A8_FBO_GAU_JOFOC_Electric_FY16.pdf

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

Electric Utility Service MDC Guaynabo

Pursuant to the Federal Acquisition Regulation (FAR) Part 6.302-1(a)(1) and 6.302-1(b)(3), and the Bureau of

Prisons Acquisition Policy (BPAP) Part 6.304(c), the Federal Bureau of Prisons (FBOP) has determined that the procurement of electric utility service for the Metropolitan Detention Center (MDC) Guaynabo located within the city limits of Cataño, Puerto Rico, meets the criteria established for other than full and open competition. It is further determined that only one responsible source and no other supplies and/or services will satisfy agency requirements. This limitation on competition is justified as supported by the following information in accordance with FAR Part 6.303-2:

1. Identification of the Agency and the Contracting Activity:

U.S. Department of Justice

Federal Bureau of Prisons

MDC Guaynabo

P.O. Box 2008

Cataño, PR 00963-2008

2. Nature and/or description of action being approved:

This justification for other than full and open competition is for the acquisition of Electric utility services supplied to MDC Guaynabo, from the original and sole provider of such services. MDC Guaynabo has a present and continuing requirement for electric utility service for the proper operation of the facility.

3. Description of Supplies or Services Required to Meet the Agency’s Needs:

The Puerto Rico Electric Power Authority (PREPA) shall provide to the government facility at MDC

Guaynabo, electric utility services in a manner and form that is consistent with all applicable laws, rules, codes, industry standards, permits, and regulations, promulgated by any and all governmental authorities having jurisdiction. The PREPA shall provide services on an un-interruptible daily basis (365) days per year. The PREPA will be responsible to maintain and/or repair all associated electric lines and equipment, including associated costs for such repair, up to the delivery point or meter of MDC Guaynabo. Pursuant to

FAR Part 41.202, the PREPA continues to provide the “entire electric utility service” (i.e., generation, production, transmission, distribution, system operation and maintenance, metering, billing, etc.).

The PREPA shall provide electric utility services from Effective Date of Award (EDOA) through 12 months from EDOA, subject to funds availability (FAR Clause 52.232-18). The estimated amount for a 12-month period is $2,420,000.00. Each invoice includes the Account Service Fee, Energy KWH Usage, and Fuel

Charge.

Contract Line Item Number Performance Period Estimated Annual Cost ($)

CLIN 0001 October, 2015 $235,000.00

CLIN 0002 November, 2015 $218,000.00

CLIN 0003 December, 2015 $220,000.00

CLIN 0004 January, 2016 $190,000.00

CLIN 0005 February, 2016 $187,000.00

CLIN 0006 March, 2016 $180,000.00

CLIN 0007 April, 2016 $177,000.00

CLIN 0008 May, 2016 $195,000.00

CLIN 0009 June, 2016 $185,000.00

CLIN 0010 July, 2016 $193,000.00

JOFOC MDC GUAYNABO

Electric Utility Services

CLIN 0011 August, 2016 $225,000.00

CLIN 0012 September, 2016 $215,000.00

Total Estimated Cost: $2,420,000.00

4. An Identification of the Statutory Authority Permitting Other Than Full and Open Competition:

This justification to award as a sole source is prepared pursuant to the exception to full and open competition requirements in accordance with the statutory authority for these services that is found at 41 USC §

253(c)(1), when the supplies or services required by the agency are available from only one responsible source. The application which permits use of the cited statutory authority are stated at FAR Part

6.302-1(b)(3), “When acquiring utility services (see 41.101), circumstances may dictate that only one supplier can furnish the service (see 41.202).” When a public utility supplier refuses to execute a tendered contract the agency may proceed with the acquisition and pay for the utility service under the provisions of

31 USC § 1501(a)(8). This contracting officer is not required to make a responsibility determination when awarding to a Foreign, State, or local government in accordance with FAR 9.102(b). Analysis of the market indicates that the PREPA has proprietary rights up to the meter at MDC Guaynabo. In order for another provider to be capable of providing the service, significant capital improvements would be needed.

The Bureau would be required to pay for the capital improvements, but it would not recover the costs of duplication of services, connection fees and infrastructure installation costs through competition. The current requirement is for follow-on services and does not include funding for capital improvements.

5. A Demonstration that the Proposed Contractor’s Unique Qualifications or the Nature of the

Acquisition Requires use of the Authority Cited:

The PREPA is the government-owned sole provider of electric utility service on the island of Puerto Rico including the City of Cataño service area. The PREPA is ruled by a Governing Board appointed by the

Governor with the advice and consent of the Senate of Puerto Rico and daily operations are run by an

Executive Director appointed by the Board. The Board is the governing body that sets all rates and tariffs with the responsibility of electric utility service for the locale in which MDC Guaynabo resides. The

PREPA is an entity of the Commonwealth of Puerto Rico, the only agent authorized by rules and regulations to provide electric service on the island thus creating a natural monopoly. Having a single supplier of electricity for this area is the most efficient method of producing and distributing electricity. This requirement cannot be obtained by contracting directly with a private source because building multiple generation, transmission and distribution systems would be costly and inefficient.

6. A Description of Efforts made to Solicit from as many Potential Sources as Practicable, Including

Whether a Notice was or will be Publicized as required by FAR Part 5.2:

As stated in FAR Part 5.202 (a)(5), “the contract action is for utility services other than telecommunications services and only one source is reasonably available.” Therefore, a notice is not required in the

Government wide point of entry (GPE) according to the exemptions. GSA, Energy Management Center of

Expertise, has previously determined that there are no area wide contracts for electric utilities and that no opportunity exists in the local area to compete the requirement.

7. A Determination by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable:

The estimated average monthly cost, which was based on invoice history, for the electric utility service is

$200,000.00 with a total estimated usage for a 12 month period of $2,420,000.00. The current rates offered by the PREPA are equal to the market price levied other commercial, industrial, and government users in the

MDC Guaynabo area. Utility rates are enacted by resolutions by the Board of the Authority, which is charged under Puerto Rico law to ensure that rates be just and reasonable. The PREPA website has provided sufficient data to the FBOP contracting officer, pursuant to FAR 15.402, Pricing Policy, allowing the ability to make a preliminary determination that such anticipated costs appear to be fair and reasonable.

The PREPA is a public corporation chartered by the Commonwealth of Puerto Rico pursuant to the right and power granted by Title 22 §§ 191—217 of the Laws of Puerto Rico. A formal decision in the form of periodic rulings, reviews, or similar actions of a governmental body, or embodied in the laws, are sufficient to set pricing (see FAR 15.403-1[c][2]) and the purchasing of supplies and services from a responsible source is determined fair and reasonable. The establishment of the current supply and delivery of services began when the original service connections were installed and the meters set in 1993. As such, this

Contracting Officer has determined the anticipated cost to the Government will be fair and reasonable.

8. A description of the market research conducted:

This documentation is in accordance with FAR Part 10, which describes the policies and procedures for conducting market research in a process of finding viable sources of goods and services to meet government requirements and to find the most suitable approach to acquiring, distributing, and supporting supplies and services. The extent of market research will vary, depending on such factors as urgency, estimated dollar value, complexity, and past experience. Market research involves obtaining information specific to the item being acquired. This report is submitted in support of an acquisition with an estimated value in excess of the simplified acquisition threshold. Below are the findings of the market research for the above referenced requirement.

I. BACKGROUND: A review of the obligation reveals the following – the Metropolitan Detention Center

Guaynabo (hereinafter referred to as “MDC Guaynabo”) has a current and continuing requirement for the purchase of electric utility service for the continuation of normal operations of the institution in order to provide a safe, secure environment to confine offenders and protect the public. MDC Guaynabo has purchase electric service from this same vendor since 1993.

A. Title: Electric Utility Service – MDC Guaynabo

B. Product or Service Code: S-Utilities and Housekeeping Services-S112 Utilities-Electric

C. North American Industry Classification System (NAICS): 221122 Electric Power Distribution=this

U.S. industry comprises electric power establishments primarily engaged in either (1) operating electric power distribution systems (i.e., consisting of lines, poles, meters, and wiring) or (2) operating as electric power brokers or agents that arrange the sale of electricity via power distribution systems operated by others.

D. Standard Industrial Classification (SIC) Code: 4911 Electric Services

II. DELIVERY / PERFORMANCE: Purchase order to provide electric utility services October 1, 2015, through the month of September 30, 2016. The Puerto Rico Electric Power Authority (PREPA) shall provide to the government facility at MDC Guaynabo, electric utility services in a manner and form that is consistent with all applicable laws, rules, codes, industry standards, permits, and regulations, promulgated by any and all governmental authorities having jurisdiction. The PREPA shall provide services on an un-interruptible daily basis (365) days per year. The PREPA will be responsible to maintain and/or repair all associated electric lines and equipment, including associated costs for such repair, up to the delivery point or meter of MDC Guaynabo. Pursuant to FAR Part 41.202, the PREPA continues to provide the

“entire electric utility service” (i.e., generation, production, transmission, distribution, system operation and maintenance, metering, billing, etc.).

III. POTENTIAL SOURCES: Puerto Rico Electric Power Authority, Dba: PREPA, P.O. Box 364267, Treasury Division, Santurce, PR 00936-4267

IV. MARKET ANALYSIS:

A. The results of market research have determined that the Government's needs can be met by items of a type customarily available in the commercial marketplace.

B. The following methods were utilized to conduct Market Research:

X FedBizOpps Sources Sought Synopsis; Found no other interested party capable of providing electric utility service.

X Searched database and contacted GSA Energy Center of Expertise; Found no area wide or single point contract is available.

X Searched FPDS-NG; Found GSA, Department of Defense, VA, and the FBOP are purchasing electric service from PREPA.

X Searched previous purchases of similar/identical acquisitions; Found the PREPA is current provider to MDC Guaynabo. This is a continuation of service.

C. Results: Results of Market Research were as follows: Only one source could be found. A

Justification for Other Than Full and Open Competition provided for approval.

V. RECOMMENDATION:

A. The requirement will be awarded to PREPA as a single award of a firm-fixed price requirements type electric utility purchase order utilizing FAR Parts 6, 12, 13, and 41. A Performance-Based

Acquisition method will not be used for this procurement as it is determined not applicable. A PBA relies on the use of measurable performance standards and financial incentives in a competitive environment to encourage competitors to develop and institute innovative and cost-effective methods of performing the work.

B. One potential source is a local entity, the incumbent PREPA, which appears able to satisfy the requirement and is regulated by the PREPA Board of Supervisors. Puerto Rico Law Ordinances as an avenue through which local law is adopted. Resolutions are a sub-set of ordinances, stating a commonwealth’s opinion on a given matter and authorizing such actions as setting various fees for services, and initiating agreements between the commonwealth and other entities. PREPA is other than small business. PREPA is not considered a regulated utility.

C. This requirement will not be posted to Fedbizopps as a solicitation to promote competition, broaden industry participation, and assist small business concerns in obtaining contracts for MDC Guaynabo, Puerto Rico. This requirement meets the exemption at FAR 5.202(5) the proposed contract action is for utility services other than telecommunications services and only one source is available. The PREPA is the government-owned sole provider of electric utility service in the MDC Guaynabo service area. The

PREPA is an entity of the Commonwealth of Puerto Rico, the only agent authorized by rules and regulations to provide electric service on the island of Puerto Rico area thus creating a natural monopoly. Having a single supplier of electric service for this area is the most efficient method of generating, distributing and metering electricity.

D. The Bureau does not have the commonwealth or local approval or the resources to provide the funding for another company to install alternative generation facilities at the institution, another distribution system is not available, and no other contractor can provide electric service through PREPA network.

E. The U.S. General Services Administration has issued a Delegation of Contracting Authority to the

U.S. Department of Justice, Federal Bureau of Prisons to negotiate and execute utility service contracts.

F. I also make the determination that this procurement action “NOT” be set-aside for small business

VI. COMMENTS: Based on the results of the above research, it is determined that this requirement can met by a commercial item. Electric Utility Service is an item that is of a type customarily used by the general public and by non-governmental entities for purposes other than governmental purposes. This Contracting

Officer, as the awarding official, has determined that the award of the electric utility service purchase order will be performed by PREPA a Government entity. Market research involves obtaining information specific to the item being acquired. The market research conducted by the contracting office and facility department personnel determined that a GSA area-wide or single point contract is not available in accordance with Title 31 USC § 1535. No Interagency Agreement is available for use either. GSA is specifically authorized by law and regulation to purchase utility services on behalf of other agencies by providing an Assisted Acquisition. August 2010, in accordance with Title 40 USC § 121(d), GSA issued the Department of Justice for the FBOP a Delegation of Authority for nationwide authority to negotiate and execute utility service contracts at Federal facilities under the control and direction of the FBOP in accordance with Title 40 USC § 501(b)(1)(B). The FBOP, as the requiring agency, must make a determination of the best procurement approach that satisfies MDC Guaynabo’s schedule, performance, and delivery requirements. The PREPA is the current electric utility service provider for MDC Guaynabo and has continuously serviced the facility since 1993. The PREPA controls the electric generating capacity on the island of Puerto Rico, as well as the electric power transmission grid. The PREPA sells electricity to all sectors of the market (public, private, and government). No other source could be expected to make the capital investments for the infrastructure required to provide electric service or meet the regulatory approvals to generate and deliver power to meet MDC Guaynabo’s power consumption requirements.

Because Puerto Rico is remote, there is not a realistic possibility of importing power from other sources off the island. The MDC Guaynabo has no reasonable expectation(s) that the Commonwealth of Puerto Rico

PREPA would entertain entering into a contractual relationship at this time. Numerous attempts to secure anything in writing to confirm PREPA’s position regarding this subject have been unsuccessful.

Contracting and requirement staff continues to conduct appropriate market research to determine if sources capable of satisfying the agency’s requirement exist and to overcome competition barriers. Deregulation laws are presently nonexistent in this area and no alternative source of service is currently available. A review of FPDS-NG shows several other agencies (i.e., GSA, DOD, VA, etc.) are issuing purchase orders to the PREPA for their electric utility requirements. As with all the other agencies, MDC Guaynabo is a consumer of services from the public utility. If another potential source emerges, the agency will assess whether competition for future requirements is feasible.

The provision of electric services is essential for the orderly operation of MDC Guaynabo. History shows and economics dictate that the construction of infrastructure facilities by multiple utilities in the same location would be extremely costly and disruptive to communities. The utility is regulated by local government to assure fair rates for safe and adequate service. The ratemaking process ensures the lowest reasonable rate for consumers while maintaining the financial stability of the utility. Under the law, the utility is entitled to recovery of its reasonable incurred expenses.

9 Any other facts supporting the use of other that full and open competition:

The provision of electric utility service is essential for the orderly operation of MDC Guaynabo, which has a rated capacity to collectively house approximately 1300 inmates. The institution’s primary mission is to hold pre-trails and holdover inmates as a service to the US District Courts and the US Marshals Service for the Districts’ of Puerto Rico and the US Virgin Islands. Commonwealth regulations and ordinances limit the providers of this service to only one.

10 A listing of the sources, if any, that expressed, in writing, an interest in the acquisition:

There were no other sources which expressed an interest in this acquisition or that would be able to provide the service to meet the minimum requirements of the government.

11 A statement of the actions, if any, the agency may take to remove or overcome barriers to competition before any subsequent acquisition for the supplies or services required:

Contracting and requirement staff continues to conduct appropriate market research to determine if sources capable of satisfying the agency’s requirement exist and to overcome competition barriers. Deregulation laws are presently nonexistent in this area and no alternative source of service is currently available. A review of Federal procurement reporting databases show several other agencies (i.e., Army, Navy, Air

Force, Corps of Engineers, DHS, GEMS, US Coast Guard, DOT, VA, etc.) are issuing purchase orders to the PREPA for their electric utility requirements. As with all other agencies, MDC Guaynabo is a consumer of services from the public utility. If another potential source emerges, the agency will assess whether competition for future requirements is feasible. MDC Guaynabo will continue to monitor the trends in the utility industry to seek competition or sources that may be able to meet the minimum needs of the government and its utility requirements. Should opportunities arise in the future MDC Guaynabo will take appropriate action.

12 CONTRACTING OFFICER CERTIFICATION:

I hereby certify that this request for Justification and Approval of other than Full and Open Competition is made in good-faith and that the supporting data and information are accurate and complete to the best of my knowledge and belief, and that I would not be making this request if it were feasible to fully compete this requirement. I further certify that this request is not the result of lack of advance planning or desire to expend funds while those funds are still available.

//Signed// 9/1/2015

Dennis Dempsey, Contract Specialist Date

Field Acquisition Office

I hereby certify that the supporting data, provided by the technical and requirements personnel, which form the basis for this justification is complete and accurate to the best of my knowledge and belief.

//Signed// 9/1/2015

Charles Davis, Facilities Manager Date

MDC Guaynabo

Concurrence of:

//Signed// for 9/1/2015

Steve Mora, Warden Date

MDC Guaynabo

//Signed// 9/16/2015

Jill D. Ryan, Chief Date

Field Acquisition Office

//Signed// 11/9/2015

H. J. Marberry, Regional Director Date

Southeast Regional Office

//Signed// 1/21/2016

Matthew D. Nace, Procurement Executive Date

Administration Division

Approved:

//Signed// 1/25/2016

Bradley T. Gross, Date

Assistant Director for Administration

Competition Advocate