Consolidation Memo_Hanscom Fire Station_Redacted.pdf

CUI//SP-PROCURE//FED ONLY

DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, NEW ENGLAND DISTRICT

DETERMINATION AND FINDINGS

REQUEST FOR CONSOLIDATION

PANNAD-26-P-0000 029528

DESIGN-BID-BUILD CONSTRUCTION CONTRACT

FOR THE FIRE STATION AND AIR PASSENGER TERMINAL AT

HANSCOM AIR FORCE BASE, MASSACHUSETTS

The Federal Acquisition Regulation (FAR) 2.101 defines consolidation or consolidated requirement as 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.

I have reviewed this requirement and associated market research and determined in accordance with 15 U.S.C. § 657q and FAR 7.107-2 that consolidation is both necessary and justified. This approval is made in accordance with the approval thresholds set forth in Army Federal Acquisition Regulation Supplement (AFARS) 5107.170-3, “Consolidation of Contract Requirements.” My review resulted in the following findings:

FINDINGS

1. Introduction: The U.S. Army Corps of Engineers, New England District (NAE), proposes to consolidate the demolition of a fire station, the construction of a fire station, and construction of an Air Passenger Terminal (APT), located at Hanscom Air Force Base (AFB) in Massachusetts. The estimated construction cost is $ base price, and $ in options, totaling . The North American Industry Classification System (NAICS) code is 236220. The procurement constitutes consolidation of requirements per 15 U.S.C. § 657q(a)(2)(B) in that it involves construction at two or more discrete sites on Hanscom Air Force Base (HAFB). NAE has conducted analysis and market research that demonstrates consolidation of requirements in this procurement is both necessary and justified.

2. Description of Procurement Action:

a. Project Description: The purpose of this acquisition is to build a new fire station at HAFB to replace its existing station. The current fire station is in Building 1721, which also includes HAFB’s APT. Because the current fire station will no longer be needed after the new one is ready, and space is needed for parking, a walkway, and security fencing to support the APT facility, Building 1721 will be demolished. All the support systems for Building 1721 – utilities, HVAC, etc. - are on the fire station side, so the APT cannot operate without that portion of the building. Therefore, Building 1721 will need to be demolished in its entirety. A new APT will be constructed near its current location. The new fire station will be built on HAFB at the site of an abandoned gas station, Building 1639. Building 1639 is currently being demolished under a HAFB contract.

The project will be phased. Work will start with construction of both the fire station and the APT simultaneously. There must be continuous operation of both the fire station and APT throughout construction, so Building 1721 will not be demolished until both the fire station and APT are close to completion. Some site work for the APT cannot be completed until Building 1721 is demolished.

Accordingly, the APT portion of the project will not be substantially completed or complete/useable until demolition of Building 1721 occurs and parking, sidewalk, and security fencing is constructed.

The estimated cost to construct the new fire station is . The estimated cost to construct the new APT, including the site work, is $ . The costs do not include the estimated cost of demolition of Building 1721 ( ).

b. Acquisition Strategy/Procurement Summary: NAE will conduct an

Unrestricted Invitation for Bid procurement with a pre-qualification requirement and award a Firm-Fixed Price construction contract to the low responsive and responsible bidder. The contract will include construction of the fire station, construction of an APT and associated site work, and demolition of Building 1721. This contract will take place at two discrete sites. The anticipated period of performance is approximately 28 months.

c. Applicability of Consolidation: As implemented in FAR 2.101, consolidation or consolidated requirement means 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. The definition applies to this procurement because the scope will require that construction projects be performed at two discrete sites on HAFB.

d. Requirements Being Consolidated: The requirements being consolidated are:

(1) Construct a new fire station; and

(2) Construct a new APT with the associated site work, and demolish Building

1721.

Technical complexity is approximately the same for the two items being considered for consolidation.

e. Procurement History: This requirement has not been procured previously. The

New England District awarded an Architect-Engineering task order to Burns & McDonnell Engineering Company, a large business entity, on 17 November 2022 for this design of the scope described herein. The planned completion date for the design is 31 January 2026. NAE completed the following comparable projects at HAFB in the last few years:

Dormitory, $13.2M, completed in December 2018, Small Business Set-Aside.

System Management Engineering Facility, $18.8M, completed in May 2020, Small Business Set-Aside.

Primary School, $37.4M, completed in August 2019, unrestricted procurement.

Middle School, $35.0M, completed in April 2016, unrestricted procurement.

Vandenburg Gate Complex, $20.5M, completed in February 2026, unrestricted procurement.

f. Rationale for Consolidation: Based on the analysis of the New England District, the quantitative benefits of this consolidated approach fall short of the required 10% cost savings. However, the qualitative benefits of the proposed consolidation approach are critical to the District’s success and, as detailed below, these benefits substantially exceed the benefits of any approach that involves less consolidation.

(1) To be determined necessary and justified, the benefits of the consolidated acquisition must substantially exceed the benefits that would be derived from alternative contracting approaches that involve less consolidation. Such benefits may include quantifiable cost savings or price reductions as well as other benefits, regardless of whether quantifiable in dollar amounts, to include quality improvements that will save time or improve or enhance performance or efficiency, reduction in acquisition cycle time, better terms or conditions, or any other supportable benefit.

Benefits that are quantifiable are considered substantial if they meet the dollar amounts set forth in FAR 7.107-2(d). If the quantifiable benefits do not meet these thresholds, the approving authority may determine that consolidation is necessary and justified if the expected benefits of the consolidated approach are critical to the agency’s mission success and the procurement strategy provides for maximum practicable participation by small business.

(2) Per FAR 7.107-2(d), benefits that are quantifiable in dollar amounts are substantial if individually, in combination, or in the aggregate the anticipated financial benefits are equivalent to ten percent (10%) of the estimated contract value (including options) if the value is $94 million or less. For this procurement, the quantifiable benefits do not meet/exceed this threshold, but the expected benefits of the proposed approach are critical to the agency’s achievement of mission success, while ensuring maximum practicable participation by small business entities. Utilizing a consolidated, stand-alone construction contract for the construction of the fire station, construction of the APT with its associated site work, and demolition of Building 1721 is necessary to minimize schedule risk, maximize efficiency and quality throughout project execution, and minimize risk of significant cost increases during construction. Therefore, in this instance, consolidation is in the best interest of the Government because it is critical to the agency’s mission success.

Comprehensively, the expected benefits to the Government in terms of quality, scheduling, and cost savings justify a consolidated approach to the work. See Section 5 analysis below for the benefits of this proposed consolidated acquisition. A comparison of these items is shown in Table 1.

i. Quality. The ability to work with a single contractor for building construction provides significant advantages in terms of quality and efficiency compared to awarding multiple contracts.

The consolidated approach significantly reduces risk to the Government and increases efficiency because there would not be two or more Government contractors competing for the limited space at the site. This would impact contractor parking, storage, laydown area, trailers, and circulation. The unconsolidated approach would require extensive work by the Government to coordinate and manage that limited space for multiple contracts, increasing the risk of contractor delays and claims. Moreover, the proposed consolidated approach will facilitate a deeper understanding of the coordination requirements across agency and stakeholder teams, site-specific installation and facility procedures, and will place the contractor in a stronger position to stabilize relationships with its bonding company/companies and subcontractors, thus reducing risk to the Government and increasing efficiency during project execution.

ii. Scheduling. Continuous execution of work can occur by using the consolidated award approach.

The consolidated alternative gives the contractor full control of the critical path and greatly reduces the risk of compensable Government delays. Each element of the project relies on the progress of the other elements. If this work was spread over multiple contracts, then the Government might become responsible for the separate contracts delaying each other. USACE will not award its contract until HAFB has completed demolition of the abandoned gas station, Building 1639. That ensures that there will be no dependencies between contracts and therefore will allow for a continuous progression of work.

The unconsolidated approach has an overall duration 3 months longer than that for the consolidated approach, 28 months versus 31 months, respectively. This is because the unconsolidated approach includes two contracts. The Notice to Proceed (NTP) of the second contract, the APT and Building 1721 demolition, could not be given until after the anticipated Beneficial Occupancy Date (BOD) of the Fire Station is achieved. The minimum timeframe for this would be three months after the Contract Completion Date (CCD) stipulated with the initial contract award of the Fire Station. BOD is the anticipated completion date, based on risks that typically impact the CCD, to be used for planning and scheduling purposes. In contrast, the consolidated approach would allow more work to occur concurrently without additional risk to the Government, leading to a shorter duration overall.

As indicated above, project scheduling benefits arise from executing this project via the consolidated approach. It will allow for a fully up to date functioning Fire Station three months earlier than for the unconsolidated approach. The approach will result in gained efficiencies from streamlined coordination meetings and submittal reviews for the new building construction and reduced efforts for data collection teams.

iii. Risk.

Consolidation reduces risk because, unlike the unconsolidated approach, the contractor’s performance will not depend on the timely performance of other government contractors and will avoid the challenges with working in close proximity to other contractors. The only dependency between contracts for the consolidated approach will be the timing of the USACE contract award, which would occur at the end of the HAFB’s Building 1639 demolition contract. There are risks that the HAFB contract could be delayed due to differing site conditions or other reasons. NAE will be coordinating with HAFB and getting updates as to the status of its contract.

iv. Cost Savings. Per 15 U.S.C. § 657q(c)(2)(B), “savings in administrative or personnel costs alone do not constitute a sufficient justification for a consolidation of contract requirements” unless the total amount of the cost savings is expected to be substantial in relation to the total cost of the procurement.

Even though cost savings are not expected to be substantial, consolidation still provides benefits. Consolidation will also allow for the project to be properly tracked and budgeted. The two biggest items in this project are the two new buildings. If the efforts are in two separate contracts and being executed simultaneously, that will make it challenging to ensure the overall project, which encompasses three components, is within the overall budget.

In other words, as costs change for one component, it affects the amount that can be used for the other and can affect the outcome of the other component.

The use of a consolidated approach will allow the Government to secure fair and reasonable prices for all the work required to execute the full scope of this project while minimizing acquisition time and performance and schedule risks. Additionally, Table 2 below reflects the estimated difference in costs required for a consolidated versus unconsolidated procurements. These costs are based on standard labor costs developed by the NAE Contracting Division for procurements, along with historical average procurement support costs for Cost Engineering Division, Programs and Project Management Division (PPMD), and Engineering Division for acquisition coordination, document review, IGE development, site visit attendance, and related document preparation, travel, and administration.

3. Applicable Statutes/Regulations: 15 U.S.C. § 657q, FAR 7.107-2, and AFARS 5107.107-2.

4. Results of Market Research:

a. A Sources Sought Announcement was posted to SAM.gov on 21 March 2023, with responses from industry due by 5 April 2023. This first sources sought announcement identified the possibility of consolidating all four components (including the gas station demolition) in a single contract. There were no responses received to this Sources Sought Announcement.

HAFB decided to procure, award, and oversee the gas station demolition contract itself.

A new Sources Sought Announcement was posted to SAM.gov on 11 February 2025, with responses from industry due by 13 March 2025. The NAICS code for this announcement was 236220, Commercial and Institutional Building Construction. The estimated construction cost range was identified as $25M to $100M. There were seven responses received to this Sources Sought Announcement. Of the seven, three were ranked qualified to perform the work, three were ranked unqualified, and one was unknown. Two of the three qualified responses addressed consolidation and supported the approach.

5. Alternate Contracting Approach Considered and Rationale for Rejection: In determining that a consolidated contract is the best solution for satisfying the requirement, the District considered utilizing the contracting approach described below:

Alternative 1: Unconsolidated Approach – 2 Contracts, Each Site Specific. The District considered awarding separate contracts based on the discrete locations of work included in this project. One contract would be for construction of the new fire station and the other for construction of the new APT with its associated site work and demolition of Building 1721. The approach is expensive to administer and has time, physical, administrative, and quality inefficiencies.

The benefits of the consolidated approach exceed the disadvantages over the unconsolidated alternative, for the reasons described below. A comparison of these items is shown in Table 1.

a. Quality. The ability to work with a single contractor for building construction provides significant advantages in terms of quality and efficiency compared to awarding multiple contracts.

As mentioned in 2.f.(2)i, the consolidated approach significantly reduces risk to the Government and increases efficiency because there would not be two or more Government contractors competing for the limited space at the site for contractor parking, storage, laydown area, trailers, and circulation. Furthermore, there is a significant learning curve associated with: Government work, District and/or HAFB policies and procedures, scheduling, initial plans, submittal processes, base access, outages, and RFI processes. With two building construction contracts, that learning curve would be repeated for the same requisite items. This duplicative process would create strain on the District’s oversight personnel, as well as HAFB staff. It could create delays multiple times rather than just once. With limited staffing at the District and HAFB, this could affect the quality and timing of getting submittals and RFIs reviewed and approved. While pursuing two building construction contracts would result in a wider range of potential firms for each contract, this approach could also result in a lack of cohesion and need for significant additional effort amongst the District’s oversight teams.

b. Scheduling. Work stoppages pose a significant risk to the unconsolidated approach.

The unconsolidated approach has a dependency between contracts because the APT site work cannot be completed until Building 1721 is demolished, but demolition cannot occur until the fire station is completed. Delays in the fire station contract could delay the APT contract. In contrast, the consolidated approach gives the contractor greater control over the timing of work. The consolidated approach has the more desirable shorter overall duration of 28 months, versus the 31 months for the unconsolidated approach. See paragraph 2.f.(2)ii for additional discussion.

The dependency between the two contractors presents increased risk to the Government and potential for schedule delay.

c. Risk.

There is an increased risk when dependencies beyond the control of a particular contractor are created. The unconsolidated approach has a dependency between contracts, as discussed above.

d. Cost Savings. Per 15 U.S.C. § 657q(c)(2)(B), “savings in administrative or personnel costs alone do not constitute a sufficient justification for a consolidation of contract requirements” unless the total amount of the cost savings is expected to be substantial in relation to the total cost of the procurement.

Even though cost savings are not expected to be substantial, consolidation still provides benefits. As mentioned in paragraph 2.f.(2)iv, there would be difficulty tracking and reconciling project costs for the two separate unconsolidated contracts which operate under an overarching single project budget. There may be instances where funding priorities may shift from one contract to another, making it challenging to fund potential modifications.

Table 2 below reflects the estimated difference in costs required for a consolidated versus unconsolidated procurements and demonstrates that there are additional costs of approximately $ associated with the unconsolidated strategy. These costs are based on standard labor costs developed by the NAE Contracting Division for procurements, along with historical average procurement support costs for Cost Engineering Division, Programs and Project Management Division (PPMD), and Engineering Division for acquisition coordination, document review, IGE development, site visit attendance, and related document preparation, travel, and administration.

Dollars are based on historical figures from recent procurements and the current projections for FY26. As demonstrated in Table 2, the additional cost associated with the unconsolidated approach is the estimated contract increase. There would be a significant increase in the contractors’ general conditions and overhead with that strategy, approximately $ . This amount represents approximately 1.92% of the total estimated contract value of .

TABLE 1: ALTERNATIVE ANALYSIS SUMMARY

ITEM

PROCUREMENT APPROACH

CONSOLIDATED

PROCUREMENT

UNCONSOLIDATED

PROCUREMENT

Quality Highest Medium Overall Timeframe 28 months 31 months Contract Completion Date 3/15/2029 6/18/29 Contract Dependencies No Yes Risk Due to Contract Dependencies None High

Period of Inactivity Within Contract None Likely

Administrative Cost Average Higher this acquisition may be considered bundling. Because the total acquisition value is over $8M, this procurement is considered substantial bundling. As such, in accordance with FAR 7.107-4(b), the following items are addressed:

(1) The specific benefits anticipated to be derived from substantial bundling: This includes increased quality, reduced schedule, reduced risk, and cost savings, as discussed in sections 2.f and 5.

(2) An assessment of the specific impediments to participation by small business concerns as contractors that result from substantial bundling: Small businesses are not precluded from bidding on the contract. However, the size of the contract is large and may eliminate some small businesses from competing as the prime contractor.

(3) Actions designed to maximize small business participation as contractors, including provisions that encourage small business teaming: The contractor will need to submit and adhere to an approved small business subcontracting plan, which will be negotiated and approved as a condition for contract award. The plan will establish minimum percentage goals for the awardee to subcontract to small business categories. There will be an industry day for interested firms.

(4) Actions designed to maximize small business participation as subcontractors

(including suppliers) at any tier under the contract, that may be awarded to meet the requirements: See section (3) above.

(5) The determination that the anticipated benefits of the proposed bundled contract justify its use: The justification is included throughout this document herein.

(6) Alternative strategies that would reduce or minimize the scope of the bundling, and the rationale for not choosing those alternatives: The alternative strategies and why they are not appropriate for this procurement are included in this document herein.

c. Definition of the Competition in Contracting Act (CICA) Bundling Principle.

This principle, as developed by the Government Accountability Office (GAO) case law, focuses on whether the combined requirement (new, old, or otherwise) restricts competition and whether the agency is consolidating or bundling a new requirement unnecessarily. To justify CICA Bundling, the agency must show “a reasonable basis for why the bundling is necessary to meet the agency need.”

(Vantex Serv., Inc., B- 290415, Aug. 8, 2002 and Outdoor Venture Corp., B- 299675; B-299676, Jul. 19, 2007).

CICA requires solicitations to provide for full and open competition except where restrictions on competition are necessary to satisfy the procuring agency’s needs. In such a case, restrictions on competition are allowed. Bundled procurements combining separate requirements into one contract have the potential to restrict competition by excluding firms that can provide only a portion of the bundled requirement. However, combining like and related efforts to achieve economies of scale and eliminate duplication of effort, consistent with industry practice and market research, is reasonable basis for bundling requirements, though it may have the effect of restricting competition.

d. Applicability of CICA Bundling Principle. Although this action constitutes CICA bundling, in accordance with FAR 7.107-3(c), the benefits include cost savings, price reduction, quality improvements, and reduction in acquisition cycle times. These items are discussed in Sections 2.f and 5. Though it may be possible to award multiple contracts, the savings and efficiencies that are anticipated to be achieved through this acquisition justify the use of a single contract vehicle for the consolidated requirement, which involves the least amount of consolidation necessary to execute the mission.

7. Considerations, Facts, and Reasoning Supporting the Determination: All facts, considerations, and rationale have been covered previously in the findings. The DD2579 will be signed by the Contracting Officer, Deputy for Small Business, and SBA Procurement Center Representative. All concur that consolidation of this requirement is both necessary and justified.

8. Summary: Though the preferred approach utilizing a single contract constitutes consolidation in that it combines construction at two or more discrete sites in one contract, this approach provides the best combination of competitive procedures, timely acquisition, cost efficiency, quality, and capable prime contractors to execute HAFB and AFCEC requirements. The quantifiable benefits of consolidation, $ or 1.92% of the estimated contract value, do not exceed the standard in FAR 7.107- 2(d)(1)(i). However, the qualitative benefits of consolidation presented herein are critical to the mission success of USACE, AFCEC, the fire station and APT.

Standalone contracts for each of the two sites were considered but would result in significantly higher risks due to the dependencies of the contracts. Additionally, it is significantly less burdensome for the District’s Contracting and Construction Divisions to administer the work via the consolidated versus the unconsolidated approach. 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 number of efforts to be executed at HAFB, and the consolidated approach provides advantages that substantially exceed the benefits of an approach that provides a lesser degree of consolidation.