JA Letter Contract.pdf

United States Department of State Office of Acquisition Management Facilities, Design & Construction Division Arlington, VA 22209

JUSTIFICATION & APPROVAL (J&A)

FOR OTHER THAN FULL AND OPEN COMPETITION

CHIEF OF MISSION RESIDENCE PHYSICAL SECURITY UPGRADE,

U.S. EMBASSY SEOUL, REPUBLIC OF KOREA

FAR 6.302-2 (UNUSUAL AND COMPELLING URGENCY)

Pursuant to FAR subpart 6.303-2, the following facts and rationale for justification to award a sole-source contract to the Korean firm Gunhwa Construction Company Limited (hereafter referred to as Gunhwa) on the basis of unusual and compelling urgency (IAW FAR subpart 6.302-2) are as follows:

1. Identification of the agency and the contracting activity, and specific identification of the document as a “Justification for other than full and open competition.”

Pursuant to Federal Acquisition Regulation (FAR) subpart 6.303-2 (Unusual and Compelling Urgency), 22 U.S. Code § 4852 (Diplomatic Construction Program), DOSAR 652.236-71 (Foreign Service Buildings Act), and 22 U.S. Code § 302 (Award of Contracts) upon the basis of the following justification, the U.S. Department of State’s (DoS), Office of Acquisition Management (AQM) proposes to enter into a sole source letter contract (Attachment 1, Draft Letter Contract, 19AQMM-20-C-0073) with Gunhwa for the proposed contractual action based on the exceptional circumstances involving a breach of security incident at the Chief of Mission’s Residence (CMR) at the U.S.

Embassy Seoul, Republic of Korea; and the mandated suspension of work and travel bans associated with the increasing and dynamic tangible impacts of the novel Coronavirus (COVID-19) pandemic.

The total estimated cost for this 365-day (1 year) effort is ₩5,962,550,000KRW (est.

$4,842,234.00 U.S. dollars).

2. Nature and/or description of the action being approved.

Issuance of a hybrid firm fixed-price and cost reimbursement letter contract (i.e., a written preliminary contractual document that authorizes the contractor to begin immediately performing construction services) payable entirely in South Korean won to the local Seoul Korean construction firm Gunhwa.

The DoS’s Overseas Buildings Operations (OBO) is conducting this acquisition for the provision of Architectural/Engineering (A/E) design expertise and construction services for a Scope of Work (SOW) and design development; and installation of vital Chief of Mission Residence (CMR) perimeter and grounds Physical Security Upgrades (PSU) at the U.S. Embassy, Seoul, Republic of Korea.

Facilities, Design & Construction Division Arlington, VA 22209

Professional Development Support Services (DSS) requested under this solicitation may include, but are not limited to, the development and/or execution of requirement analyses, facility/infrastructure assessments, a contractor generated SOW, interviewing of Post engineering staff, local cost data and construction methodology research, life-cycle costing and generating studies/findings/cost estimates and/or other construction documents.

No additional sums will be payable on account of any escalation in the cost of materials, equipment, services or labor, or because of the contractor’s failure to properly estimate or accurately predict the cost or difficulty of achieving the results required by this letter contract post definitization. Nor will the contract’s definitized price be adjusted on account of fluctuations in currency exchange rates. Changes in the contract’s definitized price or time to complete this effort will be made only due to changes made by the Government in the work to be performed, or by delays caused by the Government.

NOTE: The cost reimbursement portion of the letter contract (for the dollar-to-dollar remuneration of Value Added Tax (VAT) and Performance and Payment Bonds) will not entitle Gunhwa to receive fixed, award or incentive fees.

3. A description of the supplies or services required to meet the Department’s needs.

Seoul CMR Physical Security Improvements – Perimeter and Grounds. Scope: Perimeter security improvements enumerated in Attachment 2, Scope of Work. Primary Contract Value Appx. $4.9M (See Attachment 3, Current working Estimate - CWE).

4. An identification of the statutory authority permitting other than full and open competition.

a) FAR subpart 6.302-2 Unusual and compelling urgency allows for sole source awards, “when the agency’s need for the supplies or services is of such an unusual and compelling urgency that the Government would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits bids or proposals, full and open competition need not be provided for.”

b) 22 U.S. Code § 4852. Diplomatic Construction Program

(a) Preference for United States contractors Notwithstanding section 302 of this title, and where adequate competition exists, only United States persons and qualified United States joint venture persons may—

Facilities, Design & Construction Division Arlington, VA 22209

(1) bid on a diplomatic construction or design project which has an estimated total project value exceeding $10,000,000; and

(2) bid on a diplomatic construction or design project which involves technical security, unless the project involves low-level technology, as determined by the Secretary of State.

c) DOSAR 652.236-71 Foreign Service Buildings Act: This solicitation is subject to Section 11 of the Foreign Service Buildings Act of 1926, as amended (22 U.S.C. 302)

d) 22 U.S. Code § 302. Award of Contracts

(a) Eligibility Limitation for Construction, ETC., Abroad

Eligibility for award of contracts under this chapter or of any other contract by the Secretary of State, including lease-back or other agreements, the purpose of which is to obtain the construction, alteration, or repair of buildings and grounds abroad, when estimated to exceed $5,000,000, including any contract alternatives or options, shall be limited, after a determination that adequate competition will be obtained thereby, to (1) American-owned bidders and (2) bidders from countries which permit or agree to permit substantially equal access to American bidders for comparable diplomatic and consular building projects, except that participation may be permitted by or limited to host-country bidders where required by international agreement or by the law of the host country or where determined by the Secretary of State to be necessary in the interest of bilateral relations or necessary to carry out the construction project.

5. A demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited.

The two primary conditional reasons for application of the referenced authorities, and pursuing a local contractor are: (1) the urgent need for physical security improvements; and (2) the mitigation of cost and delays induced by the COVID- 19 pandemic.

Physical Security Upgrade: On the 18th of October 2019, 19 South Korean university students were arrested after successfully climbing the walls of the official residential compound of the U.S. ambassador to Korea (Attachment 4, CMR Security Breach, Washington Post and Los Angeles Times Articles). This was one of several repeated attempts to attack the U.S. Ambassador according to reports; and would be attackers are becoming more brazen and closer to succeeding than ever. Ergo, OBO must take immediate action to bolster the physical security of the CMR.

Facilities, Design & Construction Division Arlington, VA 22209

NOTE: Intelligence reports indicate an imminent threat of reoccurrence of such events. Therefore, more stringent defense posturing by Diplomatic Security forces and immediate garrison improvements are of the essence.

U.S. construction firms are currently facing continued downward pressure on demand, along with supply chain issues, as the COVID-19 pandemic intensifies.

This in effect, along with current federal travel restrictions, is causing DoS commissioned projects to be delayed, and future spending to be curtailed. It stands to reason for the sake of the Seoul Ambassador’s personal security, use of a local South Korean firm like Gunwha must be considered as a matter of urgency.

Also, the fact that Gunhwa recently and successfully completed similar work for the U.S. Embassy Seoul (Attachment 5, Gunwha’s Past Performance & Record of Responsibility) make them an obvious technical choice. Further bolstering this contention are the additional facts that:

a) Gunhwa personnel will not be working in any known classified areas (i.e., there is no need for security clearances);

b) COVID-19 related travel restrictions, whereby a U.S. firms cannot visit nor work on the site in the immediate present or near term. Gunhwa is located in Seoul and continues to operate in Seoul;

c) The urgent need to execute the PSU project to secure the October 2019 CMR security breach occurrence. Gunhwa is already working and operating in Seoul, and is experienced in processing approvals with local authorities (e.g., building permit) and working with historically and culturally sensitive structures such as the CMR (Attachment 6, The Residence of the U.S. Ambassador to the Republic of Korea).

i. NOTE: Construction requires sensitivity, understanding, and experience with traditional Korean building systems and techniques. The CMR is a historically significant property in a culturally significant area of Seoul. A U.S. contractor, not having such a background would need to acquire the services of a company like Gunhwa to properly execute the work.

d) Labor, equipment and materials required to complete this effort are readily available in Seoul, and accessible to Gunhwa in Korea;

e) The construction and design is of low-level technology in nature; and

Facilities, Design & Construction Division Arlington, VA 22209

f) Gunhwa has been permitted substantial equal bidding access to comparable past diplomatic and consular building projects (at a greater value to the government) as evidenced by the following:

i. Gunhwa’s successful completion in 2019 of similar work at the CMR;

61 meters of new wall construction to replace deteriorating segment of existing perimeter wall. This was a Post managed project (Attachment 6, Seoul - Post's Gunhwa Contracts Purchase Orders).

ii. Gunhwa’s pending execution of another wall project; this time within the CMR grounds, by the pool. Also, a Post managed project.

iii. Competitive Pricing: OBO’s estimate for Gunhwa to execute the project is $33M; a U.S. contractor would be $68M (more than twice the cost).

In summary, given the particular context and conditions, Gunhwa is deemed best able to satisfy the DoS’s requirements for survey, design, and construction of the aforementioned PSU project, without execution delays and at a competitive price.

6. A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable:

Pursuant to (FAR) 19.805-1(b), 19.808-1(a)(e) and 6.303-2(d), OBO and AQM entertained the option of awarding sole-source contracts for the aforementioned subprojects, both jointly and severally, to the Native American Corporation 8(a) firm Cherokee Nation, and the Native Hawaiian Organization (NHO) Hui Huliau (H2). Both firms provided capabilities briefings and responses to the government’s Requests for Information (RFI) in the form of established fully-burdened firm-fixed priced labor rates for a variety of A/E and construction disciplines (Attachment 7, Fully-Burdened Firm-Fixed Priced Labor Rates).

Both domestic firms anticipated major delays (in terms of patent strains on the free movement of labor, key personnel and equipment) as the specter of widespread construction site shutdowns loom in the wake of recent local country official and OBO decisions.

As such, OBO and AQM do not currently find it a proper use of government resources to undertake a full and open solicitation to meet the DoS’s requirements for this project. The requirement will be synopsized as required by FAR 6.302- 1(d)(2) and will include Gunhwa’s statements of capability, on-site experience, and Post’s acceptance of Gunhwa’s performance on the previous CMR perimeter wall project.

Facilities, Design & Construction Division Arlington, VA 22209

7. A determination by the Contracting Officer that the anticipated cost to the

Government will be fair and reasonable.

Gunhwa’s cost proposal will be evaluated against an Independent Government Estimate (IGE) and the Current Working Estimate (Attachment 3) to determine if it is of a fair and reasonable value to the Government. An estimate of the level of effort required for any other source to meet the project requirements will be included is the determination of fair and reasonable cost.

A cursory estimate of the project costs/price compared to historical cost and pricing data gave indication that Gunhwa could execute the CMR PSU project for an aggregate total of $4.9M – the lowest estimated U.S. contractor is estimated at $11M (more than twice the Gunhwa’s cost)

Moreover, Section L, Instruction to Offerors of the letter contract requires offerors to furnish certified cost or pricing data and/or data other than certified cost or pricing data in accordance with FAR-15.408 Table 15-2—Instructions for Submitting Cost Price Proposals When Certified Cost or Pricing Data Are Required (Attachment 8, FAR-15.408 Table-15-2).

In furtherance of this, as a remedial measure against defective pricing, the letter contract additionally includes the following provisions/clauses:

I.29 52.215-10 PRICE REDUCTION FOR DEFECTIVE CERTIFIED COST

OR PRICING DATA (AUG 2011) (Reference 15.408)

I.30 52.215-11 PRICE REDUCTION FOR DEFECTIVE CERTIFIED COST OR

PRICING DATA—MODIFICATIONS (AUG 2011) (Reference 15.408)

I.31 52.215-12 SUBCONTRACTOR CERTIFIED COST OR PRICING DATA

(OCT 2010)(Reference 15.408)

I.32 52.215-13 SUBCONTRACTOR CERTIFIED COST OR PRICING DATA—

MODIFICATIONS (OCT 2010) (Reference 15.408)

I.33 52.215-21 REQUIREMENTS FOR CERTIFIED COST OR PRICING

DATA AND DATA OTHER THAN CERTIFIED COST OR PRICING DATA—

MODIFICATIONS (OCT 2010) (Reference 15.408(m))

I.34 52.215-21 I REQUIREMENTS FOR CERTIFIED COST OR PRICING

DATA AND DATA OTHER THAN CERTIFIED COST OR PRICING DATA—

MODIFICATIONS (OCT 2010)--ALTERNATE II (OCT 2010) (Reference 15.408(m))

Facilities, Design & Construction Division Arlington, VA 22209

8. A description of the market survey conducted and the results or a statement of the reasons a market survey was not conducted.

As indicated in Paragraph 6 above, AQM entertained the option of awarding sole-source contracts to the Native American Corporation firm Cherokee Nation, and the Native Hawaiian Organization (NHO) Hui Huliau (H2), but was stifled due to the realities of the COVID-19 pandemic.

Post’s experience with local contractors, to include Gunhwa, is the basis of determination. With Gunhwa’s successful completion of the previous CMR wall project, its absence from the Excluded Parties List System (EPLS) - Attachment 5, Gunhwa’s EPLS Check - further market survey is deemed unnecessary and would not improve the Government’s knowledge as the basis for source selection.

9. Any other facts supporting the use of other than full and open competition, and determination that the use of a sole-source contract is in the best interest of the agency.

The Government has a short timeframe for executing the required work. Any delay in award of a letter type contract has the potential of resulting in serious injury, financial or other, to the Government. Moreover, with COVID-19 making it impossible for U.S. contractors to visit the project sites - let alone executing the design/build construction portion of the contract - it is imperative the DoS solicit a local Korean firm that can expeditiously move forward with this effort. As such, awarding a letter contract to Gunhwa is naturally deemed the best course of action due:

a. Primarily, to protect lives and limbs, property; and make optimal use of time and money - as it offers the earliest completion of each construction effort.

b. Secondly, the total period of performance of a contract awarded or modified using this authority will not exceed one year.

c. Thirdly, the work involved is of a low-technical nature, and the total contract value will not exceed $5M.

d. Fourthly, AQM has issued memorandums for consideration of steps to mitigate project and schedule delays (Attachment 8 - AQM Memorandums, Consideration of Steps to Mitigation Project and Schedule Delay, COVID-19) to all OBO projects globally; and in many cases suspensions of work.

e. Lastly, the increase in cost and time for any other source to acquire the knowledge required to complete the work - knowledge which is currently possessed by Gunhwa, must also be factored.

Facilities, Design & Construction Division Arlington, VA 22209

10. A listing of sources, if any, that expressed, in writing, an interest in the acquisition.

Native American Corporation firm Cherokee Nation, and the Native Hawaiian Organization (NHO) Hui Huliau (H2) expressed interest, but were stifled due to the realities involving the COVID-19 pandemic.

11. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required. Include a statement that this J&A for other than full and open competition will be published on SAMbeta

(formerly FedBizOpps) in accordance with FAR Section 6.305 within 14 days of award (or within 30 days if the J&A is for unusual and compelling urgency.)

The intent to acquire the services described herein from a sole source will be published on SAMbeta (formerly FedBizOps) in accordance with FAR 6.302- 1(d)(2). Offers or statements of competence from potential alternatives will be evaluated. This J&A or a revision thereof will be published within 14 days after award if award on a sole-source basis is made.

CERTIFICATIONS

TECHNICAL AND REQUIREMENTS CERTIFICATION AQM QA Plan

I certify that this justification is accurate and contains complete data necessary to support the recommendation for other than full and open competition.

SIGNATURE:

Nelson Kim Date Project Manager

OBO/PDCS/PDC/EAP

LEGAL SUFFICIENCY REVIEW; AQM QA Plan This J&A is hereby determined to be legally sufficient.

SIGNATURE:

Dennis Gallagher Date Assistant Legal Adviser Office of the Legal Adviser, Buildings and Acquisitions (L/BA)

Nelson Kim 4/24/2020

Dennis J. Gallagher 4/24/2020

Facilities, Design & Construction Division Arlington, VA 22209

CERTIFICATIONS (Continued)

CONTRACTING OFFICER CERTIFICATION AQM QA Plan

I certify that this submission is accurate to the best of my knowledge, and that it contains complete information necessary to enable other officials to make an informed recommendation for approval or disapproval.

SIGNATURE:

Devin D. Banks Date Contracting Officer

A/OPE/AQM/FDC/CON

APPROVALS

SIGNATURE:

James G. Thomas Jr. Date Branch Chief

A/OPE/AQM/FDC/CON

OFFICE OF SMALL DISADVANTAGED BUSINESS UNIT

SIGNATURE:

Date James A. Josey Procurement Analyst - OSDBU Office of Small Disadvantaged Business Unit

SIGNATURE:

Robert Powell Date Division Director

A/OPE/AQM/FDC

Devin D. Banks 4-24-2020

James G. Thomas Jr. 4/25/2020

James A. Josey 4/27/2020

Robert R. Powell 4/24/2020

Facilities, Design & Construction Division Arlington, VA 22209

PROCURING ACTIVITY COMPETITION ADVOCATE – QA Plan -

SIGNATURE:

Date Sharon D. James Competition Advocate

A/OPE

Sharon D. James 4/25/2020

Facilities, Design & Construction Division Arlington, VA 22209

APPROVALS (Continued)

HEAD OF THE PROCURING ACTIVITY AND

SENIOR PROCUREMENT EXECUTIVE OF THE AGENCY

SIGNATURE:

Cathy J. Read Date Managing Director and Senior Procurement Executive

A/OPE

--as acting HCA 5-5-2020