Justification_and_Approval_(Liberty_Village_LPG _Redacted).pdf

For Official Use Only

COORDINATION AND APPROVAL DOCUMENT

CONTRACTING ACTIVITY: 48th Contracting Squadron (48CONS), RAF Lakenheath PROGRAM/PROJECT: Liberty Village LPG Bridge Reacquisition AUTHORITY: 10 U.S.C. 2304(c)(1), as implemented by FAR 6.302-1(a)(2)

ESTIMATED TOTAL CONTRACT COST: £381,780 / $642,403

TYPE OF J&A: Individual

COORDINATION:

48CES

Requiring Official: ______________________________________________ _____________ Mr. Keiron Mullen, 48 CES/CEOO Date Signed

DSN: 314-226-1932, COMM: (44) 01638-52-1932

REVIEWED BY:

48CONS/LGCB

Contracting Officer: ______________________________________________ _____________ Mr. Steven F. Quillin, 48 CONS/LGCB Date Signed

DSN: 314-226-2393, COMM: (44) 01638-52-2393

APPROVED BY:

48CONS/DBO

Chief of Contracting Office: ___________________________________ _____________ Mr. Michael N. Hogan, 48 CONS/DBO Date Signed

DSN: 314-226-2094, COMM: (44) 01638-52-2094

JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

I. CONTRACTING ACTIVITY.

The contracting agency responsible for the proposed contracting action is the 48th Fighter Wing, 48th Contracting Squadron (48 CONS), RAF Lakenheath, Unit 5070, Box 270, APO, AE 09461.

This Justification for Other than Full and Open Competition is prepared with regard to the acquisition of liquid petroleum gas (LPG) utility services (supply and incidental system maintenance) in support of a sole-source contract action for the 48th Civil Engineer Squadron (48 CES), RAF Lakenheath, United Kingdom (UK).

II. NATURE AND/OR DESCRIPTION OF THE ACTION BEING PROCESSED.

The resultant contract action will be procured IAW FAR Part 12 – Commercial Items, FAR Part 13

– Simplified Acquisition Procedures and FAR Part 41 – Utility Services. The contract will be awarded as a new, hybrid Firm-Fixed Price (FFP) contract with provision to negotiate and subsequently change pricing associated with the primary cost driver under this contract action, LPG. Because LPG is a direct derivative of crude oil, the associated raw cost is strictly dependent upon crude oil pricing; resultantly changing on an unpredictable basis that cannot be realistically fixed. As prescribed by FAR Part 41 for Utility Services, the application of FAR Clause 52.241-8, CHANGE IN RATES OR TERMS AND CONDITIONS OF SERVICE FOR UNREGULATED

SERVICES will be utilized under the contract to change rates, as a means to accommodate upward and downward fluctuations in the resultant contract price. The process for price negotiations and subsequent changes in contract pricing will be specifically prescribed under the aforementioned clause; ultimately as a means to achieve pricing that is fair and reasonable to both the Government and the contractor, on an ever-changing basis.

Calor Gas Ltd’s current sole-source contract FA5587-12-P-0019 expired 30 September 2012 and the maximum six (6) month option period to extend services under this contract were exercised through 31 March 2013. The extension of services were exercised for this timeframe to accommodate the pending results of a concurrent solicitation fulfilling the same requirements for LPG on a United Kingdom (UK)/MOD-wide basis, issued by the Ministry of Defense (MoD) Glasgow UK Central Contracting Office. 48 CES’ utilization of MoD’s contractual framework for LPG utility services will be commensurate with like requirements for other base utilities at RAF Lakenheath such as water, electric, and oil. As the MoD was strategically-sourcing LPG on a UK-wide basis for the MoD, cost savings were anticipated due to the larger volume ordered (i.e.

economies of scale). Based on the annual LPG consumption levels at Liberty Village, the pricing under MoD’s contract resulted in a pence per liter price for LPG which represent an approximate cost savings of $280K annually. Not accounted however was the expected likelihood that under UK LPG law and regulation, the incumbent contractor currently under contract with 48 CES, Calor Gas Ltd, would need to transfer ownership of their LPG distribution system at Liberty Village to the MoD’s awardee, or an entirely new system be installed and commissioned. Nor was the aspect of transition/transfer considered or offered by the MoD during the pre-award phase of their acquisition by means of allowing the opportunity of competing LPG suppliers to attend a site visit/assessment or feasibility study at RAF Lakenheath.

The MoD announced the award of their contract on 31 January 2013, which was resultantly protested. While the protest was not upheld, it led to a resultant delay in the commencement date of MoD’s contract until 12 February 2013. Subsequently, the site assessment timeframe by 48 CES with the MoD’s awardee for purpose of consideration by both parties in conducting a feasibility study to transition the supply of LPG to Liberty Village accordingly (from Calor to the MoD’s awardee), was delayed. Resultantly, the sole source contract action subject to this J&A represents a continuation of performance with the incumbent contractor currently under contract, Calor Gas Ltd, with 48 CONS and 48 CES, to bridge the provision of LPG supply to 48 CES’ Liberty Village housing area during the assessment of the system by the MoD LPG supplier.

III. DESCRIPTION OF THE SUPPLIES/SERVICES REQUIRED TO MEET THE AGENCY’S

NEEDS

Under the contemplated contract, Calor Gas Ltd will provide LPG utility services (supply and system maintenance) in support of a 100 metric ton capacity LPG distribution system to sustain heating and hot water to six-hundred and six (606) housing units at RAF Lakenheath’s military housing area Liberty Village. Calor maintains the supply of LPG to their system at a fourteen (14) day minimum requirement level and performs inspection and maintenance each time supply of LPG is provided, to maintain the interoperability of the condensing heating boiler system and the associated pressure limits in safely supplying LPG to each housing residence. The period of performance for this effort will be six (6) months beginning 1 April 2013 and ending 30 September 2013. Approximately 818,000 liters of LPG at an estimated total cost of $642,000 will be acquired, and the anticipated contract will be funded with fiscal year 2013 Military Family Housing (3Y) funds.

IV. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION.

10 U.S.C. 2304(c), as implemented by FAR 6.302-1 -- Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements, further prescribed by FAR 6.302-1(b)(3), When acquiring utility services, circumstances may dictate that only one supplier can furnish the service.

V. DEMONSTRATION THAT THE CONTRACTOR’S UNIQUE QUALIFICATIONS OR

NATURE OF THE ACQUISITION REQUIRES THE USE OF THE AUTHORITY CITED

ABOVE (APPLICABILITY OF AUTHORITY).

The LPG distribution system to which this contemplated action for the utility of LPG pertains, is described in Section III below with relation to its’ purpose and capabilities. Calor Gas Ltd has been providing the supply of LPG and associated maintenance of its’ distribution system at Liberty Village since initially being contracted to design and install the system under contract FA5587-05- C-R070 in September of 2005, and most recently to-date under FA5587-12-P-0019, since 1 October 2012. Unique and stringent standards to supply, maintain, and operate Calor’s LPG system as detailed below in the second subsection, and shall remain the same for the resultant bridge contract;

therefore, this acquisition is for continued performance of a highly specialized service.

The safe operating standards and tank pressure configurations of Calor’s LPG distribution system were commissioned by Calor under their initial contract, and are continually required to meet “fail to safe” configurations IAW restrictive UK LPG statutory laws and regulations entailing Health & Safety at Work Act 1974 (HSAW), Gas Safety Installation And Use Regulations 1998 (GSIUR), and Pressure Systems Safety Regulations 2000 (PSSR). These LPG regulations are issued and enforced by UK-law under the premise that the provision of LPG is a highly specialized service, and must be strictly regulated by statute to ensure public safety. Accordingly, the pressure limits and operational capacity of specialized LPG-systems are technically unique to whomever performs the installation (in the case of the immediate requirement subject to this J&A, Calor Gas Ltd), and remain proprietary with that company until ownership is transferred independently, or another system installed by an alternate company.

Due to the highly specialized nature of this requirement, the Government does not and cannot develop the internal/organic expertise to maintain and/or supply the systems, even if ownership rights were granted to re-compete the requirement. Accounting for the pending site visit/assessment and feasibility study under MoD’s recently awarded contract however, there may be potential for a direct transfer of ownership by Calor of their system, or a new distribution system installed by MoD’s contractor; if cost duplication in either case does not prove to an extent that is disadvantageous to the Government. Accordingly, the only means for the Government to evaluate the potential for the supply of LPG at 48 CES’ Liberty Village to transition to MoD’s successful offeror, is to conduct the associated site visit during the 6-month timeframe of the immediate bridge-contract action.

48 CES believes that award to any source other than Calor Gas will result in unacceptable delays in fulfilling the Air Force’s requirements. This delay would primarily result because the Government does not possess the internal/organic capability, nor authority, to assume, or immediately transfer ownership, of Calor’s highly specialized LPG distribution system. In the event MODs contractor is either authorized by Calor to assume ownership of their system, or approved by MOD to install a new system (resultant of the feasibility study by 48 CES), the transfer and/or installation of a highly specialized system of this nature would take a minimum of six (6) months to complete. Resultantly, if a contract with Calor Gas is not executed to bridge and subsequently fulfill 48CES’ LPG requirements, the utility of heating and hot water to Liberty Village will be nonexistent; rendering the entire housing area inhabitable. Associated with the closure of the housing area, military members and their families would need to relocate, significantly increasing operating costs while reducing the ability of the War-fighter to accomplish specific missions within the tri-base area of RAF’s Lakenheath, Mildenhall, and Feltwell.

Accordingly, Calor Gas Ltd is determined as the only company capable of providing the supply and services as described in Section III above, without the U.S. Air Force experiencing unacceptable delays in fulfilling its requirements.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE SOLICITED

FROM AS MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE.

The site assessment and feasibility study by 48 CES with the MoD and its’ awardee for purpose of consideration to transition the supply of LPG to Liberty Village accordingly, is resultant of MoDs acquisition; which has already solicited potential sources on a UK-wide basis. Soliciting an identical requirement concurrently was not considered practical or prudent, nor in the best interest of the Government.

VII. DETERMINATION BY THE CONTRACTING OFFICER THAT THE ANTICIPATED

COST TO THE GOVERNMENT WILL BE FAIR AND REASONABLE.

As LPG is a petroleum by-product, its price is largely dependent upon market conditions of crude oil and it is accounted that the continued volatility of associated markets may cause overly inflated prices on a fixed-priced basis FAR Clause 52.241-8 CHANGE IN RATES OR TERMS AND CONDITIONS OF SERVICE FOR UNREGULATED SERVICES will be included in the contract to ensure that the anticipated cost to the government will be fair and reasonable. This clause provides a contract mechanism to bi-laterally negotiate LPG rates monthly (on a pence per liter basis), which will ensure a fair and reasonable price not only to the Government, but also to the contractor. For the intended contract actions, the individual price elements of Calor’s proposal will also be evaluated IAW FAR Part 13.106. The Government will rely upon nationally indexed and commercially publicized pricing of LPG in the UK, as well as other RAF Lakenheath/Mildenhall LPG requirements serviced by other UK LPG suppliers, to negotiate fair and reasonable rate changes. As 48 CONS does have other LPG suppliers under separate contracts, price analysis will also entail a comparison of current prices for LPG. Additionally, proposed pricing will be compared with independent government cost estimates, and negotiated with the contract if necessary.

VIII. DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AND THE RESULTS, OR

A STATEMENT OF THE REASONS MARKET RESEARCH WAS NOT CONDUCTED.

There is no formal market research performed to support this requirement as this contract, once awarded, only serves to bridge the gap between the current contract’s expiration date of 31 March 2013; as a means to potentially transition to MOD’s contract.

IX. ANY OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL AND OPEN

COMPETITION.

Due to UK LPG-legislation, even if the Government were to acquire or assume ownership of Calor's LPG system, it is unknown whether it could be legally provided as GFE to another LPG supplier. This approach requires further analysis and coordination between the Government and UK authorities, which will be explored during the pending site visit/feasibility study; hence the need for the immediate six (6) month bridge contract

X. LIST OF SOURCES, IF ANY, THAT EXPRESSED INTEREST IN THE ACQUISITION.

No other sources expressed direct interest in the immediate contract action, subject to this J&A.

However, reference Section VI of this J&A which details interest by other sources under MoD’s LPG contract.

XI. A STATEMENT OF THE ACTIONS, IF ANY, THE AGENCY MAY TAKE TO REMOVE

OR OVERCOME ANY BARRIERS TO COMPETITION BEFORE MAKING

SUBSEQUENT ACQUISITIONS FOR THE SUPPLIES OR SERVICES REQUESTED.

The analysis and coordination between the Government and UK authorities which will be explored during the pending site visit/feasibility study, is resultant of the MoD’s contract award which did compete this requirement. To become part of the MoD’s contract would be commensurate with like requirements for other base utilities at RAF Lakenheath such as water, electric, and oil; which is currently the agencies action by 48 CONS and 48 CES, to overcome barriers to competition before making subsequent acquisitions for the supply of LPG to Liberty Village.

XII. CONTRACTING OFFICER’S CERTIFICATION.

The contracting officer’s signature on the Coordination and Approval document attached evidences this document to be both accurate and complete to the best of his/her knowledge and belief.

XIII. TECHNICAL/REQUIREMENTS PERSONNEL’S CERTIFICATION.

As evidenced by their signatures on the Coordination and Approval Document, the technical and/or requirements personnel have certified that any supporting data contained herein, which is their responsibility, is both accurate and complete to the best of his/her knowledge and belief.