25R0058ConsolidationMemo(CUI)flat_Redacted.pdf

CUI

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All NSNs are code and part numbered items and all NSNs have an Acquisition Method Code (AMC) of 3, which indicates these items are acquired from the actual manufacturer. This does not preclude offers from dealers.

CLIN 0003 has an AMSC code of B. This part must be acquired from a manufacturing source(s) specified on a source control or selected item drawing as defined by the current version of DoD-STD-

100. Suitable technical data, Government data rights, or manufacturing knowledge are not available to permit acquisition from other sources, nor qualification testing of another part, nor use of a second source part in the intended application. Although, by DoD-STD-100 definition, altered and selected items shall have an adequate technical data package, data review discloses that required data or data rights are not in Government possession and cannot be economically obtained. If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources exist, AMCs 1 or 2 are valid.

CLINs 0004 and 0005 have an AMSC code of C. These parts require engineering source approval by the design control activity in order to maintain the quality of the part. Existing unique design capability, engineering skills, and manufacturing knowledge by the qualified source(s) require acquisition of the part from the approved source(s). The approved source retains data rights, manufacturing knowledge, or technical data that are not economically available to the Government, and the data or knowledge is essential to maintaining the quality of the part. An alternate source must qualify in accordance with the design control activity’s procedures, as approved by the cognizant Government engineering activity. The qualification procedures must be approved by the Government engineering activity having jurisdiction over the part in the intended application. If one source is approved, AMCs 3, 4, or 5 are valid. If at least two sources are approved or if data is adequate for an alternate source to qualify in accordance with the design control activity’s procedures, AMCs 1 or 2 are valid.

CLINs 0001, 0002, 0006, and 0007 have an AMSC code of D. The data needed to acquire these parts competitively is not physically available, it cannot be obtained economically, nor is it possible to draft adequate specifications or any other adequate, economical description of the material for a competitive solicitation.

All NSNS have been purchased via small buys and Procurement Automated Contract Evaluation (PACE) awards under the Simplified Acquisition Threshold of $250,000.00 as well as long term contracts. The proposed acquisition constitutes a consolidation of contract requirements as defined in FAR 2.101 and 7.107- 2 because the proposed procurement will result in a single contract for items that DLA Land and Maritime previously procured under separate acquisitions, each of which was lower in cost than the total cost of the contract for which offers are solicited. Accordingly, the proposed acquisition constitutes a consolidation of contract requirements and requires a written determination.

Market Research

Market research was conducted by the Buyer at the time of project receipt. Questionnaires and spreadsheets were sent to past providers of these items with various inquiries about their businesses and to gauge interest in providing these items again. A Sources Sought notice was posted on May 13, 2025 and closed on May 20, 2025. No responses were received. Market surveys were also sent to past providers of these items. Responses were received from CE Niehoff (76761) and Cavanaugh Government Group (5UY76). CE Niehoff responded that they are a small business manufacturer. They indicated that these are not commercial items and they would be able to provide cost and pricing data. They also provided quantity range price breaks for all NSNs.

Cavanaugh responded that they are a small business dealer for CE Niehoff. They would be capable of providing cost and pricing data.

A review of the past buy histories for these NSNs shows that these items have been procured predominately from the OEM, CE Niehoff & Co.

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Impact on Small Business:

As required by FAR 7.107-2(a)(3), the consolidation was coordinated with the DLA Land and Maritime Small Business Office and Small Business Administration. It is reasonable to conclude that the consolidation of these requirements will not negatively impact small business participation since the sole manufacturer is a small business as well as the Cavanaugh Government Group who responded to the sources sought notice..

Benefits of Consolidation:

The details of the proposed approach are discussed in the acquisition plan. The proposed acquisition approach results in the following benefits:

1. Acquisition Cycle: Administrative Lead Time (ALT) will be reduced because items will not have to be procured via individual purchase orders (spot buys) each time a requirement arises.

Requirements will source automatically to the proposed LTC using DLA’s automated procurement system, which will generate delivery orders against the contract. As of April 2025 in the Land Supply Chain, the average ALT for delivery orders on LTC was day, days for small buys, days for large buys, and days for Procurement Automated Contract Evaluation (PACE) awards. Using this data for comparison, there is a minimum savings of days when comparing the proposed LTC approach to small buys, 160 compared to large buys, and days compared to PACE awards

2. Relationship Management: Orders from a LTC will provide a continuous relationship between the contractors and the contracting activity. After award issuance, the contract(s) will be assigned to a Basic Contract Administrator (BCA). The BCA and an Administrative Contracting Officer (responsible for post award actions on delivery orders) will be responsible for ensuring Purchase Requests are sourced properly to this contract and tracking delivery. The BCA will also be responsible for exercising any options until contract expiration. Having a primary contact within the administration area will ensure that potential quality/delivery issues will be resolved more efficiently and quickly than individual spot buys. Also, contractors are more likely to be proactive in seeking avenues to resolve quality/delivery discrepancies since the items are on contract for an extended period.

3. Cost: The vendor(s) will reduce duplicate efforts and thereby lower administrative costs associated with quoting on multiple solicitations over the same period. Additionally, the vendor(s) may be able to reduce material costs for items on a LTC by using long-term production planning, which allows buying raw material or finished materials in bulk, resulting in quantity discounts. These efficiencies can result in reduction of Government costs. There are also internal Government benefits from using an LTC, such as decreased inventory capital investment requirements as a result of lowered ALT, since quicker and more reliable vendor delivery means that less stock is required to be kept on-hand. Also, the Government’s administrative and operational costs to initiate and manage multiple solicitations, evaluations, award decisions, and contracts is significantly reduced, ordering is automated, and the automated ordering process time is almost instantaneous.

The acquisition is for supplies and the end-items will be delivered to DLA stock at the depots. The BCA Simulator (formerly the Vendor Stock Retention Model (VSRM) estimates a total of potential cost avoidance over five years using the proposed contract for LTC for Stock versus Spot Buys for Stock; see attachment #1- BCA Simulator. The estimated savings are primarily resulting from cost reductions in the following cost drivers: depot throughput, transportation, asset management, and storage. Since the proposed vendor materiel prices are unknown at this time, this savings assumes the vendor's materiel prices will be the same as the

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average DLA acquisition prices for each NSN. The actual savings will depend on the final negotiated materiel prices.

The advantages of this project include cost avoidance for the Government, workload reduction, opportunity for continued participation in a supplier partnership, little disruption of the current flow of items to the customer, and minimal level of maintenance. These benefits are interrelated and largely result from elimination of the numerous separate contract actions (with associated lead-time and contracting resource requirements) now required to support DLA Land and Maritime based weapon systems on a worldwide basis.

The quantifiable benefits identified above do not meet the threshold for a substantial benefit at FAR 7.107- 2(d)(1)(ii) of this subsection; however, enumerated benefits are critical to DLA Land and Maritime’s mission success. DLA Land and Maritime uses LTC methods to offer the best value to our customers. By consolidating these requirements, DLA Land and Maritime will be able to ensure consistent supplies while achieving economies of scale and reducing ALT and PLT. The benefits of this consolidation are critical to the Agency’s mission success. DLA is the military’s premier logistics provider, and it is imperative that DLA structures its contract actions to maximize benefits while minimizing costs. The consolidation does this by reducing administrative costs which, in turn, helps to keep DLA’s cost recovery rate low. Critical benefits include increased material availability, reduction in lead time, and increased warfighter equipment operational readiness.

Alternate Contracting Approaches:

The Contracting Officer has identified the less consolidated alternatives in developing the acquisition strategy for this project. The least beneficial approach would be to procure the items via individual purchase orders (spot buys). The use of spot buys to satisfy requirements for some or all of these items does have benefits. Specifically, there is low risk of transitional disruption associated with moving to a different procurement alternative, and the relatively low dollar value of spot buys may increase small business participation. However, these benefits are outweighed by the costs of spot buys and the benefits of long-term contracting. Spot buys, whether small or large, are more expensive than delivery orders. Additionally, there are efficiencies and other benefits with long-term contracting. A long-term contracting instrument has the potential to improve in all areas. Better prices will probably be obtained with a long-term instrument rather than increases that would likely occur with an individual spot buy. This approach would not achieve the efficiencies, cost avoidance, and other benefits when compared to the acquisition strategy proposed.

Another less consolidated contracting strategy would be to procure these items using Automated Indefinite Delivery Contracts (IDCs). However, Auto IDCs have a $250,000 threshold per item and are typically shorter than LTCs. The demand for these items would quickly reach this threshold and require multiple solicitations during the same timeframe as a Long Term Contract. Therefore, these NSNs should not be placed on Auto IDCs.

Another approach that is less consolidated than that proposed is to separately solicit for and award individual LTCs for each NSN. While this approach seeks to leverage the contract administration advantages of long-term delivery order contracts, it provides very little practical difference from the first alternative above. This approach would require greater resources both to award and administer (even if the contracts were awarded to the same vendor) and would take substantially longer to award than the proposed approach. Therefore, this alternative contracting strategy is substantially less beneficial than the proposed approach because it significantly decreases efficiencies during the pre-award cycle and provides no better benefits associated with competition than the proposed approach, as both approaches allow for the individual evaluation and award of each NSN.

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Determination:

In view of the foregoing, I hereby determine:

1. This proposed acquisition constitutes a consolidation of contract requirements.

2. The contract requirements being consolidated exceed $2 million.

3. There are benefits to consolidating the contract requirements, which include both quantifiable and non-quantifiable benefits.

4. The expected benefits do not meet the thresholds for a substantial benefit at FAR 7.107-2(d)(1) but are critical to the Agency’s mission success.

5. The procurement strategy provides for maximum practicable participation by small business.

6. The consolidation of contract requirements is necessary and justified.

DLA Land Maritime

Attachments:

1. BCA Simulator

VANSCHAIK.JULI

E.N.1229070327

Digitally signed by

VANSCHAIK.JULIE.N.1229070327

Date: 2025.07.03 12:24:44 -04'00'