36C776-24-AP-0133 - Consolidation Memo.pdf

36C77624R0098

VAAM M807-C Page C-1

CONSOLIDATION DETERMINATION AND FINDINGS

INDEFINITE DELIVERY, INDEFINITE QUANTITY MULTIPLE AWARD TASK ORDER

CONTRACT FOR CONSTRUCTION SERVICES IN VISN 1

FINDINGS

I. INTRODUCTION

The Department of Veterans Affairs (VA), Veterans Health Administration (VHA), Program Contracting Activity Central (PCAC) plans to solicit offers for construction services in Veterans Integrated Service Network (VISN) 1 and has conducted market research that demonstrates consolidation of this procurement to be both necessary and justified.

II. BACKGROUND

A. Requirement:

VISN 1 has stations located in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, and has a requirement for on-going facilities construction (including new square footage construction), alterations, and repair of buildings, structures and other real property relating to, but not limited to, civil, mechanical, plumbing, structural, electrical, heating, roofing, site work, heating ventilation and air conditioning, for the following VISN 1 VA Medical Centers (VAMCs):

(1) VA Togus, ME;

(2) VA White River Junction, VT;

(3) VA Manchester, NH;

(4) VA Central Western MA, Northampton, MA;

(5) Edith Nourse Rogers Veterans Memorial Hospital, Bedford, MA;

(6) VA Boston Health Care System, MA, including the Brockton Campus, the

Jamaica Plain Campus, and the West Roxbury Campus;

(7) VA Providence, RI;

(8) VA Connecticut Health Care System, including the West Haven Campus, and the Newington Campus;

(9) Any Community Based Outpatient Clinics located within VISN 1;

(10) Any other VA facility and/or location within the New England Healthcare System

The intent of this acquisition is to establish a construction Indefinite Delivery, Indefinite Quantity (IDIQ) Multiple Award Task Order Contract (MATOC) to expedite PCAC’s construction procurements in support of VISN 1 for Network Contracting Offices’ (NCOs) Non-Recurring Maintenance (NRM) projects, targeted critical

VAAM M807-C Page C-2 infrastructure modernization, and Minor construction projects, all of which are critical to the VA’s mission success.

Construction services in VISN 1 are currently being accomplished through Federal Acquisition Regulation (FAR) Part 14 and 15 procedures. The need for on-going construction at multiple VAMC’s would be fulfilled with the award of a consolidated IDIQ MATOC to expedite the solicitation process. As a measure of ongoing need, VISN 1 has a facility condition backlog in NRM projects, as well as a number of Minor projects, and has more than in construction projects over the next five years. This number represents an assessment of need that will only continue to grow. These numbers also demonstrate a large construction workload, and this endeavor would allow the solicitation process to be as expeditious as possible eliminating the need to utilize FAR Part 14 and 15 open market procedures for most construction requirements. An expedited solicitation process would assist greatly in processing the construction projects and ultimately improving care settings and the environment for Veterans served in these geographic areas.

B. Applicable Statutes/ Regulations

In accordance with (IAW) the definition provided at FAR 2.101, “Consolidation or consolidated requirement” means a “solicitation for a single contract, a multiple-award contract, a task order, or a delivery order to satisfy … requirements of the Federal agency for construction projects to be performed at two or more discrete sites.”

While FAR 7.107-2(a) recognizes that consolidating requirements may provide substantial benefits to the Government, further account is given to the potential negative impact upon small business participation. Accordingly, before actions are taken by an agency to consolidate requirements under a subsequent solicitation and/or contract award, accompanied by an estimated total dollar value exceeding $2 million, a written determination is required. In accordance with FAR 7.107-2(a), the senior procurement executive or chief acquisition officer shall make a written determination that the consolidation is necessary and justified for actions exceeding $2 million.

This determination is issued pursuant to FAR 7.107-2(e), that consolidation is necessary and justified for an acquisition exceeding $2 million based on benefits that are critical to the VA’s and VISN 1’s mission success.

C. Market Research

Market research has been conducted in accordance with FAR 10.001(a)(2)(iv) and has demonstrated that Consolidation is necessary and justified.

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A Sources Sought Notice was published on SAM.gov on November 1, 2023, under 36C77624Q0029, with a response date of November 27, 2023. A search of the Small Business Administration’s (SBA) VetCert database displayed 3,297 certified Service-Disabled Veteran Owned Small Business (SDVOSBs) and VOSBs registered in NAICS 236220, Commercial and Institutional Building Construction. A search of the SBA’s Dynamic Small Business Search for all small businesses registered in NAICS 236220 within resulted in a list of 2,359 small business vendors in these states. These registered vendors were emailed a copy of the Sources Sought Notice with a link to the Contracting Opportunities on SAM.gov.

Additional outreach was done via email to contact known SDVOSBs as well.

Notifications

The following have been consulted regarding this Consolidation effort: A Small Business Specialist and the local SBA procurement center representative (PCR) (see FAR 10.001(c)(1).

Results of Market Research

All responses to the Sources Sought Notice and additional outreach were reviewed by the Contracting Officer’s Representative (COR) and Contracting Officer (CO).

Many of the responding contractors were considered technically qualified, including

SDVOSBs, some of whom have experience in VISN 1. This finding met the SDVOSB set-aside requirement per the VA Veterans First Program. There is ample competition within the SDVOSB community to compete projects at the task order level. Based on the market research conducted and the resulting analysis, the data supports setting aside the procurement for SDVOSBs. See attached Market Research Report for further analysis.

Sources Sought Results - Technically Qualified SDVOSB Vendor List

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D. Buy American Act

Consideration was given to the Buy American Act in the acquisition plan and will be part of the solicitation and resulting IDIQs.

There were SDVOSBs that were interested and found capable to perform the required construction services. Market research and historical experience based on the last MATOC for VISN 1 indicates that SDVOSBs are expected to be able to fulfill the domestic sourcing requirements of this effort. The solicitation for the new MATOC will contain the applicable FAR 25 provisions and clauses to include FAR 52.225-9, 52.225-10, 52.225-11, and 52.225-12, in order to ensure all material is domestically sourced in accordance with the Buy American Act (BAA). In addition to the clauses, compliance with the BAA will be monitored through the material submittal process. The submittal will be reviewed against the VA specifications and approved by the VA Engineer and Architect/Engineer firm in order for a contractor to move forward with procuring the material.

The solicitation will also include VA Acquisition Regulation (VAAR) 852.219-76, VA Notice of Limitations on Subcontracting - Certificate of Compliance for Supplies and Products.

III. CONSOLIDATION

A. Benefits

In order to be determined necessary and justified, the benefits of the consolidated acquisition must substantially exceed the benefits that would be derived from alternative contracting approaches that involve a lesser degree of consolidation.

Such benefits may include quantifiable cost savings or price reductions well as other benefits, regardless of whether quantifiable in dollar amounts, to include quality improvements that will save time or improve or enhance performance or efficiency, reduction in acquisition cycle time, better terms and conditions, or any other benefit.

The expected benefits of the consolidated acquisition will be discussed in the paragraphs below.

According to FAR 7.107-2(c), benefits other than cost savings or price reduction may also be used to justify consolidation. These benefits include: 1) Quality improvements that will save time or improve or enhance performance or efficiency;

(2) Reduction in acquisition cycle times; (3) Better terms and conditions; or (4) Any other benefit. The consolidation of construction services efforts between all of the stations will clearly achieve benefits (1), (2), and (3) as described in subparagraphs below:

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(1) Creating one VISN 1 construction services MATOC for recurring needs will reduce duplicative efforts, save time and money, provide flexibility to the VISN 1 facilities, and protect the Government’s interests. The MATOC will establish a pool of highly capable SDVOSB firms with standardized ordering procedures.

This will streamline construction acquisitions and increase the Government's ability to obtain quality construction services in the most efficient manner as there is less risk of low-quality performance. The familiarity with the IDIQ holders and the consistent proposal submissions could reduce the evaluation time.

(2) Significant reductions in acquisition cycle times are expected to be achieved through consolidation. The standard VHA Procurement Action Lead Time (PALT) for design-bid-build acquisitions under $7M is 120 days and acquisitions $7M to $50M is 180 days respectively. However, with the Construction MATOC in place, the PALT is reduced by 50% to 60-90 days for each task order. The pre-solicitation time will be greatly reduced due to not having to do full blown market research and complete an acquisition plan.

(3) The terms and conditions will be established by written agreement of the parties in the resultant MATOC contracts and will apply to future task orders between the parties during the five-year ordering period. This should result in increased administrative efficiencies and cost savings with the use of the MATOC.

(4) The Construction MATOC previously in place for VISN 1 established more advantageous terms and conditions as a direct result of the use of the MATOC vehicles. Under this contract type, contractors have a greater likelihood of receiving a higher quantity of work over an extended period. The increase in job security, paired with the higher expected volume of projects provided by the MATOC incentivizes contractors to provide the Government more competitive pricing. If contractors receive multiple awards at the various locations, it may incentivize them to provide more competitive pricing because they are already mobilized on these sites.

B. Mission Success

The approval authority may also determine that consolidation is necessary and justified when the benefit thresholds are not met, but the contract is critical to the VA mission success and the procurement strategy provides for maximum practicable participation by SDVOSBs.

Veteran’s Health Administration’s (VHA’s) current owned infrastructure is aged, deteriorating, and does not meet modern healthcare requirements. Additionally, the growth of projected space need has outpaced VA’s execution capability. Without addressing both problems, VA is at risk of systemic failure. The risk is being realized now with costly and repeated repairs to several aging facilities. VHA must act now to

VAAM M807-C Page C-6 avert an increasing risk for potentially catastrophic critical infrastructure failures. VA has developed a long-term capital investment strategy to modernize and optimize healthcare infrastructure. Congress has committed to increasing Minor Construction and NRM funding to address critical space issues and address failing utilities. As a result, VHA anticipates an unprecedented increase in NRM funding, as well as a steady increase in Minor Construction funding.

VHA must ramp up its ability to execute Minor Construction and NRM projects. VHA is planning for an increase in NRM and Minor construction funds over the next five years. Currently, there is not a VISN 1 MATOC for construction to support the VISN facilities. An IDIQ MATOC for construction that enables VHA to acquire construction services from vetted SDVOSB construction firms using a streamlined acquisition process supports the mission essential goal of modernizing Veteran healthcare facilities.

The use of a consolidated MATOC for construction projects is critical to the mission success of each VAMC. Without a construction services MATOC in place to provide streamlined project execution, increased times for projects would occur and result in delays in facility renovations and operations. These delays would jeopardize the effectiveness of these hospitals in serving the Veterans and could ultimately result in mission failure. Therefore, the MATOC is critical to the agency’s mission success.

As demonstrated here, while the anticipated financial benefits do not meet the thresholds in FAR 7.107-2(d)(1), the expected benefits not quantifiable in dollar amounts are critical to the agency's mission success and this procurement strategy provides for maximum practicable participation by small business, particularly SDVOSBs.

C. Procurement Strategy

The MATOC is not intended to replace IDIQ contracts for construction services which are currently available within PCAC or NCO 1, or to preclude NCO 1 from establishing their own vehicle. The ordering period will be five (5) years from the date of award. The planned consolidated MATOC will have an estimated maximum contract value of over the five-year ordering period. Individual IDIQs will not have a maximum contract value. It has been determined that a firm-fixed-price (FFP) MATOC is appropriate, and each subsequent task order will be FFP. There will be no options on the IDIQs. The MATOC competition will be sought via a request for proposal announced on Contract Opportunities via SAM.gov.

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As there is ample competition at the SDVOSB level, the acquisition will be set-aside for SDVOSBs with awards being made following construction procedures set forth in FAR 36, VAAR 836, and VA Acquisition Manual (VAAM) M836. NAICS 236220 has a size standard of $45M.

D. Alternative Approaches

The following are contracting approaches that would involve a lesser degree of consolidation but are not as beneficial as the VISN-wide IDIQ MATOC:

(1) Take No Action: Taking no action or “doing nothing” does not support PCAC with expediting the procurement of the budgeted workload for construction services in VISN 1. There is not currently an IDIQ for VISN 1 construction projects. Continuing to take “no action” will continue to compromise efficiencies gained using an IDIQ vs a “C” type contract, resulting in fewer construction awards directly affecting the VA’s mission. NRM funding is typically one-year money, which means it expires at the end of each Fiscal Year if not obligated.

Any acceleration in PALT is important when trying to make annual obligations.

(2) Perform Services In-House: The VHA does not currently possess sufficient staffing to perform the required construction services.

(3) Utilize Another Government Agency: In order to utilize another Government agency via an assisted acquisition, this would be required to be awarded as an Interagency Agreement (IAA) and would be conducted IAW the procedures set forth under FAR Subpart 17.5 and VAAM Part M817. Currently, an IAA exists between the VA and USACE (VA101F15M0005). Awarding an IAA is determined to be unnecessary as VHA possesses the resources to perform all acquisition activities, including awarding and administering a contract.

(4) Orders Against GSA Federal Supply Schedule Program: FAR 8.004, “Use of other sources,” encourages agencies to consider satisfying requirements from or through non-mandatory sources, such as Federal Supply Schedules before considering commercial sources in the open market. However, orders against General Services Administration (GSA) Federal Supplies Schedules are not a feasible acquisition alternative as GSA does not provide for complex construction in their schedules.

(5) Blanket Purchase Agreements (BPAs) using Simplified Acquisition Procedures: Using Simplified Acquisition Procedures to award BPAs as prescribed at FAR Section 13.303 is not a feasible acquisition alternative as individual purchases shall not exceed the simplified acquisition threshold pursuant to FAR paragraph 13.303-5(b). Historically, construction projects often exceed the simplified acquisition threshold.

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(6) Single Award Type “C” Contracts: PCAC is currently procuring each VISN 1 construction requirement open market utilizing FAR Part 14 or 15 procedures.

Although this approach is “feasible” it is not advantageous to the Government as both procedures require more Government resources and reviews and result in an overall increased PALT which ultimately impacts mission needs. As noted above, “C” type contracts for construction take approximately 120-180 days to award versus 60-90 days to award a task order.

(7) IDIQ MATOC per VISN 1 VAMC: An IDIQ MATOC for each of the VAMC’s within the VISN 1 locations is a feasible alternative, but not advantageous to the Government. All VISN 1 locations frequently procure almost-identical construction requirements using the same pool of SDVOSBs; therefore, acquiring these requirements through separate MATOCs substantially duplicates efforts, and becomes inefficient and administratively burdensome.

E. Negative Impact

The proposed MATOC is essential in assisting the agency with meeting its mission goals and will potentially provide efficiencies to the Government. It is anticipated that this MATOC will have a limited negative impact on the SDVOSB community;

however, some mitigation techniques will be implemented in order to alleviate any negative impacts.

(1) General:

The Government intends to make as many awards as possible, potentially as many as . Each contract will have an ordering period of five (5) years and the Government reserves the right to reopen competition at any time during the term of the contract to ensure an adequate number of firms are always available to achieve effective competition on all task orders. The ordering period for new awardees will not exceed the overall maximum term of the original MATOC.

(2) Lack of exclusivity: The proposed MATOC will primarily be used by PCAC personnel. Additionally, NCO 1 will also have the ability to use the IDIQ;

however, this MATOC is not a mandatory contract for VHA. As a result, NCO 1 may still choose to use or pursue their own Indefinitely Delivery Vehicles (IDVs) or standalone contracts for construction services. Due to the lack of exclusivity, VAAM M807-C Page C-9 firms will still have the ability to compete for construction related services within the VISN if NCO 1 or PCAC chooses not to utilize the proposed MATOC.

(3) On-ramping Procedures: On-ramping procedures will be included to add businesses throughout the life of the contract. The on-ramping procedures will occur at scheduled times and at frequent enough intervals to allow additional SDVOSBs the opportunity to compete on the MATOC. The on-ramping procedures will also be transparent as these opportunities will be posted at SAM.gov. Moreover, the eligibility requirements included in the on-ramping procedures will not be more restrictive as the Government will simply use the criteria established in the initial solicitation.

In summary, the proposed MATOC is critical to the agency’s mission success as discussed above and will potentially offer efficiencies to the Government. Based on the information presented above, these efficiencies will be balanced with support for SDVOSBs. At least SDVOSB firms were found capable during market research, and it is anticipated to award at least that many IDIQ contracts. It is acknowledged that there may be some minimal impact; however, measures such as on-ramping, lack of exclusivity, and transparency will assist in mitigating any potential negative impacts throughout the life of the contract.

F. Inclusion of small business concerns

IAW VAAR 819.201, it is VA policy that small business concerns owned and controlled by Veterans shall have maximum practicable opportunity to participate in VA acquisitions, consistent with efficient contract performance and the priorities and preferences established under 38 U.S.C. 8127 and 8128. Additionally, within the VA hierarchy of small business program preferences established by 38 U.S.C. 8127(i) (see VAAR subpart 819.70), VA must consider preferences for certified SDVOSBs first. Market Research conducted supports the 100% SDVOSB set-aside.

Additionally, there will be subcontracting opportunities in each location for other small businesses and SDVOSBs to be utilized.

This Determination and Findings has been coordinated with the Office of Small Disadvantaged Business Utilization for the VHA, as evidenced by the signature block on the last page of this document.

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DETERMINATION

Based on the above, I hereby determine that in accordance with FAR 7.107-2(e) that consolidation is necessary and justified.

Attachments:

1. VHA Procurement PALT Standards

2. Market Research Report

PREPARED BY: I hereby certify that the supporting information and data used to complete this determination is accurate and complete to the best of my knowledge and belief.

Date

Contracting Officer

REVIEWED BY: I have reviewed this determination and find it to be accurate and complete to the best of my knowledge and belief.

Date

Supervisory Contracting Officer

Date

Director of Contracting

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Concur:

Date

Executive Director, RPO Central Head of Contracting Activity

Concur:

Date

Date

Executive Director and Senior Procurement Executive Office of Acquisition and Logistics

Senior Director, OSDBU Acquisition Support

08/12/2024

8/5/2024