Consolidation_Determination_-_PR_IDIQ.pdf

Consolidation Determination:

Puerto Rico and U.S. Virgin Islands Repair and Alteration (R&A) Multiple Award (MA) Indefinite Delivery, Indefinite Quantity (IDIQ) Contract

Table of Contents

Executive Summary 3

Acquisition History 4 Products/Services 4 Customers 5 Existing Contracts 5

Market Research (MR) Overview 6 DSBS Tool 6 FPDS Data 7 Sources Sought 7

Alternative Involving a Lesser Degree of Consolidation 7

Contracting Approach Selected 8

Negative Impact to Small Business 8

Steps Taken to Include Small Business 9

Substantial Benefits 10 Review and Approvals 12

Detailed Calculations 14

Contract Cost Savings 18

Government Administrative Savings 18

Pre-award Savings 18

Post-award Savings 18

Executive Summary

General Services Administration (GSA), Public Buildings Service (PBS), Northeast and Caribbean Region (Region 2), is developing a solicitation for a Multiple Award Indefinite Delivery, Indefinite Quantity (IDIQ) contract, for Repair and Alteration (R&A) services covering the geographical areas of Puerto Rico and the U.S. Virgin Islands (together, “the Caribbean”).

The GSA, PBS, Region 2 analyzed the benefits of consolidation by comparing the costs of executing the R&A program in the Caribbean through standalone contracts with the costs of executing the program through one multiple-award IDIQ contract. GSA has found the consolidation necessary and justified. Consolidation of the requirements will result in substantial benefits estimated at 11.8% cost savings. The benefits exceed the requirement per FAR 7.107- 2(d) of 10% of the estimated contract value due to reduction of administrative costs. In addition to the significant quantified cost savings, the contract is expected to have the qualitative benefits discussed below. The cost savings and other benefits that will be realized as a result of this consolidated contract outweigh the negative impacts to small business.

Currently, small R&A procurements are awarded via sole source, competed standalone contracts or under an existing IDIQ contract. We found the consolidation necessary and justified based on the anticipated “substantial benefit” of 11.8% in savings.

In addition, there are various other benefits which include, but are not limited to: expediting and simplifying the ordering process, reducing procurement lead times, reducing the risk of projects not getting completed, increasing customer satisfaction through expedited delivery, and facilitating the process of obtaining security clearances for pre-qualified contractors and long-range resource planning. A minimal yet positive impact to the small business community is anticipated since the multiple awards IDIQ contract will be set-aside for small businesses. In addition, the Government reserves the right to further set-aside this requirement for specific small business socioeconomic categories, and is intending to do so by setting aside this requirement strictly for HUBZone companies.

Table 1: Executive Summary

Project Title: Puerto Rico & U.S. Virgin Islands IDIQ Contracts

Contracting Office: GSA, PBS, Region 2

Total Estimated Contract Value:

The Multiple Award IDIQ contract is at or below $94M.

Contract Requirements: Repairs and Alterations/Construction Services

Period of Performance (PoP): One year base period with four one year options, for a total of 5 years.

Maximum IDIQ total Order of Limitation (MOL) over the 5 years is $15,000,000.00 Minimum Guarantee, only for the base year, for each IDIQ Holder is $2,000.00

NAICS Code: 236220

Deviations Applicable? No.

Business Case Applicable? No.

Program Initiative? Not applicable.

Intended Contract Structure: One Solicitation for one Multiple Award IDIQ contract; up to five expected awardees; Firm Fixed Price (FPP) line items; and Socioeconomic set aside to HUBZones.

Previous Contract Structures: FFP Competed Stand-alone Contracts, FFP Stand Alone 8(a) Sole Source Contracts, and an under

SAT R&A IDIQ.

Substantial Benefits Expected:

11.8%

Acquisition History

Products/Services GSA has a need for one Multiple Award contract for Repair and Alteration (R&A) construction services below the Simplified Acquisition Threshold ($150,000) on an IDIQ basis at Government-owned and leased facilities located throughout the Caribbean.

The Task Order (TO) requirements may include, but are not limited to, the following:

General construction;

Painting;

Carpeting;

Walls and framing;

Demolition;

Carpentry;

Heating, Ventilation and Air Conditioning (HVAC);

Electrical;

Ceilings; and Plumbing.

The multiple award IDIQ contract will be procured through one solicitation under North American Industry Classification System (NAICS) Code 236220 entitled “Commercial and Institutional Building Construction.” NAICS Code 236220 has a small business size standard of $36.5M.

Customers The resulting contract will be utilized by GSA, PBS, Region 2 to support both PBS and tenant agency funded contractual needs.

Existing Contracts The current methods used to meet repair and alteration construction needs are standalone contracts and a single award IDIQ contract. Regarding the standalone contracts, for contracts over $25K, solicitations are posted on FBO. For contracts with values ranging between $2K and $25K, solicitations are sent to three small businesses (i.e. either as total small business set-asides, SDVOSB, WOSB, 8(A), SDB, etc.). The current IDIQ in place was anticipated to expire in 2019 if all option years were utilized. However, the maximum ordering limitation of

$4,000,000.00 is rapidly approaching with only about $700,000 remaining to obligate as of 2017.

An FPDS report was used to determine the number of awards made in FY16 and FY17 for the Caribbean area. The report showed that in FY16 and FY17, Region 2 awarded 73 construction contracts for requirements under $150,000.

Market Research Overview The acquisition team conducted market research activities to better understand the impact of consolidation and understand possible alternatives to the procurement approach. Specifically, to gain a better understanding of the small business set-aside potential for the multiple award IDIQ, the Acquisition Team used various methods which are generally accepted and/or mandatory per the FAR. The process included:

Conducting a review of the existing small business sources for R&A services using the Small Business Administration’s Dynamic Small Business Search (DSBS) Tool search;

Posting a sources sought notification to the Federal Business Opportunities (FBO) website;

Collecting and reviewing Federal Procurement Data System – Next Generation (FPDS-NG) data on the number of small businesses with current R&A contracts in the area.

Each of these market research activities and corresponding data analysis are further highlighted below.

DSBS Tool The DSBS Tool national searches for NAICS Code 236220; and contractors filtered by their “active” status, respective small business types (i.e. WOSB, SDVOSB, etc) with a bonding capacity of at least $150K per contract) revealed the following:

Table 2: DSBS Tool Search Summary

Small Business Categories Number of SB

Total Small Businesses 4,798

Small Disadvantaged 1,018

Women Owned Small Business 266

Veteran Owned 158

Service Disabled Veteran Owned 117

Historically Underutilized Business Zones 966

Other Minority-Owned 637

8(a) Business Development Program 1,636

Note: Most firms indicated multiple certifications; therefore, the above numbers add up to more than the total number of small businesses.

FPDS Data

In the area covered by the proposed IDIQ contracts, small business vendors were awarded 73 R&A contracts under $150,000 with PBS in FY16 and FY17.

All market research results and corresponding analysis identified that there are capable small businesses, 8(a)s and HUBZones to support the decision to solicit the multiple award IDIQ as a socioeconomic set-aside.

Sources Sought

A sources sought notice was posted to FBO to determine the number of small businesses that qualified to bid on an R&A IDIQ contract for work under $150,000. Sixty three (63) responses were received with the capabilities to perform all required work under one multiple award IDIQ contract. The responses to the Sources Sought notice indicates competition from small businesses would exist if the procurement were set-aside for small business. Furthermore, based on the responses to the Sources Sought, which resulted in ten (10) HUBZones directly responding via e-mail, this reflects there is sufficient competition to set this procurement aside to HUBZones (Note: five (5) of the ten (10) HUBZones that responded, were also 8(a) certified).

Alternatives Involving a Lesser Degree of Consolidation

Two alternatives involving a lesser degree of consolidation were identified and consist of:

Alternative 1: Maintaining the current method of executing stand-alone contracts for each required service. In this contracting approach, Region 2 evaluated the alternative of not establishing the multiple award IDIQ contract and relying on stand-alone contracts to execute our R&A project needs. While this approach might increase competition by competing each contract on its own merits, it would result in longer procurement timeframes; higher costs (i.e.

administrative procurement); and administrative burdens for the Government;

Alternative 2: Procuring two multi-award IDIQs, one for Puerto Rico and one for the US Virgin Islands. In this contracting approach, we evaluated the alternative of soliciting for two multi-award contracts - one for PR and one for USVI. This approach increases administrative costs and burdens for the Government without significantly increasing competition or minimizing consolidation.

Contracting Approach Selected

GSA, PBS, Region 2 will procure R&A projects under the Simplified Acquisition Threshold ($150,000) utilizing one Multiple Award IDIQ contract at Government owned and leased facilities throughout Puerto Rico and U.S. Virgin Islands. The use of this Multiple Award IDIQ contract will ensure the expeditious delivery of R&A projects, for various buildings, via the placement of task orders against the IDIQ contracts by either the Contracting Officer (CO) or the designated Ordering Official(s) (OO). This structure ensures GSA, PBS, Region 2 will have adequate small business competition in the Caribbean, have a better matching of contractor capabilities related to specific needs in the region, and ensures a greater response rate at the task order level than either of the two alternatives listed above.

GSA, PBS, Region 2 will issue one Multiple Award IDIQ. The team identified a need for up to five contractors to satisfy the requirements and ensure adequate competition in Puerto Rico and the U.S. Virgin Islands.

Negative Impact to Small Business

In FY 2016, 90% of total contracts, below the Simplified acquisition Threshold (SAT), were awarded to small business. In FY 2017, 95.5% of total contracts were awarded to small business.

During the 1st year of the expected period of performance it is anticipated that 100% of the R&A contracts will be awarded to small business. Therefore, small business will be receiving more contracts in FY 18 than FY 16 and FY 17.

In FY 16, $1,099,257.34 was awarded to small businesses. In FY 17, $902,001.39 was awarded to small businesses. During the 1st year of the expected period of performance, it is anticipated that $1,102,254.75 will be ordered from small business. Therefore, small business will be receiving more dollars in FY 18 than FY 16 and FY 17.

In FY 16, 13 small business companies received contracts. In FY 17, 16 small business companies received contracts. It is anticipated that up to 5 will receive an award. Therefore, less small businesses will receive an award than in FY 16 and FY 17.

Despite the fact that the number of small businesses will appear to drop due to the IDIQ, the percentage of contracts, via task orders, and monetary value ultimately going to small businesses is estimated to increase under this IDIQ. Further, there are subcontracting possibilities under this IDIQ that will likely provide opportunities to other small businesses outside of those awarded the contract.

Steps Taken to Include Small Business

The Region posted a Sources Sought, which was extended due to the impact of Hurricane Maria at the request of interested parties, to provide companies with a chance to review, comment and provide their capabilities statements. In addition, over 1,083 small businesses were selected per their socioeconomic status of SDVOB and HUBZone from the Dynamic Small Business Search (DSBS) Tool and emailed a link to the Sources Sought posting on FedBizOpps. This was done to promote interest within the small business community and to provide an opportunity to make the requirements clearer prior to the issuance of the solicitations. The region will ensure that all small business contractors identified in the DSBS tool and Region 2’s database search will be notified of the opportunity by e-mail, and encouraged to submit a proposal when the solicitation is posted. The e-mail notifications will contain the dates and times for a pre-proposal conference, if one is scheduled. There is an anticipation of up to five (5) awards under the IDIQ.

It has been determined that this acquisition will be synopsized through FBO to promote competition among the HUBZones.

Moreover, each of the small business awardees will be guaranteed a minimum of $2,000 in orders for the initial year of each contract.

Substantial Benefits Expected

The solicitation for the Multiple Award IDIQ contract for Repair and Alteration (R&A) services for Puerto Rico and U.S. Virgin Islands is necessary and justified as outlined in this document.

The substantial benefits will exceed the required 10%. The acquisition team examined acquisition administrative costs (primarily Procurement Acquisition Lead Time (PALT)) to substantiate the benefits of doing these procurements.

R2 used agency data to extract the total number of SAT actions performed within the Caribbean location within R2 as stand-alone contracts (i.e. 8(a), Competitive, etc.) as well as the existing R&A IDIQ contract. R2 followed PBS Procurement Instructional Bulletin (PIB) 15-01 entitled, “Procurement Acquisition Lead Time (PALT)”. PIB 15-01 defines the number of days required to perform each action as a stand-alone contract between $25,000 and the SAT. R2 simply multiplied the number of actions by the required number of days to develop the total days required.

Next, the Acquisition Team took the approximate total number of PALT days and transformed the days into personnel costs. Doing so, results in a realistic calculation of the costs associated with successfully running the R&A program (i.e. for SAT and below acquisitions) using only stand-alone contracts. Using the basic hourly rate of a contracting officer in R2, R2 completed a cost calculation by multiplying the basic hourly rate against the total hours needed (i.e. Total Days Required x 4 Hours = Total Hours).

The Acquisition Team conducted the same analysis and calculations assuming the requirements were fulfilled by competing task orders against the Multiple Award (MA) IDIQ contract, resulting in the total administrative savings when using this method. Further analysis was then conducted to develop the most realistic cost savings over the PoP of the IDIQ contract.

Total projected cost savings is outlined below for the Caribbean location. The percentage savings for the geographic area is also depicted below based on the MA IDIQ contract MOL. The total percent savings (administrative savings) is the substantial cost benefit expected for the contract.

Table 3: Estimated Percent Savings

Multiple Award IDIQ Location

Total Estimated Contract Value (Including Options)

Estimate Percent Savings (Gov. Administrative)

Caribbean $15,000,000.00 11.8%

There are other important benefits that will be realized from the consolidation that are difficult to quantify and are discussed below.

It is anticipated that there will be contract cost savings, but these have been determined to be unquantifiable benefits due to variables in contractors’ means and methods which are project/scope of work specific. Contract cost savings may be realized by the general contractors achieving efficiencies in task order offers and administration in the following areas:

Familiarity with our federal buildings resulting in more accurate initial quotes;

Efficiencies in security clearances requirements;

Better pricing for smaller, simpler projects with less risk;

Repeated use of local subcontractors who will realize the same efficiencies

Another benefit of this IDIQ in the Caribbean region is to provide a reliable and efficient way to aid in the disaster relief and rebuild after Hurricane Maria. The impact of the Hurricane was quite devastating. All possibilities should be explored that could aid in the recovery efforts, and an R&A IDIQ would be vital in this endeavor. The estimations created are based on data from years where no disaster occurred. Therefore, it is not only probable but also expected that more projects will need to be completed. The spike in number of projects needed plus the urgency behind the rebuild are major reasons to support this requested IDIQ.

The Current IDIQ in place in the Caribbean is set to expire in 2019, however they only have about $700,000 left to obligate before hitting the maximum limit. Based on the facts that the current IDIQ was widely used and the anticipated need for a large number of projects per the recent disaster, putting another IDIQ in place would be prudent.

The Acquisition Team has demonstrated in the above analysis that there is an expected substantial benefit to the Agency if a multiple award IDIQ contract is awarded for Region 2, Caribbean area. The expected savings exceeds the minimum cost savings requirement of 10% with an 11.8% expected savings. Furthermore, FAR 7.107-2(e)(1)(i) states that the Approving Authority should approve the consolidation if it is critical to the agency’s mission success. Due to the aforementioned need of the Caribbean region and the expected savings, this consolidation should be approved, and the R&A multiple award IDIQ contract should be awarded.

Approvals

Statement: This consolidation is necessary and justified, and the benefits substantially exceed both the benefits of the alternative approaches and any negative impact on small businesses.

Prepared by:

Omar Mahmud Contracting Officer, Acquisition Management Division, Region 2

Reviewed by:

Digitally signed by Stephen Cox DN: cn=Stephen Cox, o=R2, ou=PBS, email=stephen.cox2@gsa.gov, c=US

Stephen Cox

Date:2017.12.2808:45:51-05'00'

Program Lead, Region 2

For Winnie Eng Supervisory Contracting Officer, GSA, Region 2

Digitally signed by BRIAN BURNS DN: c=US, o=U.S. Government, ou=General Services Administration, cn=BRIAN BURNS, 0.9.2342.19200300.100.1.1=47001000023381 Date: 2017.12.19 19:00:01 -05'00'

Brian Burns Branch Chief, Acquisition Management Division, Region 2

NICOLE

HOWERTON

Nicole Howerton

Digitally signed by NICOLE HOWERTON DN: c=US, o=U.S. Government, ou=General Services Administration, cn=NICOLE

HOWERTON,

0.9.2342.19200300.100.1.1=47001003308536 Date: 2017.12.28 15:50:46 -05'00'

Procurement Analyst, GSA, Region 2

MAUREEN LENNON

Maureen Lennon

Digitally signed by MAUREEN LENNON DN: c=US, o=U.S. Government, ou=General Services Administration, cn=MAUREEN LENNON, 0.9.2342.19200300.100.1.1=47001000051254 Date: 2018.01.02 11:54:32 -05'00'

Director, Acquisition Management Division, Region 2

BRIAN BURNS

Digitally signed by BRIAN BURNS

DN: c=US, o=U.S. Government, ou=General Services Administration, cn=BRIAN BURNS, 0.9.2342.19200300.100.1.1=47001000023381 Date: 2017.12.19 18:59:30 -05'00'

OMAR MAHMUD

Digitally signed by OMAR MAHMUD DN: c=US, o=U.S. Government, ou=General Services Administration, cn=OMAR MAHMUD, 0.9.2342.19200300.100.1.1=47001000630544 Date: 2017.12.21 12:50:31 -05'00'

Stephen Cox

BRIAN BURNS

RICHARD

HUGHES

Digitally signed by RICHARD HUGHES DN: c=US, o=U.S. Government, ou=General Services Administration, cn=RICHARD HUGHES, 0.9.2342.19200300.100.1.1=470010000 09979 Date: 2018.01.03 09:33:33 -05'00'

Richard Hughes (Legal Concurrence) Regional Counsel, Office of General Counsel (OGC), Region 2

Darren E Gomez

Darren Gomez (Acting) Regional, Commissioner, re-delegated Head of Contracting Activity (HCA)

Carbon Copy to:

Janice Bracey OSBU Small Business Technical Advisor (SBTA), Region 2

Concurrence by:

Digitally signed by WAYNE BENJAMIN DN: c=US, o=U.S. Government, ou=General Services Administration, cn=WAYNE BENJAMIN, 0.9.2342.19200300.100.1.1=47001000078547 Date: 2018.01.09 08:11:10 -08'00'

Wayne C. Benjamin Assistant Commissioner (Acting), PBS, Office of Acquisition Management (OAM) E-mail to: pbsoampolicy@gsa.gov

Digitally signed by WAYNE BENJAMIN DN: c=US, o=U.S. Government, ou=General Services Administration, cn=WAYNE BENJAMIN, 0.9.2342.19200300.100.1.1=47001000078547 Date: 2018.01.09 08:12:41 -08'00'

Wayne C.Benjamin Service Commissioner PBS, Office of Acquisition Management (OAM) E-mail to: pbsoampolicy@gsa.gov

Approved by:

Charles Manger Associate Administrator, Office of Small Business Utilization (AAOSBU) E-mail to: OSBU_Review_Concurrence@gsa.gov

Jeffrey A. Koses Senior Procurement Executive (SPE), Office of Acquisition Policy (OGP) E-mail to: SPE.Request@gsa.gov

CHARLES MANGER

Digitally signed by CHARLES MANGER DN: c=US, o=U.S. Government, ou=General Services Administration, cn=CHARLES MANGER, 0.9.2342.19200300.100.1.1=47001003457602 Date: 2018.01.12 09:49:35 -05'00'

WAYNE BENJAMIN

WAYNE BENJAMIN

JEFFREY KOSES

Digitally signed by JEFFREY KOSES DN: c=US, o=U.S. Government, ou=General Services Administration, cn=JEFFREY KOSES, 0.9.2342.19200300.100.1.1=47001000016255 Date: 2018.01.30 08:16:07 -05'00'