B.04.Consolidation_Determination_W912EE24B0012.pdf

CUI

DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, VICKSBURG DISTRICT

DETERMINATION AND FINDINGS FOR CONSOLIDATION

W912EE24B0012 FIRM FIXED PRICE FOR

Calhoun County, MS, MDHP, RP-18-02, FC/MR&T, Yazoo River Basin

Yalobusha River Watershed

COORDINATION PAGE:

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

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

Jason M. Carlock Business Oversight Branch

Demetric T. Erwin Deputy for Small Business Programs

Steven H. Finch Assistant District Counsel

References

Federal Acquisition Regulation (FAR) 2.101 defines consolidation or consolidated requirement as: (1) a solicitation for a single contract, a multiple-award contract, a task order, or a delivery order to satisfy (i) Two or more requirements of the Federal agency for supplies or services that have been provided to or performed for the Federal agency under two 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 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, after ensuring that--

(a) Market research has been conducted;

(b) Any alternative contracting approaches that would involve a lesser degree of consolidation have been identified;

(c) The determination is coordinated with the agency's Office of Small Disadvantaged Business Utilization or the Office of Small Business Programs;

(d) Any negative impact by the acquisition strategy on contracting with small business concerns has been identified; and

(e) Steps are taken to include small business concerns in the acquisition strategy.

FINDINGS

1. Introduction:

The U.S. Army Corps of Engineers (USACE), Vicksburg District (MVK), plans to consolidate requirements to construct six (6) riser pipe grade control structures in support of the Yazoo River Basin, Yalobusha River Watershed. This procurement constitutes a consolidation of requirements per 15 U.S.C. § 657q(a)(2)(B) in that work performed under the proposed contract will involve construction at two or more discrete sites. MVK has conducted analysis and market research that demonstrates consolidation of requirements in this procurement is both necessary and justified.

2. Description of the Procurement Action:

(A) Project Description:

The major maintenance activities consist of furnishing all plant, labor, materials, and equipment, and constructing six (6) riser pipe grade control structures in Calhoun County, Mississippi along the Yalobusha Watershed. Principal features of the work include clearing and grubbing, excavation, fill, backfill, embankment, miscellaneous items, control of water, engineering fabric, stone protection, corrugated metal pipe, erosion control, lime treatment, welding, concrete work, and storm water pollution prevention and environmental protection. This procurement will meet repair and construction mission requirements under North American Industry Classification System (NAICS) code 237990, Other Heavy and Civil Engineering Construction with a size standard of $45M. The construction period will not exceed 260 calendar days.

(B) Acquisition Strategy/Procurement Summary:

The procurement will be advertised as a 100% HUBZone Small Business Set-Aside under Solicitation No. W912EE24B0012, with the intent to award one (1) Firm Fixed- Price (FFP) contract. The estimated value of this procurement is $2,235,000.00. MVK has historically utilized this type of contract for similar requirements to successfully execute projects on tight schedules at reasonable costs. Use of a FFP contract is 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 requirements, which is described as a solicitation of a single contract to satisfy the requirements of the Federal agency for construction projects to be performed at two (2) or more discrete sites.

The total estimated value of the requirements exceeds the $2M threshold. By consolidating these requirements, MVK will be able to efficiently coordinate and respond to the dynamic requirements of the six (6) Riser Pipe Grade Control Structures at a significant savings of cost and time. Additionally, consolidation will allow MVK to accommodate the Riser Pipe Grade Control Structure scheduling window which is 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.

3. Results of Market Research:

(A) Dynamic Small Business Search: DSBS search parameters included all SBA Economic Group Categories, in the state of Mississippi and produced a listing, with NAICS code 237990, randomized by original start time of search:

PARAMETERS:

NAICS 237990

Locations: Mississippi

RESULTS:

Small Business Sub‐ Category

No. of SBs Registered

HUBZone Certified 45 8(a) 44

SDB Certified 26 Woman or Women Owned 38 Service-Disabled Veteran 38

Veteran 2

Procurement History:

(2) A review of procurement history for the periods of FY 2017 through FY 2023 revealed six (6) internal awards for similar projects:

Historical Construction Contract Awards:

Solicitation# Contract#

Contractor

LG/

SM

Procurement Method

Contract Type

Contract Value

# of Bids

W912EE17B0015

W912EE17C0026

Quinn Contracting, Inc.

WOSB

FFP

$1,638,639.03

W912EE19B0014

W912EE19C0012

TLSL Inc.

$2,073,456.50

W912EE20B0009

W912EE20C0007

Quinn

$1,278,338.00

W912EE21B0007

W912EE21C0011

Frontier

LLC

$2,575,233.33

W912EE23B0007

W912EE23C0015

Quinn

$2,540,212.00

W912EE23B0015

W912EE23C0019

Quinn

$1,984,158.41

TOTAL:

$12,090,037.30

During the internal historical review period, in any one instance of responding to a Riser Pipe Structure Invitation for Bid (IFB), two (2) or more WOSB concerns have submitted bids.

Although both historic and current market research supports the expectation of at least six (6) bid responses from a WOSB concern, market research also shows that there are 45 certified HUBZone firms within the parameters of the NAICS Code of 237990 and the state of Mississippi. Therefore, there is a reasonable expectation of receiving an offer from at least two (2) responsible HUBZone concerns capable of providing an offer at a fair and reasonable price.

5. Alternative Contracting Approaches and Rationale for Rejection:

(A) In identifying that one (1) stand-alone FFP contract as the best solution for satisfying this requirement, the district also considered utilizing a Single Award Task Order Contract (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. Additionally, after award, there is no competition under a SATOC, which makes it difficult to negotiate pricing.

The intent of this analysis was to address all alternative contracting approaches that would involve a lesser degree of consolidation, or no consolidation.

The following analysis addresses alternative contracting approaches in detail:

(i). Alternative 1: Six (6) Individual FFP Contracts: The consolidation of one (1)

FFP contract would substantially exceed the benefits of having six (6) individual contracts to perform the work along the Yalobusha Watershed. The benefits will include cost savings, quality improvements, reductions in acquisition cycle times, better terms and conditions, and any other identifiable benefits. Though awarding six (6) individual contracts could provide a lesser degree of consolidation, or no consolidation at all, the benefits of awarding one (1) consolidated contract substantially exceed the benefits of six (6) individual contracts for the reasons outlined below:

(a) 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 six (6) individual contract holders to offer competition, one (1) contractor is afforded a greater opportunity to better understand the expectations of the Government to build project experience and capability for follow on support.

(b) Acquisition Cycle. According to the Procurement Administrative Lead Time

(PALT), the average time to acquire six (6) individual contracts is approximately 540 calendar days. Each contract takes on average, 90 calendar days to award. Some projects may require a significant amount of back and forth in the process of clarifications. Conversely, the average time to award one (1) FFP is 90 calendar days.

This is possible due to all pre-award processes being captured within the base contract.

The estimated procurement lead time saved is 450 days on the contract.

Table A – Time Savings Comparison of In-house Procurement to Award One (1) FFP versus Six (6) FFP Individual Contracts.

One (1) FFP Contracts Six (6) Individual Contracts Invitation for Bid (IFB) 90 days) X 1 contracts

IFB (90 days) X 6 contracts 540

Total – 90 540

(A) Cost Savings. Pursuant to FAR 7.107-2(d) - Benefits.

(1) Benefits that are quantifiable in dollar amounts are substantial if individually, in combination, or in the aggregate the anticipated financial benefits are equivalent to- (i) Ten percent of the estimated contract or order value (including options) if the value is $94 million or less; or (ii) Five percent of the estimated contract or order value (including options) or $9.4 million, whichever is greater, if the value exceeds $94 million.

(2) Benefits that are not quantifiable in dollar amounts shall be specifically identified and otherwise quantified to the extent feasible.

(3) Reduction of administrative or personnel costs alone is not sufficient justification for consolidation unless the cost savings are expected to be at least 10 percent of the estimated contract or order value (including options) of the consolidated requirements, as determined by the SPE or CAO ( 15 U.S.C. 657q(c)(2)(B)

(B) 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, document review, Independent Government Estimate (IGE) development and site visit attendance. In addition, the average design and procurement costs provided by the MVK 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 $60,000. 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 MVK Contracting Division, as shown in

Table 1 below, the total cost required to award one (1) FFP contract equals $320,000.

As shown in Table 2 below, awarding six (6) individual FFP contracts would cost $1,920,000. As shown in Table 3 below, the one (1) single FFP method would reduce the procurement/close-out cost by $1,775,000.

6. Consolidation Benefit Analysis:

Table 1 – Cost to Award One (1) Consolidated FFP Contract

ORGANIZATION LABOR

Contracting ($30K each) $30,000 Cost Engineering ($30K each) $30,000 Engineering ($30K each) $30,000 Construction ($30K each) $30,000 Mobilization and Demobilization ($200K each) $200,000 Subtotal $320,000 Total Cost to Award One (1) Consolidated FFP Contract

$320,000

Table 2 – Cost to Award Six (6) Individual FFP Contracts

ORGANIZATION LABOR

Contracting ($30K each) $180,000 Cost Engineering ($30K each) $180,000 Engineering ($30K each) $180,000 Construction ($30K each) $180,000

Mobilization and Demobilization ($200K each) $1,200,000 Subtotal $1,920,000 Total Cost to Award Six (6) Individual Contracts $1,920,000

Table 3 – Cost Savings Comparison of In-house Labor for One (1) Consolidated FFP contract vs Six (6) Individual FFP contracts

Acquisition Approach

1 Consolidated FFP Contract Cost

6 Individual Contracts Cost

Cost per Procurement of FFP contract $320,000 $1,920,000 Contract Close Out ($5K each) $5,000 $30,000 Subtotal $325,000 $1,950,000 Other In-House Labor ($30K each) $30,000 $180,000

Total $355,000 $2,130,000

Cost Savings to Award One (1) Consolidated Contract vs Six (6) Individual Contracts

$1,775,000

As demonstrated in Table 3, the costs of awarding six (6) contracts is approximately 133% of the cost of awarding one (1) consolidated contract and the benefit well exceeds the 10% quantifiable benefit required by FAR 7.107-2(d). In sum, MVK estimates the use of one (1) consolidated FFP contract would generate $1,775,000 in labor savings for the life of the consolidated contract. A FFP contract maximizes the opportunity to acquire high quality professional services at competitive prices while minimizing acquisition time, performance, and schedule risks.

Table 4 – Analysis Summary

BENEFIT 1 Consolidated FFP 6 Individual FFP Quality High High

Acquisition Cycle 90 days 540 days Administrative Cost Low High

7. Bundling:

Bundling (FAR 7.107-3) and/or Substantial Bundling (FAR 7.107-4) are not applicable to this procurement. A bundled requirement is considered necessary and justified if the agency would obtain measurably substantial benefits as compared to meeting its agency’s requirements through separate smaller contracts or orders. Substantial Bundling is any bundling that results in a contract with an estimated value of $8 million or more for the Department of Defense. This acquisition does not meet the definition of bundling since the government is not attempting to consolidate two (2) 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.

8. Considerations, Facts, Reasoning Supporting the Determination:

A DD2579 has been signed by the Contracting Officer and Deputy for Small Business.

Both concur that consolidation of this requirement is necessary and justified.

Consolidation will result in a significant savings of cost and time, as well as accommodate river stage dependent construction and environmental windows.

Consolidation will allow 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 Sediment Reduction Structure programs. 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.

9. Summary:

(1) Although this total small business FFP solicitation constitutes consolidation of riser pipe structure requirements at six (6) discrete sites into one (1) consolidated FFP contract, this approach provides the best combination of competitive procedures, timely acquisition, cost efficiency, quality, and capable prime contractors to execute maintenance sediment reduction on the MVK navigation channels.

(2) For the reasons indicated above this consolidation is necessary and justified and is critical to the agency’s mission success. There is a maximum of $1,775,000 in cost benefit associated with this consolidation; also, 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 sediment reduction program is critical to the mission of USACE in that it provides navigable Federal waterways which are vital to many aspects of Mississippi’s economies.

(3) 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 Construction Divisions to administer a consolidated scope of work for the Yalobusha Watershed 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.

10. Program Manager/Requiring Activity Justification: Market research has been conducted utilizing dynamic online searches in conjunction with a comparison of historical data from previous procurements of similar size, scope and complexity and the determination has been made that there is a reasonable expectation of receiving offers from two (2) or more responsible small business concerns that are competitive in terms of fair market prices, quality, and delivery. The market research supports that this procurement shall be advertised as a HUBZone Small Business Set-Aside.

DETERMINATION

Based on the foregoing rationale, I hereby determine, in accordance with 15 U.S.C. § 657q and FAR 7.107-2 that the consolidation of the requirements for Calhoun County, MS, MDHP, RP-18-02, FC/MR&T, Yazoo River Basin Yalobusha River Watershed is both necessary and justified and will serve the best interests of the Government. In accordance with Army Federal Acquisition Regulation Supplement (AFARS) 5119.202- 1, all preference program (socio-economic programs) were considered, and it has been determined to be in the best interest of the Government to advertise this consolidated requirement as a HUBZone set-aside. This approval is made in accordance with the approval thresholds set forth in AFARS 5107.107-2, “Consolidation of Contract Requirements” and U.S. Army Corps of Engineers Acquisition Instruction (UAI) 5107.107-2-100, “Consolidation.”

Davita S. Baloue Chief, Vicksburg District Contracting Office