Consolidation DF Memorandum_SPRDL1-24-R-0171 Signed.pdf

CUI

DEFENSE LOGISTICS AGENCY

LAND AND MARITIME

P.O. BOX 3990

COLUMBUS, OHIO 43218-3990

FOUO – Source Selection Information – See Far 2.101 and 3.104

MEMORANDUM FOR FILE

SUBJECT: Consolidation Determination (D&F) – Sole Source Solicitation SPRDL1-24-R-0171

INTRODUCTION:

It is the Defense Logistics Agency’s (DLA) goal to provide the best value to our customers while reducing costs and improving efficiencies. DLA uses Long Term Contracting (LTC) methods to ensure a steady, uninterrupted flow of parts and services to our Military personnel and to reduce internal administrative lead-time and costs. This acquisition will provide continued or improved supply availability to preclude backorders, reduce administrative and production lead-times, decrease potential contract administration actions, and obtain stable and fair pricing.

Solicitation SPRDL1-24-R-0171 will establish from one up to potentially four individual Five-Year Indefinite Delivery/Indefinite Quantity (IDIQ) LTCs for four National Stock Numbers (NSN). DLA is soliciting the below requirements utilizing an “All or None by NSN” acquisition strategy where each individual National Stock Number (NSN) will be considered a Contract Line-Item Number (CLIN). Each CLIN will be evaluated separately with the potential for split awards to be made to the responsive low offeror per CLIN. A contractor can quote one, multiple, or all of the NSNs which constitutes the “all or none” basis per NSN. A lowest price technically acceptable evaluation will be conducted per CLIN.

The subject NSNs support four engine Fuel Injection Pump (herein referred to as Fuel Pump) variants in support of the High Mobility Multi-Purpose Wheeled Vehicle (HMMWV) fleet, including two Legacy versions, the Legacy A2 and the Up Armored version. See the below Charts 1 and 2 for specific details regarding the requirements, the engine type that each Fuel Pump is utilized with, order quantities and the estimated dollar amounts. The contract(s) will be awarded on an other than full and open competition basis. See the Justification and Approval (J&A) document (JA-00872, SPRDL1-24-R-0171) being routed along with this D&F for further details.

Purchase Request Order

Number

(PRON)

EH4L0344EH EH4L0345EH EH4L0351EH EH4L0359EH

Item Name Pump, Fuel Pump, Fuel Pump, Fuel Pump, Fuel

NSN 2910016337261 2910016337271 2910016410007 2910016410042

Manufacturer Part Number(s)

DB2831-6278 or

DB2831-6361

DB2831-6277 or DB2831-6365 DB2829-6286 DB2831-6364 or

DB2831-6282

Engine Usage 6.5L Detuned 6.5L Naturally Aspirated 6.2L Basic 6.5L Turbo

HMMWV

Usage Legacy Legacy (A2) Legacy Up Armored

CAGE Code 84760 84760 84760 84760

Contract Type

New LTC & First Delivery Order

New LTC & First Delivery Order

New LTC & First Delivery Order

New LTC & First Delivery Order

Unit Cost $1,101.95 $999.25 $1,238.06 $1,152.66 Yearly Usage 528 672 180 1,452 Minimum Guaranteed 132 168 45 363

Maximum Quantity 3,300 6,841 1,125 10,890

Minimum Estimated Cost

$145,457.40 $167,874.00 $55,712.70 $418,415.58

Maximum Estimated Cost

$3,636,435.00 $6,835,869.25 $1,392,817.50 $12,552,467.40

TOTAL MIN $787,459.68

TOTAL MAX $24,417,589.15

Chart 1

The total estimated annual contract value including all NSNs is shown in Chart 2 below.

Year Estimated Annual Value 1 $4,883,517.82 2 $4,883,517.82 3 $4,883,517.82 4 $4,883,517.82 5 $4,883,517.82

Chart 2

The total minimum guaranteed order quantity for this requirement is 708 each, and the total maximum order quantity is 22,156 each over a five-year ordering period for all four NSNs. Each NSN has its own defined minimum and maximum quantity over five years (see Chart 1 above for details).

This proposed acquisition constitutes consolidation as defined by FAR 2.101 and FAR 7.107-2 because it is a solicitation which will result in one up to potentially four contract actions that will satisfy two or more requirements of DLA for supplies that have previously been provided to DLA under two or more separate contracts.

RESULTS OF MARKET RESEARCH AND BENEFITS OF CONSOLIDATION:

Market Research

AM General is the original equipment manufacturer (OEM) of the HMMWV vehicle, while Stanadyne Corporation (CAGE 84760, Large Business) is the OEM of the Fuel Pumps that are mounted to the HMMWV vehicle engines. These Fuel Pumps were tested and developed by Stanadyne, and the Government does not own any technical data rights. The J&A (JA-00872, SPRDL1-24-R-0171) contains details on the estimated cost and time delay to reverse engineer the Fuel Pumps to make them competitive. This is not an available option for this acquisition due to significant cost and delays for these sustainment Fuel Pumps.

The Contract Specialist posted a Sources Sought Notice to SAM.gov for public viewing of this consolidated Fuel Pump requirement which closed on 15 Aug 2024. One valid response was received from Triman Industries (Triman, CAGE 0ZBE8, Large Business) stating that their company is the authorized military distributor for Stanadyne manufactured parts. Prior history for all four Fuel Pump variants shows these items were purchased using FAR Part 12 commercial item procedures with separate LTCs awarded to small business concerns as authorized distributors of the Stanadyne Fuel Pumps. The most recent contracts awarded for all four NSNs are shown in Chart 3 below.

Contract Number Awarded Contractor (CAGE/Business Size) Award Date Dollar Value NSN

SPRDL1-19-D-0013 Southeast Power Systems, Inc. (3L018/Small) 15 Nov 2018 $9,342,729.00 2910-01-633-

SPRDL1-19-D-0148 Southeast Power Systems, Inc. (3L018/Small) 27 Aug 2019 $4,288,383.00 2910-01-633-

SPRDL1-20-D-0034 Southeast Power Systems, Inc. (3L018/Small) 26 Mar 2020 $5,203,484.55 2910-01-641-

SPRDL1-22-D-0010 Worldwide Equipment, Inc. (3HVN9/Small) 31 Mar 2022 $6,407,307.36 2910-01-641-

Chart 3

Market research efforts were conducted by DLA to understand the current acquisition and business environment for these items. These Fuel Pump variants have historically been awarded to small business distributors of Stanadyne. The Contract Specialist sent out a Market Survey on 09 Sep 2024 to small business concerns who had either been awarded a contract in the past or had submitted an offer for these four Fuel Pumps. These included Southeast Power Systems, Clarke Power Systems, and Worldwide Equipment.

Clarke Power Services, the small business vendor who submitted proposals for some of the above-listed contracts in Chart 3 responded to the Market Survey request on 18 Sep 2024. They stated that the Fuel Pump variants are currently not available to quote through Stanadyne and that Clarke Power Services would pass on submitting a proposal for this requirement. Southeast Power Systems, the previous small business awardee for contracts SPRDL1-19-D-0013, SPRDL1-19-D-0148, and SPRDL1-20-D-0034 responded to the Market Survey request on 02 Oct 2024 stating that they would decline to bid, as Stanadyne told them they would utilize Triman Industries for bidding on Government contracts for these parts. Worldwide Equipment, the small business awardee for contract SPRDL1-22-D-0010 did not respond to the Market Survey or a follow-up email.

The Contract Specialist contacted Triman on 01 Oct 2024 and asked for supporting details and documentation showing that Triman is the authorized Government distributor for Stanadyne parts.

Triman confirmed they are currently the only authorized military distributor for Stanadyne. They sent a letter dated 02 Oct 2024 on Stanadyne letterhead stating that Triman was appointed as Stanadyne’s exclusive Government distributor. Stanadyne mentioned that the partnership helps to ensure the legacy replacement and service parts needs of the Government would be met in a more timely and cost-effective fashion with the arrangement. The business agreement between Stanadyne and Triman came into effect in May 2024. Triman mentioned understanding the small business concerns of the Government, and that it would be addressed in their small business subcontracting plan submitted with their proposal for these requirements.

Benefits of Consolidation

Benefits under the proposed approach include:

1. Reliable Source of Supply – The selected contractor(s) would provide a reliable and consistent source of supply throughout the life of the contract(s). By awarding this consolidated requirement using from one up to potentially four LTCs, contractors would be able to work with the manufacturing source Stanadyne to develop the most efficient inventory levels and design a supply chain and production process that reduces lead-time and maximizes supply and availability.

2. Improved Administrative Lead Time (ALT) and Workload Reduction - The purchase request process typically includes assembling a technical data package (not applicable to this procurement), developing an acquisition strategy, soliciting proposals from industry, evaluating, negotiating, and finally awarding the contract or purchase order. ALT will be significantly reduced because the four Fuel Pump variants will not be individually solicited, competed, evaluated, negotiated, and awarded each time a requirement arises during this five-year period.

Reducing ALT is important because it ultimately reduces the time it takes to have parts delivered to the military customer, which in turn supports military readiness. The time to award delivery orders against an LTC is substantially less than recurring one-time buys, as each one-time buy would require synopsis, solicitation, evaluation and negotiation prior to award. This benefit largely results from elimination of numerous separate contract actions (with associated lead-time and contracting resource requirements) that would happen if these items were not consolidated.

The Government’s post award administrative and operational costs is significantly reduced since processing delivery orders for these items takes very little time and effort. The contractor(s) are more likely to be proactive in seeking avenues to resolve quality/delivery discrepancies since the items are on contract for an extended period.

3. Customer Support - Another advantage of the proposed consolidation is the opportunity to participate in a supplier partnership for broader-based customer support. DLA would be proactive in meeting customer delivery requirements by establishing from one to potentially four integrated contracts instead of relying on spot buys for each Fuel Pump NSN in support of the HMMWV vehicle fleet. Delivery orders can be issued quickly in response to customer demands for each Fuel Pump variant.

4. Cost - The vendor(s) will reduce duplicate efforts and thereby lower administrative costs associated with quoting on multiple solicitations over the same period. Additionally, the vendor(s) may be able to reduce material costs for items on a LTC by using long-term production planning, which allows buying raw material or finished materials in bulk, resulting in quantity discounts. These efficiencies can result in reduction of Government costs. There are also internal Government benefits from using a LTC, such as decreased inventory capital investment requirements as a result of lowered ALT, since quicker and more reliable vendor delivery means that less stock is required to be kept on-hand. Also, the Government’s administrative and operational costs to initiate and manage multiple solicitations, evaluations, award decisions, and contracts is significantly reduced, ordering is automated, and the automated ordering process time is almost instantaneous.

Historically, the HMMWV vehicle fleet has required higher demand and more frequent orders for these Fuel Pump units. In recent years, the four Fuel Pump variants have been planned, solicited, evaluated, negotiated and awarded under four individual five year LTCs for each Fuel Pump. They could however be issued as one time procurements (with or without option periods) that would result in several individual procurement actions, as much as 20 separate procurement actions for all four Fuel Pumps over a five year period. When evaluating the administrative cost and time spent by both the Government and the contractor(s) from one up to potentially four actions as opposed to multiple individual actions, significant cost savings are obtained.

Impact on Small Business and Measures to Maximize Small Business Participation

Awarding a consolidated LTC means future opportunities for small businesses to participate on the subject NSNs would be unavailable for the entire life of the contract. This aspect could negatively impact small business. Although the solicitation will not be set-aside exclusively for small businesses, steps have been taken to maximize small business participation. All items being procured are code and part numbered items and are being solicited on an “All or None by NSN” basis, so small businesses will have the opportunity to provide only one, a few, or all of the items. Therefore, Small Businesses are not prohibited or precluded from submitting an offer and could potentially receive an award for the NSN(s) for which they bid. Should an award be made to a large business, in accordance with FAR 19.702 a subcontracting plan will be required. The subcontracting plan will then require that subcontracting opportunities be afforded to small businesses. Furthermore, the Government contacted small business vendors who actively bid or were awarded previous contracts for the four Fuel Pump variants and found that it could be difficult to submit a proposal due to Triman’s current exclusive business agreement with the manufacturing source Stanadyne.

In accordance with FAR 7.107-2(a)(3), this consolidation determination has been coordinated with the DLA Land and Maritime’s Office of Small Business Programs (OSBP) and Small Business Administration Procurement Center Representative (SBA-PCR). A Small Business Coordination Record (DD2579) detailing the acquisition strategy to maximize small business participation as well as actions taken to preserve opportunities for small businesses was provided to each office for approval. All efforts to maximize small business prime and subcontracting opportunities to the fullest extent practicable are being made. The DD2579 was approved and signed by the OSBP and the SBA-PCR on 28 Feb 2025.

Alternative Contracting Approaches:

The Contract Specialist has identified and considered the following less consolidated alternatives in developing the acquisition strategy for this project:

The consolidated and also the least beneficial approach would be to procure the four Fuel Pump variants via individual contracts (spot buys). This approach would not achieve the efficiencies, cost avoidance, and other benefits when compared to the acquisition strategy proposed.

Another less consolidated approach is to separately solicit for and award four individual LTCs for each of the Fuel Pump NSNs. While this approach seeks to leverage the contract administration advantages of long-term delivery order contracts, it provides very little practical difference from the first alternative above. This approach would require greater resources both to award and administer and would collectively take substantially longer to award than the proposed All or None by NSN approach.

Individual J&A documents would need to be generated, reviewed and approved for each Fuel Pump variant. Therefore, this alternative contracting strategy is substantially less beneficial than the proposed approach because it significantly decreases efficiencies during the pre-award cycle and provides no better benefits than the proposed approach. Since all contracts would be through the manufacturing source Stanadyne, there would be no advantage in using this less-consolidated approach.

Determination:

For the reasons stated above, I hereby determine:

a. This proposed acquisition constitutes a consolidation of contract requirements.

b. The contract requirements being consolidated exceeds $2 million.

c. There are benefits to consolidating the contract requirements, which include both quantifiable and non-quantifiable benefits.

d. The expected benefits do not meet the thresholds for a substantial benefit at FAR 7.107-2(d)(1), but are critical to the Agency’s mission success.

e. The procurement strategy provides for maximum practicable participation by small business.

f. The consolidation of contract requirements is necessary and justified.

ROBERT D. JOHNSON, SES DATE

Acquisition Executive