ConsolidationMemo25R0029(CUI)flat_Redacted.pdf

CUI

SPE7LX-25-R-0029 Page | 3 manufacturer and dealers can also receive the award. The solicitation will be awarded on an all-or-none by NSN basis, so that each item can be awarded to a different vendor, thereby precluding quantities or dollar values that make it difficult for a small business to compete for a contract. In effort to ensure that offers are solicited from as many sources as practicable, the acquisition will be synopsized on SAM.gov and posted on the DLA Internet Bid Board System (DIBBS).

Benefits of Consolidation:

The details of the proposed approach are discussed in the acquisition plan. The proposed acquisition approach results in the following benefits:

1. Acquisition Cycle: The purchase request process typically includes assembling a technical data package (if applicable), developing an acquisition strategy, soliciting proposals from industry, negotiating (if applicable), reviewing, and finally awarding the contract or purchase order. This administrative processing is called administrative lead time (ALT). As of November 2023, for DLA Land and Maritime Supply Chains, the average ALT for delivery orders on LTC is , for small buys is , for large buys is and for PACE awards is . Using this data for comparison, there is a minimum savings of 97 days when comparing the proposed LTC approach to small buys, when compared to large buys, and when compared to PACE awards.

ALT will be reduced because items will not be individually solicited, competed, evaluated, and awarded each time a requirement arises. Reduced ALT is important to ultimately reduce the time for awards in an effort to get the parts delivered quicker to the Military customer. Requirements will source automatically to the proposed LTC using DLA’s automated procurement system, which will generate delivery orders against the contract.

2. Relationship Management: Orders from a LTC will provide a continuous relationship between the contractors and the contracting activity. After award issuance, the contract(s) will be assigned to a Basic Contract Administrator (BCA). The BCA and an Administrative Contracting Officer (responsible for post award actions on delivery orders) will be responsible for ensuring Purchase Requests are sourced properly to this contract and tracking delivery. The BCA will also be responsible for exercising any options until contract expiration. Having a primary contact within the administration area will ensure that potential quality/delivery issues will be resolved more efficiently and quickly than individual spot buys. Also, contractors 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. 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 an 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.

A full BCA was determined to be unnecessary for this initiative since it falls under DLAI 5010.06 Exemption #2: The acquisition is for supplies and the end-item will be delivered to DLA stock at the depots. The BCA Simulator (formerly the Vendor Stock Retention Model (VSRM) estimates a total of cost avoidance over five years using the proposed contract for LTC for Stock versus Spot Buys for Stock; see attachment #1- BCA Simulator. The estimated savings are primarily resulting from cost reductions in the following cost drivers: depot throughput, SPE7LX-25-R-0029 Page | 4 transportation, asset management, and storage. Since the proposed vendor materiel prices are unknown at this time, this savings assumes the vendor's materiel prices will be the same as the average DLA acquisition prices for each NSN. The actual savings will depend on the final negotiated materiel prices.

The advantages of this project include cost avoidance for the Government, workload reduction, opportunity for continued participation in a supplier partnership, little disruption of the current flow of items to the customer, and minimal level of maintenance. These benefits are interrelated and largely result from elimination of the numerous separate contract actions (with associated lead-time and contracting resource requirements) now required to support DLA Land and Maritime based weapon systems on a worldwide basis.

The quantifiable benefits identified above do not meet the threshold for a substantial benefit at FAR 7.107- 2(d)(1)(ii) of this subsection; however, enumerated benefits are critical to DLA Land and Maritime’s mission success. DLA Land and Maritime uses LTC methods to offer the best value to our customers. By consolidating these requirements, DLA Land and Maritime will be able to ensure consistent supplies while achieving economies of scale and reducing ALT and PLT. The benefits of this consolidation are critical to the Agency’s mission success. DLA is the military’s premier logistics provider, and it is imperative that DLA structures its contract actions to maximize benefits while minimizing costs. The consolidation does this by reducing administrative costs which, in turn, helps to keep DLA’s cost recovery rate low. Critical benefits include increased material availability, reduction in lead time, and increased warfighter equipment operational readiness.

Alternate Contracting Approaches:

The Contracting Officer has identified the less consolidated alternatives in developing the acquisition strategy for this project. The least beneficial approach would be to procure the items via individual purchase orders (spot buys). The use of spot buys to satisfy requirements for some or all of these items does have benefits. Specifically, there is low risk of transitional disruption associated with moving to a different procurement alternative, and the relatively low dollar value of spot buys may increase small business participation. However, these benefits are outweighed by the costs of spot buys and the benefits of long-term contracting. Spot buys, whether small or large, are more expensive than delivery orders. Additionally, there are efficiencies and other benefits with long-term contracting. A long-term contracting instrument has the potential to improve in all areas. Better prices will probably be obtained with a long-term instrument rather than increases that would likely occur with an individual spot buy.

Another less consolidated contracting strategy would be to procure these items using Automated Indefinite Delivery Contracts (IDCs). However, all of these NSNs require First Article Testing and are ineligible for Auto IDCs. Therefore, these NSNs should not be placed on Auto IDCs. The remaining NSNs could be placed on Auto IDCs, but this approach would not achieve the efficiencies and other benefits of the proposed approach.

A third approach that is only slightly less consolidated than that proposed is to separately solicit for and award individual LTCs for each NSN. 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 (even if the contracts were awarded to the same vendor) and would take substantially longer to award than the proposed approach. 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 associated with competition than the proposed approach, as both approaches allow for the individual evaluation and award of each NSN.

Determination:

SPE7LX-25-R-0029 Page | 5

CUI

In view of the foregoing, I hereby determine:

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

2. The contract requirements being consolidated exceed $2 million.

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

4. 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.

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

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

Chief of the Contracting Office

Attachments:

1. BCA Simulator

VANSCHAIK.JULI

E.N.1229070327

Digitally signed by

VANSCHAIK.JULIE.N.1229070327

Date: 2025.07.03 12:30:33 -04'00'

BCA Simulator Results

A full BCA was determined to be unnecessary for this initiative since it falls under one of the exceptions according to the BCA guidance in DLAI 5010.06. A BCA Simulator run was completed with a summary of the results below. There was a total of 4 items used in the simulation.

The Simulator estimates a total of $18,148.77 in potential cost avoidance over five years using the proposed contract for LTC for Stock versus Spot Buys for Stock. Since the proposed vendor materiel prices are unknown at this time, this avoidance assumes the vendor's materiel prices will be the same as the average DLA acquisition prices for each NSN. Any actual cost avoidance will depend on the final negotiated materiel prices, and a new simulation can be performed again when those are determined. This analysis shows a combined Break-Even Percentage (BEP) of 0.45%, so to avoid DLA losing money, there is little room for increases over current prices.