NGO Health Services Delivery Project

JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND OPEN COMPETITION (J&A)

TO: Deborah Broderick, Agency Competition Advocate

FROM: Melissa Jones, Director
Office of Population, Health, Nutrition and Education, USAID/Bangladesh

SUBJECT: Justification and Approval for Other than Full and Open Competition (J&A) for an Increase to the Total Estimated Cost of Contract No. AID-388-C-13-00002 with Pathfinder International

DATE: November 22, 2015

1. This document sets forth the facts and rationale justifying the use of other than full and open competition, in accordance with AIDAR 706.302-70(b) (5). This document was prepared by USAID/Bangladesh's Office of Population, Health, Nutrition and Education (OPHNE).

2. The nature and/or description of the action being approved:

This is a request to approve an increase to the Total Estimated Cost (TEC) for the Contract No. AID-388-C-13-00002 with Pathfinder International (the "Contract") of $3,919,417. The increase will continue grant funding to two NGO sub-grantees which receive highly specialized technical assistance activities to improve the availability and quality of family planning, antenatal, delivery, postnatal, newborn and child health services to mothers, newborns and children under age five.

The Contract is currently valued at $82,746,497, and expires on December 09, 2017. The Modification will increase the Contract's TEC by $3,919,417 from $82,746,497 to $86,665,914. The increased amount will be wholly funded with appropriated funds that were intended to provide USAID direct grants to the two NGO sub-grantees. No new grants will be undertaken, no new activities will be initiated and the duration of the contract will not change. This request is only to continue activities that are within the original scope of the award.

3. Description of the supplies or services required, including an estimated value:

The current NGO Health Services Delivery Project (NHSDP) Contract with Pathfinder International (the "Contractor") was awarded on December 9, 2012. The contract is a health service delivery project, with umbrella grants to 26 NGOs. These 26 NGOs operate a network of 388 clinics. The contract was designed and awarded at the height of USAID Forward procurement reform with a strong Agency-wide push to make new awards directly to indigenous organizations. The design embraced USAID Forward reforms, and the Request for Proposal (RFP) emphasized the need for country ownership, local leadership and systems strengthening. In an effort to also provide direct USAID funding to indigenous organizations, the RFP explicitly stated that the offerors must identify one or two of the larger NGOs (managing 20 or more clinics) and build the managerial and financial capacity of those NGOs to receive direct grant funding from USAID/Bangladesh. In the Request for Information, the instructions stated that the offer would support the transition of up to four local NGOs from the umbrella grant mechanism to direct funding, the first within 12 months of award, the second in the third year, with up to two more by the end of the contract. This information, and subsequent technical direction from USAID during work plan negotiations, resulted in the Contractor removing two NGOs from their budget in Year 3 of the contract, anticipating they would receive transition grants directly from USAID.

All NGO sub-grantees have a long history of providing these specialized clinical services in Bangladesh, and their clinical qualifications are exemplary. Some of the NGOs have served as sub-grantees for two decades. They function well as sub-grantees, where they do not have to maintain the sophisticated systems required of direct grantees. The Contractor provided targeted capacity building assistance to all of the sub-grantee NGOs. Based upon organizational capacity assessments, capacity building roadmaps were developed to improve business planning, financial management, reporting systems, documentation processes, and staff development. The Contractor did identify and short list four NGOs for targeted technical assistance for direct USAID/Bangladesh assistance. Additional capacity building for proposal writing and financial management was provided for the two NGOs selected to apply for transition grants. Based upon achievement toward the capacity building roadmaps, the Contractor proposed two larger NGOs that were technically sound and had strong management in the grantee relationship as candidates for direct USAID/Bangladesh assistance at the beginning of year 3. These two NGOs support over 80 clinics.

USAID/Bangladesh conducted pre-award surveys on both NGOs. Both NGOs had technically sound service delivery, but USAID/Bangladesh determined that it was in the best interest of the U.S. Government to not award direct grants at that time. USAID/Bangladesh and the Contractor have enacted corrective action plans for the NGOs in order to specifically address the institutional deficiencies identified during the pre-award surveys. While efforts are underway to implement these corrective actions, additional time and support are required to institutionalize internal controls systems to ensure that the NGOs manage their finances transparently. While USAID/Bangladesh remains highly committed to local solutions development, it is in USAID/Bangladesh's interest that the Contractor continues to provide the oversight and compliance required of USAID funds, until the nascent internal control processes are institutionalized. The focus on direct funding should not disrupt the goals of providing life-saving care to mothers and children.

Because it was anticipated that these two NGOs would receive direct funding from the third year of the contract, they were not included in the Contractor's budget in the final three years of the project. The projected budget was $4 million for one and $9 million for the second NGO. Given the unsuccessful attempt to award grants directly to the NGOs, the Contractor faced a projected shortfall of nearly $13 million through the remainder of the contract. In order to prioritize quality service delivery, USAID/Bangladesh worked with the Contractor to streamline the existing budget, cutting non-priority activities, scrutinizing travel, restricting clinic expansion and tightening sub-grantee and subcontractor budgets. For example, an activity to test mobile health services was deemed to be duplicative of other USAID-funded activities, and to provide little added value to service delivery. Participation at high-level technical conferences was reduced. Under this exercise, the Contractor identified nearly $9 million in cost savings. However, even after these efforts, the two NGOs are not fully funded in the final year of the project. Therefore, USAID/Bangladesh is seeking approval to increase the Contract's TEC by $3,919,417 to continue project grants under contract to support these two NGOs which together oversee more than 80 clinics. This increase to the award will be used solely to fund the two sub-grantees, and will enable both to remain within the network during the last project year.

The Contract was amended in 2013 to accept $29 million under a Donor-to-Donor grant agreement, pursuant to ADS 351, from the Government of the United Kingdom's Department for International Development ("DFID") as part of the Urban Health Programme. The purpose of the grant was to co-fund and augment USAID/Bangladesh's NHSDP project in order to continue and scale up the delivery of the health service activities being implemented under the existing Contract. Prior to investing in USAID/Bangladesh's program, DFID had been funding an urban health project managed by the Asian Development Bank. DFID strategically invested in the USAID/Bangladesh program because they viewed it as a better value for their investment: the Contractor was providing high-quality services and had a strong presence in urban areas. At that time, the award was also extended through December 2017. As a result of DFID funds, USAID/Bangladesh and DFID have engaged in a much closer collaboration and partnership in health programming and policy engagement. These funds have yielded more focused services to mothers, newborn and children under five in areas beyond the current project area, particularly in urban areas. DFID considers the USAID/Bangladesh portion of the program to be very high functioning, and has awarded the project an A+ in the 2015 annual review.

NHSDP is mandated to serve underserved mothers, newborns and children under five by providing access to quality family planning services, antenatal checkups, delivery care, postnatal care, newborn health services, vaccinations and treatment for childhood illnesses through a vast network of 388 primary health care centers, including 72 Emergency Obstetric Care centers, over 10,000 satellite clinics and approximately 8,000 community volunteers. This network provides critical health services to a catchment area of approximately 27 million. NHSDP complements the Government of Bangladesh's ("GOB") public health system by working in partnership with the GOB and local NGOs in areas where the GOB's health services are limited or absent. In these areas, NHSDP clinics provide family planning and child health services, including immunizations, on behalf of the GOB.

Adding these funds to the project to maintain the two NGOs as sub-grantees in the NHSDP network will enable the project to continue to successfully meet common GOB, DFID and USAID/Bangladesh health development goals. Both USAID/Bangladesh and DFID recognize that Bangladesh's health service delivery environment is changing and have engaged in health financing research to determine how to best leverage donor funding. In addition, USAID/Bangladesh has requested the midterm performance assessment to critically examine the sub-grantee relationship and provide recommendations about future sub-grant models. While the final results are still pending, based upon preliminary recommendations, USAID/Bangladesh expects to implement an accreditation system across the network and to pilot a small-scale re-imbursement model during the time remaining in the contract. It is expected that this will provide the NGOs greater autonomy over service delivery, leading to improved sustainability. USAID/Bangladesh and DFID technical offices are presently in discussions about how to continue this collaboration in subsequent project designs, and adding these funds to the project will enable USAID/Bangladesh to continue to leverage a very fruitful partnership with DFID.

4. Statutory authority permitting other than full and open competition:

AIDAR 706.302-70(b)(5) "Impairment of foreign aid programs" permits other than full and open competition when "it would impair or otherwise have an adverse effect on programs conducted for the purposes of foreign aid, relief and rehabilitation". The authority may be used "for the continued provision of highly specialized services when award to another source would result in substantial additional costs to the government or would result in unacceptable delays." The requirements and/or limitations below apply to use of this authority:

- Approval of the Agency Competition Advocate is required for use of this authority for proposed follow-on amendments in excess of one year or, as here, over $250,000. (AIDAR 706.302-70(c)(4))
- When the contracting officer uses this authority to determine that the incumbent contractor is the only practicable, potential offeror, the requirement to publicize the intended award per FAR 5.201 still applies. (AIDAR 706.302-70(c)(1))
- The contract file must include appropriate explanation and support justifying the award without full and open competition as provided in FAR 6.303-2(b).

Compliance with Agency rules under ADS 302.3.4.5.a. and b. is also required.

5. Demonstration that the proposed contractor's unique qualifications or the nature of the acquisition that requires use of the authority cited:

The Contractor has assembled a team of highly experienced international and local professionals with strong technical expertise in the design, management, implementation and oversight of primary health and family planning services, and intimate knowledge of the NGO, public and private components of the national Bangladesh health sector. Local staff are augmented by highly specialized international and local expertise from their headquarters as needed. The Contractor and its staff have developed productive working relationships and strong partnerships with all sub-grantees, DFID as a co-donor of this project, other implementing partners under DFID's Urban Health Programme, multiple implementing partners of other USAID-funded health projects, and the GOB, specifically the Ministry of Health and Family Welfare (MOHFW). As a result of the GOB's strong confidence in the Contractor's expertise and experience, the Contractor has been selected as a member of several ministerial and directorate level working groups under the MOHFW. In these past three years, clinics under the NHSDP network received a total of 847 awards from the GOB for the high quality of service delivery and community outreach. In addition, high-level GOB officials from eight ministries serve on the NHSDP Inter-Ministerial Steering Committee, which links the project to GOB priorities, and identifies opportunities to leverage GOB resources. This unique and comprehensive mix of technical capabilities, experience, knowledge of Bangladesh, and many strong working relationships in the country would be difficult for another Contractor to replicate.

If USAID were to compete a new contract to oversee the operations of only the two NGOs and their more than 80 clinics, it would require a significant investment of USAID/Bangladesh time and resources, taking away staff from the design of the follow-on project, development of USAID/Bangladesh's second Country Development Cooperative Strategy (CDCS) and the redesign of the GOB's Health Sector Plan; thereby adversely impacting OPHNE's foreign aid health sector programming in Bangladesh. Additionally, a new project with just these two NGOs would be detrimental to the partnership with DFID. USAID/Bangladesh would like to continue to collaborate with DFID and continue to leverage funds through this partnership. The removal of these 80 clinics from DFID's project could jeopardize USAID/Bangladesh's contribution to DFID's Urban Health Programme. It could undermine or even terminate this very promising co-funding arrangement with an important bilateral Donor and hinder USAID/Bangladesh's future ability to enter into Donor-to-Donor arrangements; as well as impede a very meaningful and worthwhile investment in an important, two-year development partnership.

6. Description of the efforts made to ensure that offers are solicited from as many potential sources as practicable, including whether a notice was or will be publicized as required by Federal Acquisition Regulation (FAR) 5.201 and AIDAR 706.302-70(c)(1).

Offers will only be solicited from Pathfinder International, the incumbent contractor, for the reasons cited above. A FedBizOpps notice of the proposed non-competitive procurement will be publicized in accordance with FAR 5.201(b)(1)(ii), as required by AIDAR 706.302-70(c)(1), announcing the US Government's intent to modify the existing contract with Pathfinder International on a sole source basis. This will give potential offerors an opportunity to express their interest in this activity.

7. A determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable:

The current Contract with Pathfinder International was competed and the costs were carefully reviewed and negotiated by the USAID/Bangladesh Contracting Officer. The Contracting Officer has determined that the anticipated cost for the TEC increase will be based on the costs contained in the current Contract and recent market rates and will be thoroughly analyzed to ensure that all costs are fair and reasonable.

 
8. Description of the market research conducted and the results or a statement of the reasons market research was not conducted:

USAID/Bangladesh's Office of Population, Health, Nutrition and Education (OPHNE) conducted a financial analysis of the potential success of implementing a 12-month contract to provide sub-grants to the two NGOs. The analysis showed that the cost associated with staffing and other administrative costs for the twelve-month period would be very high and would result in additional and unnecessary cost to the U.S. Government. The estimated cost to compete a new Project with the two NGOs including mobilization and closeout costs of the current activities of the two NGOs would be approximately $250,000 and the combined time for acquisition and mobilization would be greater than one year. USAID/Bangladesh's estimates indicate that a new project to administer grants to these two NGOs would cost $7 million for one year. Fielding a new contractor for the remaining short period of only one year will be nearly impossible with the difficulty of finding experienced personnel willing to relocate and accept short one-year positions. A new implementation team would have a steep learning curve and would require time to establish strong working relationships with local counterparts. Additionally, establishing a good working relationship with GOB, DFID, local NGOs and other USAID-funded health project implementers is critical and would be challenging in a 12-month contract. A lower level of service delivery to poor women and children and a lower programmatic impact would likely result. Given the size of Bangladesh, it would not be feasible, productive nor financially reasonable to have two implementers both providing specialized technical assistance in the same program area. Finally, previous USAID/Bangladesh investments would be jeopardized by the break in health services and start up time and costs of an additional 12-month contract.

9. Other facts supporting the use of other than full and open competition:
The additional funds from the increased TEC will only contribute to ongoing work under the project; no additional grants or contracts will be undertaken. The Contractor has taken every possible measure to contain all costs and streamline every possible element of the budget in order to absorb the two NGOs into its budget. Non-priority activities were eliminated and all travel training was scrutinized to only permit those that would significantly contribute to the Contract's objectives. The Contractor is on track to fully meeting all deliverables and targets set forth in the contract and has demonstrated its substantial capacity and considerable technical expertise for delivering highly specialized services under the Contract. In FY 2015, the Contractor conducted 39 million services, 42 percent of those were to the poor. It distributed over 41 million family planning commodities and services, provided counseling and health services for 7.5 million adolescents, conducted nearly 1.7 million antenatal care check-ups for pregnant women, delivered 41,378 babies, provided post-delivery care to 123,916 newborns within two days of birth, treated 140,463 cases of child pneumonia, counseled 864,393 women on optimal breastfeeding and infant feeding practices and provided growth monitoring and promotion visits for 539,565 children to identify children at risk of growth faltering due to poor nutrition.

As stated above, DFID has entered into an Agreement with USAID/Bangladesh to co-fund the Contract with the understanding that the Project is to be implemented by Pathfinder International. Therefore, the funding received by DFID was conditionally tied to the NHSDP project as implemented by Pathfinder under the Contract. An award to a second contractor would require renegotiation of the agreement with DFID, per Paragraph III of USAID's legal agreement with DFID , creating further implementation delays and which could potentially risk USAID/Bangladesh losing DFID funding and thus impair PHNE's and the Mission's efforts to provide effective, lifesaving care to pregnant women and children. The Contractor has exceeded DFID's program expectations as well, achieving or surpassing all of DFID's indicators.

The benefit of approving the funding increase is that it will ensure that all clinics remain under the Contract, fully enabling the project to achieve all deliverables under the Contract. The technical office staff will be able to dedicate sufficient time to high-priority concurrent redesign efforts: the follow-on to this project, the CDCS, and the new GOB health sector plan. If the request is not granted, the technical office may end the project early, or design a concurrent 12-month award. If the project ends early, the new design, which is presently underway, will not be ready to be awarded, and the project may be shy of reaching the deliverables as stated in the contract. If the technical office designs a new award, it may be stretched too thin to meaningfully contribute to the CDCS and GOB sector plan designs. Therefore, if the request is not approved, the consequences would have an adverse effect on PHNE's and the Mission's health and family planning program in Bangladesh overall.

10. Sources, if any, that expressed an interest, in writing, in the acquisition:

No sources have expressed an interest in the proposed acquisition to date. USAID/Bangladesh will consider and document expressions of interest received in response to the FedBizOpps notice that will be posted.

11. The actions the Agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required:

At present, USAID does not envision further non-competitive modifications to the current award. It is expected that all subsequent requirements for these services will be competed.

12. Technical or Requirement Personnel Certification:

In accordance with FAR 6.303-2(b), I hereby certify that the technical statements included above and which form a basis for the justification are complete and accurate.

____________________________________ _________________
Miranda Beckman Date
Contracting Officer's Representative

13. Contracting Officer Certifications:
[As required see AIDAR 706.302(c) (2 & 4)]

Pursuant to FAR 6.303-2(b) (12) I hereby certify that the justification is accurate and complete to the best of my knowledge and belief.

___________________________________ __________________
Stanley Canton Date
Supervisory Contracting Officer

RECOMMENDATION

That you approve the procurement without full and open competition pursuant to the authority vested in you under AIDAR 706.302-70(c)(4).

 

APPROVED: ________________ DISAPPROVED: _________________

Date: _______________________ Date: ____________________________

 

14. Clearances
[As required see ADS 302 Mandatory Reference Key Guidance]

_____________________________________ ________________________
Alexis Taylor-Granados, Resident Legal Officer Date

_____________________________________ ________________________
Paul Sabatine, Acting Mission Director (Head of Contracting Activity) Date

_____________________________________ ________________________
Terry Youngblood, Acting Deputy Mission Director (Activity Competition Advocate) Date