DCSOR22338_Redacted.pdf

CUI

CUI Category: General Procurement

DEFENSE LOGISTICS AGENCY

CONTRACTING SERVICES OFFICE

6090 STRATHMORE ROAD, BUILDING 15A

RICHMOND, VA 23237

Limited Source Justification (LSJ)

(1) Identification of the agency and contracting activity:

# DCSO-R2-23-38

Requiring Activity:

DLA J314/DLA J8 in support of Defense Security Cooperation Agency (DSCA)

Headquarters Complex Fort Belvoir, VA

Contracting Activity:

DLA Contracting Services Office – Richmond 6090 Strathmore Road, Building 15A Richmond, VA 23237

(2) Nature and/or description of the action being approved:

In support of Office of the Undersecretary of Defense Comptroller OUSD(C))’s Financial Improvement and Audit Readiness (FIAR) sustainment business rules to achieve audit sustainment, the Defense Logistics Agency (DLA) established the DLA FIAR single award BPA. The initial FIAR blanket purchase agreement (BPA) solicitation was issued in Fiscal Year (FY) 2016 as unrestricted via GSA and received two quotes resulting in competition. The resulting award was issued to KPMG (the incumbent) along with CTA BPAs with multiple small businesses. Under the current FIAR BPA, multiple Task Orders (TOs) were issued directly to KPMG, who then divided the work between its CTA members equitably. Roughly 15 requirements are fulfilled under the current BPA per year (2 TO per requirement for KPMG and a CTA member resulting in roughly 30 TOs per year) to include the J8/J314 Support TO (to KPMG and CTA member Lynch) which is further detailed below.

1) Defense Security Cooperation Agency (DSCA) TO: Approval is sought to extend services via FAR Clause 52.217-8, Option to Extend Services, under task orders SP4703-17-A-0001/SP4703-22-F-0015 to KPMG CAGE 7QEG9 and task order SP4703-19-A-0501/SP4703-22-F-0016 to the CTA Member, Lynch CAGE 6A8Q2. DLA, as an implementing agency (IA), is assisting DSCA in providing security cooperation support to Foreign Military Sales (FMS) customers. DLA has two IAs, DLA Disposition Services, and DLA Information Services. DLA Disposition Services and DLA Information Services provide FMS support for DSCA’s customers. DLA Disposition Services provides equipment to foreign partners through excess equipment; DLA Information Services provides cataloging services to FMS partners. DLA is required to support DSCA’s audit readiness goals as per Congressional authority.

DSCA’s goal is to have auditable financial statements by FY2026. Contractor support is needed to assist DLA in supporting DSCA in their audit readiness efforts. The primary objective of this task order is to provide support to DLA in execution of DLA actions that positively contribute to DSCA’s audit readiness activities. Activities include: preparation of responses to audit readiness examination requests for DSCA audit readiness, identification of external customer entity relationships, recommendations on how DLA will support its user entity customer financial statement audits, rationale and supporting documentation for execution of actions, tracking and monitoring of the DLA portion of the Security Assistance Accounts (SAA) project plan steps, assistance with root cause analysis, development of corrective action plans, the design, testing, and evaluation of internal controls, preparation of testing plans, preparation of briefs for DLA’s DSCA audit readiness efforts, and assistance with responses to financial statement audit readiness examination requests. These task orders DLA seeks to extend were awarded on January 13, 2022, the proposed prices were determined fair and reasonable in accordance with FAR 15.404-1(b)(2)(v) comparison of proposed prices with independent government cost estimates.

(3) Description of the supplies or services required to meet the agency’s needs (including the estimated value):

The authorization of the 52.217-8 extensions will provide coverage for essential DSCA financial statement audit examination support from September 16, 2023 to January 15, 2024, at which time a new TO will be awarded competitively (issued against the FIAR SDVOSB BPAs). The current period of performance ends abruptly 2 weeks before the end of the Fiscal Year 2023. DLA needs to perform internal control testing to fully support DSCA’s audit readiness efforts but has limited time to work on internal control testing due to year-end close activities, which are very time intensive and do not allow additional time for testing. Financial statement year-end close activities are also synchronized with other business cycles/activities so any delays will impact the DLA Enterprise, In order to perform internal control testing, the design of controls to be tested must be developed. After which current test plans need to be updated, and new ones need to be established. This process is labor intensive and require the development of both design and execution tests. These processes – from the design of the internal control – to the completed test plans take several weeks. Then, the actual testing needs to take place. After testing, deficiencies must be identified, root cause analysis performed, and a corrective action plan developed, with each activity taking several weeks, going into calendar year 2024.

This will be challenging even after year-end since the financial statement and Agency Financial Reports are produced at this time and limited government personnel are available.

Testing and development of corrective actions plans, by each IA, is a key priority of the DSCA Audit Remediation team and are high visibility items to the DoD OIG, which oversees the DSCA audit. Fiscal Year (FY) 2023, Quarter 4 reporting between October and November is also a highly visible period with the DoD OIG and DSCA leadership. There is limited flexibility because key milestones must be met, including Prepared By Client (PBC) Requests, and financial reporting impacts to DSCA on behalf of the DLA IAs. An extension will remove the risk of disruption that a contract transition to another prime contractor would cause during this critical time frame. DSCA’s Independent Public Accounting firm, under the supervision of DoD OIG, will be off cycle near the end of the FY 2024 Quarter 1 timeframe, which dovetails with the transition period to the new vendor.

To assist DSCA in their SAA audit, an in-depth knowledge of FMS operations, DLA Disposition Services Excess Disposal Authority processes, and DLA Information Services cataloging processes is needed. This in-depth knowledge cannot be obtained in a few months. Any DSCA audit request is Operational in nature, requiring knowledge of the Security Assistance Management Manual (SAMM) and similar FMS operational guidance. A level of expertise cannot be gained by a new vendor in enough time to perform testing. It is very important for DLA to perform testing on behalf of DSCA because the last testing was in FY 2021 and more updated testing is needed.

The current period of performance is from July 15, 2022 to September 15, 2023. FAR Clause 52.217-8 Option to Extend Services was added to each task order at the time of award and states the limit for the total extension of performance shall not exceed 6 months. The option to extend the contract within the authority of FAR Clause 52.217-8 was listed at 3 days before period of performance end date which is calculated to be September 11, 2023.

These task orders were to secure non-personal services to assist DLA in furnishing the necessary services and qualified personnel to assist in the development and implementation of corrective actions that will result in sustainable compliant processes that improve both the financial reporting of DLA operations and value to the customer in support of the DLA J8 FIAR Program.

Exercising the option to extend services under the authority of FAR 52.217-8 will allow DCSO to extend the term of each task order up to six months as follows: September 16, 2023 – January 15, 2024.

Exercising the extension of services in accordance with FAR Clause 52.217-8 for 4 (four) months from September 16, 2023 to January 15, 2024 will increase the task orders SP4703-22-F-0015/0016 value by

(4) Authority and supporting rational and, if applicable, a demonstration of the proposed contractor's unique qualifications to provide the required supply or service:

Pursuant to FAR 8.405-6(a)(1)(i)(B), only one source is capable of providing the services required at the level of quality required because the services are unique or highly specialized. Due to KPMG & their CTA Partner, Lynch’s highly specialized knowledge of the DSCA’s FIAR Program, the program’s unique processes, and established familiarity of the related research, KPMG & Lynch are the only viable approach at this time for this relatively short-term contract extension in order to prevent a lapse in service and lack of thorough testing of internal controls. Any alternative vendor other than KPMG and Lynch would have a very significant ramp up time which would result in a lapse in critical FIAR support services. Since KPMG has provided FIAR support services exclusively to DLA over the preceding 3 years, only KPMG and Lynch have the requisite knowledge of the unique financial improvement and audit readiness requirements of the DSCA and DLA’s support of DSCA to satisfy those requirements in the specified timeframe while the agency awards a new single award BPA.

(5) Determination by the ordering activity contracting officer that the order represents the best value consistent with FAR 8.404(d):

The Contracting Officer determines the anticipated cost to the government will be fair and reasonable, and that the resulting order represents the best value to the Government, by comparing proposed prices to historical prices paid for the same or similar supplies/services and/or comparison of proposed prices with independent government cost estimates.

(6) Description of the market research conducted among schedule holders and the results, or a statement of the reason market research was not conducted:

Market research was not conducted as the extension of services under FAR Clause 52.217-8 will be exercised utilizing existing KPMG and Lynch contract rates from the prevailing task orders.

(7) Other facts supporting the use justification:

All previous task orders for these same or similar services were issued to KPMG and their CTA partners.

(8) Statement of the actions, if any, the agency may take to remove or overcome any barriers that led to the restricted consideration before any subsequent acquisition for the supplies or services is made:

DLA has and continues to exercise competition as often as possible and is required to conduct ongoing reviews to keep abreast of new solutions, both in industry and in the Government, as a continuing effort within DLA. DLA uses a variety of vendors and contracts to fulfill its requirements and will continue its practice of surveying the market to ensure full and open competition. DCSO has awarded 6 FIAR SDVOSB BPAs which are currently being utilized to competitively solicit 4 FIAR requirements.

Controlled by: DLA Contracting Services Office, Richmond (R2)

CUI Category:

Distribution/Dissemination Control: FED ONLY

POC:

CERTIFICATIONS AND APPROVAL

TECHNICAL/REQUIREMENTS CERTIFICATION

I certify that any supporting data that is the responsibility of technical or requirements personnel (e.g., verifying the Government's minimum needs or requirements or other rationale for limited sources) and which form a basis for the justification have been certified as complete and accurate by the technical or requirements personnel.

Technical/Requirements Cognizance:

9/1/2023

Signature Name (Printed) Phone No. Date

LEGAL SUFFICIENCY REVIEW

I have determined this Justification is legally sufficient.

Elan Taylor

9/1/2023

CONTRACTING OFFICER CERTIFICATION

I certify that this Justification is accurate and complete to the best of my knowledge and belief.

Charli Soren 9/1/2023

COMPETITION ADVOCATE, DCSO-D (APPROVAL FOR ACTIONS > $750,000 - $15,000,000)

Upon the basis of the above justification, I hereby approve, as Competition Advocate, the solicitation of the proposed procurement(s) described herein on a limited source basis, pursuant to the authority of the Multiple Award Schedule Program.

TAYLOR.ELAN.

D.

Digitally signed by

TAYLOR.ELAN.D.

Date: 2023.09.01 09:48:35 -04'00'

SOREN.CHARL

I.B.

Digitally signed by

SOREN.CHARLI.B.

Date: 2023.09.01 08:58:18 -04'00'