Consolidation DnF Memo for Chillers and AHU_30 July 2026_REDACTED.pdf

ATTACHMENT VAAM M807- C

Consolidation Determination and Findings

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PREVENTIVE MAINTENANCE AND REPAIR SERVICES FOR THE HEATING,

VENTILATION, AND AIR CONDITIONING WATER CHILLERS AND AIR HANDLING

UNITS AT THE VA CARIBBEAN HEALTHCARE SYSTEM

ACQUISITION ID: 36C248-26-AP-2045

FINDINGS

I. INTRODUCTION. This Determination and Findings (D&F), prepared in accordance with Revolutionary Federal Acquisition Regulation (RFO) 1.5, justifies consolidating the Preventive Maintenance (PM) and Repair Services for Heating, Ventilation, and Air Conditioning (HVAC) Water Chillers and Air Handling Units (AHUs) at the VA Caribbean Healthcare System (VACHS). This consolidation is necessary to achieve cost savings, improve efficiency, streamline administration, and maintain mission readiness while ensuring small business participation. The justification complies with RFO 7.107 and 15 U.S.C. § 657q. Pursuant to VAAM M807.107-70(a), the D&F must be reviewed by OGC prior to SPE approval.

II. BACKGROUND.

A. Requirement. The Network Contracting Office 8 (NCO-8) San Juan Commodities and Services Team plans to solicit quotes for Preventive Maintenance and Repair Services for the Heating, Ventilation, and Air Conditioning (HVAC) Water Chillers and Air Handling Units (AHUs) at the VA Caribbean Healthcare System (VACHS) and has conducted market research that demonstrates consolidation of this procurement to be both necessary and justified.

The resulting contract will include services for 51 water chillers and 51 AHUs throughout the facility. The contractor shall provide preventive and corrective maintenance in accordance with the manufacturer’s standards. The service includes the replacement of consumables as well as the replacement of damaged parts. The solicitation and resulting contract will include a Performance Work Statement (PWS) that describes the required results in clear, specific, and objective terms with measurable outcomes.

The estimated value of this consolidation is . The Government intends to award a new firm-fixed-price requirements-type contract with an ordering period of five (5) years, commencing on September 10, 2026, through September 9, 2031.

The anticipated award date is September 1, 2026. The effective date aligns with the start of the ordering period; however, the new service contract cannot commence on September 1, 2026, because the current contracts do not expire until September 9, 2026. Therefore, performance under the new contract will begin on September 10, 2026, ensuring continuity of services and preventing any lapse in coverage.

Two separate Situation, Background, Assessment, and Recommendation (SBARs) were approved for this consolidation and uploaded to the applicable briefcase.

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The applicable NAICS code for this consolidation is 238220, Plumbing, Heating, and Air Conditioning Contractors. The size standard for this NAICS code is $19,000,000.

The relevant PSC code is J041, Maintenance, Repair, and Rebuilding of Equipment

- Refrigeration, Air Conditioning, and Air Circulating Equipment, which fits into the description of this requirement.

To align with the April 2025 Executive Order titled “Restoring Common Sense to Federal Procurement,” this consolidation supports the Order’s direction to streamline acquisition, reduce unnecessary administrative burden, and improve the efficiency with which agencies procure essential goods and services.

Acquisition History. The following summarizes the acquisition history for preventive maintenance and repair services for water chillers and air handling units, including contract details, performance periods, contractors, acquisition strategies, competition, and current values.

Preventive Maintenance and Repair Services for HVAC Water Chillers

Contract VA248-16-F-0801:

o Period of Performance: 04/01/2016 – 02/28/2021 (base year plus 4 one-year option periods) o Contractor: Multi Air Services Engineers, Corp. (Small Business) o Total Value:

Contract 36C24821C0022:

o Period of Performance: 04/16/2021 – Present (base year plus 4 one-year option periods). Expires on 09/09/2026 since FAR Clause 52.217-8 was exercised.

o Contractor: Multi Air Services Engineers, Corp. (small business) o Acquisition Strategy: Tiered Evaluation (SDVOSB - VOSB - Small

Business) o Competition: Four SDVOSB quotes; one Small Business quote o Current Value (as of 02/05/2026):

Preventive Maintenance and Repair Services for HVAC Air Handling Units

Contract VA248-16-C-0020:

o Period of Performance: 01/20/2016 – 01/19/2021 (base year plus 4 one-year option periods) o Contractor: Multi Air Services Engineers, Corp.

o Acquisition Strategy: 100% Small Business Set-Aside o Total Value:

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VAAM M807.107-70(a), which establishes VA-specific consolidation review and approval requirements.

C. Market Research. Market research was conducted IAW RFO 10.001, Market research requirements, RFO 7.104 (Acquisition Planning) and RFO 7.107 (Consolidation) and documented to meet RFO 1.5 D&F support requirements.

Methods included SAM.gov queries, SBA Small Business Search, prior contract performance reviews, GSA schedules/government-wide vehicles, and a Sources Sought posting on April 30, 2026. Findings confirm that consolidation is necessary and justified under RFO 7.107-2(a) and the benefits outlined in RFO 7.107-2(c) and (d).

Notifications (RFO 7.107-3(a))

The SBA Procurement Center Representative (PCR), Jezabel Rodriguez, was formally notified of the planned consolidation on January 28, 2026, in accordance with RFO 7.107-3(a). The notification included a summary of the requirement and identified the two affected small businesses (one SDVOSB and one Small Business) currently performing the services under separate contracts. No comments, objections, or recommendations were received from the PCR in response to this outreach. In the absence of a reply, the Government proceeded under the assumption that the PCR had no concerns at that time, while remaining prepared to incorporate any feedback should it be provided later in the acquisition process.

The VA Small Business Specialist was notified upon submission of the market research report and the VA Form 2268. The Specialist reviewed, concurred with, and signed the VA Form 2268 on May 20, 2026, confirming agreement with the consolidation approach. In addition, the Small Business Specialist reviewed the information documented in this D&F and provided concurrence with the analysis and justification as presented.

Furthermore, the Contracting Officer and the undersigned Branch Chief discussed the proposed consolidation with the Office of Small Business & Disadvantaged Business Utilization (OSDBU). On May 29, 2026, a call was held to address OSDBU’s concerns regarding the previous performance issues documented in this memorandum, including matters related to the Limitation on Subcontracting (LOS) addressed in the Result of Market Research below. The discussion also covered the rationale for the proposed Tiered Evaluation approach, specifically why Veteran-Owned Small Businesses (VOSBs) were not included, as none were identified during market research. OSDBU acknowledged the explanations provided and agreed with the proposed acquisition strategy and evaluation approach.

A separate letter was sent to both incumbent contractors notifying them about the government’s intent to consolidate these requirements.

VAAM M807-C Page C-6 requirements will be lower than the costs of procuring, awarding, and administering separate requirements contracts.

3) Reduction in acquisition cycle times by avoiding two separate procurement actions for the requirements identified throughout this document.

4) Increased efficiencies during contract performance by eliminating multiple contract surveillance activities, eliminating the necessity for associate contractor agreements, as well as the Program Point of Contact activities such as inspection, receipt, acceptance, and payment of services.

5) Providing increased flexibility for program requirements and contract management, financial management, and budget analysis.

6) Substantial Benefits Savings. The consolidation of the Chiller and AHU service requirements is expected to yield substantial cost savings and efficiencies over a five-year period. Procuring these services under two separate contracts (each with a base period and options) was estimated to cost in total (Chillers: ; AHUs: ).

By contrast, the single consolidated requirement will be acquired under a firm-fixed-price Requirements contract with a five-year ordering period (no options), at an estimated total value of . This represents an immediate cost avoidance of (approximately 5.4 percent of the combined baseline) due to economies of scale. In addition to these upfront savings, further analysis identified multiple quantifiable benefits from consolidation, increasing the total anticipated five-year savings to approximately . These combined savings are approximately 14 percent of the consolidated contract value (around ), exceeding the 10 percent (approximately ) threshold for substantial benefits under RFO 7.107-2(c)(3)(i).

The following cost savings categories have been quantified (five-year projections):

i. Reduced Contractor Personnel & Overhead. Elimination of duplicate management positions (one Project Manager and one Quality Control Manager instead of two of each) and more efficient allocation of technical staff (e.g., a single ductwork team and fewer licensed HVAC Technicians serving both chiller and AHU systems) will reduce contractor labor and overhead expenses. Five-year savings are estimated at (this includes for removing redundant PM/QC positions, plus additional labor efficiencies and overhead costs).

ii. Economies of Scale and Consolidated Tools & Parts. Combining requirements allows for volume discounts on parts and consumables.

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The estimated savings fluctuate between 2-3% on service pricing and 3% on parts, totaling approximately during the life of the resulting contract. The contractor will utilize one set of specialized tools and equipment for all HVAC units and maintain a unified spare parts inventory, avoiding duplicate purchases and leveraging bulk discounts on materials. Five-year savings are estimated at (this is a portion of the economies-of-scale/materials savings

iii. Single Facility and Storage Area. The Government will provide only one on-site storage and work area for the consolidated contract, instead of two separate contractor spaces. This frees up about 200 square feet of valuable facility space and reduces utilities and maintenance costs. Based on local commercial lease rates (in the range of to per square foot per year for industrial space in San Juan), the space and utility cost avoidance is approximately per year, or about over five years.

iv. Streamlined Acquisition & Contract Administration. The acquisition and award of a single contract (in place of two) reduces the workload for contracting personnel. The VA avoids duplicating acquisition steps (developing multiple solicitations, separate evaluations, awards) and ongoing administrative actions (e.g. separate option exercises, modifications, invoice processing, and meetings for two contracts).

This reduction in procurement and contract management effort is estimated to save approximately in Government labor costs over five years.

v. Consolidated Government Project Management. Oversight responsibilities are streamlined from two separate contracts to one, yielding efficiencies for the Government’s Contracting Officer’s Representative (COR) and project management personnel. Based on a detailed review, the total five-year Government oversight cost avoidance is approximately .

vi. Reduced Duplication for Support Staff. Supporting VA staff (e.g., budget analysts, security and badging personnel, facility engineers, and electricians) will handle one contractor’s needs rather than two.

This minimizes redundant coordination efforts such as scheduling maintenance outages, processing work clearances, and managing separate safety trainings or badging. The combined productivity gains and overtime avoided for these support functions are projected to save roughly in equivalent labor cost over five years.

vii. Fewer Maintenance Shutdowns. With one contractor responsible for the entire HVAC system, maintenance on chillers and AHUs can be coordinated and performed concurrently, reducing the number of

VAAM M807-C Page C-8 distinct system shutdowns. It is anticipated that 5–6 major shutdown events will be avoided over five years, which in turn avoids costs for temporary cooling equipment rentals, after-hours work, and associated downtime. This improved scheduling efficiency is expected to save approximately (contingency cost avoidance) over the contract term.

viii. Optimized Filters and Belts Replacement Schedule. Under the prior

AHU contract, filters were replaced every two weeks (fixed interval), whereas the new performance-based maintenance plan requires filter changes only when needed (per manufacturer recommendations and actual condition). This best-practice approach prevents unnecessary material and labor expenditures while maintaining air quality. Based on current filter prices and labor rates for VA HVAC maintenance, the AHU services cost is expected to decline by over 20% as a result of this change. Estimated five-year savings: in filter materials and labor.

Summary of Estimated 5-Year Savings:

Category Description of Benefit Estimated 5- Year Savings

(a) Contractor Personnel & Overhead

One PM & one QC (vs. two each);

optimized tech staffing

(b) Contractor Tools & Parts One set of tools; consolidated spare parts & bulk material buys

(c) Facility/Storage Space Single on-site storage & shop area

(vs. two); reduced utilities

(d) Acquisition/Admin Effort One solicitation, award, and contract to manage (vs. two)

(e) Government One COR workload (vs. two); half the meetings, reports, invoices

(f) Government Support Services Less duplicate coordination by budget, security, facilities staff

(g) Combined Maintenance Downtime

Fewer separate shutdowns; less temp equipment & overtime

(h) Filter and Belts Replacement Efficiency

Need-based (vs. bi-weekly) filter changes; lower parts & labor

Total Estimated Savings (5 Years) Sum of all categories above

Note: All estimated savings cover a five-year performance period and are stated in current dollars. The baseline reflects two separate contracts (each with a base year plus options), while the consolidated value reflects one five-year

VAAM M807-C Page C-9 requirements contract. All quantified benefits have been developed in accordance with RFO 7.107 2(c)(3) criteria and represent cost reductions or avoidances without double-counting. Any non-monetary advantages of this consolidation (for example, improved HVAC reliability and mission continuity for VA patient care) are addressed separately in Section A2, Mission Success, as required.

A2. Mission success. The proposed consolidation supports a critical infrastructure reliability at VACHS, reduces operational risks, and ensures uninterrupted climate control for clinical functions. Given the clinical dependence on uninterrupted HVAC performance, consolidation strengthens mission assurance by ensuring unified contractor accountability across both systems.

B. Procurement strategy. Based on the findings presented in the market research report, historical acquisition data, risk analysis, and in this D&F, the recommended procurement strategy is to issue a Tiered Evaluation solicitation, from SDVOSB through small business. This approach maximizes socioeconomic participation while preserving schedule and ensuring capability for a mission-critical service. In addition, this strategy complies with VAAR 819.201 and supports Veterans First priorities

C. Alternative approaches. Separate follow-on contracts were considered but rejected due to:

1) Increased administrative burden. Managing two independent contracts would require the Government to issue, track, and administer separate sets of contract actions, including two solicitations, two award processes, two sets of modifications, two invoice streams, and two contract files. This duplication multiplies workload for the Contracting Officer, COR, and program staff, increasing the time and resources required to manage the requirement over the five-year ordering period.

2) Duplicate quality assurance surveillance and COR functions. Maintaining separate contracts would necessitate two surveillance plans, two streams of performance monitoring, and two separate oversight schedules for services that are inherently interdependent. Because the Chillers and AHUs operate as part of the same HVAC infrastructure, having different contractors perform related work introduces overlap in inspections, increases coordination complexity, and raises the likelihood of inconsistent maintenance approaches across systems.

3) Higher costs. Procuring these services separately results in the Government paying for duplicated overhead, project management, quality control, and mobilization costs across two contracts instead of one. Additionally, separate procurements limit the contractor’s ability to leverage economies of scale, integrated staffing, consolidated parts inventories, and shared technical

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The acquisition planning conducted for this consolidation ensured accessibility for SDVOSB (based on the tiered evaluation), including early SBA and Small Business Specialist involvement as documented above. The consolidated acquisition remains fully suitable for SDVOSB participation.

F. Bundling analysis. In accordance with RFO 2.101, Definitions, bundling means a subset of consolidation that combines 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.

The proposed consolidation of the Preventive Maintenance and Repair Services for Water Chillers and AHUs is suitable for competition among certified SDVOSBs and/or small businesses; therefore, this acquisition does not meet the definition of bundling.

IV. DETERMINATION. Based on the findings above, and in accordance with RFO 7.107-2(a) and VAAM M807.107.70(a), consolidation is necessary, justified, and in the best interest of the government.

PREPARED BY: I hereby certify that the supporting information and data used to complete this determination is accurate and complete to the best of my knowledge and belief.

REVIEWED BY: I have reviewed this determination and find it to be accurate and complete to the best of my knowledge and belief.

Concur:

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Approved: