B.4.21 DnF_Consolidation Determination_23R0020 Redacted.pdf

Control No. POA-ACQ-23-04

CONSOLIDATION OF CONTRACT REQUIREMENTS DETERMINATION

FOR

INDEFINITE DELIVERY CONTRACT(S) FOR

MULTI-DISCIPLINE ARCHITECT-ENGINEER SERVICES

PRIMARILY VARIOUS LOCATIONS, ALASKA

W911KB23R0020

(As prescribed by FAR 7.107-2 and AFARS 5107.107-2)

RATIONALE

1. Consolidation may provide substantial benefits to the Government. However, because of the potential impact on small business participation, before conducting an acquisition that is a consolidation of requirements with an estimated total dollar value exceeding $2 million, a written determination shall be made that the 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.

2. Introduction: U.S. Army Corps of Engineers (USACE), Pacific Ocean Division (POD), Alaska District (POA) plans to solicit offers for Multi-discipline Architect-Engineer (AE) services primarily in various locations in Alaska and outside Alaska on an exception basis in the U.S. Territory of Wake Island and has conducted market research that demonstrates consolidation and of this procurement to be both necessary and justified.

FAR 2.102 defines consolidation 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.

(2) separate contract as used in this definition, means a contract that has been performed by any business, including small and other than small business concerns.

3. Description of the Procurement Action: Multi-Discipline AE services indefinite delivery contract (IDC) solicitation with a total shared capacity of $249,000,000.

Solicitation W911KB23R0020, will be offered as unrestricted with a small business reserve under NAICS 541310, Architectural Services with stated intention of reserving at least three (3) awards to Small Business firms of any category with a target of seven

(7) awards total. Each award will have a base ordering period of seven (7) years with no option periods. Task orders will be firm fixed price (FFP), based on AE qualifications.

a. Project Description: The USACE POA has a requirement for Multi-discipline AE services primarily in various locations in Alaska and outside Alaska on an exception basis in the U.S. Territory of Wake Island. Typical types of services to be provided include: the design of new structures, the renovation of existing structures, studies to include life safety code compliance, interior design, programming studies, energy analysis, landscape architecture, technical reviews (on behalf of the government) of other AE developed products, construction phase services, commissioning services (LEED both Fundamental and Enhanced) and development of Design/Build RFPs.

Design of utilidors, airfield pavement, and communication systems may be required but are incidental to facility design. AE may be required to provide master planning services such as: facility master planning for various federal customers such as Army and Air Force, Installation and Real Property Master Planning, facility allowance analysis, economic and market analysis, preparation of Installation Design Guides, MILCON DD Form 1391 development and other programming level analysis. The AE and their subcontractors must have experience in cold regions design. Cold regions design is not considered to be a separate discipline that can be subcontracted. Rather, knowledge and experience in the design, construction and operation of facilities in arctic, subarctic, and cold region environments must be integral to all design disciplines. The AE may be required to participate in programming, value engineering studies, design Charrettes and project review conferences; participation may include facilitation, VE Study team, etc. Facilities will generally be located in arctic, subarctic and cold region environments.

b. Procurement History: POA currently has two (2) Multi-discipline AE MATOCs for like services in Alaska and may be utilized outside Alaska on Wake Island on an exception basis; one unrestricted MATOC suite with a capacity of $36M and one total small business set-aside with a capacity of $12M over a base period of five (5) years.

As of May 2023, the current multi-discipline AE small business contract pool has $9.7M in shared capacity remaining and the Unrestricted contract pool has $8.3M in shared capacity remaining; planned projects will consume the remainder of the contract capacity of the multi-discipline AE contracts prior to the anticipated award date for this services acquisition in Fiscal Year (FY) 24 Quarter 1. Over the past 5 years, POA has also had the following single award AE IDCs in place for like services in Alaska;

W911KB17D0003 and W911KB17D0004, each with a capacity of $18M, and two small business set asides, W911KB17D0006 and W911KB17D0007, each with a capacity of $6M. The contracts were each fully used to capacity, and each has expired.

The following table shows procurement history for the POA Multi-discipline AE program over the past 5 years.

Table 1- Procurement History

Acquisition Vehicle

Contractor Name Business Type

Project Description

W911KB21D0009

(Unrestricted)

McCool Carlson Green, LLC

Small $3.78M obligated for one AE project ($2.77M in unexercised options)

W911KB21D0010

(Unrestricted)

PDC BV Joint Venture Large $1.97M Various AE projects

W911KB21D0011

(Unrestricted)

KPB Architects- Coffman Engineers JV

Large $8M Various AE projects ($4.4M in unexercised options)

W911KB21D0003 Architects Alaska Small $0 -No projects awarded to date

W911KB21D0004 KPB Architects, Inc. Small $799K Various AE projects ($99K in unexcised options)

W911KB21D0005 McCool Carlson Green, LLC (MCG)

Small $769K various AE projects ($23K in unexercised options)

W911KB17D0003 KPB Architects- Coffman Engineers JV

Large $17M Various AE Projects

W911KB17D0004 RIM/HDR Joint Venture

Large $16M Various AE Projects

W911KB17D0006 McCool Carlson Green, LLC

Small $5.5M Various AE Projects

W911KB17D0007 KPB Small $5.4M Various AE Projects accordance with FAR 16.500, the statutory multiple award preference does not apply to A-E contracts subject to FAR Subpart 36.6. These will be replacement contracts for contracts W911KB21D0003 through W911KB21D0005 and W911KB21D0009 through

W911KB21D0011.

The USACE POA will acquire these AE services in accordance with FAR Subpart 36.6 and 40 U.S.C.1101. The selection board will review Standard Form (SF) 330s and will select the most highly qualified AE firms. Once the most highly qualified firms are identified using FAR Subpart 36.6 evaluation procedures, USACE POA will look to negotiate and award a contract to those firms, with a target of seven (7) awards, provided they submit fair and reasonable rates for the duration of their respective MATOC award. The USACE POA will also follow FAR Subpart 36.6 and the Task Order Requirement Notice (TORN) process for each task order as the goal of the Brooks Act is to ensure the most highly qualified firm is selected to perform each proposed project.

d. Requirements Being Consolidated: As stated above in section 2. b. Procurement History, multi-discipline AE services primarily in various locations in Alaska is required.

e. Funding: In order to comply with the 26 June 2019 memorandum titled �Updated Accounting Policy for Single/Multiple Award Task Order Contracts (SATOC/MATOC)�, funding was requested from Army, Air Force and Missile Defense Agency stakeholders for preaward/contract development costs. The stakeholders responded that they are not going to provide preaward funding for this MATOC tool. The POA District requires this tool to be able to provide timely support to the stakeholders; therefore, Indirect District Overhead funding will be available to meet the minimum guarantee for each Multi-discipline AE IDC award with a target of seven (7) awards. The District will comply with the 26 June 2019 Memorandum paragraphs 2.C.(1)-(4) to obtain funding for the preaward/contract development from any newly identified stakeholders. The type of funding used in each task order will be dependent upon the customer (Army, Air Force, MDA, DLA, etc.). Each contract will have a minimum guarantee amount of $3.5K applicable to the entire contract base period of seven (7) years.

f. Rationale for Consolidation: As defined by FAR 2.101, �consolidation [�]� means the use of a �[�] solicitation to obtain offers for a single contract or a multiple award contract or task or delivery order to satisfy two (2) or more requirements of a Federal agency for supplies or services that have been provided to, or performed for, that 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 now] solicited.� In accordance with FAR 7.107-2, any consolidation of requirements with an estimated total value exceeding $2M must be determined by the approval authority as necessary and justified. The policy regarding contract consolidation, per 15 U.S.C.§ 657 q(b), states that, �The head of each Federal agency shall ensure that the decisions made by the Federal agency regarding consolidation of contract requirements of the Federal agency are made with a view to providing small business concerns with appropriate opportunities to participate as prime contractors and subcontractors in the procurements of the Federal agency.� The proposed strategy for the Multi-discipline AE IDC contracts supports the expressly stated policy of the aforementioned statute, which is to provide small businesses with opportunities to participate in Federal contracts, both as prime contractors and subcontractors. Per the FAR definition of consolidation, this planned acquisition meets the definition of consolidation due to the shared total contract capacity for this planned acquisition being greater than previous contracts.

In accordance with FAR 7.107-2(d)(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 five (5) percent of the estimated contract or order value (including options) or $9.4M, whichever is greater, if the value exceeds $94M.

Substantial benefits quantifiable in dollar amounts of five percent or approximately $12.5M should apply to this Multi-discipline MATOC which has an estimated contract value of $249M. Notwithstanding at least $12.5M substantial benefits, if such cannot be clearly quantified, consolidation is necessary and justified when, like for this Multi-discipline AE services acquisition, the expected benefits are critical to the agency's mission success; and also, the procurement strategy provides for maximum practicable participation by small business. With the increased capacity for AE Multi-discipline MATOC and plan for three (3) small business awards, this acquisition will provide the possibility for small business to participate for a greater amount than $12M as on the current AE Multi-discipline MATOC. The USACE POA will follow the TORN process for each task order, considering the qualifications of the small business reserve pool first.

In addition, large business firms will have small business subcontracting goals which will further increase opportunities for small businesses.

Although this Multi-discipline AE acquisition is planned as multiple award higher in value than previous multiple award contracts for similarly performed requirements, the MATOC approach remains the most effective tool for the AE requirements and will continue to provide multiple small businesses opportunities to successfully perform as prime contractors and as subcontractors. In FY21, POA awarded 61.9% (or $232M) of all POA programs to small businesses, exceeding the POA overall SB goal. For FY22, POA awarded 33.4% (or $198.8M) of all POA programs to small businesses, achieving approximately 84% of the small business goal of 40%. The POA intends to continue to achieve their SB goals, in part, by awarding three (3) Multi-discipline AE IDC contracts to qualified SB firms under this planned acquisition.

When considering the current and planned increase in the Multi-discipline AE project requirements for the next seven (7) fiscal years and the quantifiable benefits of consolidation that meet the threshold set forth at FAR 7.107-2(d)(1)(ii), the Government will realize at least $12.5M substantial benefits in terms of both internal Government costs, as well as costs to customer for AE Multi-discipline acquisitions. The most substantial benefit is in the Government and Customer savings by using a vehicle with pre-selected, highly qualified AE firms with established labor category rates. The manhours for USACE POA to accomplish a MATOC AE Task Order is significantly less than the labor hours to conduct a standalone AE acquisition, from 3,750 to approximately 1,000.

A primary benefit, not quantifiable in utilizing a MATOC, is that awardees are much more likely to spread their operating expenses across more projects when they have a greater expectation of receiving multiple projects over a set ordering period. This generally reduces each project's individual cost, especially for projects at the same location. Although not specifically quantifiable, the AE Multi-discipline procurement history and market research have indicated that on standalone procurements, price proposals generally tend to be higher than the Government estimate(s) (likely due to increased unknowns with administration of Government requirements, as well as mobilization/de-mobilization expenses). Further, more affordable and competitive task order proposals for level of effort may also be some benefit realized related to contractor offered labor estimates pricing in the MATOC approach as there will be competition for each task order ensuring AE firms within the MATOC will likely provide more effective approach to labor estimates. There is an increased price risk contractors are typically willing to take based on established working relationships, recent performance history on similar contract actions, and the clarity in the market associated with having a definitive group of contractors competing for the same requirements as occurs on a MATOC, which adds to cost savings in using a MATOC approach versus standalone contract(s). With open market, standalone contract actions, interest can be discouraged based on the higher cost and time involved in proposal preparation when set against the probability of award.

The following table, based on an average fully burdened hourly labor rate for key POA Project Delivery Team personnel and the Multi-discipline A-E planning budgetary figures, demonstrates an overall savings of $440,000.00 for the execution of an individual task order under a MATOC tool versus execution of a standalone contract.

The general fully burdened labor rate key for personnel working multi-discipline AE projects and used in the estimates on the following table is $160/hour.

Table 3- Typical Costs for Procurement Typical Costs For Procurement Man-

Hours $ Amount

Cost for New �C� Type Stand-Alone Contract 3,750 $600,000

Cost for Task Order under IDIQ 1,000 $160,00 Savings per Task Order Action 2,750 $440,000

Based on the table above, this savings, when applied across the planned duration and capacity of this replacement Multi-discipline AE acquisition, and assuming at least task orders under the AE IDC awards will yield an estimated total savings of (approximately on the total $249M shared capacity) in Government acquisition costs alone. (The order estimate of is based on previous Multi-discipline MATOC with shared capacity of $36M, as well as additional planned and unplanned requirements that are anticipated on this replacement MATOC). The MATOC approach will open the door for these small business AE firms and continue to provide POA with high quality performance on Multi-discipline AE projects. The use of a MATOC strategy provides an overall reduction in acquisition lead time, as task order requests submitted to MATOC holders can often be processed for proposal in 45 days or less. The cost savings and benefits noted above provide the rationale for consolidation as necessary and justified for this acquisition.

4. Results of Market Research: The following market research methods were used for this planned A-E Multi-discipline acquisition: Sources Sought Notice at SAM.Gov and Historical Data.

a. Market Research Conducted: A sources sought notice was posted on SAM.gov from 17 November 2022 through 2 December 2022. The sources sought provided that the anticipated size of task orders against this contract would be between $25K and $20M. The AE(s) selected would be required to have sufficient staff, flexibility, and capability to be available on an as-needed basis. Typical types of services to be provided include: the design of new structures, the renovation of existing structures, studies to include life safety code compliance, interior design, programming studies, energy analysis, landscape architecture, technical reviews (on behalf of the government) of other AE developed products, construction phase services, commissioning services (LEED both Fundamental and Enhanced) and development of Design/Build RFPs. Interested parties were asked to provide the following information:

Business name, address point of contact including email address, and business size under NAICS 54131 O; Identification of business type (i.e., Large Business, Small Business, HUBZone, SDVOSB, 8(a), etc.); CAGE Code; and Demonstration of the AE's experience as a prime contractor on projects of a similar type and complexity within the past five (5) years. Listing of actual projects completed to include project title and location, a brief description of the project to include dollar amount and work that was self-performed. The announcement was open to all business sizes and fifteen (15) firms submitted responses - six (6) large business firms and nine (9) small business firms under NAICS 541310.

A review of the materials provided indicates that four of the six large firms would have the capacity for completing work within the anticipated task orders range of $25K to $20M. The firms are potentially qualified to perform the subject requirement, that they have performed similar projects of this type and magnitude to include work in arctic environments in the past. The review of the responses also indicated that eight of the nine small business firms appear to have the staff, capability, and financial resources to perform the multi-discipline AE design services at lower task order values.

The following table summarizes the firms and socioeconomic categories of businesses that responded to the sources sought notices, to include only the firms considered potentially qualified for the Multi-discipline AE IDC contracts:

Table 4- Sources Sought Responses Business Business Size Small Business under 541310 Designation

MATOC. In addition, the funds type for the planned requirements are typically O&M annual funds, adding schedule constraints for any standalone "C" type AE procurement.

b. Alternative with No Consolidation: Use of Two (2) Separate MATOC Suites � Small business and Unrestricted with Separate Shared Capacity. Another contracting alternative would be to issue the AE Multi-discipline exactly the same as prior and current tools, with two separate combined solicitation/synopsis announcements � one for total SBSA and one unrestricted without any set-aside with same shared capacities of $12M and $36M, respectively, of current MATOC tools. This is the alternative POA has used in the past; therefore, no consolidation would be applicable.

(i) Quality. A high-quality product would be received by choosing to use either a standalone "C" contract or the proposed MATOC approach. The difference in the quality of the ultimate product received from any alternative method versus the proposed consolidated MATOC approach would not likely be significant;

however, under the MATOC IDIQ approach, POA will have increased ability to efficiently develop quality standards that meet both POA and customer expectations. With the MATOC approach and a limited number of contractors, the initial quality standards established at contract outset will be more likely to transfer to future requirements through application of lessons learned by MATOC holders and subcontractors. This approach is more likely to have prime contractors develop an effective management process for the AE requirements, that will meet or exceed Government expectations. MATOC holders know that competition exists and will likely strive to provide a competitive price and quality product.

(ii) Acquisition Cycle. Under this alternative, POA would be required to solicit and award two separate contracts. The time required to solicit, award and administer two MATOC tools is 330 days per solicitation and award, whereas, with one MATOC Suite even with a target of seven awards only one 330 day timeframe is required. Future task orders can be processed in approximately 45 days.

(iii) Cost. The cost to award two MATOC tools is about $1,200,000 for in-house labor (see Table 3 for cost of new stand-alone contract), so with establishing just one (1) larger shared capacity vehicle rather than two would save $600,000.

(iv) Terms and Conditions. It is not anticipated that the Government will secure better terms or conditions by selecting this alternative.

(v) Other Benefits. One benefit of Alternative 2 is faster processing time for individual task orders under the Small business or the Unrestricted MATOC.

With the recommended consolidation, POA may receive responses to the

TORN from a target of seven contractors rather than just three small businesses or three unrestricted firms on two separate MATOC suites.

(vi) Conclusion. This alternative would be effective, except for the marked increase in AE Multi-discipline requirements expected for POA AE program between FY23 and FY30. This requires a tool for POA with greater total capacity than $48M. The cost and time to solicit, award and administer two MATOC tools is 330 days per solicitation and award, whereas, with one (1) MATOC Suite even with a target of seven awards only one 330-day timeframe is required. Each establishment of a MATOC suite costs about $1.2M in in-house labor, so with establishing just one larger shared capacity vehicle rather than two , the cost savings is $600K. Another disadvantage is that with this method can leave capacity unused and cause requirements to be solicited via other methods. For example, if there is $1M in capacity remaining on the total SBSA and $2M remaining on the unrestricted when a requirement comes in that needs $2.2M in capacity, neither tool would be used. That requirement would have to be solicited as a �C� type contract rather than a Task Order under the MATOC. With the new acquisition strategy, there would not be a set capacity for SBSA or capacity for Unrestricted, it would be a Multi-discipline AE total shared capacity, and the task order would be set aside appropriately based on the requirement and in accordance with FAR 19.504(a). Lastly, similar to the use of project-specific "C" contracts, this alternative is more costly with regard to the labor and time required to procure, negotiate, and administer multiple contracts.

c. Summary of Alternatives: The analysis summary table below reflects the estimated total pre-award/award time required to award one standalone "C" type contract, and other vehicles, in comparison to a MATOC AE IDC. These hours/days are based on standard labor hours developed by Contracting for FY22 procurements, along with historical average procurement support costs.

Table 5- Summary of Alternatives

Selected Alternative Advantages Disadvantages

One Consolidated Contract (MATOC with Small Business Set Reserve)

1. Quality: High Acquisition Cycle:

MATOC- 330 day or less, Task Orders 45 days

2. Cost: Lowest Other Benefits:

small businesses able to compete on all task orders

1. Terms and Conditions: No difference

Alternative 1 Advantages Disadvantages

No Consolidation- Standalone �C� Type Contract

1. Quality:

Average to High

2. Other Benefits:

potential of more than the target of eight businesses to participate

1. Cost: Highest

2. Acquisition Cycle: 180 days 3.Terms and Conditions: No difference

Alternative 2 Advantages Disadvantages

Use of Two (2) Separate MATOC Suites � Small business and Unrestricted with Separate Shared Capacity

1. Acquisition Cycle: MATOC- 330 days or less, Task Orders- 45 days

2. Cost: Low

3. Other Benefits:

shorter time to process task orders for Small business or Unrestricted portion.

1. Terms and Conditions: No difference

2. Other Disadvantages:

potential to leave unused capacity

6. Consolidation Benefit Analysis: The USACE POA proposes use of a single consolidated MATOC for Multi-discipline AE Services in Alaska provides the greatest benefits to the Government. It ensures that the Government will be able to procure the most highly qualified AE firms with the ability to issue task orders in the most efficient amount of time at the most reasonable cost to the Government. The alternative approaches are significantly more costly and require a longer acquisition lead time.

7. Bundling: Bundling in accordance with (IAW) FAR 2.101 and 7.107, and 15 U.S.

Code 657q is not applicable to this planned acquisition.

a. Definition. FAR 2.101 defines bundling as consolidating two (2) or more requirements for supplies or services, previously provided or performed under separate smaller contracts, into a solicitation for a single contract, a multiple-award contract, or task order 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.