Limited_Source_Justification_Final_430.doc

LIMITED-SOURCES JUSTIFICATION FOR FEDERAL SUPPLY SCHEDULE PROGRAM

RFQ-OH-16-00110

Upon the basis of the following justification, prepared in accordance with Federal Acquisition Regulation (FAR) 8.405-6(c), I, the Contracting Officer hereby approve the use of sources limited to fewer than those required in FAR 8.405-1, FAR 8.405-2, and FAR 8.405-3 pursuant to the authority of 41 U.S.C. 251 as implemented by 8.405-6(a)(1)(i)(B). This acquisition is conducted under the authority of the Multiple-Award Schedule Program (41 U.S.C. 251, et seq, and 40 U.S.C. 501).

1. Identification of the agency and the contracting activity.

The U.S. Environmental Protection Agency (EPA) Office of Water, Office of Wastewater Management, Municipal Support Division plans to award a limited source Blanket Purchase Agreement (BPA) for services detailed in Paragraph 3.

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

The agency intends to award a Federal Supply Schedule (FSS) Blanket Purchase Agreement (BPA), against which task orders may be issued. The EPA may issue both firm-fixed price and time & materials task orders, with limited competition, to Summit Consulting, LLC (Summit). The Blanket Purchase Agreement will be award with a one-year base and three one year option periods.

3. A complete description of the supplies and/or services required to meet the agency’s needs.

The Water Infrastructure Finance and Innovation Act (WIFIA) program was established under the Water Resources Reform and Development Act of 2014 (WRRDA). The program is designed to provide loans for the development of water infrastructure that satisfies national water infrastructure technological priorities and needs.

EPA must complete various program development tasks for the WIFIA program prior to the implementation of credit review, monitoring, and compliance activities required of Federal Credit programs under the Office of Management and Budget (OMB) Circulars A-11 and A-129. The development of robust policies and procedures will help ensure that the WIFIA program is effective in meeting programmatic objectives while providing adequate protection to the taxpayer.

The scope of this BPA is intended to encompass a full array of technical support services for WIFIA that would allow successful development and implementation of this new program within EPA. Contractor support services will involve: planning and development meetings and work plans; assisting in developing an interim or final WIFIA rule; communicating with WIFIA program applicants and potential applicants; updating the credit subsidy models to be compliant with OMG Circular A-11; developing Credit Extension Policies and Documentation; developing a Credit Program Risk Management Framework; developing Credit Program Monitoring and Portfolio Management policies; development of an Information Collection Request for the WIFIA program; development of Credit Council Protocols and By-Laws; and Application Processing and Training.

4. An identification of the LSJ rationale, and if applicable, a demonstration of the contractor’s unique qualifications to provide the required supply or service.

FAR 8.405-6(a)(1)(i)(B), only one source is capable of providing the supplies or services required because the supplies or services are unique or highly specialized.

The WIFIA program has been included in the President’s Budget for FY17 and is being developed in anticipation of receiving appropriations for FY17. It is expected to make its first loan in FY17, therefore, there has been a focused and concerted effort to develop the WIFIA program within EPA, and prepare for successful implementation of the program.

The program office initially looked for existing Agency contracts that were available to address the immediate need to initiate development of the WIFIA program. OW was able to find an existing contract that could provide the required technical support, but the existing contract has limited capacity to continue to support development and implementation of the program. Under the existing contract, Summit is the subcontractor that is currently providing technical support to EPA, in compliance with industry best practices, Federal credit guidelines, and other Federal regulations.

The assistance Summit has provided to date includes the production of program documentation and operational protocols, the development of a credit subsidy model and a risk rating tool, and advisory support for implementation of the WIFIA Program. In turn, providing these services has involved identification of all WIFIA program characteristics that are expected to impact cash flows, such as transaction tenors, transaction size, the collateral behind the transactions, and borrower characteristics. The ongoing development of the credit subsidy model and risk rating tool, a process that has required extensive negotiation with OMB and a considerable amount of research into other Federal programs, is critical to the success of the WIFIA Program.

Without final development of the credit model, risk rating tool, and the internal development of credit policies and governance structures, the program will not be able to function. Moreover, once the draft credit subsidy model has been completed, the Summit Team will perform a battery of testing to validate the credit subsidy model and will provide support services to facilitate approval by OMB and other oversight bodies such as the Office of the Inspector General (OIG). The Summit Team will also be needed to update the model and documentation in response to the results of these tests as well as feedback from EPA, OMB and other stakeholders.

In addition, OMB Circular A-129 requires a wide range of documentation to support the administration of the WIFIA program. Based on discussions with EPA management, the Summit Team will develop a policy handbook to formalize the structure of the WIFIA program and the relevant responsibilities of each EPA office. This document will provide a framework for the credit approval and loan closing process, will broadly outline the credit extension process, and will define the roles and responsibilities of all program officials.

Furthermore, implementation of an A-129 compliant credit program does not end with the extension of credit. Once loans are disbursed, a strong monitoring and risk management framework is needed in order to ensure that the program maximizes its achievement of policy goals within acceptable thresholds of risk. The Summit Team is needed to support the establishment of a program structure defined by clear lines of authority for the program’s accounting, budgetary, financial, and risk management functions.

Development of the program is on a very tight schedule where each step in the development process is mapped out to allow for the first loan to be made in FY17, and to develop the procedures, documentation and ensure a risk management framework is established after the issuance of the first loan(s).

Furthermore, due to the lead crisis in Flint, MI, Congress is currently considering several bills to provide current year appropriations to WIFIA. If any of the bills pass and are signed by the President, the development of the WIFIA program will need to be accelerated more quickly than the already aggressive schedule EPA has been working towards to date. EPA may be expected to provide loans to either Flint or the state of Michigan prior to the end of the current fiscal year. Due to the increased focus on the stand up of the WIFIA program and the potential for current year funding to support Flint, the capacity under the existing contract available to OW has been more quickly utilized than planned.

Accordingly, Cincinnati Procurement Operations Division (CPOD) and OW have been collaborating to develop a new BPA that would provide continued technical support for the development and implementation of the WIFIA program, and allow EPA to meet the deadlines established for this program. The introduction of the proposed bills referenced above have created an even more critical need for this limited source BPA and continued support by Summit. Any delay in the development and implementation of the program could prevent EPA from successfully meeting its deadlines.

In addition, Summit is the only source capable of providing the necessary support for the continued development and implementation of the WIFIA program because the services required are very unique in nature and highly specialized. Congress does not frequently authorize new federal credit subsidy programs. There have been limited opportunities for contractors to gain experience assisting agencies in developing and implementing federal credit programs as WIFIA is only the third federal credit program to be developed since 2008, Moreover, EPA has never been authorized to establish a federal loan program, so EPA’s in-house expertise is very limited. Significant technical support is needed by the current contractor in order to ensure continuity and cohesiveness during the development this new program, and to ensure EPA is fully able to implement, properly monitor, and make adjustments as needed to the program once the initial framework has been created. EPA has done significant market research as noted below, and has found Summit uniquely qualified to provide the services needed to ensure efficient and effective development and implementation of this critical program, especially in light of the deadlines discussed above.

The Agency conducted market research on the FSS vendors available for this BPA, and has found Summit possesses unique and highly specialized experience that is needed to fully develop and implement the WIFIA program. Summit has unique expertise with the Federal Credit Reform Act of 1990 and it has supported a number of Federal Credit programs since 2003. This includes the Department of Treasury CDFI Bond Guarantee Program and the Department of Energy’s Title 17 Loan Guarantee Program. These are the only two other Federal credit programs formed since the recession in 2008 whose programs reflect the requirements in the amended OMB Circular A129, “Managing Federal Credit Programs.” In addition, Summit has direct experience in designing credit models and A-129 compliant programs for other Federal agencies and has expertise in navigating the requirements of OMB. The Summit Team also has experience working with the Transportation Infrastructure Finance and Innovation Act (TIFIA) program (which Congress has requested EPA to model its program after), that covers multiple angles, including working with the office of the Secretary of Transportation to perform a loan programs review, and serving on the Department of Transportation’s (DoT) audit team as a credit subsidy expert. In addition, the Summit Team also has several years of experience working with the TIFIA program as a financial advisor evaluating requests for credit assistance, as well as structuring and negotiating term sheets and credit agreements for approximately 10 TIFIA applications. Finally, Summit’s Principal served at the Office of Management and Budget (OMB) as a credit policy analyst, where he gained experience in all areas of Federal Credit, including credit subsidy model development, credit-related training, and financial and budget analysis across at least 30 Federal Credit programs.

This expertise and experience makes Summit uniquely qualified to allow the agency to obtain the needed technical support as quickly as possible to help EPA expeditiously establish and implement the WIFIA program, especially given the fact that the WIFIA program may need to be utilized much more quickly than anticipated to support the on-going crisis in Flint. In addition, the continued support of Summit for the duration of the four year period of performance will be needed to ensure that EPA is able to establish the rigorous testing, validation, documentation and creation of a risk management framework needed to support the WIFIA program.

Transferring to another contractor in the middle of development and implementation of the program would require the new contractor to learn the intricacies of Federal credit subsidy models, particularly the assumptions and calculations made for the WIFIA Program, during the development of the credit subsidy model and risk rating tool. The current timeline for development of the WIFIA Program does not allow for any learning curve associated with a new contractor. With a brand new program that is entirely novel to EPA, continuity in support is critical to ensure consistency with applicable statutory and regulatory requirements, industry best practices for risk management, guidance from applicable OMB Circulars, including A-11 and A-129, and other oversight guidelines. Continuity of support is equally critical to ensure the timely development and implementation of a comprehensive and cohesive credit program with internal consistency among all the components of the program, including the associated policies, procedures, criteria, risk management strategies and documentation thereof. More importantly, regardless of the critical nature of the timeliness of the program development, Summit is the only capable source to provide the necessary support for the continued development and implementation of the WIFIA program.

5. A determination by the ordering activity Contracting Officer that the order represents the best value consistent with FAR 8.404(d).

In accordance with FAR 8.404(d), GSA has already determined the prices of supplies and fixed-price services, and rates for services offered at hourly rates, under schedule contracts to be fair and reasonable. Therefore, by placing an order against a schedule contract in accordance with FAR 8.405, the ordering activity concludes that the order represents the best value. EPA will obtain a cost proposal from Summit in support of this effort, and evaluate the proposed rates against the GSA schedule rates and the IGCE developed for this effort.

6. A description of the market research conducted among schedule holders, and the results of the research, or a statement why market research was not conducted. A statement must be made that the supplies and services are available from the FSS.

The services to be performed are available under the Federal Supply Schedules. Sources were reviewed under GSA Source 00CORP, The Professional Services Schedule (PSS), specifically SIN 520-13, Complementary Financial Management Services. There are 196 small businesses currently listed under SIN 520-13 on GSA eLibrary. In addition, the EPA met with potential vendors expressing interest in the WIFIA program. None of the vendors that met with EPA were interested in providing the technical support needed to develop and implement the WIFIA program. The vendors were interested in the other work that will be conducted via competitive procurements with CPOD for financial analyst services, legal service and engineering services. None of the contractors with financial advisory service experience had experience with the actual development of a Federal credit subsidy program. The firms mainly had experience in evaluating creditworthiness, negotiating financial terms and conditions in credit agreements, and providing post-closing financial services. Therefore, the program made a determination to include them in the list of vendors for the financial advisory services contract to be procured competitively at a later date. EPA also contacted TIFIA program officials to discuss known sources of qualified vendors. In addition, EPA conducted a random sampling of the GSA schedule vendors to review the contractor’s capabilities, terms and conditions. After reviewing the GSA schedule vendors, conducting market research and holding discussions with TIFIA officials, the EPA found that Summit Consulting, LLC is considered to be uniquely qualified to assist EPA in the development of its new WIFIA program. No other sources were identified during EPA’s market research or through consultation with subject matter experts in the TIFIA program. Therefore, Summit was determined to be the only source capable of meeting the requirement at this time, due to the unique and highly specialized nature of the services required, and Summit’s unique qualifications and expertise to provide them, as described in Paragraph 4.

7. Any other facts supporting the limited source justification.

None

8. A statement of the actions, if any, the agency will take to remove or overcome any barriers that led to restricted consideration before any subsequent acquisition for supplies and services is made.

At this point, EPA knows of no other source with the necessary qualifications and expertise that could provide these services to fulfill this requirement for the development and implementation of the WIFIA program. However, the EPA will continue to conduct market research with potential vendors, conduct discussions with TIFIA program officials and monitor the market place to ensure that future contracts needed to support the WIFIA program are competed among qualified contractors.

9. The ordering activity Contracting Officer’s certification that the justification is accurate and complete to the best of the Contracting Officer’s knowledge and belief and evidence that the supporting data that form a basis for the justification have been certified as complete and accurate by technical/program personnel.

Certification

10. Contract Level Contracting Officer Representative:

I certify that the facts and representations under my cognizance, which are included in this justification and which form a basis for this justification, are complete and accurate.

____Cynthia Simbanin__________ 4/28/2016___________________

CL-COR

Signature

Date

Contracting Officer:

I certify that this justification is accurate and complete to the best of my knowledge and belief.

_Kathleen Rechenberg____ _4/28/2016__________________

Contracting Officer Signature Date

Level Above Contracting Officer:

I certify that the facts and representations under my cognizance, which are included in this LSJ and which form a basis for it, are complete and accurate.

___Lisa Stultz____________________

4/28/2016_____________

Service Center Manager Signature

Date

Reviews and Approvals

Activity Competition Advocate (if < $700K and > $13.5M):

For a proposed order or BPA with an estimated value exceeding $700,000, but not exceeding $13.5 million, the justification must be approved by the advocate for competition of the activity placing the order. This authority is not delegable.

I have reviewed this justification and find it to be accurate and complete to the best of my knowledge and belief. Since this LSJ does not exceed $13.5M, this review serves as approval.

_Susan Moroni__________________________ 05/2/2016___________________

Competition Advocate Signature

Date