A04_Limited_Source_Justification.pdf

DEPARTMENT OF DEFENSE

WASHINGTON HEADQUARTERS SERVICES

1155 DEFENSE PENTAGON

WASHINGTON, DC 20301-1155

ACQUISITION

DIRECTORATE

Control No. 2019-WHS-0019

JUSTIFICATION FOR LIMITED SOURCE JUSTIFICATION (LSJ)

UNDER FEDRAL ACQUISITION REGULATION SUBPART 8.4

1. AGENCY AND CONTRACTING ACTIVITY: The Office of the Chief Management

Officer (OCMO) Contracting Activity: Washington Headquarters Services, Acquisition

Directorate

2. DESCRIPTION OF ACTION: WHS/AD proposes to issue a logical follow on to contract

HQ003417A0012 under task order HQ003418F0317 using a Firm Fixed Price contract type to the incumbent, Boston Consulting Group (BCG). The current period of performance for the Financial Due Diligence and Business Case will end 4 Feb 19. The logical follow-on effort will provide to the Department of Defense (DoD), project integration plans to consolidate the management of the Defense Commissary and Military Exchange Systems into a single organization. The anticipated period of performance will be for a period of 36 weeks from date of contract award. The total estimated cost of this Task Order will be

$8.014M using Fiscal Year (FY)2019 funding will be used to support this reform initiative.

3. DESCRIPTION OF SUPPLIES/SERVICES: The contractor will develop detailed integration plans, or “playbooks” complete with milestones and timelines to assist the

Community Services Reform Task Force Director to consolidate the management of The

Defense Commissary and Military Exchange Systems into a single organization and operation as the first phase of implementing Enterprise Management of Community Services for the DoD.

In the last 24 weeks, the Task Force identified between $700M - $1.3B savings (over five years) and instituted a culture of data and fact-driven continuous productivity improvement.

The Government established baselines; identified quick win opportunities; commenced developing productivity metrics; and has established a leadership engagement rhythm. This additional work will posture the DoD to begin transitioning the entire Defense Resale System to Enterprise Operations on 1 Oct 19. This work will build upon the work executed under task order HQ003418F0317. The anticipated period of performance will be 9 months from date of award, anticipating 08 Feb 19 – 30 Sep 19 as the period of performance. This project focuses on strategic transformation management and administration; planning and preparation for executing integration on Day 1 (conducting merchandising, non-resale procurement data normalization, baselining and developing an IT architecture; and developing an organizational structure and effective governance for the resale enterprise.

FOR OFFICIAL USE ONLY

4. CIRCUMSTANCES JUSTIFYING LIMITED SOURCES: 8.405-6(a)(1)(i)(C), In the interest of economy and efficiency, the additional work is a logical follow-on to contract #

HQ003417A0012/HQ003418F0317 which was competed on the CMO Reform BPA and was derived from a Federal Supply Schedule.

The DoD Community Services Reform Task Force is required to deliver a report to Congress on the business case assessment of the consolidation of back-office functions and the alignment of the four resale systems under one director and one governing body, while leaving the customer-facing functions untouched. This approach would be transparent to customers but could realize between $700M - $1.3B, in net savings, across the Future Years

Defense Program (FYDP). The proposed approach would be executed in phases to ensure a successful implementation of the recommendations. The first phase initiates implementation and integration planning at detailed level of the business case in January 2018.

For the following reasons, the Government has determined that BCG is capable of performing this additional work by the congressionally imposed deadline of 1 Oct 19 required by Section 726, National Defense Authorization Act (NDAA) for Fiscal Year 2019.

This additional work is needed in order to assist the Chief Management Officer (CMO) build upon the work executed in the previous option period and transition towards use of enterprise services to conduct business operations. This work is even more critical as the Agency

Reform teams have begun to launch their initiatives. This additional work and tight deadlines are being driven by the deadlines as outlined in the 2019 NDAA.

BCG is currently performing under contract# HQ003417A0012/HQ003418F0317 which was the initial task order awarded in July 2018. This contract was a competitive award that was competed on the CMO Reform BPA and was derived from a Federal Supply Schedule, which delivered a DoD Reform Management Group (RMG) Management Business Case

Analysis (BCA) to the Chief Management Officer (CMO). The CMO expected to approve the BCA no later than 25 Jan 2019.

The additional work will provide a more disciplined approach to prioritizing and managing major initiatives across the DoD. This work will assist the CMO mature the operations of the

RMG, and enable a more robust process for executing the enterprise approach and aligning the functions of the organization. Additionally, this work will help the CMO strengthen its internal and external communication. Tasks that the vendor will focus on are: establishing readiness performance goals and metrics that define specific metrics for each DoD Line of

Business; background support to ensure high impact RMG meetings; and CMO

Organizational and Rebranding Efforts.

Since DoD Reform is an evolving effort, this additional work was not contemplated at time of initial contract award. As the Governance structure was stood up, Agency reform leads were identified, and the process started to become standardized. Reform leads and CMO colleagues started to collaborate and bring about more ideas for efficiencies to be gained as a result of the various reform efforts that are being stood up. As a result of all collaboration and suggestions provided, additional work was identified in the process in order to capture in efficiencies and ways to reform DoD and the reform lines of businesses. At the end of May

2018, the OCMO realized that it needed the additional work as mentioned above in order to capture processes, business rules and metrics in order to help it develop the RMG Charter, which currently does not exist and which is needed.

The DoD is required to complete this planning work no later than the end of the fourth quarter of FY19 in order to support a full shift of business operations to an enterprise management framework, moving from the current military department and defense agency stovepipes to a whole-of-DoD alignment by the first quarter of FY20, as stipulated by the

FY19 NDAA. Further competitive processes and the time to transition to another vendor will jeopardize achievement of CMO’s currently programmed and DepSecDef-approved

Reform Management Group milestones to achieve significant Community Service reforms.

At a minimum, it would take more than 30 days to in-process and educate any new vendor up on the current initiative.

Furthermore, BCG used proprietary software and commercially developed roadmapping and process management tools and data to guide the Financial Due Diligence, Business Case, and development of phasing plans for the integration of the resale enterprise. Based on BCG’s approach, methodology, findings, conclusions, and recommendations, it will be a duplication of cost of approximately $1M for another vendor to enter into the environment provide these services. The current BCG effort has been performed using their Team B which includes 6

FTEs and other adhoc staff working for 24 weeks to baseline all data from resale activities and document a detailed and complex business case which was then coordinated with all the

CEOs of the Military Exchanges and the Director of the Defense Commissary Agency, and the Secretaries of the Military Services. The approved approach will be briefed to Congress in January 2019. For the follow on effort, the BCG will integrate and plan the new organization which will encompass all Defense Resale activities which include the exchanges and commisaries. In order to enact the approved approach created by BCG, BCG’s proprietary software must be used and then implemented using BCG’s process management tools. The Government does not have rights to use BCG’s software or process management tools.

As this is the end of the 1st quarter of FY19, it would be impossible to meet the end of 4th quarter deadline if the current vendor did not continue this work. As a result, in order to continue into the final execution phase of Community Services reform, the Government determined that the current vendor is the only vendor that could reasonably complete this work and meet the 30 Sep 19 deadline.

5. BEST VALUE DETERMINATION: The Contracting Officer hereby determines that this action represents the best value to the Government, in that the level of effort agreed upon, is appropriate; the firm has vast experience in this area; and the contractor proposes a price that is reasonable and in accordance with its established BPA schedule. Additionally, the Contracting Officer will review prices and conduct price analysis to ensure that they are fair and reasonable in accordance with FAR 15.404. Price analysis techniques that will be used are, comparison with competitive published price lists and comparison of proposed prices with independent Government cost estimates.

6. MARKET RESEARCH: Based on the market research that was conducted and the findings stated below, the Government will solicit this requirement as a sole source follow on contract through the reform BPA with BCG. From the orginal contract, the Contracting

Team relied upon market research from the five (5) CMO Reform BPA Holders that was conducted in September 2018. The PWS fell within scope of the CMO Reform BPAs. A draft version of the Performance Work Statement (PWS) was sent to all five (5) vendors on

18 May 2018. Current market research was conducted and it was determine this follow-on effort is within the current services BCG is providing, therefore, this represents the best acquisition strategy for this requirement. This is a logical follow-on since BCG has:

a) Performed financial due diligence of 19 critical M&A areas, and authored a business case that proves the CMO’s vision to integrate Defense resale functions pursuant to the above-entitled contract and congressional mandate,

b) Collaborations with the CSRT Lead and CSR Task Force Director and his staff of subject matter experts to develop functional capabilities process maps and feasible courses of action, the foundation for ‘playbooks’ required by the follow-on integration Task Order,

c) Possesses significant insights on the current and future state of Defense resale enterprise operations to include knowledge of governing legislation and the complexities of approaches required to transform the DeCA from an Appropriated Fund to a

Nonappropriated Fund business model, and

d) Further competitive processes and the time to transition to another vendor will jeopardize CMO’s currently programmed and DepSecDef-approved Reform

Management Group milestones to achieve significant Community Service reforms that will shift business operations to an enterprise management framework, moving from the current military department and defense agency stovepipes to a whole-of-DoD alignment.

7. OTHER SUPPORTING FACTS: None

8. ACTIONS TO REMOVE OR OVERCOME ANY BARRIERS THAT LEAD TO

THE RESTRICTED CONSIDERATION BEFORE ANY SUBSEQUENT

ACQUISITION FOR THE SUPPLIES OR SERVICES IS MADE

As an alternative, which is not recommended, WHS/AD will compete this follow on requirement among the all current CMO Reform BPA holders. The current BPA holders are:

HQ0034-17-A-0011, McKinsey & Company

HQ0034-17-A-0012, Boston Consulting Group

HQ0034-17-A-0015, Price Waterhouse Coopers

HQ0034-17-A-0014, KPMG

HQ0034-17-A-0013, Deloitte

The overall objectives of this order is to develop the integration and execution plan

“playbooks”. The playbooks will detail the execution which any vendor can perform, therefore future requirements will be competed.

9. IF THIS ACQUISITION IS FOR NEW WORK AS A LOGICAL FOLLOW-ON

TO ON ORIGINAL FEDERAL SUPPLY SCHEDULE (FSS), WAS THE

ORIGINAL ORDER PLACED IN ACCORDANCE WITH THE APPLICABLE

FSS ORDERING PROCEDURES?

☒Yes, the original order was issued using the competitive procedures.

☐No, the original order was issued under a sole-source or limited-sources procedures.

CERTIFICATION

I, hereby, certify that the supporting data under my cognizance included in this justification are accurate and complete to the best of my knowledge and belief.

24 Jan 2019

Jennifer Marroig

Contracting Officer Representative

Date

24 Jan 2019

Madeline Baumgtner

Contracting Officer

APPROVAL

Based on the foregoing, this justification is, hereby, approved.

David H. Kao, Competition Advocate