Monterey Salinas_Sole Source Justification FE.pdf

DEPARTMENT OF TRANSPORTATION

FEDERAL HIGHWAY ADMINISTRATION

Justification for an Exception to Fair Opportunity

1. Identification of the agency and the contracting activity.

Federal Highway Administration (FHWA), Office of Acquisition and Grants Management, 1200 New Jersey Avenue, S.E., Washington, DC 20590.

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

This is a justification for an exception to fair opportunity to award a task order to Skadden Arps Slate Meagher Flom LLP (Skadden) under FHWA Contract No. 693JJ318D000009.

The task order associated with this justification will provide financial advisory services for a prospective loan applicant in connection with the Monterey-Salinas Transit District’s (the Borrower) Operations & Maintenance (O&M) project under the Transporation Infrastructure Improvement and Innovation Act (TIFIA) Program. This justification is prepared in accordance with the content requirements in FAR 16.505(b)(2)(ii)(B) “Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized.”

3. Description of the supplies or services required to meet the agency’s needs (including the estimated value).

The Build America Bureau (Bureau) administers the TIFIA program, which provides (secured) direct loans, loan guarantees, and standby lines of credit to borrowers seeking to develop major surface transporation infrastructure projects. For each credit assistance request, the Bureau retains external legal counsel to provide support in the areas of: general due diligence; loan drafting and negotiation; advising on collateral package; and closing of credit transactions. The planned task order associated with this justification is for legal advisory services in connection with Monterey-Salinas Transit District’s TIFIA loan credit assistance request.

The estimated value of this task order is $219,460, based on historical cost/prices paid and know level of effort to complete similar work.

4. Identification of the exception to fair opportunity (see 16.505(b)(2)) and the supporting rationale.

The exception to fair opportunity utilized for this proposed action is FAR 16.505 (b)(2)(i)(B) "Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized.”

Skadden is currently providing services to support San Luis Obispo’s O&M Facility project prospective TIFIA loan application under task order No. 693JJ320F200001. Under this task order, Skadden has performed a significant amount of due diligence work, including review and analysis of a small rural transit agency in central, coastal California. Over the course of several months, Skadden also had numerous discussions with the Bureau team on risks and considerations for negotiation with the San Luis Obispo Rural Transit Authority based on its due diligence work. The work performed by Skadden under this task order provided Skadden with unique and specialized knowledge of the Borrower, the Borrower’s debt repayment cashflow sources, and the credit structure of the TIFIA loan proposed for the Borrower. It is noted that this transaction is the first Rural Projects Initiative (RPI) loan, a TIFIA program focused on lending to small rural projects.

This planned new task order will also be a RPI loan for a similar small rural borrower with the same loan repayment cash streams, which have already been analysed by Skadden.

Specifically, Skadden undertook the following analysis for San Luis Obispo which is also applicable for proposed loan for Monterey-Salinas Transit:

• analysing the legal structure and disbursement mechanics of the Local Transportation Fund, which is the key revenue source used to repay the TIFIA loan, and reflecting their unique nature in drafts of financing documents for the TIFIA loan;

• analysing the unique loan and collateral structure of the TIFIA loan proposed where the Bureau does not control its pledged revenue source but relies on another source of revenue to meet debt service (this was the first TIFIA deal with this structure), and reflecting such structure in drafts of financing documents for the TIFIA loan;

and

• analysing the unique regulation framework that applies to small rural transit agencies in California, and tailoring drafts of financing documents to such framework.

This new task order will be of identical scope of work to task order No. 693JJ320F200001 and is based on a similar type of borrower, credit, project, location, and economic conditions. A new contractor would require extensive time to understand the circumstances of the new loan which are nearly identical to those already analysed, and addressed through preparing draft documentation, by Skadden for the current task order.

5. Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The task order will be issued as a hybrid firm-fixed price and labor hour task order. The order will be issued against an FHWA IDIQ contract. The Government will also evaluate the cost against the Independent Government Cost Estimate and historical costs for similar services to ensure the amount is fair and reasonable.

6. Other facts supporting the use justification.

The work performed by Skadden under the current task order provides Skadden with significant knowledge of a very similar borrower and similar project in the neighboring county, including risks and considerations related thereto. This unique advantage would result in significant time savings in respect of due diligence hours and analysis on the type of borrower, type of project and regional economics. This time savings would result in a lower cost to the Borrower under the new task order.

7. Statement of the actions, if any, the agency may take to remove or overcome any barriers that led to the exception to fair opportunity before any subsequent acquisition for the supplies or services is made.

Because the information and material are subject to attorney/client privilege, as well as other protections associated with sensitive information, there is no known action that the Government can take to remove or overcome the barrier that led to the exception to fair opportunity.

8. Certification and Approval

The evidence and any supporting data which form a basis for the justification is complete and accurate.

Alexandra Lancaster, COR Date Senior Attorney Advisor Office of the General Counsel U.S. Department of Transportation

I certify that the information provided in this justification is accurate and complete to the best of my knowledge and belief. Based upon the preceding information, I hereby approve this Justification for an Exception to Fair Opportunity to award a new task order to Skadden under FHWA contract No. 693JJ318D000009 for legal advisory services in connection with the Monterey-Salinas Transit District’s Operations & Maintenance Project.

Hector R. Santamaria Date Contracting Officer Office of Acquisition and Grants Management Federal Highway Administration

6/29/2020

6/29/2020