Justification_Notice_of_Intent_to_Award_Sole_Source_AMR_Matter_FBO.pdf

PBGC01-RQ-13-0035

SIMPLIFIED ACQUISITIONS PROCEDURES (SAP)

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

1. REQUISITION NUMBER:

RQ-37-13-000177

2. ESTIMATED AMOUNT (OVER $3,000 BUT NOT EXCEEDING $150,000):

This contract requirement is anticipated to cost approximately $150,000 and cover the period starting from August 29, 2013 through August 28, 2014. However, the amount and time may vary based on actual experience, including resolution of the legal issues in the American Airlines bankruptcy.

The contract action is being sought under 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. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES REQUIRED AND THE INTENDED USE:

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 $150,000.

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.

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.

4. A DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AND RESULTS; OR REASON

MARKET RESEARCH WAS NOT CONDUCTED:

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

5. UNIQUE CHARACTERISTICS THAT LIMIT AVAILABILITY TO ONLY ONE SOURCE, WITH THE

REASON NO OTHER SUPPLIES OR SERVICES CAN BE USED:

Since the commencement of American’s bankruptcy, OCC and CFRD have been vigorously engaged on multiple fronts to prevent American Airlines 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.

PBGC01-RQ-13-0035

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, 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. REASON THAT SUGGESTED SOURCE IS THE ONLY SOURCE WHICH CAN PROVIDE THE

SUPPLIES OR SERVICES:

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.