C2E Consolidation DF.pdf

DEPARTMENT OF THE AIR FORCE AIR FORCE MATERIEL COMMAND (AFMC)

AIR FORCE INSTALLATION AND MISSION SUPPORT CENTER (AFIMSC)

AIR FORCE INSTALLATION CONTRACTING CENTER (AFICC)

772nd ENTERPRISE SOURCING SQUADRON

DETERMINATION AND FINDINGS

CONSOLIDATION OF CONTRACT REQUIREMENTS FOR COMPREHENSIVE

CONSTRUCTION & ENGINEERING (C2E)

1. Contracting Activity: 772nd Enterprise Sourcing Squadron/PKA (772 ESS/PKA)

2. Regulation/Authority: This Determination and Findings (D&F) was prepared in accordance with Federal Acquisition Regulation (FAR) 1.704 and 7.107-2, and 15 U.S.C. 657q. This D&F supports the determination to consolidate requirements previously performed under two (2) separate contracts.

3. Requirement: 772 ESS is tasked with acquisition of construction services for facilities sustainment, restoration, modernization (FSRM) worldwide. The requirement includes a full range of design, construction, and engineering activities necessary to meet Air Force and other customer requirements. Projects will be located at various locations, worldwide. This contract is not a mandatory vehicle, therefore MAJCOMs and FLDCOMs will have the option of using their own contracts if they choose.

The acquisition will be competed as Full and Open (F&O) with a Small Business Set-Aside (SBSA).

Projects less than or equal to $50M, where performance of work is to occur within the Contiguous United States (CONUS) and its outlying areas, or within austere, hostile, and contingency locations, that contain a Firm-Fixed-Price (FFP) or Fixed-Price (FP) Economic Price Adjustment (EPA) pricing structure, will be set-aside for competition amongst small business awardees. Any project, regardless of location, greater than $50M or any project requiring Cost-Plus-Fixed-Fee (CPFF) pricing structure will be competed amongst the F&O awardees. Any projects taking place outside the CONUS or outside its outlying areas will be competed amongst F&O awardees. If after an RFI is submitted to the SBSA portion, responses, or lack of responses, indicate that a project taking place in an austere/hostile/contingency location cannot be competed amongst the SBSA, it will be competed amongst the F&O awardees (unless an exception applies).

The Government anticipates awarding fifteen (15) small business contracts for the SBSA portion, which includes three (3) firms with 8(a) certification; two (2) Women Owned Small Businesses (WOSB), one (1) Service-Disabled Veteran Owned Small Business, and one Historically Underutilized Business Zone Small Business (HUBZone). The Government anticipates awarding twelve (12) contracts for the F&O including one (1) firm with 8(a) certification. In order to meet the requirement of Executive Order 14091, Section 7, which calls for the creation of spend-goals for socially and economically disadvantaged individuals and of FY2024 NDAA Sec.863, award of three

(3) 8(a) reserves as well as one (1) SDVOSB are included as part of the acquisition strategy under the SBSA portion of this MATOC IDIQ. The spend goals (percentage of contract dollars) for Small Business is 51%, Small Disadvantaged Businesses (SDB) is 15%, and for SDVOSB is 5%. Spend projections for each additional socio-economic category are as follows: SDB is 37%, HUBZone is 1%, and WOSB is 8%. The total award is anticipated to be twenty-seven (27) contracts. In addition, the ability to have a flexible pricing arrangement which facilitates different needs is essential.

Consolidation of these requirements is in best interest of the Government in order to achieve improved utilization of the capacity of small business, administrative costs savings for small businesses, increased participation opportunities for small business, lower vendor proposal costs, better application of Government administrative resources, and improved responsiveness to critical requirements for the Air Force mission. This consolidation will also help implement the requirements set forth in Executive Order (EO) 14091 for increasing Small Disadvantaged Business participation and the 25 Jan 24 OMB memorandum for increasing small business participation on Multiple Award Contracts.

FINDINGS

1. Background: This is a follow-on Indefinite Delivery, Indefinite Quantity (IDIQ) contract that continues to satisfy existing/ongoing requirements to support design and construction of new facilities, infrastructure; repair, renovate and/or restore existing facilities and infrastructure.

772 ESS awarded the eight (8)-year Regional Engineering & Construction (RE&C) (valued at $2.5B) and eight (8)-year Worldwide Engineering & Construction (WE&C) (valued at $4.8B) as two separate suites of Multiple Award Task Order Contracts (MATOC) in 2017. The contracts currently provide FSRM construction services worldwide and are reliant upon each other. Task Orders occurring in one of three awarded regions (East, West, and Central) within the CONUS valued at less than $25 million are awarded on the RE&C, which is a 100% SBSA MATOC. Task orders greater than $25 million; task orders crossing any of the three regions within the CONUS; task orders in outlying U.S. areas; and/or task orders occurring Outside the Continental United States (OCONUS) are awarded through the F&O WE&C contract. Seventeen (17) Small Businesses were awarded contracts across the three regions on the RE&C. Eleven (11) firms (nine (9) Other Than Small Businesses (OTSB), one (1) small business, and one (1) 8(a) were awarded contracts on the WE&C, which had one (1) 8(a) reserve.

Geographically, the RE&C West Region consists of the following U.S. states: Idaho, Washington, Oregon, Utah, Nevada, California, Arizona, Alaska, and Hawaii; the RE&C Central Region consists of the following U.S. states: Minnesota, North Dakota, South Dakota, Montana, Wyoming, Nebraska, Iowa, Missouri, Kansas, Colorado, Arkansas, Oklahoma, New Mexico, Texas, and Louisiana; and the RE&C East Region consists of the following U.S. states and Puerto Rico: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Ohio, Michigan, Indiana, Wisconsin, Illinois, Kentucky, West Virginia, Maryland, Virginia, North Carolina, Tennessee, South Carolina, Georgia, Alabama, Mississippi, Florida, and District of Columbia.

To date, a total amount of $377,799,129 has been obligated under the RE&C West Region, a total amount of $661,703,329 has been obligated under the RE&C Central Region, and a total amount of $334,672,484 has been obligated under the RE&C East Region, for a total amount of $1.37B obligated under the RE&C suite of MATOC IDIQs. To date, a total amount of $1,599,496,028 has been obligated under the WE&C MATOC IDIQ. The 8(a) receiving an award for the 8(a) reserve on the WE&C was unsuccessful in receiving any subsequent task orders based on a business decision to not propose on the WE&C, but only RE&C Task Orders; however, the other Small Business on the WE&C had 15 task orders, valued at $125.5M.

The C2E MATOC will have the same basic construct as the RE&C and WE&C suites of contracts with a SBSA and a F&O portion that includes an 8(a) reserve; however, small business opportunities are greatly increased. The RE&C three region construct (West, Central, and East) directed projects that crossed multiple regions to the WE&C, which meant award outside the SBSA. Eliminating the regions in the C2E SBSA means that all CONUS and outlying area work under $50M will go to the SBSA. Both the larger SBSA ($25M RE&C to $50M C2E SBSA), eliminating regions, and adding outlying areas increase small business participation as directed by the 25 Jan 24 OMB memorandum.

C2E is all CONUS and outlying areas under $50M for the SBSA. The RE&C SBSA set-aside was for up to $25M. It was determined for C2E that the small businesses had both experience and sufficient bonding capability to increase the set-aside to $50M. The team also determined that small business had sufficient experience in all 50 states in the United States and the outlying areas of the United States and could also perform in austere, hostile, and potentially, contingency locations. Incorporating these changes into the C2E contract greatly increases small business participation. Additionally, Small Businesses can propose and be awarded contracts on both the SBSA as well as the F&O portion, in addition to the 8(a) reserve on the F&O. SBA acceptance will be requested for 8(a) reserves. The C2E team conducted extensive market intelligence including Requests for Information, questionnaires, Industry Days, Society of American Military Engineer outreach events, and market analysis of federal spending and industry capability and determined increased small business participation was appropriate. The three regions concept established in the RE&C and WE&C suite of contracts was determined to be ineffective, as most of the small business contractors were awarded contracts in all the regions.

As discussed, it was determined that increasing the small business single award set-aside threshold to $50 million was appropriate; however, increasing it beyond that would greatly impact small business participation, as market analysis determined few small business firms possessed elevated single bonding beyond $50 million and $100 million aggregate. Furthermore, the C2E contract provides for Task Orders that require up to $100M single bonding and contains services in OCONUS locations. Market Research indicates that there are an insufficient number of Small Businesses with an elevated level of bonding to set the requirement aside entirely for Small Business. While small business may be able to participate in the F&O portion and receive awards, it is not reasonable to expect small business to perform all task orders awarded under the F&O portion of the MATOC, while also providing offers that are competitive in terms of fair market prices, quality, and delivery. Consequently, it was determined that it was not appropriate to set aside the portion of C2E (which was previously acquired via the WE&C) that requires a greater bonding capacity due to the size and the scope of the individual construction projects.

2. Description of Procurement Action: 772nd ESS intends to compete this requirement on SAM.gov.

The Air Force's proposed strategy is to consolidate two separate contracts into one (1) acquisition.

The contract is estimated to be awarded in the second quarter of FY2025 with a base ordering period of five (5) years, and five (5) one-year option periods. The total contract ceiling value is estimated at $15B. Task orders are expected to be worldwide, including, but not limited to, Department of Defense (DoD) installations Worldwide. TOs will be issued for either (1) Design-Build (DB) Construction or (2) Design-Bid-Build (DBB) Construction. Standalone design services without accompanying construction services are excluded from the services to be provided in this contract.

3. Market Research: The source selection team conducted significant market research to identify and assess the capability of large and small businesses within the marketplace to meet the government's requirements, as well as to obtain industry's input to the maximum extent practicable.

Market research information is depicted in the Market Intelligence Report dated, 13 July 2023.

a. North American Industry Classification System (NAICS): C2E will utilize NAICS code 236220, Commercial and Institutional Building Construction. The U.S. Small Business Administration established the small business concern size standard for this NAICS code of $45M.

b. Request for Information (RFI): The C2E team posted an RFI on 2 June 2023, with revisions posted on 14 June 2023, that included draft Sections L (Instructions to Offerors) and M (Evaluation Criteria), to include HTRO self-scoring matrices, draft procedures (to include on- /off-ramping), and ten (10) specific questions to industry in order to better determine the evaluation criteria, as well as how to validate that criteria appropriately in accordance with the

HTRO method. Responses to the RFI were received from fourteen (14) vendors. In response to the RFI, an additional sixty-five (65) questions were submitted for Government response. The questions industry also submitted provided insight and information on competition, small/large business participation, as well as insight into the Government’s planned acquisition method.

c. Small Business Consideration: After further review of these vendors, small business has sufficient presence in the market to perform a significant portion, but not all of this effort. Based on Industry Days the vendor responses to the RFI posted on SAM and the capable vendors, there is a reasonable expectation of obtaining offers from two or more responsible small businesses in the marketplace. In addition, keeping in line with the previous worldwide strategy, the F&O contains an 8(a) reserve similar to the WE&C.

d. Industry Engagement Day / Industry Day 2: Industry Engagement Day was held on 22-24 March 2023 with 98 vendors and 188 participants in attendance, and 44 one-on-one sessions to discuss recommendations and responses for acquisition strategy approach, performance bonds, past performance evaluation periods, and thresholds. Industry Day 2 was held on 28 September 2023 to have a meaningful conversation on the utilization of the Highest Technically Rated Offeror (HTRO) method, self-scoring matrices, and cross-reference matrix.

4. Analysis and Rationale for Rejection/Acceptance of Alternatives: Analysis that consolidation of this procurement is in the best interest of the Government.

a. Course of Action (COA) #1: Current Approach - Perform two (2) follow-on FAR Part 15 negotiated acquisitions resulting in award of two (2) separate MATOC IDIQs.

The first alternative considered, involves conducting multiple requirement-specific acquisitions, resulting in a total of two (2) follow-on FAR Part 15 negotiated acquisitions for a five (5)-year base period to include five (5) one(1) -year options.

The benefits to this approach include:

• Continued support for known requirements.

• Award one (1) 100% set aside for small business MATOC IDIQ, achieve small business goals and continue to grow experienced small businesses in the area of FSRM construction, and one (1) F&O MATOC IDIQ which would allow for small businesses to compete amongst small and large businesses.

The risks to this approach include:

• Continued acquisition cycle inefficiencies experienced during the preceding contracts.

• Increased risk for administrative inconsistencies or errors when managing multiple acquisitions.

• Inefficient use of Government resources necessary to manage two (2) separate MATOC

IDIQs.

• Additional cost increase to the contractor associated with developing multiple proposals and greater cost to the Government in executing multiple acquisitions and administration of multiple contracts.

• Missed opportunity for $25M threshold increase to SBSA.

The risks associated with this alternative contribute to a high probability of overall increased cost and an inefficient use of manpower required to make this alternative effective. Since the benefits of this alternative do not substantially exceed the risks, Alternative #1 is not considered a viable option for the acquisition of these requirements.

b. COA #2: No IDIQ – Do not perform any follow-on acquisitions resulting in no award of MATOC IDIQs.

The second alternative considered is not conducting a follow-on acquisition to the RE&C and WE&C IDIQs. The using commands would be responsible for sourcing their requirements using their own contractual vehicles (such as “C” contracts or local IDIQs) or transferring funds outside the Air Force to use external contractual vehicles via MIPRs (such as USACE IDIQs).

The benefits to this approach include:

• Greater flexibility in acquisition approach, to include pricing structures and evaluation criteria.

• Loss of the economies of scale achieved through the centralization of FSRM construction acquisition activities. FSRM construction acquisitions and administration would default to the MAJCOMs and local organizations contracting for their construction projects, increasing costs to both source and administer otherwise similar construction projects. The increased sourcing costs are due to developing documentation multiple times that would have only been developed once at the basic IDIQ. The increased administration costs result from every contract action being tracked uniquely over its lifecycle. There is also a reduction of leverage on individual suppliers as they are dealing with many customers instead of one customer, the 772 ESS.

• Increased costs to the Air Force and the SBA to meet similar levels of small business participation. These increased costs would be incurred as the Small Business office would review every requirement versus reviewing requirements at the basic level of the IDIQ. This increases both the number of touch points with MAJCOMs and local organizations and increases the amount of Small Business Office and SBA labor spent reviewing similar requirements.

• Continued acquisition cycle inefficiencies experienced during the preceding contracts.

• Increased risk for administrative inconsistencies or errors when managing multiple acquisitions.

The risks associated with this alternative contribute to a high probability of overall increased cost and an inefficient use of manpower required to make this alternative effective. Since the benefits of this alternative do not substantially exceed the risks, Alternative #2 is not considered a viable option for the acquisition of these requirements.

c. COA #3: Consolidated Source Selection

The third alternative considered is conducting a source selection to consolidate the follow-on IDIQ to the RE&C and WE&C suites of contracts into a single suite of IDIQ MATOCs with a SBSA that includes three (3) 8(a) reserves, one (1) SDVOSB; two (2) WOSBs; one (1) HUBZone; and a F&O portion that includes an 8(a) reserve. Small business in major disaster areas will be accorded a preference consistent with 15 U.S.C. 644(f).

The acquisition strategy provides maximum practicable opportunities for small business and all steps have been taken to include small business concerns in the acquisition strategy.

The benefits to this approach include:

Support of mission criticality through combining Government resources to allow for two large construction source selections to occur concurrently; without such consolidation, current Government capacity would not be possible and would be forced to complete either the CONUS contract or Worldwide contract. The ramifications would potentially include (but may not be limited to): 1. Award a worldwide vehicle only, potentially leading to limited awards to small businesses, ultimately affecting task order awards to small businesses and not meeting small business goals, 2. Awarding either a CONUS or Worldwide vehicle only, requiring FSRM construction acquisitions and administration to default to the MAJCOMs and local organizations contracting for their construction projects, increasing costs and significant time to both source and administer otherwise similar construction projects, 3.

Awarding only one vehicle could potentially stress awarded firms under the vehicle past their capacity to perform due to a limited number of firms for the amount of work required. By combining the RE&C and WE&C and reorganizing the competitive pools, the Government is able to leverage a greater capacity of small business across CONUS rather than isolating businesses to specific regions, thus building the expertise of those businesses and creating a larger industrial base for future requirements. Likewise, the reorganization allows the Government to leverage small businesses in outlying areas and austere locations, again, promoting experience of small businesses in this area and increasing the industrial base capacity to meet requirements. Furthermore, reducing the number of contracts from 4 to 2 for C2E offers several benefits to the administrative burden on small businesses.

o With fewer contracts to monitor, small businesses can allocate their resources more efficiently, focusing on delivering quality work rather than navigating complex administrative processes.

o Managing multiple contracts incurs additional costs related to administrative personnel, compliance efforts, and paperwork. By reducing the number of contracts, small businesses can save on these overhead expenses, allowing them to reallocate funds to other critical areas of their operations, such as innovation or workforce development.

o Compliance requirements can be overwhelming for small businesses, especially when dealing with multiple contracts. Consolidating contracts simplifies compliance procedures, making it easier for small businesses to ensure they are meeting all necessary regulations and requirements.

o With reduced administrative burdens, small businesses can devote more time and resources to improving their competitiveness.

o With a more streamlined contracting process, communication channels can be clearer, fostering a stronger partnership that benefits both parties.

Continued support for known requirements.

Better efficiencies and use of Government resources through reduced costs and time associated with sourcing and administration. Approximately $650k is spent yearly on source selection efforts, assuming the team is comprised of six (6) individuals with a mix of GS-12 and GS-13 (or equivalent) employees working on a full-time basis. Further assuming that a source selection takes two years, approximately $1.3M is spent on one source selection team. By doing only one source selection rather than two, the Government is saving approximately $1.3M. This does not include the cost of the review process, or those positions associated with providing advice, such as AFICC/KPF, AFICC/KPS, AF/JACQ, AFICC/KA, AFIMSC/JAQ and AFIMSC/SB, associated with source selections, which has included nine or more individuals at various stages in the source selection process. The grade/rank of these individuals vary from GS-13 to GS-15s (or equivalents).

Better overall life-cycle risk management, including mitigating risks of compliance errors, resource allocation challenges, and performance risks managed at the MATOC level. The time, cost and manhour savings can be converted into not only administrative cost savings on C2E but also on the opportunity represented by allowing AFICC to redirect those resources and savings into supporting other critical programs that must be prioritized by AFCEC and the DAF.

Continued opportunities for small business as they can compete on both the SBSA and F&O portions, achieving small business goals to increase small business experience in FSRM construction. Small businesses have the experience and sufficient bonding capacity to compete in the SBSA, and small businesses have sufficient experience in all 50 United States and the outlying areas of the United States and could also perform in austere, hostile, and, potentially, contingency locations to compete in the F&O portion alongside large businesses.

Small business may not realistically be able to solely compete in the F&O portion due to a high bonding capacity of $100M single and $200M aggregate; although, through teaming arrangements with larger businesses with higher bonding capacity, this risk could be mitigated.

COA #3 is considered the recommended approach as the benefits outweigh and substantially exceed the risks. An analysis of this alternative in comparison to previous alternatives indicate COA #3 also exceeds the benefits of the other strategies. A consolidated IDIQ arrangement permits contracting for maximum flexibility and streamlined regulatory approvals process.

In accordance with FAR 7.107-2(e)(1) Consolidation is necessary and justified as -

(i) C2E is critical to mission success as it affords expedited award procedures for critical construction services for FSRM throughout the Air Force Enterprise worldwide as well as providing a critical tool for contingency, hostile, and austere locations; and

(ii) This consolidation will provide for substantial and maximum practicable participation by small business, thus increasing industrial base and opportunities for agile responses to critical needs.

5. Coordination with the Office of Small Business Programs: This determination was coordinated with the Secretary of the Air Force Small Business Office (SAF/SB) as required by 13 CFR 125.2 and FAR 7.107-2, in addition to the AFIMSC/SB. Additionally, the acquisition strategy was discussed with the Small Business Administration.

6. Bundling: This Consolidation does not constitute Bundling, FAR 2.101 defines bundling is a subset of consolidation that occurs when two or more requirements performed under separate small contracts are combined into a solicitation for a multiple award contract that is likely to be unsuitable for award to a small business concern. In this case, the government has determined through market research and feedback from small business entities that both the SBSA and F&O portions of C2E are suitable for Small Business participation and small businesses are willing and capable of performing as prime contractors for the F&O requirements as well as the SBSA portion. Specifically, during the administration of the WE&C, a small business contractor successfully received 15 task orders valued at $125.5M, and market research indicates that an award to a small business contractor is probable. Furthermore, the chosen approach increases small business opportunity due to increase in SBSA threshold from $25M to $50M, as well as the increase in geographic locations in which small businesses will perform (e.g. additional US outlying areas as well as austere, hostile, and contingency locations). Therefore, this is not a bundled requirement as defined IAW FAR 2.101, since this approach further demonstrates the consolidated effort is highly suitable for Small Business participation and enhances opportunities for greater capability and capacity.

DETERMINATION

Based upon the findings stated above and pursuant to FAR 7.107-2 , I hereby determine the expected benefits of consolidation are critical to the mission success of 772 ESS, AFCEC and other users, and the procurement strategy provides for maximum practicable participation by small business.

Consequently, I hereby determine the proposed consolidation of the current RE&C and WE&C vehicles into one vehicle that includes both a SBSA with reserves for three (3) firms with 8(a) certification; one (1) SDVOSB, two (2) WOSBs, and one (1) HUBZone; and a F&O that includes an 8(a) reserve is both necessary and justified and is in the best interest of the Government.