DF 22B0008 for posting to SAM_Redacted.pdf

DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, MOBILE DISTRICT

Determination and Findings Request for Consolidation

W9127822B0008

Indefinite Delivery Indefinite Quantity (IDIQ) Single Award Task Order Contract (SATOC) for 24-Inch Cutterhead Pipeline Dredge and Attendant Plant for Dredging in Alabama, Mississippi, and Florida

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, “Consolidation of Contract Requirements.” My review resulted in the following findings:

FINDINGS

1. Introduction: The Mobile District plans to solicit offers and award an IDIQ SATOC for a 24” cutterhead pipeline dredge and attendant plant for dredging in Alabama, Mississippi, and Florida. The primary requirements are several Federal navigation channel dredging projects. The SATOC will meet dredging requirements under North American Industry Classification System (NAICS) code 237990 and is estimated not to exceed The Mobile District has conducted market research that demonstrates the consolidation of this procurement is both necessary and justified.

2. Description of Procurement Action:

a. Project Description:

(1) The Mobile District is tasked with maintaining area harbors, rivers, waterways, channels, and bays within Alabama, Mississippi, and Florida. Among these are requirements for dredging of Federal navigation channels. The Mobile District has utilized civil works funded, multi-year IDIQ SATOCs for over ten years to provide flexible and effective management of deep channel dredging requirements on both a scheduled and an as needed basis. Each project is assigned a Project Delivery Team (PDT) comprised of various organizational elements within the

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f. Rationale for Consolidation:

(1) In order 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 a lesser degree of consolidation. Such benefits may include qualitative or 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, and better terms or conditions. 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 critical to the agency’s mission success and the procurement strategy provides for maximum practicable participation by small business. For this procurement, the quantifiable benefits of consolidation exceed the standard set forth in FAR 7.107-2(d). See Section 5 analysis below for the benefits of this proposed consolidated acquisition.

(2) The Mobile District’s decision to consolidate the requirements under this proposed solicitation is primarily based on the anticipated cost savings of mobilization and demobilization (mob/demob) costs. Utilizing an unrestricted IFB process will allow the Mobile District to obtain binding pricing on the required dredging services and will enable the district to engage the successful contractor in a timely manner to execute requirements for harbor dredging in Alabama, Mississippi, and Florida. A substantial cost in Federal navigation channel maintenance dredging project is the mob/demob of dredges into the project area. Consolidation allows the Government to realize greater savings by using a single contractor’s dredge equipment to maintain a group of project areas concurrently, which reduces the cost of moving dredges unnecessarily in and out of the areas, as only one mob/demob will be allowed under the contract. If the mob/demob costs are not combined, as they are in a consolidated procurement, the overall price to perform the work will increase.

With limited funds available for dredging work, the mob/demob costs subtract from the dredging budget, impacting how much actual dredging can be accomplished. A reduction in dredging work can compromise safe navigational access to these channels, increase vessel delays, increase transport costs, and unnecessarily increase ship traffic delays.

Additionally, consolidation of these dredging areas allows synchronization of operations by improving the coordination and collaboration required to efficiently schedule dredges, accommodate environmental challenges, and restore project depths in the channel areas.

Lastly, there are very few contractors with 24” cutterhead pipeline dredges available, and these same contractors typically compete for the same dredging contracts around the nation. A contractor that wins a contract for a certain geographical area will have a significant advantage over future competitions in that area due to mob/demob costs. In the case of dredging, competition can actually be limited when multiple solicitations are issued instead of consolidating the requirements, particularly when the remaining contractors are committed to other contracts within or outside the Mobile District. Multiple solicitations can also significantly increase contract costs because the reduction in competition allows the remaining available contractors to increase their pricing.

Consolidating this procurement actually enhances competition given the magnitude of the project and the limited pool of contractors. Use of an IDIQ contract is appropriate IAW FAR 16.50l-2(a), when exact times and/or exact quantities of future deliveries are not known at the time of award.

FAR l6.504(b) indicates that the Contracting Officer may use an indefinite-quantity contract when the Government cannot predetermine, above a specified minimum, the precise quantities of supplies and services that the Government will require during the contract period, and it is inadvisable for the Government to commit itself for more than a minimum quantity. Accordingly, the above justification falls in line with consolidating these dredging efforts.

3. Applicable Statutes/Regulations: 15 U.S.C. § 657q, FAR 7.107-2, and AFARS 5107.170.

4. Results of Market Research: To ensure that small business concerns are given appropriate opportunities to participate as prime contractors and subcontractors in Federal procurements, the Mobile District conducted market research based on historical acquisition information, which includes review of recent market research results from the past three years of similar or identical requirements under NAICS code 237990 with a Small Business Size Standard of $32.5 Million. For the past three years, the Government issued annual sources sought notices for the Mobile District’s dredging requirements. These notices were publicized in the Government Point of Entry (GPE). The results showed that there were no small businesses capable to perform the job.

As stated above, the 24” pipeline requirement is deemed necessary and appropriate to effectively and efficiently perform the required maintenance dredging at the various shoal locations in Black Warrior & Tombigbee Rivers (BW&T), Tennessee-Tombigbee Waterway (Tenn-Tom), Gulf Intracoastal Waterway (GIWW), Biloxi Harbor and Mobile River, and therefore is required to satisfy the minimum needs of the Agency.

Based upon procurement history, the targeted pool of contractors is fully capable of performing the consolidated requirement and their ability to compete will not be negatively impacted by this approach. Therefore, based on this analysis, the benefits of consolidation outweigh any negative impact to small business competition and enhances competition given the magnitude of the project and the limited pool of contractors.

5. Alternate Contracting Approaches Considered and Rationale for Rejection: The Mobile District considered alternative contracting approaches including multiple consolidated SATOCs (one per state) and to a lesser degree a stand-alone “C” type contract. Multiple SATOCs (issuing one per state) is rejected due to the mob/demob and scheduling impacts identified below as well as the fact that some projects cross state lines and cannot be pinned to a single state. A Multiple Award Task Order Contract (MATOC) approach is not considered as a viable alternative because it would not represent a lesser degree of consolidation and would not achieve the mob/demob savings possible with a single contractor.

a. Alternative: Stand-Alone “C” Type Contracts: The District considered the award of multiple stand-alone “C” type contracts to perform the required maintenance dredging work.

While this approach could provide a lesser degree of consolidation, or no consolidation at all if individual contracts are awarded for single requirements, the benefits of the SATOC approach substantially exceed the disadvantages of consolidation for the reasons outlined below. As discussed in Section 4, Market Research, there is a very limited known pool of contractors who are capable of performing the required scope of work, and most of those contractors are engaged in other maintenance dredging operations nationally, so competition can be very limited.

(1) Quality: While “C” contract competitions generally give the Government the opportunity to avail itself of a wider range of potential contractors for each project, that does not necessarily hold true for dredging because of the limited contractor base and capacity from which to pull. As indicated earlier, historically only three contractors have responded to IFBs. Moreover, as also noted above, the iterative process of working with one contractor under a SATOC tends to generate a more thorough shared understanding between the contractor and Government for the Government's requirements and procedures.

(2) Acquisition Cycle: Civil works funds are not tied to a specific FY appropriation and is not a substantial factor in determining requirements; however, while the funding does not generally expire, if they are not generally expended the following fiscal years may see a reduction in overall civil works funds available to the district. It is beneficial for the district to have a contract vehicle that allows expedient funding for task order awards. The District addresses this budgetary uncertainty with regular IDIQ acquisition actions to create capacity to accomplish a customer’s known requirements, and to respond to those that arrive on short-notice.

(a) In addition to building capacity, the use of task orders under a SATOC streamlines the procurement process under a regimen that is significantly more expeditious than a “C” contract scheme. Specifically, task orders under a SATOC do not require advance notice, voluminous solicitations and proposal submissions, and the evaluations can be streamlined. As compared to awarding a stand-alone “C” contract, it is estimated that placing task orders under a SATOC reduces acquisition time from 140 to 30 days on average for each project.

(b) In addition to the quality benefits resulting from the iterative process of negotiating and executing maintenance efforts, contractors are in a stronger position to stabilize relationship with their bonding company(s) and subcontractors when awarded larger, more predictable, contracts thus reducing risk to the Government during execution. Contracts for dredging have a unique advantage in that the proposed rates remain constant through-out the life of the contract. The Government knows the exact cost of the effort and thus the negotiations are based upon level of effort and not a fluctuating cost of various labor rates. Additionally, SATOC contracts have the unique advantage in that after receipt of proposals, the Government has the ability to virtually conduct continuous scope and cost negotiations to arrive at the best scope and cost for the work in an efficient manner. In the formal acquisition process for a “C-Type” contract, the ability to react quickly and as needed by mission requirements cannot be accomplished in the same expedited manner. Information flow is restricted to formal Requests for Information (RFI) with responses provided to all potential offerors.

Answers to RFIs often times result in more RFIs and the process drags on. As a result of this rigid process for the advertisement of MATOCs and “C” contracts, it is much more time consuming than a SATOC advertisement.

(3) Terms and Conditions: Other than request for proposal (RFP) requirements and proposal submissions, there is essentially no difference between the contractual terms and conditions for construction or repair project executed under a SATOC or a “C” contract. However, in accordance with Sec 835 of the NDAA of 2017, task orders, are not subject to Agency or Government Accountability Office (GAO) protests under $25M. On the other hand, all “C” contracts, regardless of value, are subject to protest for any number of reasons. The use of “C” contracts thus put procurement and award schedules at greater risk of delay than task orders under SATOCs.

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. In order 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-29041 5, Aug 8, 2002, and Outdoor Venture Corp., B- 299675; B- 299676, Jul 19, 2007.)

d. Applicability of CICA Bundling Principle: This procurement is intended to be a full and open, unrestricted IFB. Bundled procurements combine separate requirements into one contract; thus, they have the potential to restrict competition in violation of CICA by excluding firms that can provide only a portion of the bundled requirement. However, substantial cost savings achieved through the reduction of duplicative efforts and operational efficiency can be a reasonable basis for restricting competition where requirements are bundled. As demonstrated above, substantial cost savings will be accomplished through consolidation of these requirements.

These projects have been consolidated in the past into an IDIQ contract. This action does not unreasonably restrict competition. As stated above, no small businesses responded to the Market Research (or are currently known) that is capable of performing this work. There are three known dredging contractors with the ability and equipment to perform this work and who historically bid on contracts for work within the Mobile District. These contractors are Mike Hooks, Inc., Inland Dredging Company, and Great Lakes Dredge & Dock Company. While these contractors did not respond to the market research, the District fully expects these contractors to bid on this contract, because the scope of work is the same as it has been in past years. Additionally, the District has no information nor received any comments from the dredging community to suggest that placing each navigation project under separate contracts, or regrouping them in some other manner, would create interest and allow other contractors to perform this work.

7. Considerations, Facts, and Reasoning Supporting the Determination: All facts, considerations and rationale have been covered previously in the findings. The Small Business Coordination Record (DD Form 2579) has been 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: Although this unrestricted IDIQ SATOC 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 maintenance dredging on District navigation channels. The quantifiable benefits of consolidation, of the estimated contract value, exceed the standard in FAR 7.107-2(d)(1)(i) and are further supplemented by the qualitative benefits.

Standalone “C-Type” contracts were considered but either would result in significantly higher costs and increased acquisition cycle time. Additionally, it is significantly less burdensome for the District’s Contracting and Operations Divisions to administer one SATOC than numerous “C” contracts. 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 potential number of efforts to be executed in support of the District’s Civil Works program, and the consolidated approach provide advantages that substantially exceed the benefits of an approach that provides a lesser degree of consolidation in consideration of either the quantitative or qualitative benefits.