Consolidation Determination NMGROUP F2F Final.pdf

OCT 23

CONSOLIDATION OF CONTRACT REQUIREMENTS DETERMINATION

FOR New Mexico Group Fence to Fence Environmental Compliance, Cannon Air

Force Base (CAFB), Holloman Air Force Base (HAFB), and Kirtland Air Force Base (KAFB), New Mexico, W912PP24R0002

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

As defined in 15 USC 657q(a)(2), the term “consolidation of contract requirements,” with respect to contract requirements of a Federal agency, means a use of a solicitation to obtain offers for a single contract or a multiple award contract to satisfy two or more requirements of the Federal agency for goods or services that have been provided to or performed for the Federal agency under two or more separate contracts lower in cost than the total cost of the contract for which the offers are solicited; or to satisfy requirements of the Federal agency for construction projects to be performed at two or more discrete sites.”

Further as defined in FAR 2.101, consolidation or consolidated requirement means solicitation for a single contract, a multiple-award contract, a task order, or delivery order to satisfy 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 requirements of the Federal agency for construction projects to be performed at two or more discrete sites. FAR 7.107-2 requires that before conducting an acquisition that is a consolidation of requirements with an estimated total value exceeding $2 million, the senior procurement executive or chief acquisition officer shall make a written determination that the consolidation is necessary and justified in accordance with 15 U.S.C. 657q.

I have reviewed this requirement and associated market research and have determined that consolidation, in accordance with 15 U.S.C. §657q, Federal Acquisition Regulation (FAR) 2.101 and 7.107, Consolidation of Contract Requirements is both necessary and justified.

RATIONALE

1. Introduction: The U.S. Army Corps of Engineers (USACE), Albuquerque District (SPA) Contracting Division, has been tasked by the Air Force Civil Engineer Center (AFCEC) with awarding a performance based Environmental Compliance Service Contract under the North American Industry Classification System (NAICS) 562910 to meet the customer’s requirements for a Firm-Fixed-Price (FFP) Environmental Compliance Services Contract to support Cannon Air Force Base (CAFB), Holloman Air Force Base (HAFB), and Kirtland Air Force Base (KAFB) in New Mexico. Market research has been conducted that demonstrates consolidation of this procurement to be both necessary and justified.

2. Description of the Procurement Action:

a. Project Description: The scope of this acquisition is for the New Mexico Group Fence to Fence environmental compliance activities to support the following programs:

Hazardous Waste Management, Hazardous Material Management, Air Quality, Wastewater, Stormwater, National Pollutant Discharge Elimination System (NPDES), Cultural Resources, Solid Waste Management, Environmental Management Systems, Aboveground storage tanks, Petroleum, Oil and Lubricant Management, National Environmental Policy Act (NEPA) activities, and other compliance activities as needed by CAFB, HAFB, and KAFB. The Contractor will also perform Per- and polyfluoroalkyl substances (PFAS) monitoring of stormwater and Melrose Range groundwater monitoring for CAFB and landfill gas monitoring and landfill inspections at HAFB. The Contractor will conduct environmental sampling and analysis, inventory, data management, development of planning documents, waste characterization, survey, recordkeeping, spill response, training, reporting, and permit application. Regulatory oversight is provided by the United States Environmental Protection Agency (USEPA) Region 6, the New Mexico Environment Department (NMED) and Albuquerque Environmental Health Department.

b. Acquisition Strategy/Procurement Summary: The acquisition strategy for this procurement will be a competitive small business set-aside. The proposed solicitation will be for a FFP service contract procured in accordance with FAR 15, Negotiated Procurement using a Best Value trade-off process with a term of up to five years. The total contract value is estimated at $41,000,000.00 under the North American Industry Classification System (NAICS) code 562910 for remediation services. The contract will include base tasks, as well as optional years.

c. Procurement History: There is prior procurement history for the proposed contract action under Contract No. ID07180031 and ID07200023. Contract No. ID07180031 contains sites and work at CAFB and HAFB. Contract No. ID07200023 covers sites and work at KAFB.

d. Requirements Being Consolidated: Environmental compliance at these installations is currently supported by means of two separate contracts: one small business contract for KAFB, and one 8(a) small business for CAFB and HAFB. The New Mexico Group Fence to Fence Environmental Compliance project is more than double the scope and level of effort of either existing contract. The New Mexico Group Fence to Fence Environmental Compliance project for CAFB, HAFB, and KAFB is not considered a follow-on contract.

e. Applicability of Consolidation Definition: By definition, consolidation applies to this acquisition because a single solicitation will be used to obtain an offer for a single contract award to satisfy two or more requirements of the Federal agency for goods or services that have been provided to or performed for the Federal agency under two or more separate contracts lower in cost than the total cost of the contract for which the offers are solicited.

f. Rationale for Consolidation: The Albuquerque District, and its customers, are faced with shrinking budgets and reduced staffing. In an effort to gain efficiencies in the acquisition process in consideration of limited resources, increasing workloads and contracting actions, consolidation of these requirements is highly advantageous to the government, while not precluding small business participation. Consolidation also reduces duplication of efforts by offering an efficient contracting tool for SPA.

By consolidating these requirements, government efficiency is increased because program and project management costs will be limited to one contract action.

Consolidating requirements into one solicitation allows for preparation of a single solicitation document.

g. Extent of Consolidation: The proposed contract action will result in the consolidation of work, as mentioned in paragraph 2.d., at CAFB, HAFB and KAFB in New Mexico. Market research has determined that consolidating these requirements does not adversely affect small business, as shown in section 4, Results of Market Research.

Applicable Statutes/Regulations: 15 U.S.C. §657q, FAR 2.101 and 7.107-2, Consolidation; and AFARS 5107.1 7-2, Consolidation.

Results of Market Research: USACE Albuquerque District issued a sources sought synopsis to SAM.gov on 26 April 2023 with responses due 12 May 2023 in order to gain knowledge of interest, capabilities and qualifications of various members of industry, to include the Small Business Community. The responses submitted were technically evaluated against requirements set forth in the sources sought synopsis. A total of twenty-one (21) submittals were received in responses to the announcement with none of those responses being from large business. Out of the twenty-one (21) respondents, four (4) were determined to meet the minimum requirements from the sources sought.

However, review of the Contractor Performance Assessment Reporting System (CPARS) evaluations for these four (4) Contractors indicated that two (2) of these contractors have received Marginal rating for project management. This performance based contract spans three Air Force installation across New Mexico and includes a wide variety of environmental compliance media. As such, this project will require high performing project management skills. Upon evaluation of CPARS records, two (2) contractors have been found to fully meet the governments needs for this project based upon sources sought responses and CPARS evaluations, with only one of the contractors having an 8(a) certification. It is recommended that this work be solicited as a Small Business competitive type C contract.

Alternative Contracting Approaches and Rationale for Rejection: The considered alternatives are summarized in the following table:

Table 1:

Alternative Advantages Disadvantages Alternative 1: Two Stand- Alone “C” Type Contracts:

1. Allows for maximum competition for each procurement.

2. Allows the Government to select the most qualified firms through the source selection process.

3. Allows more contractors the opportunity to submit proposals for Government work.

4. Competitive pricing.

1. Two separate contracts to manage.

2. Inefficiencies in schedule, logistics, administration and management of contracts.

3. Fewer contractor efficiencies due to learning curve for contractors new to Government work and/or environmental remediation investigations at Air Force Installations.

4. Increased costs to the Government to award two stand-alone contracts;

development of RFPs, Source Selection Factors development, evaluation boards, reviews and contract awards.

5. Government costs are increased considerably.

6. Greater costs to contractors for proposal preparation.

7. Longest procurement lead time needed in project schedule.

Alternative 2: Two Stand- Alone Sole Source 8(a) Contracts:

1. Potentially allows two 8(a) contractors the opportunity to submit proposals for Government work.

2. Greater efficiencies in acquisition process over “C” type contracts.

3. Allows the Government to select qualified 8(a) firms.

1. Competition not maximized to the same extent as stand-alone type contracts.

2. Two separate contracts to manage.

3. Inefficiencies in schedule, logistics, administration and management of contracts.

4. Shorter lead time in schedule.

5. Negotiated pricing.

4. Fewer contractor efficiencies due to learning curve for contractors new to Government work and/or environmental remediation at Air Force Installations.

5. Increased costs to the Government to award two stand-alone contracts;

development of RFPs, proposal evaluation, negotiation, and awards.

6. Government costs are increased.

Alternative 3: One (Consolidated) Stand-Alone “C” Type Contract:

1. Allows for maximum competition.

2. Allows the Government to select the most qualified firms through the source selection process.

3. Greatest efficiencies in acquisition process.

4. One contract to manage.

5. Economies of scale.

6. Reduced duplication of efforts.

7. Contractor efficiencies in applying lessons learned across sites.

8. Negotiated pricing.

1. Longer lead time in schedule.

a. Alternative 1: Two Stand-Alone Contracts (Not Recommended): The first alternative contracting approach considered is a stand-alone “C” type contract for each requirement, and represents the standard contractual tool used to satisfy requirements.

This approach requires the procurement of individual contracts to cover the anticipated work to be performed. While stand-alone contracts offer the maximum amount of competition, they are the costliest and require the longest schedule.

Quality: This approach allows the Government to select the most qualified contractor to perform the work through the source selection process. However, risks include overall project inefficiencies when the Government is managing separate contracts. There are inefficiencies in schedule, logistics, administration, and management of contracts as well as contractor inefficiencies due to a learning curve for those contractors new to Government work. This poses financial and logistical inefficiencies in administration and management of the project requirements.

Acquisition Cycle: Many of the requirements of SPA’s customers are time sensitive and dependent on availability of funds. This approach will result in extended lead times and duplication of contracting effort, and presents a greater risk in executing customer requirements. Any inefficiencies due to the contractor’s learning curve regarding Government requirements will also affect project schedules. Awarding stand-alone “C” type contacts is a time-consuming process that typically takes 4-6 months to execute. It represents the longest procurement lead time needed in project scheduling and execution. It is also the most inefficient procuring method for similar requirements.

Acquisition Cost: An advantage to Alternative 1 is that it provides for competitive pricing. However, this approach is a significantly more expensive acquisition process from start to finish. It is estimated that stand-alone contracts cost the Government approximately $125,000.00 for each procurement, significantly more expensive than the other alternatives. Costs include development of solicitations, source selection and contract award along with repeating this process for each requirement. There are greater costs to contractors for proposal preparation for a Best Value Source Selection acquisition. Contractors pass on a percentage of their costs for proposal preparation to the Government each time.

Terms and Conditions: Terms and conditions are likely to be similar among the three alternatives.

Other Benefits: The benefits of this approach include maximum competition for each procurement and two opportunities for contractors to compete for additional work. This provides for competitive pricing.

Conclusion: A risk in managing two contracts and contractors for the same or similar work is that it can produce inefficiencies in schedule, logistics, administration, and management. Alternative 1 has the longest acquisition cycle of all the alternatives considered. Also, it is the most expensive means of procuring environmental remedial services. It does not provide for the best terms and conditions for the Government.

For these reasons, the benefits of this alternative do not outweigh the risks and costs.

Therefore, this alternative is not considered.

b. Alternative 2: Two Stand-Alone Sole Source 8(a) Contracts (Not Recommended): The second alternative contracting approach considered is awarding two stand-alone sole source 8(a) contracts. This approach results in two contracts to cover all requirements. This alternative provides less competition since the contracts would go to two 8(a) contractors.

Quality: Alternative 2 allows the Government to select two qualified firms. The sole source acquisition provides greater efficiencies in contracting for the Government by reducing redundancy and duplication of efforts. However, the award of two stand-alone sole source contracts would increase redundancy and duplication of efforts.

Acquisition Cycle: Sole source contracts offer the shortest lead time in project schedules. Sole source contracts can be awarded quickly as compared to stand-alone “C” type contracts, since sole source contracts are negotiated and do not need to be competed. Sole source contracts can be executed in 4-6 weeks from start to award compared to 4 to 6 months with individual “C” type contracts.

Acquisition Cost: Government labor cost for sole source contracts are the least costly to execute of all the alternative contracting approaches due to reduced lead time.

Government savings are estimated at $35,000.00 per contract vs. that of stand-alone “C” type contracts. However, there is greater risk since there is no competition for sole source contracts, possibly resulting in higher contractor pricing. This could potentially result in schedule delays due to extended negotiations caused by the sole source environment.

Terms and Condition: Terms and conditions are likely to be similar among the three alternatives.

Other Benefits: A benefit of this approach is that it provides 8(a) firms with the opportunity to submit proposals for Government work. However, there are inefficiencies in schedule, logistics, administration, and management of two separate contracts.

Conclusion: While this approach has the benefit of a reduced lead time for projects, and greater efficiencies in the procurement process, there are still schedule risks and redundancies in preparing two requirement documents and solicitations, reviewing two proposals, potentially engaging in two negotiations, and awarding and administering two contracts. For these reasons, the benefits of this alternative do not outweigh the risks and costs. Therefore, this alternative is not considered to be in the Government’s best interest.

c. Alternative 3: One (Consolidated) Stand-Alone Contract (Recommended): The third alternative contracting approach considered is awarding one stand-alone “C” type contract.

Quality: This approach allows the Government to select the most qualified contractor to perform the work through the source selection process. The Government can manage one stand-alone contract better than two separate contracts and ensure efficiency in executing tasks, consistency in contractor personnel, work quality, and reduction of duplicated and repetitive efforts in the acquisition, negotiation, award and administrative processes.

Acquisition Cycle: Utilizing a single stand-alone “C” type contracts provides greater efficiencies in contracting for the Government by reducing redundancy and duplication of efforts.

Acquisition Cost: An advantage to Alternative 3 is that it provides for competitive pricing. It is estimated that Government would save approximately $135,000.00 using a single contract as opposed to two stand-alone contracts. Costs include development of solicitations, source selection and contract award along with repeating this process for each requirement.

Terms and Conditions: Terms and conditions are likely to be similar among the three alternatives.

Other Benefits: The benefits of this approach includes maximum competition for the procurement, which results in competitive pricing.

Conclusion: A single contract reduces the Government’s risk and costs associated with managing two separate contracts and contractors for the same or similar work. This method can reduce inefficiencies in schedule, logistics, administration, and management. One stand-alone contract allows the Government to select the most qualified firms through the source selection process and overall lower pricing through negotiations. This contracting alternative can meet the Government's needs and is considered the best acquisition strategy.

6. Bundling:

a. Definition. 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, a multiple-award contract or a task or delivery 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.

b. Applicability of FAR Bundling Definition. This acquisition does not meet the definition of bundling as it has been determined that the procurement is suitable for award to a small business concern.

7. Measurably Substantial Benefits:

a. FAR 7.107-2(b), (c) and (d) state the following:

(b) The senior procurement executive or chief acquisition officer may determine that the consolidation is necessary and justified if the benefits of the acquisition would substantially exceed the benefits that would be derived from each of the alternative contracting approaches identified under paragraph (a)(2) of this section, including benefits that are quantifiable in dollar amounts as well as any other specifically identified benefits.

(c) Such benefits may include cost savings or price reduction and, regardless of whether quantifiable in dollar amounts-

(1) Quality improvements that will save time or improve or enhance performance or efficiency;

(2) Reduction in acquisition cycle times;

(3) Better terms and conditions; or

(4) Any other benefit.

(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. The following summarizes benefits that the Government will receive from consolidating this project over the life of the contract:

Procurement Based upon historical contracting actions, the overall cost for the Government to perform pre-award, award, and post-award activities for a Best Value Source Selection acquisition typically exceeds $125,000 to execute a new "C" type contract. This cost includes the time spent developing, reviewing, and approving all contract documents and conducting source selection evaluation boards. Consolidating the efforts into one contract will result in procurement cost savings of roughly 50% when compared to two stand-alone “C” type contracts.

Post-Award Contract While the field work tasks of the consolidated contract represent the largest cost drivers in the contract, the majority of the costs savings during execution of the contract will come from savings in project management, work planning, and final reporting. The similarities in tasks and requirements between the two projects will lead to efficiencies and reductions in duplication of effort for tasks such as monthly teleconferences, monthly reporting, and development of templates for work plans, safety plans, and final reporting. Similarly, time and effort for Government review and approval of these documents will be reduced.

Additional cost savings can be gained in the following ways:

Contractors receiving sporadic Government stand-alone contracts will have varying overhead (OH) and profit rates which will be higher and passed on to the Government in their proposals.

AT/OPSEC training costs up to 5 hours of training per person one time with contractors instead of many times over with several contractors.

Cost of background security investigations would be minimized with a single contractor.

Based on the above, the Government will derive measurably substantial benefits in cost savings by consolidating these services. The benefits of consolidation substantially exceed the benefits of other alternatives by having more consistency in quality of services, assisting the Government and contractors in allocating resources, reducing the number of solicitations required, optimizing Government oversight, and enhancing SPA's ability to quickly respond to a customer's request and short suspense schedules.

This saves time and money for both the Government and the contractors without having an adverse effect on the quality of service provided to customers. Given the delivery needs and the results of the market research conducted, consolidation of these services into one contract is both necessary and justified.

The cost to contractors to respond to multiple sources sought notices, develop business arrangements to meet a variety of strategies, prepare proposals, and compete for a new contract is significant. Contractors have indicated the cost of competing for multiple contract awards can be stifling for small businesses and as a result can cause the contractor's overhead costs to significantly increase, which is inevitably passed on to the Government in future contracting actions. Consolidating the requirements into a single contract can result in substantial savings. Consolidation of this requirement is considered necessary and justified as the agency would obtain substantial benefits as compared to meeting its agency’s requirements through separate smaller contracts or orders.

8. Considerations, Facts, Reasoning Supporting the Determination: All facts, considerations and rationale have been covered previously in the findings. The Acquisition Strategy to compete this solicitation as one (Consolidated) stand-alone “C” type contract has been signed by the Contracting Officer and Deputy for Small

Business. Both concur that consolidation of these requirements are necessary and justified.

9. Summary: Consolidation of the requirements for SPA and its customer are both necessary and justified. Small business participation will be achieved as the requirement will be a competitive small business set-aside procurement. Concurrence has been received from the Contracting Officer and the Deputy of Small Business.

Consolidation will bring savings that are measurably substantial in acquisition costs, acquisition cycle, and execution of tasks, schedule, and quality, all of which support the determination that consolidation of these requirements is necessary, justified and in the Government's best interest.

Attachments:

Market Research Acquisition Strategy

DETERMINATION

Based on the foregoing rationale, I hereby determine, pursuant to the Federal Acquisition Regulation 7.107-2 and Army Federal Acquisition Regulation Supplement 5107.107, that the consolidation of the requirements for a Firm-Fixed-Price Fence to Fence Environmental Compliance Contract at Cannon Air Force Base (CAFB), Holloman Air Force Base (HAFB), and Kirtland Air Force Base (KAFB), New Mexico, is justified and necessary.

SIGNATURE:

Leslie M. Molina Date Signed Chief, Contracting Division