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Justification of Competitive Procurement Process. Cap-and-Trade Market Monitoring Services. October 8, PDF

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Justification of Competitive Procurement Process Cap-and-Trade Market Monitoring Services October 8, 2015 Introduction In support of its purpose to provide administrative and technical services to its
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Justification of Competitive Procurement Process Cap-and-Trade Market Monitoring Services October 8, 2015 Introduction In support of its purpose to provide administrative and technical services to its Participating Jurisdictions, WCI, Inc. proposes to procure Cap-and-Trade Market Monitoring Services. The scope of work is based on and defined to meet the specifications and requirements of the Participating Jurisdictions that are implementing cap-and trade programs. This document summarizes the justification for procuring this work through a competitive procurement process. In accordance with the WCI, Inc. Procurement Policy, WCI, Inc. staff, with the assistance and involvement of Participating Jurisdictions, developed and executed an open competitive process for procuring the Cap-and-Trade Market Monitoring Services. The result of the procurement process is a unanimous recommendation that the contract be awarded to Monitoring Analytics, LLC. No material deviations from the planned procurement process were required and the procurement was consistent with the WCI, Inc. Procurement Policy. Description of Cap-and-Trade Market Monitoring Services The purpose of this work is to enable multi-jurisdictional monitoring among Participating Jurisdictions of auctions and markets in greenhouse gas compliance instruments and related derivatives. The services being procured in the proposed WCI, Inc. contract include: Develop Final Work Plan and Schedule Prepare and Maintain a Security Plan Prepare and Maintain a Monitoring Plan Monitor and report Compliance Instrument Holdings; CITSS Transfer Activity; Secondary, Derivative, and Related Market Activity; and Market Structure Provide Independent Review of Participant Corporate Structure Audit and Monitor the Auctions Audit and Monitor the Reserve Sales Participate in Auction Services Testing and Demonstration Review Participating Jurisdiction Regulations and Other Program Documentation Linking with Additional Jurisdictions Provide Knowledge Transfer and Ad Hoc Reports Optional Task: Transition Out 1 Process for Procuring the Services Using a Competitive Procurement Process The process for soliciting and recommending a contractor was done in accordance with the WCI, Inc. Procurement Policy. The key solicitation and evaluation requirements of the policy are provided below: To obtain the best value for the Corporation, the procurement process shall ensure open and effective opportunities for competition, including but not limited to the following: A. Conduct procurement in a transparent and fair manner. B. Provide equal access and timely and accurate procurement information to potential suppliers prior to and during the procurement process. C. Make procurement documents and related materials electronically and publicly available in a timely manner, with sufficient time prior to a bid or proposal due date, taking into consideration the complexity of the procurement. D. Ensure all bid documents contain the necessary information for proposers to prepare a bid. E. Ensure that procurement is conducted in a geographically neutral manner. F. Provide flexibility to ensure goods and services are obtained in a timely manner. To further support obtaining best value and providing a stable procurement environment, the procurement evaluation process will include but is not limited to the following: A. Defining administrative bidding requirements that are clear and fair, and applying the requirements consistently to all bidders. B. Tailoring technical evaluation criteria and scoring methods to each procurement to obtain best value for the Corporation. C. Comprising the evaluation team with personnel that have the requisite technical expertise to evaluate the proposals effectively. D. Ensuring that the evaluation process is free of conflicts of interest. Rationale for Recommending Monitoring Analytics, LLC The Monitoring Analytics, LLC proposal meets all the administrative and technical requirements of the RFP. In addition, the Monitoring Analytics, LLC proposal scored higher than any other proposal received. In addition to the overall quality of the proposal, Monitoring Analytics demonstrated several factors that separated their proposal from others that were received, including: demonstrated experience in successfully providing market monitoring services; ability to extend work load to new jurisdictions; capabilities to develop and manage various reporting requirements of the participating Jurisdictions; extensive experience in the energy and carbon offsets industry; and an experienced project team. The Monitoring Analytics proposal also contains cost advantages over other proposals received. 2 STANDARD AGREEMENT Cap and Trade Market Monitoring Services December 1, 2015 Page 1 of STANDARD AGREEMENT ( Agreement ) 1. This Agreement is entered into between Western Climate Initiative, Inc. (WCI, Inc.) and the Contractor named below: CONTRACTOR'S NAME Monitoring Analytics, LLC The term of this Forty Eight (48) months to begin December 1, 2015 to January 31, 2020 Agreement is: With one (1) two (2) year option to extend contract thru January 31, The maximum amount of this Agreement is: Base term $691,390 (USD) 2 year extension not to exceed $324,127 (USD) 4. The parties agree to comply with the terms and conditions of the following attachments, which are by this reference made a part of the Agreement. WCI, Inc. is not an agent of the WCI, Inc. Participating Jurisdictions or any of its funding entities. Attachment A Scope of Work Attachment B Budget Detail and Payment Provisions Attachment C General Terms and Conditions Attachment D Individual Conflict of Interest and Confidentiality Attachment D1 Organization Conflict of Interest and Confidentiality Attachment E Contract Insurance Requirements Attachment F Contractor s Technical and Cost Proposal IN WITNESS WHEREOF, this Agreement has been executed by the partieshereto. CONTRACTOR CONTRACTOR S NAME (if other than an individual, state whether a corporation, partnership, etc.) Monitoring Analytics, LLC BY (Authorized Signature) Joseph Bowring PRINTED NAME AND TITLE OF PERSON SIGNING DATE SIGNED(Do not type) WCI, Inc. Use Only ADDRESS 2621 Van Buren Avenue, Suite 160, Eagleville, PA CONTRACTEE CONTRACTEE S NAME Western Climate Initiative, Inc. BY (Authorized Signature) Greg Tamblyn PRINTED NAME AND TITLE OF PERSON SIGNING DATE SIGNED(Do not type) ADDRESS th Street, Suite 1600, Sacramento, CA Page 2 of Contractor agrees, as part of the Agreement, to provide to WCI, Inc. the services described in the Agreement and the Attachments to the Agreement, including the services described in Attachment A, Scope of Work, and in Attachment F, Contractor s Technical an cost Proposal, (all such services, collectively, the Work or the Work Schedule ). This Agreement includes 1 optional contract extension of 2 years each. The decision to exercise an optional extension is at the sole discretion of WCI, Inc. The scope of work of the extension shall be mutually agreed to by WCI, Inc. and the Contractor. The cost of the extension shall be mutually agreed to by WCI, Inc. and the Contractor based on the scope of work of the requested services. Project Representatives are responsible for administrative and financial oversight and accountability. The Contractor Project Representative has the authority to make executive level administrative decisions for the Contractor and any subcontractor(s). The Project Representatives during the term of this Agreement will be: Western Climate Initiative, Inc. Contractor: Monitoring Analytics, LLC Name: Greg Tamblyn Name: Joseph Bowring Phone Phone: Fax Fax: Direct all administrative inquiries to: Western Climate Initiative, Inc. Contractor: Monitoring Analytics, LLC Attention: Greg Tamblyn Attention: Joseph Bowring Phone: Phone: Fax: Fax: Page 3 of Table of Contents Purpose / Background / Overview... 5 A. Purpose... 5 B. Background... 5 C. Overview... 5 Attachment A: Scope of Work... 6 Attachment B: Budget Detail and Payment Provisions... 9 A. Invoicing and Payment... 9 B. Budget Detail... 9 Attachment C. General Terms and Conditions Attachment D. Individual Conflict of Interest and Confidentiality Statement Attachment D1. Organization Conflict of Interest and Confidentiality Statement Attachment E. Contract Insurance Requirements Attachment F. Contractor s Technical and Cost Proposal Page 4 of PURPOSE / BACKGROUND / OVERVIEW A. PURPOSE The purpose of this work is to enable multi-jurisdictional monitoring among Participating Jurisdictions of auctions and markets in greenhouse gas compliance instruments and related derivatives. B. BACKGROUND WCI, Inc. supports the Participating Jurisdictions by contracting for analyses that support market monitoring. These analyses include review and evaluation of auctions and reserve sales to identify any inappropriate market activity or deviations from the requirements of each Participating Jurisdiction s program. C. OVERVIEW This Agreement provides for multi-jurisdictional monitoring among Participating Jurisdictions of auctions and markets in greenhouse gas compliance instruments and related derivatives. The scope of work in this Agreement includes: developing a final work plan and schedule, preparing and maintaining a security plan, preparing and maintaining a monitoring plan, monitoring compliance instrument holdings; CITSS transfer activity; secondary, derivative, and related market activity; and market structure, providing independent review of participant corporate structure, auditing and monitoring the auctions, auditing and monitoring the reserve sales, participating in auction services testing and demonstration, reviewing Participating Jurisdiction regulations and other program documentation, the linking with additional jurisdictions, providing knowledge transfer and ad hoc reports, and transition out at the end of the contract. Page 5 of Task 5 Provide Independent Review of Participant Corporate Structure. Under this Page 6 of ATTACHMENT A: SCOPE OF WORK This Scope of Work covers twelve (12) tasks. A brief description of each task is presented below: Task 1 Develop Final Work Plan and Schedule. Under this task the Contractor shall develop a Final Work Plan to reflect the final work schedule and task descriptions. Task 2 Prepare and Maintain Security Plan. Under this task the Contractor shall provide Participating Jurisdictions with a documented plan for handling and communicating confidential information submitted by and to Contractor. The plan must recognize that confidential information must be stored and shared only on servers located in the United States or Canada, and that Contractor will use any secure file sharing service that might be approved and in use by Participating Jurisdictions. The Security Plan must include procedures for communicating confidential information between Contractor and Participating Jurisdictions, between Contractor and WCI, Inc., and between Contractor and other WCI, Inc. contractors Task 3 Prepare and Maintain a Monitoring Plan. Under this task the Contractor shall provide Participating Jurisdictions with a plan for how Contractor will monitor Participating Jurisdictions compliance instrument and related markets, including a description of the methods and metrics to be used. The Monitoring Plan must describe Contractor s plan for 1) monitoring holdings and transfers of compliance instruments recorded within the Compliance Instrument Tracking System Service (CITSS), 2) monitoring secondary and related markets, including derivative markets, and 3) auditing and monitoring allowance auctions and reserve sales. The auction and reserve sale portion of the Monitoring Plan must include Contractor s activities to monitor applicant approvals, criteria for bid flagging and bid rejection, and auction and reserve sale certification. Task 4 Monitor Compliance Instrument Holdings; CITSS Transfer Activity; Secondary, Derivative, and Related Market Activity; and Market Structure. Under this task the Contractor shall monitor, evaluate, and report relevant market activities, metrics, and structures, including any allowance holding positions that may violate Participating Jurisdictions regulations or provide opportunity to exercise market power. Contractor shall conduct this task in accordance with the Monitoring Plan to be developed under Task 3. Contractor shall obtain primary and backup staff access to required systems and data, including CITSS; process the data using robust analytical tools and report results in usable formats (e.g., Excel); calculate appropriate metrics for analysis; and identify any issues found in allowance holdings and transfers. Contractor shall also monitor, identify, and report any issues found in allowance market activity outside of CITSS using secondary and derivatives market data sources. These efforts shall include any issues related to potentially fraudulent activity affecting the compliance instrument market. Contractor shall also monitor related markets that may significantly affect a compliance instrument market, such as related energy markets. task the Contractor shall maintain a database of corporate structure information, such as corporate ownership and affiliates, which can be used to track ownership and identify when market participants may be in violation of Participating Jurisdictions regulations or may be in a position to exercise market power. Contractor shall maintain access to relevant ownership data (Dun and Bradstreet, SEC 10k filings, etc.) and review ownership structures using such collected data. This review will occur on a routine basis, as described in the Monitoring Plan. Based on this review, Contractor shall revise its ownership structure database. Where additional data elements would be useful, e.g., the visual mapping of corporate structures to better understand potential inter-jurisdictional issues, the Contractor shall communicate suggested changes to data requirements to WCI, Inc. and Participating Jurisdictions. When requested by Participating Jurisdictions, Contractor shall compare its database with data submitted to jurisdictions for accuracy and communicate any inconsistencies to the Participating Jurisdictions. Task 6 Audit and Monitor Auctions. Under this task the Contractor shall monitor the administration of and participant conduct in allowance auctions sponsored by Participating Jurisdictions, and to provide an independent review of auction performance and results and a report on the outcomes. Contractor shall conduct this task in accordance with the Monitoring Plan to be developed under Task 3. Contractor monitoring of auctions shall include 1) observing auction conduct in real time on line and via conference call with jurisdiction authorities and the Auction Administrator, 2) reviewing auction processes and compliance with regulations, 3) acquiring auction data, and 4) calculating and reporting auction results and metrics. Task 7 Audit and Monitor the Reserve Sales. Under this task Contractor shall monitor the administration of and participant conduct in allowance reserve sales sponsored by Participating Jurisdictions, and to provide an independent review of reserve sale performance and results and a report on the outcomes. California and Québec regulations require separate reserve sales for each jurisdiction. Contractor shall conduct this task in accordance with the Monitoring Plan to be developed under Task 3. Contractor monitoring of reserve sales shall include 1) observing reserve sale conduct in real time on line and via conference call with jurisdiction authorities and the Auction Administrator, 2) reviewing reserve sale processes and compliance with regulations, 3) acquiring reserve sale data, and 4) calculating and reporting reserve sale results and metrics. Task 8 Participate in Auction Services Testing Demonstration. Under this task the Contractor shall assist WCI, Inc. and Participating Jurisdictions in the testing of any new or revised auction services and in the monitoring of any auction or reserve sale conducted for demonstration or training purposes. Contractor shall, upon request by WCI, Inc., evaluate the auction services algorithm, design test cases for algorithm and auction services testing, verify algorithm and auction services testing results, participate in auction services acceptance testing, participate in any auction or reserve sale conducted for demonstration or training purposes, and provide recommendations for improving the auction services. Task 9 Review Participating Jurisdiction Regulations and Other Program Documentation. Under this task the Contractor shall review cap-and-trade program documentation and provide an independent opinion of any issues that may interfere with the efficient operation of the program or the compliance instrument markets. Contractor Page 7 of 33 shall, upon request by WCI, Inc., review documentation and provide a written list of comments, issues, and any further clarifying questions that arise in its review of the documentation. Examples of such documentation may include jurisdictions existing and proposed regulations, jurisdictions draft guidance for market participants, auction and reserve sale settlement algorithms and/or algorithm descriptions, and auction and reserve sale procedures. Task 10 Linking with Additional Jurisdictions. Under this task the Contractor shall provide data and analysis to WCI, Inc. and the Participating Jurisdictions regarding any proposed linking of additional jurisdictions to the regional market already comprised of California and Québec programs. Task 11 Provide Knowledge Transfer and Ad Hoc Reports. Under this task the Contractor shall transfer knowledge between Contractor, Participating Jurisdictions, and, where appropriate, WCI, Inc. Contractor shall upon request by WCI, Inc. or a Participating Jurisdiction, be available to provide knowledge, advice, and recommendations based on experience with monitoring markets and based on observations and lessons learned from monitoring the compliance instrument markets of Participating Jurisdictions, including best practices for detecting and addressing potentially fraudulent activities. Task 12 Optional Task: Transition Out. Under this task the Contractor shall work with WCI, Inc. and any other vendor(s) selected by WCI, Inc., if applicable, at the conclusion of the contract, to smoothly transition market monitoring services to another service provider, including training and knowledge transfer. This is an optional task that will only be acted upon by Contractor with separate, written direction from the WCI, Inc. Executive Director. Page 8 of A. Invoicing and Payment ATTACHMENT B BUDGET DETAIL AND PAYMENT PROVISIONS 1. For services satisfactorily rendered, and upon receipt and approval of the invoice, WCI, Inc. agrees to compensate the Contractor in accordance with the Contractor s Technical and Cost Proposal, which is incorporated as Attachment F. The maximum payable will not exceed the value identified in the Standard Agreement. Compensation refers to the consideration to be paid to Contractor for all of Contractor's services provided and costs incurred to fulfill its duties and obligations in connection with the Agreement. All tasks shall be payable in arrears for each month. Payment terms are NET 30. Costs for travel will be incurred and charged for on a cost-reimbursable basis, at cost, and only if duly authorized in writing by the WCI, Inc. Project Manager. When traveling within the U.S., travel cost reimbursement must abide by U.S. Federal travel regulations and per diem rates published by the U.S. General Services Administration (http://www.gsa.gov/portal/category/21287). When traveling outside of the U.S., travel cost reimbursement must abide by the per diem rates used by the State Department (http://aoprals.state.gov/web920/per_diem.asp). Invoices shall include the Agreement
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