Attachment C - MFR - IOT MATOC Equipment Purchasing.pdf

DEPARTMENT OF THE ARMY

ENGINEERING AND SUPPORT CENTER, HUNTSVILLE

P.O. BOX 1600

HUNTSVILLE, ALABAMA 35807-4301

April 28, 2026

Subject: Memorandum for Record, IO&T MATOC Equipment Purchasing

The purpose of this memorandum is to serve as guidance regarding the contractual use of the equipment purchasing line item on task orders issued under the authority of the Initial Outfitting and Transition

(IO&T) Multiple Award Task Order Contract (MATOC) Suite of contracts.

IO&T MATOC suite of contracts was put in place in order to support military healthcare construction and renovation projects through the acquisition of services that provide for the transitioning and managing of staff, patients and healthcare programs. Additionally, the contracts provide for the equipping of facilities through the contractor’s procurement process as approved by the Government. In essence the intent of the

IO&T effort is separated into two distinct tasks, one is the comprehensive IO&T services routinely under

Contract Line-Item Number (CLIN) 0001 and equipment purchasing under CLIN 0002. It is also noted that both CLINs 0001 and 0002 are established as Firm Fixed Price (FFP). In the previous MATOC I suite of contracts the equipment purchasing line item was a Time and Material (T&M) type CLIN which was eventually converted to a FFP after demonstration of competition and a determination of fair and reasonable pricing to the Government and approved by the Contracting Officer (KO). It should be noted that the equipment CLIN may be CLINs other than CLIN 0002 and be an option that may be exercised at a later date at the Government’s discretion.

The comprehensive IO&T services are just that, a service which is intended to provide all management, supervision, labor and materials necessary to conduct non-personal services of project management;

interior design development; equipment planning; equipment purchasing; transition and relocation planning; receipt, storage and warehousing of new and existing equipment; non-construction related installation, extended installation, Defense Medical Logistics Standard Support (DMLSS), technical inspection, training for equipment or systems; and conduct final turnover, close-out and post–occupancy evaluations of identified construction projects for the purpose of initial outfitting and transition of medical facilities. The funding for these services is provided at the task order level on CLIN 0001 and shall be due in full to the contractor upon successful completion of the entire IO&T effort.

CLIN 0002 equipment purchasing, is strictly funding obligated at the task order level for the purpose of procuring all the actual furniture, fixtures and equipment (FF&E); medical, research, and non-medical equipment for the principal function of outfitting the medical facility. In essence, funds to pay for the actual commodity. Funding obligated on CLIN 0002 for equipment purchasing is purposely divorced from the comprehensive IO&T services effort. Compensation for equipment purchasing services is covered within CLIN 0001 comprehensive IO&T services.

As stated above CLIN 0002 is FFP and not T&M. Selection of the FFP type CLIN was a decision made after acquisition strategy deliberation at the agency and Principal Assistant Responsible for Contracting

(PARC), now Senior Contracting Official (SCO) level. The full value of this line item is NOT due to the contractor upon completion of the entire IO&T effort.

The services or the level of effort for equipment purchasing services are provided for and included in the price of the comprehensive IO&T services covered in CLIN 0001. Although it may not be all inclusive, this priced effort of equipment purchasing should be based upon factors as stated below:

1. The size, scope and complexity of the project. This is the largest measure to be taken into consideration but may be not all inclusive to: 1) the tasks as described with in the performance work statement (PWS); 2) the type of facility and number and function of each department; 3) the

Project Room Content List (PRCR); 4) IT requirements and; 5) building design if applicable.

2. The estimated dollar value of equipment on CLIN 0002. This value is to be associated with the number of items to be purchased with the total requirement of items needed to ensure the facility can function for its intended purpose. In essence, the total value of CLIN 0002 and the total quantity of items to be purchased. For example, if the value on CLIN 0002 is $100.00 then in essence the IO&T contractor may purchase 1 item for $50.00, three items at $10.00 and one

$20.00 item; conversely, they may purchase 100 items at $1.00 or any combination in between the two examples. The level of effort to manage the equipment purchases (such as equipment planning services, procurement package development tasks or labor to procure services) is to be commensurate to the Government established value for CLIN 0002 as proposed by the Offeror and accepted by the Government.

3. The IO&T contractor. It is incumbent upon the IO&T contractor to determine a price to propose to the Government for the effort based on their 1) expertise in initial outfitting and transition industry processes and best practices; 2) The IO&T contractor’s historical knowledge of recent and relevant projects and; 3) as applicable, any lessons learned from previous IO&T efforts.

For conducting equipment purchases, after approval of a procurement package through a Notice to Proceed

(NTP) issued by the Government, it will be the responsibility of the contractor to execute the actual purchase in accordance with the PWS and any associated tasks necessary to ensure a functional facility to properly execute the patient delivery model. Once a task order is issued in which there is a CLIN 0002, purchases will be executed in accordance with the basic contract PWS equipment purchasing section, Special Contract Requirements Section of the basic contract will be enforced. In addition, the following additional guidance will be used in concert with the guidance above:

In accordance with the Revolutionary Federal Acquisition (FAR) and Regulations Overhaul (RFO), the contractor shall seek competition in the commercial market to attain the best value for the Government in all procurement efforts and submit evidence of same along with any customer generated sole source justifications that apply to the procurement package submitted. The Government will not approve procurement packages for Notice to Proceed (NTP) without such documentation. In the case of a non-sole sourced item, the Contractor shall identify not less than three comparable products meeting that requirement and receive a minimum of one vendor quote for each comparable product. The procurement package for a particular non-sole sourced item, therefore, should contain a minimum of three products meeting the item specifications and each product shall have a vendor quote. In the case of a sole sourced item where a specific product is to be purchased, the Contractor shall obtain quotes from a minimum of three vendors of that same product. There may be exceptions to the requirement to obtain a minimum of three quotes per item such as a sole source procurement where only one distributor is authorized to supply the item or when the Contractor has issued three or more RFPs to vendors but less than three reply. The contractor will explain in writing as part of each procurement package that does not demonstrate minimum competition why the Contractor was unable to obtain the minimum competition required. The HNC

Project Manager/Contracting Officer’s Representative (COR) will determine on a case-by-case basis and in consultation with the Contractor and the Contracting Officer whether an exception is justified.

Fair and Reasonable Price

A fair and reasonable price determination is an assessment by the Government that an offeror’s proposed price for a supply or service can be considered “fair and reasonable” on the basis of applying one or more price analysis techniques. RFO FAR Part 15 (Contracting by Negotiation) does not explicitly define the term “fair and reasonable.” The concept of a fair and reasonable price has elsewhere been described as the price that a prudent businessperson would pay for an item or service under competitive market conditions, given a reasonable knowledge of the marketplace. Regardless of the precise definition, the FAR clearly establishes the need for determining a price to be a fair and reasonable price before the Government KO or ordering officer may award contracts or place orders.

Methods of Price Reasonableness for NTP Packages:

Receive at least 3 valid quotes for the item (A no bid does not count as a valid quote)

• Quotes that are expired (beyond the specific date stated) will require confirmation by the PM on the technical evaluation document that the quote is still valid for use in the acquisition.

• No Bids are not the same as a no response. No response provides zero value in determining a fair and reasonable price. A No Bid is when a solicited source tells us the rationale behind the no bid.

This can be used to aid us in determining a fair and reasonable price if the no bid offers information that is pertinent to the acquisition at hand.

• As a general statement but not necessarily all inclusive, if five bids are sought and 3 are no bids with some explanation as to why and two bidders do supply a quote which show prices that are relatively close for the same Government’s minimum need then a price check from a relatively simple source should be obtained to aid in determining price reasonableness.

• Present justification through market research that due to the complexity of the equipment requirement only 2 bidders are available to provide a quote for this item. Market research presented to support this should include the salient characteristics associated with the complexity or limited vendor pool to prevent delays or questions.

• Provide a valid Sole Source Justification (SSJ) signed by the customer and approved by KO for single bids

The policy and procedures at DFARS 217.74 shall be used to the maximum extent practicable for contract modifications within the scope of the contract that are not "undefinitized contract actions"

(UCAs) as defined by DFARS 217.7401(d) (e.g., unpriced change orders (UCOs))

Jeffrey Roberts

Contracting Officer