JA_Modification_6913G623P800077_FINAL_APPROVED_Redacted.pdf

V220T.07 08/15

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE ASSISTANT SECRETARY OF RESEARCH AND TECHNOLOGY

VOLPE NATIONAL TRANSPORTATION SYSTEMS CENTER (VOLPE CENTER)

JUSTIFICATION & APPROVAL TO MODIFY PURCHASE ORDER

PART I - TECHNICAL SUPPORTING DATA

It is recommended that a modification be issued to Purchase Order 6913G623P80077 with SpecSys, Inc. of Montevideo, MN on a noncompetitive basis. The modification will be issued to change the requiring activity (end user), delivery location, and minor specification changes for the option line items (00200 and 00201).

The total price (inclusive of options) of the purchase order remains unchanged. The supporting data for this recommendation are as follows:

A. Description of Supplies/Services – Option Line Items 00200 and 00201 are options for (1) additional yard industrial switching locomotive and (1) additional locomotive camera system, respectively.

B. Market Research –Market research was conducted by the Technical Initiator and the Contracting

Officer prior to the issuance of Request for Quotation (RFQ) 6913G623Q300045 resulting in the award of Purchase Order 6913G623P800077. Market research included a review of recent historical acquisitions, internet market research, and exchanges with industry. Market research indicated that the field of potential suppliers is limited, however there are multiple small business vendors capable of manufacturing the locomotives to the required specifications. The RFQ was issued as a 100% small business set-aside.

Additional market research was performed by the Contracting Officer in May 2024. Market research included a review of small business vendors under NAICS Code 336510 (Railroad Rolling Stock Manufacturing) using the Small Business Administration (SBA) Dynamic Small Business Search application and internet market research. The search on the Dynamic Small Business Search application yielded 36 small business vendors registered under NAICS Code 336510. The Contracting Officer conducted internet research on each of the 36 companies listed in the search results. Most of the business entities listed were small machine shops that primarily produce metal components. Six (6) of the vendors appeared to potentially have the capability to produce a locomotive or are a distributor of a locomotive manufacturer. The Contracting Officer also reviewed the Association of American Railroads (AAR) list of M-1003 Certified Facilities for A21 (Manufacturer of Locomotives). Eight (8) locomotive manufacturers were identified as AAR certified. Of those eight (8) manufacturers, five (5) are identified as small businesses, including SpecSys, Inc.

Based on the above information, the Contracting Officer has determined that the competitive environment for Federal contract awards within the locomotive industry has not materially changed since the award of Purchase Order 6913G623P800077 in October 2023.

C. Background - The Volpe Center supports Federal and State agencies to facilitate transportation initiatives via interagency agreements. The Volpe Center currently has several agreements with Department of Defense (DoD) agencies to provide technical support (including acquisitions that are the subject of the technical support) to modernize the DoD’s rail assets and infrastructure. RFQ 6913G623Q30045 and the resultant Purchase Order (6913G623P80077) were issued under the authority of FAR Subpart 13.5 to provide a locomotive and camera system to Naval Facilities Engineering Systems Command (NAVFAC). The base line items had a delivery location of Norfolk Naval Shipyard in Portsmouth, VA. The purchase order included option lines to provide an additional locomotive and camera system to support NAVFAC. The inclusion of the option was based on communication from

NAVFAC that an additional locomotive and camera system may be needed within 12 months of the issuance of the award.

In addition to the agreement with NAVFAC, the Volpe Center has an interagency agreement with Army

Tank-automotive and Armaments Command (TACOM). The agreement includes a requirement to replace an aging yard-switcher locomotive at Blue Grass Army Depot in Richmond, Kentucky with the same type of locomotive procured by the Volpe Center under 6913G623P80077.

NAVFAC has communicated that they do not intend to exercise the options. To support Army TACOM, the Volpe Center intends to modify the purchase order to change the delivery location of the option line items from Portsmouth, VA to Richmond, KY. The modification will also make some minor changes to the specifications of the option locomotive to meet the Army’s needs. The necessary specification changes are to the paint scheme, lettering, and coupler configuration. By utilizing the already awarded purchase order to support the Army, the Volpe Center will shorten the procurement lead time to fulfil the Army’s existing need and achieve cost savings to the Government.

D. Circumstances Requiring the Use of Other Than Full and Open (F&O) Competition. The Volpe

Center has agreements with multiple military departments to provide expert technical assistance to support in the modernization of their locomotives and other rail assets. The proposed changes to the purchase order will not materially affect the scope of the purchase order or the field of competition associated with the requirement. In determining whether the purchase order could be modified to support a different requiring activity for the option line items, the Contracting Officer examined the extent of any changes in the type of work, performance period, and the costs between the modification and the original purchase order. The Contracting Officer also evaluated whether the original solicitation adequately advised vendors of the potential for the change, whether the change is the type that reasonably could have been anticipated, and whether the modification would materially change the field of competition for the requirement.

The Contracting Officer made the following determinations for each element addressed in the above paragraph:

Type of Work: Aside from minor changes to the specifications and delivery location of the option line items, the type of work remains unchanged. The Purchase Order Contractor is still responsible for producing and delivering a maximum quantity of two (2) locomotives and two (2) camera systems. The anticipated specification changes needed to support the Army’s need are the removal of the sliding coupler mechanism and modifications to the paint scheme and lettering (i.e., the Army’s colors, wordmark, and the locomotive’s assigned unit number). The Contractor has indicated that the specification changes and delivery location will not materially change the level of effort required to manufacture and deliver the locomotive unit under the option.

Performance Period: There is no change in the delivery dates or period to exercise the options.

Cost: There is no anticipated change in pricing. The total awarded Purchase Order price (inclusive of options) remains $4,715,000.00.

Whether the original solicitation adequately advised vendors of a potential for the change: The solicitation and resultant purchase order incorporated FAR 52.212-4(c), which states “Changes in the terms and conditions of this contract may be made only by written agreement of the parties.” It was clear that the need for modifications may arise during the term of the purchase order and there is contractual authority to make such changes. As with any Government contract it is reasonable and foreseeable that the Government may modify a contract that does not materially change the work or price of the awarded contract. The solicitation and purchase order adequately advised vendors that the terms and conditions may change in the awarded purchase order.

Whether the change is the type that reasonably could have been anticipated: The Volpe Center supports many agencies within the Federal Government, State Governments, and other entities seeking assistance with their transportation needs. The Volpe Center currently provides technical support (including acquisitions that are the subject of the technical support) for rail modernization efforts across the Department of Defense. A search of Sam.gov Contracting Opportunities conducted on 8 May 2024 displayed that the Federal Government has posted five (5) solicitations to SAM.gov for the purchase of new locomotives within the previous five (5) years. Three (3) of the five (5) solicitations were issued by the Volpe Center to support Department of Defense military departments, including a solicitation issued by the Volpe Center to support multiple military departments via the same acquisition requirement. The Volpe Center may and has used its contracts to assist the Volpe Center’s technical support of more than one entity with which the Volpe Center has an agreement during the life of a given contract. It is reasonable and foreseeable that the Government could modify a purchase order to support more than one entity that has the same needs for upgraded rail assets at approximately the same time.

Whether the modification would materially change the field of competition for the requirement: Market research conducted prior to the issuance of the original solicitation and again in May 2024 prior to the composition of this justification demonstrates that there is a limited market of suppliers who provide locomotives that meet the specifications needed for Department of Defense use. The underlying solicitation for this purchase order yielded a limited number of quotations

. The updated market research described in Section B above demonstrates that the market for qualified locomotive manufacturers remains limited and has not significantly changed from the initial market research that was conducted prior to that solicitation issuance. Given the foregoing, it is unlikely that the field of competition has or would materially change for a need by another military department of the same item. The purchase order will be administered by the Department of Transportation which limits the interaction between the contractor and requiring agency (e.g., military department). The change of delivery location from Portsmouth, VA to Richmond, KY does not materially change the field of competition as the new delivery location state borders the original delivery location state, and via rail (required method of delivery) is approximately 512 miles apart. The minor changes in specifications also would not materially change the field of competition. The specifications are not product features that are unique to any one vendor or group of vendors that would limit or expand competition in any way. Based on analysis performed by the Volpe Center’s Infrastructure Engineering and Deployment Division, the specifications changes are non-complex product modifications that should not pose a hardship to a locomotive manufacturer, and do not change the field of competition.

Additionally, by modifying the current purchase order, and having solicited such purchase order through a set aside competition for all small businesses, the Volpe Center will continue its agreement to support the military departments to meet their needs for locomotive modernization as well as avoid duplication of efforts and costs. The base line item (CLIN 00100) for a newly manufactured locomotive is priced at

. The option line item for the same locomotive (CLIN 00200) is . This reduced pricing represents a discount from the base locomotive (CLIN 00100) due to the reduction in engineering/design efforts for a second unit and volume discounts on components. An estimate of the current pricing for a locomotive was calculated by adjusting the base item pricing of for current market conditions using data from the Bureau of Labor Statistics (BLS) Producer Price Index (PPI). Using data from the BLS PPI for the railroad rolling stock manufacturing industry (Series ID PCU336510336510), the estimated current price for a new requirement for an identical locomotive equates to . Processing of a new requirement for a locomotive to support the Army will take a minimum of six (6) months to award. Thereafter, the estimated 18-month manufacturing lead time restarts, the Army would not receive a new locomotive for at least two (2) years. An additional cost savings of approximately will be achieved via a reduction in the Government’s technical and administrative support associated with generating and pursuing a new requirement to award. The estimated cost savings of is based on the projected elimination of approximately 165 labor hours and associated travel cost for technical and administrative support for a new contract award. This includes technical analysis, solicitation, award, and post-award administration.

Based on the above analysis, the total estimated cost savings to the Government is approximately

. This strategy also will result in the reduction of a minimum of four (4) months of procurement lead time. Utilizing the option in the Volpe Center purchase order (awarded after competition) to support the Army’s needs for the same locomotive in a timely and fiscally responsible manner where such use has no negative impact on competition is in the best interest of the Government.

D. Steps to Foster Competition (or Consideration) – The original requirement was competed using open market procedures. The solicitation was posted to the Government Point of Entry (SAM.gov Contract Opportunities) and open to all capable small business concerns. There were no steps taken to promote competition as the Volpe Center seeks to modify a purchase order that was (1) competitively competed and (2) included an option that was evaluated before award in order to use the option with minor modification and a change to the military department user. Future requirements for the same or similar items will be conducted using competitive processes to the fullest extent possible. Thorough market research will be conducted prior to any future acquisitions to capture any changes in the market.

E. TECHNICAL OFFICE CERTIFICATION:

The requirement set forth is initiated to satisfy a recognized Government need. As applicable, the plans, drawings, specifications, and statement of work are limited to state the minimum needs of the Government. I certify that the above information which serves as the basis for the justification for other than full and open competition is accurate and complete to the best of my knowledge and belief.

Date

Concurred By:

PART II – CONTRACTS SUPPORTING DATA

A. Description of the Procurement Action – The procurement action will be a bilateral modification to firm fixed priced Purchase Order 6913G623P80077. The purchase order was issued under the authority of FAR Subpart 13.5, Simplified Procedures for Certain Commercial Products and Commercial Services.

The modification will make the following changes to Option Line Items 00200 – 00201: change the requiring activity from NAVFAC to Army TACOM, change the delivery location from Portsmouth, VA to Richmond, KY, and make minor specification changes. The above changes will only affect the Option Line Items. The Base Line Items will remain unchanged and will be utilized to support NAVFAC. The modification will be issued under the authority of FAR 52.212-4(c). See Section B below for authority to restrict competition.

B. Authority –

41 U.S.C. 1901(e)(2) as implemented by FAR 13.501.

C. Efforts to Obtain Competition - A redacted copy of this Justification and Approval document will be posted to the Government Point of Entry. The original requirement was synopsized as a combined synopsis/solicitation in accordance with FAR Subpart 5.2 and FAR Subpart 12.6.

D. Fair and Reasonable Price– The signature of the Contracting Officer provided below represents a determination that the pricing for Purchase Order 6913G623P80077 was determined fair and reasonable at the time of award. All pricing including pricing for the option line items was evaluated and found to be fair and reasonable at the time of award via price analysis performed in accordance with FAR 13.106-3(a).

The Contracting Officer does not anticipate a change in pricing associated with the proposed action. If any requested changes to the purchase order result in a request for equitable adjustment by the contractor, the Contracting Officer will conduct a thorough price analysis prior to the issuance of any modification that revises pricing.

E. CONTRACTING OFFICER CERTIFICATION:

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

Evan Coburn Date Contracting Officer

PART III - REVIEW AND APPROVAL SIGNATURES

REVIEWED FOR LEGAL

SUFFICIENCY:

CONCURRED BY:

APPROVED: