Pak Chong JA REA and EMS 1 Final_Redacted mkw 10.17.2023.pdf

DDefense Threat Reduction Agency 8725 John J. Kingman Road, Stop 6201

Fort Belvoir, VA 22060-6201

JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND OPEN COMPETITION

Contract HDTRA1-19-C-0065 REA/EMS Procurement

Amendment #0001

1. Nature and/or Description of Action

The Defense Threat Reduction Agency (DTRA) contracting activity intends to execute a sole source contract modification on behalf of the Biological Threat Reduction Program (BTRP) of the Cooperative Threat Reduction (CTR) Program with the Mahidol Oxford Tropical Medicine Research Unit (MORU) in Thailand without using full and open competition. MORU is a non-profit collaboration between Oxford University acting in trust with Mahidol University in Thailand. MORU is currently the prime performer under DTRA Contract HDTRA1-19-C-0065, which was awarded sole source 25 September 2019 with a total price of

. The original price was subsequently increased by two previous Requests for Equitable Adjustments (REA) resulting to a total current price of . Due to an oversight on the government, neither REA’s were properly justified and approved under FAR 6.302-1. On August 23, 2021, REA 01(mod P00003) increased the value of this contract by due to the ongoing COVID-19 pandemic in Thailand. Inflation and unforeseen renovation delays were also a contributing factor. REA 02 (mod P00004) increased the value of the contract the price by on September 22, 2022. This increase was also a result of the COVID-19 pandemic in Thailand, Russian-Ukraine war, and renovation limitations on the information provided at the time of award. This effort, entitled “Request for Equitable Adjustment 03 and Incorporation of Energy Management System”, will include two elements:

1. A formal REA valued at submitted by the contractor to account for unforeseen post-award circumstances which have increased the price, these unanticipated factors also require that the period of performance be extended by 8 months for a total of 68 months. These unforeseen circumstances include but are not limited to; several COVID-19 shutdowns within a 12 month time span, 1-2 months of supply chain disruptions related to Chinese COVID restrictions and the Russian-Ukraine war, and the need to replace a roof that blew off during severe storms in April 2021. Please refer to Attachment 1 for additional factors. A separate Determination and Findings will be approved to account for this schedule extension in accordance with the applicable regulations.

2. Increases to the current scope of work which consist primarily of incorporating an Energy Management System (EMS) into the design and construction of the laboratory.

These actions are necessary to complete construction and renovation at the laboratory which will serve as a Regional Reference Laboratory (RRL) to receive and analyze Foot and Mouth Disease (FMD) samples from multiple countries in the region. FMD is a disease with potentially catastrophic economic implications overseas and within the United States. For example, when the 2001 FMD outbreak transpired within the UK more than six million livestock were slaughtered preemptively to help control and eradicate the outbreak.

Exclusion zones were implemented impacting tourism and over 2,000 farms holding 700,000 sheep were affected.. Enhancing Thailand’s capability in the areas of FMD surveillance, detection, diagnosis, and reporting directly benefits not only a close ally but the United States as well.

This J&A encompasses all elements detailed above. This J&A is required because we are increasing the contract value under current REAs as well and awarding new work (EMS) on a sole-source basis. In addition this J&A is also needed to address the REAs from modifications P0003 and P0004. The resulting Period of Performance for this modification will be through May 29, 2025. The total increased value of this Firm Fixed Price contract is for the contract extension and towards the procurement of the EMS.As a result of this amendment, the total estimated cost associated with this J&A is increased from to

2. Description of the Supplies/Services Required

MORU was established in 1979 and it is a collaboration between Mahidol University, in Thailand, the University of Oxford, in England, and the UK Welcome Trust. MORU's primary mission is to fight infectious tropical diseases affecting rural communities in Asia and elsewhere in the developing world. The purpose of this contract is to introduce significant improvements in bio-risk management at the FMD lab in Pak Chong, Thailand. The FMD lab will become a center of excellence and biosafety best practices throughout Thailand and the region.

This contract action will address unforeseen post-award conditions which could not have been reasonably anticipated at the time of award. Details of these conditions, and the resulting impact to schedule and price, are provided in Attachment One to this document. In general, two main factors resulted in these conditions: 1.

Continued impact from the global COVID pandemic which drove restrictions on travel and availability of workers, and 2. Unprecedented global supply chain disruptions resulting both from the pandemic and the Russian invasion of Ukraine. These disruptions have resulted not only in significant price increases due to reduced availability but an inability to obtain vendor quotes in a highly uncertain environment. In addition, lead times for shipping have increased and, in many cases, no reliable estimates for shipping times can be obtained.

This contract action will also provide for an increase in scope to include an EMS. This EMS includes renewable solar energy stored in batteries, power from the local grid, and power from mechanical generators located on-site. These energy sources will be managed, and balanced, by the system to ensure a continuous flow of clean, uninterrupted power to the sensitive electronics incorporated into the laboratory. The benefits of this system include not just reduction in operating costs for electricity to the facility but a “clean” supply of electricity without energy spikes which eliminates the need for Uninterrupted Power Supplies but also significantly increases the service life of sophisticated, and expensive, electronic systems incorporated into the complexity of the BSL3 laboratory.

3. Statutory Authority The statutory authority for this non-competitive action is derived from 10 United States Code (U.S.C.)

2304(c)(l), as implemented by FAR 6.302-1, Only One Responsible Source.

4. Applicability of Authority MORU is the only known performer with the following attributes:

1. An existing, and proven, exemption for payment of Value Added Tax (VAT), and other taxes, in

Thailand.

2. A long-standing relationship with the FMD laboratory in Pak Chong and strong connections with key staff and leadership at both the lab and with the leadership of the parent organization – the Department of Livestock Development (DLD).

3. Proven expertise in designing, constructing, renovating, and commissioning laboratories in Thailand, to include BSL3 facilities.

As the BTRP program expands in Southeast Asia one of the biggest hurdles has been lack of exemptions for paying Value Added Tax (VAT) and other foreign taxes. The Office of the Secretary Defense (OSD) and CTR have a strict policy to avoid payment of foreign taxes. This has adversely impacted the ability to further the BTRP mission in countries, such as Thailand, where it has proven problematic, or impossible, to obtain tax exemptions. Without a performer who has proven tax exemption in Thailand, BTRP will be unable to fulfill the subject requirement. There is currently no established exemption available to BTRP in Thailand and the timeframe for obtaining one is uncertain with no guarantees of success. MORU has a unique ability to procure and receive equipment and services in Thailand without paying VAT or Thai import duties.

MORU has this exemption through its agreement with the Southeast Asian Ministers of Education Organization (SEAMEO). MORU has successfully demonstrated the ability to operate exempt from taxes on multiple previous DTRA contracts. Given the policy to pay no foreign taxes on assistance provided to partner nations, MORU provides the only known solution to comply with this OSD mandate. An attempt by any other performer to obtain tax exempt status would be a lengthy process with a high risk of failure. This risk assessment is based on DTRA’s previous unsuccessful experience in seeking tax exemptions in Thailand.

Failure of a potential performer to obtain tax privileges would only become apparent after substantial USG investment up front and result in a complete loss of that investment.

MORU is an established organization with long-standing relationships with the FMD laboratory, the Thai Government, other Thai laboratories, U.S. Government Agencies, and International Organizations operating in Thailand. No other known performer has a proven ability to leverage this web of relationships to fulfill this requirement. This effort requires extensive coordination with the FMD laboratory to ensure continuity of critical operations during the renovation. This close coordination is essential to success of the overall effort. In order to safely sustain sample collections of live agents, operations need to be re-located to a temporary facility along with live agents which will need to be properly secured. MORU is in a unique position to coordinate closely with the laboratory given its intimate familiarity with the ongoing operations and personnel. The MORU Lead has had a close association with the FMD Lab since 1989 and worked there in the 1990s as an employee of the Australian Government. MORU also currently employs the former Director of the FMD lab not only maintains close contact with the lab and DLD personnel at all levels but she is also one of very few people not already working in a government run laboratory who possess specific in-depth knowledge of laboratory operations in Thailand.

These relationships are instrumental in successfully meeting this requirement. Moreover, MORU’s intimate familiarity with the mission, vision, and requirements of the laboratory also ensure effective implementation of post-renovation training and sustainment. Contracting with an organization other than MORU for this effort would significantly raise cost, schedule, and performance risk. It would take significant time for any other organization to achieve the same relationship with the laboratory which MORU currently enjoys. There is a risk that any other organization would not be able to achieve the same level of trust and familiarity with the FMD lab which would jeopardize the entire effort.

MORU, along with its partners, has extensive experience and expertise in designing, constructing, and commissioning BSL3 laboratories in Thailand. This has been demonstrated by successful work at the FMD Lab itself, MORU’s own BSL3 laboratory in Bangkok, a BSL3 lab at the Hospital for Tropical Diseases also in Bangkok, and the LOMWRU BSL3 lab in Laos (a neighboring country with similar culture and considerations as Thailand). MORU’s experience on all of these projects has resulted in extensive knowledge of the unique aspects of this challenging work in Thailand. This includes the legal and regulatory environment regarding BSL3 laboratories, subcontracting/partnering, and labor/hiring. MORU has unique experience regarding the effect of a harsh tropical climate, with extreme heat and rainfall, on the facilities and infrastructure required to house a BSL3 facility. MORU’s success on these projects has also demonstrated sensitivity to unique cultural aspects in Thailand which are often not obvious to foreign contractors. The subject effort also includes extensive biosafety training and mentoring of the scientists resident at the FMD Lab. MORU has successfully completed multiple training and mentoring efforts in Thailand for DTRA. Throughout all of the previous work for DTRA, MORU has proven to be a cost-efficient, non-profit performer for DTRA with minimal overhead and operating costs. MORU has a proven network of sub-performers who they will call on to perform this work. This use of vetted performers greatly reduces risk to the USG.

5. Effort to Solicit Potential Sources As part of DTRA’s market research for the original award, DTRA published a Sources Sought notice on FBO on May 1, 2019. This notice was open for 15 days and specifically sought performers with the following capabilities: 1. Proven VAT exempt status in Thailand, 2. Knowledge of the FMD lab’s operations, mission, vision, and leadership, and 3. Demonstrated experience with laboratory design, construction, renovation, and sustainment in Thailand. Four responses were received. Two of these responses consisted of generic capability statements without addressing the specific capabilities sought. A third respondee was unable to cite specific experience regarding the laboratory or performing lab renovations in Thailand. However, they did represent the ability to operate tax-free in Thailand. Further details on the plan for tax exemption were requested and provided. Upon analysis of the details, DTRA determined the plan was theoretically possible but unproven and presented unacceptable schedule risk with resulting impacts to cost and performance.

Given the unsuccessful attempts by BTRP to obtain tax exemption to date, there is a significant possibility the proposed plan would prove unworkable. This would only become apparent after substantial USG investment up front and result in a complete loss of that investment. The fourth respondee was MORU. As described in detail above, MORU was able to demonstrate unique capabilities in all three areas which are sought. MORU was the only respondee able to show proven capability in all three areas. Upon approval of this J&A, a notice of intent will be posted on FBO.

6. Fair and Reasonable Costs A fair and reasonable price determination will be completed by reviewing the IGCE and completing a price analysis. MORU has been a performing contractor under DTRA contracts since 2014 and multiple contracts have been negotiated with them. These negotiations have demonstrated that MORU is able to effectively leverage relatively low price levels in Thailand resulting in good value to the USG. This value is compounded by the fact that MORU is non-profit and applies minimal overhead charges to their direct charges. The Contracting Officer has preliminarily concluded that contract negotiations will lead to a fair and reasonable price and their signature on the resultant document will constitute the determination required by FAR 6.303-2(b)(7).

7. Market Research In accordance with FAR Part 10, market research has been conducted for this acquisition. The research sources consisted of prior acquisition information, a review of internet resources, and interviews with experts in the field. This research found no sources capable of meeting this requirement other than MORU. While commercial entities exist which are fully capable of performing laboratory renovations, none are known to have demonstrated tax exempt status in the Kingdom of Thailand. A t t h i s t i m e , n o entity, other than MORU, is known to be able to perform the renovation without incurring VAT. In addition, no

ATTACHMENT ONE

The following table details events and actions, not reasonably anticipated at contract award, which have driven an increase in pricing and schedule delays. Not all of these events and actions have been quantified, but all have had some degree of impact:

*Most likely due to global uncertainties resulting from Russian aggression in Ukraine and/or ongoing COVID 19 lockdowns in China. The global supply chain situation is completely different from the start of the project for reasons which could not have been reasonably anticipated at the time.

1 DLD independent project to remove the concreted roof of Diagnostic Building #2 (DB2) and replace with a lightweight pitched roof and steel truss arrangement; thus preventing early access to the Training Building.

The independent DLD works to replace the training building roof also took significantly longer than anticipated and prevented early occupation of the Training Building, including the ability to make surveys and measurements to facilitate key aspects of the design process leading to reworking of some design elements as the record drawings used were inaccurate and incorrectly scaled.

2 Requirement for DLD approvals process was an unforeseen bureaucratic process.

3 Delay in DLD approval process for PH1 works 4 Delay in DLD permissions to set up site 5 COVID 19 lockdowns (estimated all over delay approx. 10-12 month) including:

6 Constant Mobilization and demobilizations during 2 years of COVID 7 Travel limitations of FioTec team members, experts and vendors during COVID 8 COVID19 – initial impacts throughout 2020 – no international travel possible and during some periods no regional travel in Thailand or highly controlled and restricted 9 COVID19 – additional Thailand specific impacts during January and February 2021 with most significant impact following Songkran (a national holiday) in April 2021 – during this period there was total paralysis for many weeks as numbers of deaths, previously low in Thailand increased significantly and remained high temporarily

10 COVID19 – Omicron variant impacted site during December 2021.

11 The additional need to replace the new (DLD) pitched roof (and ceilings) after the roof blew off from the Frankel building during storms in April 2021 12 Additional time and efforts needed to provide substantial supplementary schedules and drawings including also full cost breakdowns for all engineering and construction systems to the DLD Engineering and Maintenance Department in order to facilitate the DLD handover process and the donation acceptance – this may also be needed for PH2 and will be substantially more arduous and complicated.

13 Unexpected extended discussions with International Expert Group OIE/FAO to define the floor plan layout. This expert group was not part of the original contract and discussions/meetings took longer than expected.

14 Suppliers’ situation* (Lack of vendors willing to supply or quote) 15 Unpredictable and significant price increases* 16 Significant increases in delivery time* 17 Processing of various reviewers such as NOBLIS and WSP earlier in the project 18 Additional findings during demolition works of Laboratory (LAB) resulting into VO5