J A_for_Posting.pdf

AMR Sole Source Justification and Approval – Page 1

Justification and Approval

1. Identification of the agency and the contracting activity, and specific identification of the document as a “Justification for Other than Full and Open Competion”

a. Federal agency: Pension Benefit Guaranty Corporation (PBGC)

b. Contracting Activity: Procurement Department (PD)

c. Project Officer Information:

• Project Officer Name: Karen Morris, Deputy Chief Counsel

• Department: Office of Chief Counsel

• Office No.: 3501

• Phone: 202-326-4020 x 3074

d. Type of Document Justification and Approval

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

a. Acquisition purpose and objectives.

The purpose of this acquisition is to continue providing critical support to the agency in its completion of the PBGC vs. American Airlines case.

b. Project background.

The Pension Benefit Guaranty Corporation (PBGC) is a Government owned corporation established under Title IV of the Employee Retirement Income Security Act (ERISA) of 1974 to protect the retirement income of individuals and their beneficiaries who are covered under certain private sector, defined benefit pension plans. PBGC's programs (1) encourage the continuation and maintenance of voluntary private pension plans for the benefit of the plan participants; (2) protect pension benefits in on-going pension plans; (3) ensure timely and uninterrupted pension benefit payments under Title IV-covered plans; and (4) maintain insurance premiums at the lowest level consistent with the Corporation's Title IV obligations.

PBGC protects basic pension benefits for about 40 million American workers in private pension plans.

AMR Sole Source Justification and Approval – Page 2

AMR Corporation (“AMR”), the parent company for American Airlines, Inc.

(“American”) and American Eagle Airlines, Inc. (“AMR Eagle”), is one of the largest legacy carriers, providing flights to more than 250 cities in 50 countries with, on average, more than 3,500 daily flights. On November 29, 2011, AMR filed for protection under Chapter 11 of the Bankruptcy Code in the Southern District of New York. Headquartered in Fort Worth, Texas, AMR sponsors four covered pension plans, underfunded by about $10 billion in the aggregate.

SNR Denton US LLP (Dentons) has served as PBGC’s counsel throughout the pendency of this case. PBGC continues to require the firm’s valuable assistance, and specialized expertise and knowledge of this complex and longstanding case. We will need Dentons in connection with continuing negotiations and, in the event those negotiations fail, future litigation.

c. Project Value and Timeframe.

This contract requirement is anticipated to cost approximately $570,000 and cover the period starting from September 23, 2013 through September 22, 2014.

However, the amount and time may vary based on actual experience, including resolution of the legal issues in the American Airlines bankruptcy.

d. Authority.

FAR 6.302-3(a) (2) (iii) Industrial Mobilization; engineering, developmental, or research capability; or expert services. To acquire services of an expert or neutral person for any current or anticipated litigation or dispute.

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

OCC seeks the services of a law firm to represent PBGC in the PBGC vs. American Airlines matter. The anticipated value of this procurement is $570,000 (see 2.b and c above).

4. An identification of the statutory authority permitting other than full and open competition

As detailed in the next section, OCC believes that this pprocurement meets the requirements of FAR 6.302-3(a) (2) (iii), which states that an agency can acquire the services of an expert or neutral person for any current or anticipated litigation or dispute.

It should be noted that the original and sole source follow-on contracts under which legal counsel and airline expertise were provided were competitively awarded. In summary, it has been determined that Dentons is the only source capable of providing

AMR Sole Source Justification and Approval – Page 3 these services at the level of quality required due to their familiarity with the statutory and programmatic interests that are unique to PBGC in the American Airline bankruptcy case and the complexity of the American Airlines bankruptcy case.

Furthermore, Dentons, as a result of its previous experiences working with PBGC, has the unique capability and corporate knowledge necessary to support PBGC in this bankruptcy case. PBGC believes the only viable option to accomplish this work in a timely, cost-effective manner, at the level of quality required is to award this contact to Dentons. Below, we provide details on the unique qualities of each member of the Dentons team.

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

Since the commencement of American’s bankruptcy, OCC and CFRD have been vigorously engaged on multiple fronts to prevent American from utilizing the bankruptcy proceeding to terminate its pension plans and impose a $10 billion liability on the PBGC. PBGC is a member of the unsecured creditors committee. From the outset, the Dentons attorneys have been critical to accomplishing this critical mission.

The primary Dentons attorneys, Carole Neville, Fruman Jacobson and Gary Meyerhoff, are long-standing and respected bankruptcy, litigation and restructuring practitioners in the New York professional community. Their expertise will continue to be necessary to assure that continuing developments in the case do not jeopardize the pension plans or PBGC.

Carole Neville is a Lead Partner at Dentons, US LLP and has leveraged her established relationship with key players, notably lead counsel for both American and the committee, to successfully advance PBGC’s interests. She has participated in committee meetings and in negotiations with American as PBGC’s advocate, and has gained a thorough knowledge of the case. Carole’s advice to PBGC has also been invaluable, drawing on her history as committee counsel in the United Air Lines case, which provides unparalleled insight into the unique processes and issues facing the committee in an airline bankruptcy. If PBGC loses her services, it will lose an essential channel of communication with the committee and the debtor. PBGC’s influence in the committee will be diminished, and the committee may promote actions inconsistent with PBGC’s goals, and PBGC’s view on what is best for the creditor body. In addition, PBGC will no longer be able to avail itself of Carole’s demonstrated ability to obtain critical concessions from American.

Fruman Jacobson is a Lead Partner at Dentons, US LLP and is recognized as one of the country’s leading restructuring practitioners. He played a key role in the United Airlines bankruptcy. His relationships and credibility with all of the key stakeholders, AMR Sole Source Justification and Approval – Page 4 including American, the unions, professional advisors and the creditor community, have been essential in making PBGC’s concerns and proposals fully appreciate by all stakeholders. There are few practitioners who can equal his persuasiveness and credibility, and none who understand this case and PBGC’s concerns as he does.

Gary Meyerhoff is a Senior Partner at Dentons, US LLP and spent many weeks preparing to defend PBGC in the event of American initiating litigation to terminate the pension plans. They have engaged in comprehensive interviews with PBGC’s financial and actuarial experts, devoted many hours to review of detailed background materials and have mastered every aspect of this complicated case. They are prepared to capably defend PBGC against an action to terminate the plans. Although American’s current position is that it will maintain its pension plans, American is not bound to that outcome. The present situation could change at any time, with little notice, based on any number of possible events. Indeed, American Airlines has expressly threatened to initiate termination proceedings if it does not obtain timely administrative relief.

In sum, Dentons’ expertise cannot be replaced by another law firm. If a new firm were retained, the firm lawyers would need several months to achieve even the state of readiness for litigation and negotiation that Dentons now possesses. As a result, PBGC would incur hundreds of hours in additional legal fees while new counsel become familiar with the case, which would leave PBGC left without an adequate negotiation/litigation team in the largest case in the agency’s history.

6. A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether a notice was or will be publicized as required by Subpart 5.2 and, if not, which exception under 5.202 applies.

A Notice of Intent to sole source this requirement and issue an award to Dentons will be posted on Fedbizzops.gov.

7. A determination by the Contracting Officer that the anticipated cost to the

Government will be fair and reasonable.

The contracting officer will use pre-established pricing from Dentons existing underlying Indefinite Delivery Indefinite Quantity (IDIQ) Contract to ensure the price to the Government will be fair and reasonable.

8. A description of the market research conducted and the results or a statement of the reason market research was not conducted.

OCC confirms that this work is required to advance PBGC’s mission under 29 U.S.C.

§ 1302(a)(1), and perform its role as a major creditor in the AMR case. This case

AMR Sole Source Justification and Approval – Page 5 presents risk to PBGC, and Dentons has performed at an extraordinarily high level since 2012. OCC frequently contracts with law firms and is very familiar with the market for the services they provide. Based on this knowledge, no other firms would be able to meet PBGC’s needs based on the complexity of the work within the timeframes expected for the AMR matter. Further, while other firms have worked with OCC before, other firms would face significant learning curves in getting up-to-speed with applicable legal and factual developments and other complexities associated with this case. As a result, these increased costs would outweigh the benefits of competing this effort.

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

Separate from the rationale discussed above, it should be noted that competing this effort using full and open competition would place the agency’s ability to achieve an optimal outcome in the American bankruptcy in jeopardy.

Overall, OCC believes that the issuance of a contract using other than full and open competition represents the best value to PBGC and is in the best interests of PBGC.

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

None.

11. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required.

To ensure appropriate planning, OCC will work with PD to develop a Gantt chart for the award based off similar contracts. PBGC will also continue to conduct market research regarding industry trends in the area of bankruptcy representation.

12. The Contracting Officer’s certification that the justification is accurate and complete to the best of the contracting officer’s knowledge and belief.

I, Mark Miller, hereby certify that this justification and all the data supporting this justification is accurate and complete to the best of my knowledge and belief.

13. Evidence that any supporting data that is the responsibility of technical or requirements personnel (e.g., verifying the Government’s minimum needs or requirements or other rationale for limited sources) and which form a basis for the justification have been certified as complete and accurate by the technical or requirements personnel.

AMR Sole Source Justification and Approval – Page 6

In terms of the rationale for limited sources, I, Israel Goldowitz, hereby certify that this justification is complete and accurate.

14. For justifications under FAR 6.302-3, a written determination by the approving official identifying the circumstance that applies.

I, Israel Goldowitz, hereby certify that a Statement of Work has been prepared as part of this effort and that it will be made a part of the subject contract.

15. Certifications

I hereby certify that this justification and all the data supporting this justification are accurate and complete to the best of my knowledge and belief.

Original Signed

Israel Goldowitz, Chief Counsel Date:

Original Signed

Mark Miller, Contracting Officer Date: