14/2020 RLO or GC/A&A Date: