A10_Consolidation DF Ouachita Bank Stabilization and Levee Setback_Final.pdf

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DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, VICKSBURG DISTRICT

DETERMINATION AND FINDINGS FOR CONSOLIDATION

W912EE22B0004 AND W912EE22B0005 FIRM FIXED PRICE FOR GENERAL REPAIR

AND CONSTRUCTION ALONG OUACHITA RIVER, LA

COORDINATION PAGE:

The following signatures indicate concurrence with the contents of this document.

Deputy for Small Business Programs

Assistant District Counsel

APPROVAL

Davita S. Baloue Chief, Vicksburg District Contracting Office

Control #: MVK-2022-0021

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DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, VICKSBURG DISTRICT

DETERMINATION AND FINDINGS FOR CONSOLIDATION

W912EE22B0004 AND W912EE22B0005 FIRM FIXED PRICE FOR GENERAL REPAIR

AND CONSTRUCTION ALONG OUACHITA RIVER, LA

FAR 2.101 defines consolidation or consolidated requirement as a solicitation for a single contract, a multiple-award contract, a task order, or a delivery order to satisfy (i) Two (2) or more requirements of the Federal agency for supplies or services that have been provided to or performed for the Federal agency under two (2) or more separate contracts, each of which was lower in cost than the total cost of the contract for which offers are solicited; or (ii) Requirements of the Federal agency for construction projects to be performed at two (2) or more discrete sites.

FAR 7.107-2 requires that consolidation of requirements with an estimated total dollar value exceeding $2 million shall be supported by a written determination that consolidation is necessary and justified in accordance with 15 U.S.C. § 657q.

I have reviewed this requirement and associated market research and determined, in accordance with 15 U.S.C. § 657q and FAR 7.107-2, that the benefits of consolidating this requirement into two (2) Firm Fixed Price Contracts substantially exceed the benefits of any alternative contracting approaches which have been identified and considered below. Therefore, I have determined that an acquisition strategy involving consolidation of these requirements is both necessary and justified. This approval is made in accordance with the approval thresholds set forth in Army Federal Acquisition Regulation Supplement (AFARS) 5107.107-2, “Consolidation of Contract Requirements” and U.S. Army Corps of Engineers Acquisition Instruction (UAI) 5107.107-2-100, “Consolidation.” My review resulted in the following findings:

FINDINGS

1. Introduction: U.S. Army Corps of Engineers (USACE), Vicksburg District (MVK), plans to consolidate contract requirements to provide construction at sites 1- 6 located along the Ouachita River in Ouachita and Caldwell Parishes, Louisiana. The purpose of these acquisitions is to secure, for the Government, two (2) consolidated Firm Fixed Price (FFP) construction contracts valued at $37.7M and $2.8M respectively. The contracts will be solicited on an Unrestricted basis for solicitation W912EE22B0004, Bank Stabilization and as a Total Small Business Set Aside for solicitation W912EE22B0005, Levee Setback. The FFP contracts will meet repair and construction mission requirements under North American Industry Classification System (NAICS) code 237990, Other Heavy and Civil Engineering Construction. Performance locations are within the geographic boundaries of MVK or other Districts within the Mississippi Valley Division (MVD). This procurement constitutes consolidation of requirements per 15 U.S.C. § 657q(a)(2)(B) in that the solicitation will satisfy USACE’s requirement for construction projects to be performed at two (2) or more discrete sites. Specifically, this procurement involves construction at nine (9) discreet sites along the Ouachita River in Ouachita and Caldwell Parishes, Louisiana. MVK has conducted analysis and market research that demonstrates consolidation of requirements in this procurement is both necessary and justified.

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2. Description of Procurement Action:

a. Project Description:

MVK provides rehabilitation to active levees in the PL 84-99 Rehabilitation and Inspection Program (“RIP”). Ouachita River Levee (ORL) PL 84-99, RM 159-108, Sites 1-6, are located on the left descending bank of the Ouachita River in Louisiana. This project is located in Ouachita and Caldwell Parishes. Due to bank erosion issues along the Ouachita River, the levee section is threatened. While some level of protection is provided by the existing section (at the time of the existing ground survey), it is not believed that the levee would perform to capacity in the event of a project design flood. The high-water event of 2018, where the Ouachita River remained at flood stage for 61 days, created the need for repairs at the six (6) sites. During this high-water event, the Ouachita riverbank began to cripple, causing USACE to intervene in the rehabilitation of the bank at sites 1-5. This project requires the bank to be stabilized with a longitudinal stone fill revetment with stone tiebacks at sites 1-6.

There are proposed levee setbacks for a separate project named Ouachita River Basin, Ouachita & Caldwell Parishes, P.L. 84-99 Emergency Levee Setback, RM 159-108, Sites 1, 5, & 6. The design of the setback will bring the levee to the authorized grade plus 0.5 feet of overbuild to compensate for fill shrinkage and foundation settlement. The main construction feature is a set back of the existing levee at sites 1, 5, and 6. The existing levee will be degraded concurrently with new levee construction while maintaining a continuous level of protection to an interim grade. The design of the setback will bring the levee to the authorized grade plus 1 foot of overbuild to compensate for fill shrinkage and foundation settlement. The three (3) described sites fall within an approximately 50-mile segment along the Ouachita River in Ouachita and Caldwell Parishes, Louisiana.

b. Acquisition Strategy/Procurement Summary:

The procurements will be advertised as Unrestricted for W912EE22B0004, Bank Stabilization and as a Total Small Business Set-Aside for W912EE22B0005, Levee Setback, FFP, consolidated construction projects, in accordance with FAR 16.202-2. The consolidated two (2) contracts will be awarded in amounts not to exceed $37.7M Bank Stabilization and $2.8 Levee Setback combined total of $40.5M for repair and construction work along the Ouachita River, LA. The construction period will not exceed two years. MVK has historically utilized this type of contract for similar requirements to successfully execute projects on tight schedules at reasonable costs. Use of FFP contracts are in the best interest of the Government with respect to timeliness, oversight, and administrative costs.

c. Applicability of Consolidation:

This requirement meets the definition of consolidation as the proposed FFP contracts includes construction work that will be performed at two (2) or more discrete sites in Mississippi, Louisiana, and Arkansas. The total estimated value of the requirement exceeds the $2M threshold. MVK intends to consolidate the rehabilitation active levees in the PL 84-99 Rehabilitation and Inspection Program (“RIP”). Ouachita River Levee (ORL) PL 84-99, RM

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159-108, Sites 1-6 and Ouachita River Basin, Ouachita & Caldwell Parishes, P.L. 84-99 Emergency Levee Setback, RM 159-108, Sites 1, 5, & 6 into two (2) solicitations for two (2) FFP contracts. There are 9 total requirements for levee locations along the Ouachita. By consolidating these requirements, MVK will be able to efficiently coordinate and respond to the dynamic requirements of these bank stabilization and levee setback projects at a significant savings of cost and time. Additionally, consolidation will allow MVK to accommodate the stone placement and levee setback scheduling windows which are affected by high and low water events and the timing of funding from Congress. This also allows contractors to organize their work more efficiently, offer lower unit cost with a more effective economy of scale, and more efficiently schedule their equipment for the best regional approach to meet the needs of the Corps of Engineers bank stabilization and levee setback program.

d. Requirements Being Consolidated:

MVK intends to consolidate the requirements to provide construction, bank stabilization at sites 1-6 and levee setback at sites 1, 5, & 6 located along the Ouachita River into two (2) solicitations.

The FFP’s will consolidate the Ouachita projects within MVD into two (2) solicitations for bank stabilization and levee setback. The work will be performed at the various locations that fall with an approximately 50-mile segment along the Ouachita River in Ouachita and Caldwell Parishes, Louisiana.

These projects are funded solely by Civil Works Appropriations.

e. Procurement History: Previously, the requirement for the Ouachita River Levee bank stabilization and levee construction has been satisfied via one (1) FFP contract totaling approximately $4,545,350.00, averaging $378,779.16 annually. The solicitation advertised was a total small business set-aside. Details are below:

Table A. Historical Construction Contract Awards

f. Rationale for Consolidation:

(1) 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 less consolidation. Such benefits may include qualitative or quantifiable cost savings or price reductions as 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 or conditions, or any other supportable benefit. Benefits that are quantifiable are considered

District Contract # Contractor LG/SM Set

Aside?

Contract

Type POP Contract Value # of Bids

Levee:

Vicksburg W912EE20C0004 Riverside Construction Co. SM

Total Small FFP 1 YR $ 4,545,350.00 4

TOTAL $ 4,545,350.00

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substantial if they meet the dollar amounts set forth in FAR 7.107-2(d).

For the procurement, the estimated values are $37,699,000.00 and $2,722,349.50; combined total of $40,421,349.50. Therefore, the quantitative financial benefits from consolidation must exceed $4M to qualify as substantial. Furthermore, under FAR 7.107-2(d)(3) the reduction of administrative or personnel costs alone is not sufficient justification for consolidation, unless the cost savings are expected to be at least 10% of the estimated contract or order value. If the quantifiable benefits do not meet these thresholds, FAR 7.107-2(e) states the approving authority may determine that consolidation is necessary and justified if critical to the agency’s mission success and the procurement strategy provides for maximum practicable participation by small business. This consolidation will not meet the required $4M in cost savings. Therefore, the following rationale justifies the criticality of this requirement to the agency’s mission success and that this recommendation provides maximum practicable participation by small business.

(2) In addition to cost benefits, consolidation of this requirement will yield qualitative benefits such as significantly increasing the likelihood of more efficient use of civil works funding, reducing acquisition cycle times, and generating quality improvements that will enhance performance or efficiency. The expected benefits of consolidation are substantially similar to those outlined in FAR 7.107-2(c) and are critical to the success of the RIP program. Bank stabilization and levee set back projects are two ways in which MVK delivers on its mission to maintain navigable waterways. The benefits derived from consolidation, discussed in above, are critical to the success of MVK’s mission to maintain navigable waterways. Moreover, the proposed consolidation provides for the maximum practicable participation by small business.

Solicitation W912EE22B0005, Levee Setback, will be solicited as a Total Small Business Set- Aside. As discussed in section 4, W912EE22B004, Bank Stabilization, will be solicited on an Unrestricted basis. However, solicitations for Mississippi River Levee Construction (MR) Stone Placement requirements have historically been unrestricted, and awards made to both large and small businesses.

(3) The projects to be executed under this procurement will be located at multiple sites along the Ouachita River. If these projects were awarded separately, they would have to identify separately, planned separately, funded separately, and managed separately. Construction schedules for each project would need to be sequenced so as to ensure an adequate number of qualified contractors are available to bid the solicitations and complete the work during the necessary time frames. This fragmentation of the work would greatly impair the district’s ability to address urgent missions and to maintain a safe and reliable navigation channel. By consolidating this work under two (2) consolidated FFP contracts, the Government will eliminate significant duplication of effort, save administrative costs, and minimize the overall procurement schedule. Consolidation under two (2) consolidated FFP contracts also provides the Government the flexibility to complete the most critical projects in a timely fashion. Therefore, consolidation of these projects improves the efficiency of the districts in meeting the regional mission to maintain a dependable and reliable navigation channel as authorized.

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3. Applicable Statutes/Regulations: 15 U.S.C. § 657q, DFARS 207.107, and AFARS 5107.107.

4. Results of Market Research: Market research was conducted to determine those sources that could fulfill the Government’s requirement IAW FAR 10.002(b) (2). To ensure that small business concerns are given appropriate opportunities to participate as prime contractors and subcontractors in Federal procurements, MVK conducted market research that supplemented MVK’s knowledge of capabilities based on prior similar acquisitions. The two (2) consolidated FFP contracts, led by MVK, will be solicited on an Unrestricted basis for W912EE22B004, Bank Stabilization and as a Total Small Business set-aside for W912EE22B0005, Levee Setback.

Historically, for Mississippi River Levee Construction (MR) Stone Placement requirements, solicitations have been unrestricted, and awards made to both large and small businesses. To ensure that small business concerns are given appropriate opportunities to participate as prime contractors and subcontractors in Federal procurements, MVK conducted market research that supplemented MVK’s knowledge of capabilities based on prior similar acquisitions. From the research two (2) small business vendors (Patton-Tully Marine, LLC and EFT Diversified, Inc.)

were found for “Stone Placement”. Of the two companies, Patton-Tully Marine is no longer in business of stone placement. There is an unprecedented workload quickly approaching that MVK must be capable of executing efficiently and effectively.

Therefore, it is determined that the consolidated FFP contract for MR Stone bank stabilization, led by the Vicksburg District, continue to be solicited on an Unrestricted basis. It is determined that the consolidated FFP contract for MR Levee Setback, led by MVK, continue to be solicited total small business set-aside. The consolidation of requirements under the proposed FFP contracts will have a positive impact on small businesses as it will be solicited and awarded to small and large business concerns for W912EE22B004, Bank Stabilization and solicited and awarded to small business concerns for W912EE22B0005, Levee Setbacks. Awarding the consolidated FFP contract to a small business firm will assist MVK in successfully meeting its small business goals. Bases on the findings of the market research analysis, the DD Form 2579 Small Business Coordination Record recommended that this acquisition for W912EE22B004, Bank Stabilization be solicited as Unrestricted and W912EE22B0005, Levee Setback as 100% Total Small Business set-aside. The Small Business Administration (SBA) concurred with the recommendation of unrestricted and total small business set-aside and approved the DD Form 2579.

5. Alternate Contracting Approaches Considered and Rationale for Rejection:

In identifying that two (2) stand-alone FFP contracts as the best solution for satisfying this requirement, the district also considered utilizing a SATOC. SATOCs were not considered in detail as an alternative contracting approach because SATOCs have not been used for this type of work in the past and there is not sufficient time to compete the SATOC awards. Additionally, after award, there is no competition under a SATOC, which makes it difficult to negotiate agreements. Additionally, limiting award of this work to one contractor would adversely impact both the large and small contractors who do not receive the award as they would be “locked out” of the requirement for up to five years. The intent of this analysis was to address all alternative contracting approaches that would involve a lesser degree of consolidation, or no consolidation.

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The following analysis addresses alternative contracting approaches in detail:

a. Alternative 1: Nine (9) Individual FFP Contracts: The consolidation of two (2) FFP contracts would substantially exceed the benefits of having nine (9) individual to perform the work along the Ouachita River. Though awarding nine (9) individual contracts could provide a lesser degree of consolidation, or no consolidation at all, the benefits of awarding two (2) consolidated contracts substantially exceed the benefits of nine (9) individual contracts for the reasons outlined below.

(i) Quality. The iterative process of working with experienced contractors tends to generate a more thorough shared understanding between the contractor and Government for the government’s requirements. While the potential exists for nine (9) individual contract holders to end up being poor performers, two (2) contractors allow for competition and selection to preclude subsequent award to poor producers, resulting in a “good to great” contractors being selected to perform every project. Additionally, the contractor is afforded a greater opportunity to better understand the expectations of the Government in an effort to build project experience and capability for follow on support.

(ii) Acquisition Cycle. According to the PALT, the average time to acquire nine (9) individual contracts is approximately 540 calendar days. Each contract takes, on average, 60 calendar days to award. Some projects may require a significant amount of back and forth in the process clarifications. Conversely, the average time to award a FFP is 60 calendar days with each taking 180 calendar days or less. This is possible due to all pre-award processes being captured within the base contract including negotiations of maximum labor rates. The estimated procurement lead time saved is 180 days on the contract. Awarding two consolidated FFP contracts reduces acquisition time, because the awardees have the proper clearances and can be provided access to information regarding the projects as soon as it’s available to MVK.

Table B – Time Savings Comparison of In-house Procurement to Award Two (2) FFP versus Nine (9) FFP Individual Contracts.

Two (2) FFP Contracts Nine (9) Individual Contracts IFB (60 days) X 2 contracts 120 IFB (60 days) X 9 contracts 540

Total – 120 540

(iii) Cost Savings. Per 15 U.S.C. § 657q(c)(2)(B), “savings in administrative or personnel costs alone do not constitute a sufficient justification for a consolidation of contract requirements” unless the total amount of the cost savings is expected to be substantial in relation to the total cost of the procurement.

(a) Table 1 below compares the estimated administrative and personnel costs required for a consolidated FFP contract (historically IFB). These costs are based on standard labor costs developed by MVK Contracting for FY18 procurements, along with historical average procurement support costs for Cost Engineering Division, Programs and Project Management Division (PPMD), and Engineering and Construction Division for acquisition coordination, FOR OFFICIAL USE ONLY document review, IGE development and site visit attendance. Source Selection Evaluation Board labor, and source-selection related preparation, travel, and administration costs are also included for the contract. In addition, the average design and procurement costs provided by the Memphis District Channel Improvement Project Manager for in-house labor required for the engineering and design, drafting, and review of a FFP contract by engineering, cost engineering, and construction branch is approximately $270,000. The in-house costs were derived from historic FFP contract acquisitions for this type of work using the labor rates for the different disciplines mentioned above and the combined total costs associated for each activity required from project conception to award.

(b) Based on information provided by the Vicksburg District Contracting Division, as shown in Table 2 below, the total cost required to award two (2) single FFP contracts equal $640,000.00. As shown in Table 3 below, awarding nine (9) individual FFP contracts would cost $2,880,00.00. The two (2) single FFP method would reduce the procurement/close-out cost by $2,485,000.00.

Table 1 – Cost to Award Two (2) Consolidated FFP Contracts

ORGANIZATION LABOR

Contracting ($30K each) $60,000 Cost Engineering ($30K each) $60,000 Engineering ($30K each) $60,000 Construction ($30K each) $60,000 Mobilization and Demobilization ($200K each) $400,000 Subtotal $640,000 Total Cost to Award Two (2) Consolidated FFP Contracts $640,000

Table 2 – Cost to Award Nine (9) Individual FFP Contracts

ORGANIZATION LABOR

Contracting ($30K each) $270,000 Cost Engineering ($30K each) $270,000 Engineering ($30K each) $270,000 Construction ($30K each) $270,000 Mobilization and Demobilization ($200K each) $1,800,000 Subtotal $2,880,000 Total Cost to Award Nine (9) Individual Contracts $2,880,000

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Table 3 – Cost Savings Comparison of In-house Labor for Two (2) Consolidated FFP contracts vs Nine (9) Individual FFP contracts

Acquisition Approach

2 Consolidated FFP Contract Cost

9 Individual Contract Cost

Cost per Procurement of FFP contract $640,000 $2,880,000 Contract Close Out ($5K each) $10,000 $45,000 Subtotal $650,000 $2,925,000 Other In-House Labor ($30K each) $60,000 $270,000

Total $710,000 $3,195,000 Cost Savings to Award Two (2) Consolidated Contracts vice Nine (9) Individual Contracts $2,485,000

Dollars are based on actual number of FY18 procurements and the current projections for FY22. As demonstrated in Table 3, the costs of awarding two (2) contracts are approximately 22% of the cost of awarding nine (9) individual contracts. In sum, MVK estimates that the use of two (2) consolidated FFP contracts would generate $2,485,000.00 in labor savings for the one-year life of the consolidated two (2) FFP contracts. A FFP contract maximizes the opportunity to acquire high quality, professional services at competitive prices, while minimizing acquisition time, and performance and schedule risks.

Table 4 – Analysis Summary

BENEFIT 2 Consolidated FFP 9 Individual FFP Quality High High

Acquisition Cycle 60 days 270 days Administrative Cost Low High

6. Bundling Analysis:

a. Definition of Bundling. FAR 2.101 defines bundling as consolidating two or more requirements for supplies or services, previously provided or performed under separate smaller contracts, into a solicitation for a single contract that is likely to be unsuitable for award to a small business concern due to: (i) The diversity, size, or specialized nature of the elements of the performance specified; (ii) The aggregate dollar value of the anticipated award; (iii) The geographical dispersion of the contract performance sites: or (iv) Any combination of the factors described in paragraphs (i) through (iii) of this definition.

b. Applicability of FAR Bundling Definition. This acquisition does not meet the definition of bundling since the government is not attempting to consolidate two or more requirements previously provided or performed under separate contracts into a single contract unsuitable for small business. The selected approach is capable of fulfilling all requirements under the FFP contract.

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c. Definition of the Competition in Contracting Act (CICA) Bundling Principle. This principle, as developed by the Government Accountability Office (GAO) case law, focuses on whether the combined requirement (new, old, or otherwise) restricts competition, and whether the agency is consolidating or bundling a new requirement unnecessarily. In order to justify CICA Bundling the agency must show "a reasonable basis for why the bundling is necessary to meet the agency need." (Vantex Serv., Inc., B-29041 5, Aug. 8, 2002, and Outdoor Venture Corp., B-299675; B-299676, Jul. 19, 2007).

d. Applicability of CICA Bundling Principle. CICA Bundling is not applicable to this procurement. The CICA requires solicitations to provide for full and open competition except where restrictions on competition are necessary to satisfy the procuring agency's needs. In such a case, restrictions on competition are allowed but only to the extent necessary to satisfy the agency's needs. Bundled procurements combine separate requirements into one contract; thus, they have the potential to restrict competition in violation of CICA by excluding firms that can provide only a portion of the bundled requirement. However, substantial cost savings achieved through the reduction of duplicative efforts and operational efficiency can be a reasonable basis for restricting competition where requirements are bundled. Though it may be feasible to award multiple contracts, the savings and efficiencies that are anticipated to be achieved through this acquisition justify the use of a FFP contract for the consolidated requirement, which involves the least amount of consolidation necessary to execute the mission.

7. Considerations, facts, and reasoning supporting the determination: All facts, considerations and rationale have been covered previously in the findings. The DD2579 has been signed by the Contracting Officer, Deputy for Small Business and SBA Procurement Center Representative. All concur that consolidation of this requirement is both necessary and justified.

Consolidation will allow the districts to efficiently coordinate and respond to the dynamic requirements of these MR Stone Placement, bank stabilization, and Levee setback requirements.

Consolidation will result in a significant savings of cost and time, as well as accommodate river stage dependent construction and environmental windows. Consolidation will also allow river contractors to more effectively organize their work, lower unit costs due to economy of scale, and more efficiently schedule their equipment and resources to achieve an efficient regional approach to meet the needs of the Corps of Engineers Mississippi River dike and stone navigation structures program. Moreover, consolidation of this requirement is both necessary and justified because the benefits of consolidation are critical to the success of MVK’s mission and the procurement strategy provides participation to small businesses to the maximum extent practicable.

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8. Summary: Although this unrestricted and total small business FFP solicitations constitutes consolidation of stone bank stabilization and levee construction combines construction at two (2) or more discrete sites into two (2) Consolidated FFP contracts, this approach provides the best combination of competitive procedures, timely acquisition, cost efficiency, quality, and capable prime contractors to execute maintenance bank stabilization and levee setback on the MVK navigation channels.

For the reasons indicated above this consolidation is necessary and justified and is critical to the agency’s mission success. The procurement strategy provides for maximum practicable participation by small business based on the available stone placement floating equipment in this environment supported by Market Research. While there is a minimum of $2,485,000.00 in cost benefits associated with this consolidation, these necessary and justifiable benefits significantly increase the likelihood of mission success, reduce acquisition cycle times, provide improved quality that will enhance performance or efficiency, as outlined in FAR 7.107-2(c), and are substantial. The bank stabilization and levee setback program are critical to the mission of USACE in that it provides navigable Federal waterways which are vital to many aspects of Louisiana’s economies.

Other alternatives noted above were considered, however, they would result in significantly higher costs and increased acquisition cycle time. Additionally, it is significantly less burdensome for the District’s Contracting and Operations Divisions to administer a consolidated scope of work for the Ouachita-Black rivers than numerous stand-alone contract actions. The findings of the market research and the documentation provided herein support the conclusion that consolidation of requirements is both necessary and justified, based on sound business judgment in view of the size, complexity, and potential number of efforts to be executed in support of MVK’s Civil Works program, and the consolidated approach provide advantages that substantially exceed the benefits of an approach that provides less consolidation.

DETERMINATION

Upon the basis of the findings above, I hereby determine, pursuant to the authority of 15 USC § 657q, Defense Federal Acquisition Regulation Supplement 207.170, and Army Federal Acquisition Regulation Supplement 5107.170 “Consolidation of Contract Requirements,” that the proposed consolidation of two (2) or more discrete construction projects within the Vicksburg District is both necessary and justified.

R. Ellis Screws Contracting Officer, Construction and A-E Branch