JA_Redacted.pdf

DEFENSE LOGISTICS AGENCY

ENERGY

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6222

January 23, 2019

19-0010

Justification for Other than Full and Open Competition

1. Summary/Introduction:

Defense Logistics Agency (DLA) Energy is the contracting activity for petroleum products and services for the Department of Defense (DoD). This Justification & Approval (J&A) is for the addition of one four-year option (February 1, 2019 - January 31, 2023), three one-year options (February 1, 2023 - January 31, 2024, February 1, 2024 - January 31, 2025, February 1, 2025- January 31, 2026), and a six month extension (FAR 52.217-8)( February 1, 2026- July 31, 2026) which were not evaluated at the time of contract award. This modification will require the incumbent contractor, , to provide Contractor-Owned Contractor-Operated (COCO) fuel storage services on leased Government property at on a sole source basis under the authority found at FAR 6.302-1(a)(2)(iii). The value of the action being approved is $5,072,436.00. This modification to contract , will increase the contract’s value from . The four-year option will be funded with FY 2019 Defense Working Capital Funds (DWCF); the remaining options will be funded at time of exercise.

provides COCO fuel storage services using best commercial standards at The contractor operates, maintains, manages, and provides retail/bulk fuel services while safely receiving, storing, accounting for, and issuing DWCF fuel products. The at is dependent upon the fuel management services provided by the contractor. The current contract for these services will expire on January 31, 2019. The follow-on modification will be awarded prior to January 31, 2019.

2. Nature and/or description of the action being approved (FAR 6.303-2(b)(2):

The procurement of these services for the four option periods totaling seven years is being conducted using a negotiated bilateral modification to the contract in accordance with FAR 43.103(a)(3) and contract clause 52.217-9 Option to Extend the Term of the Contract (Mar 2000). The authority to extend this contract is granted by section 881 of the National Defense Authorization Act for Fiscal Year 2018 as codified in 10 U.S.C. § 2922. This is a performance-based requirement. Successful performance will be measured by full compliance with the Performance Work Statement (PWS). Under this COCO contract, the contractor is responsible for furnishing all labor and materials to perform the fuel services including accounting and administration, storage and distribution operations, and maintenance of the COCO facility. As explained below, is the only responsible source currently capable of performing acceptable services at without delays, additional costs, or other adverse impacts to the Government. Therefore, a contract modification

Justification for Other Than Full and Open Competition (Cont’d)

The requirement for bulk fuel storage, retail fuel services and related facilities at is continuing and highly specialized. is providing acceptable performance under the current contract. As discussed below, procuring these services from another source will result in substantial duplication of costs and unacceptable delays in meeting the Government’s requirements. Therefore, based on these potential risks, the Government elected to award this option period to via contract modification. The option was not evaluated at the time of contract award; this J&A is required to meet the requirements of FAR 17.207(f).

DWCF in the amount of are provided via to fund this requirement for the four-year option period being exercised concurrently with this J&A. The additional option periods will be funded at the time of option exercise.

3. Description of supplies or services required to meet the agency’s need (including estimated value) (FAR 6.303-2(b)(3)):

The current contract, , for these services was competitively awarded to

., on June 18, 1998. On February 17, 2004, modification P00013 was issued to incorporate a novation agreement that transferred the contract to The current contract consists of a five-year base period from February 1, 1999 through January 31, 2004 with three five (5)-year options, the last of which expires on January 31, 2019. The total dollar value of the current contract is The Government has negotiated four additional option periods in accordance with 10 U.S.C. § 2922, as well as the inclusion of the six month extension provision, FAR 52.217-8.

In order to at , it is critical that the COCO fuel services are not interrupted. Under this contract, the contractor is responsible for providing retail/bulk fuel storage services including receipt, storage, and issue of and accounting for DWCF fuel product.

Additionally, the contractor is responsible for associated maintenance and management of the contractor-owned bulk storage/retail fuel facility. The contractor provides all personnel, equipment, material, and facilities necessary for providing these services, while employing best commercial practices and complying with Federal, State, and Local guidelines & regulations.

at

4. Identification of the statutory authority permitting other than full and open competition (FAR 6.303-2(b)(4)):

This J&A is based upon the authority of 10 U.S.C. § 2304(c)(1), as implemented by Federal Acquisition Regulation (FAR) 6.302-1 – Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements, and more specifically, the authority of FAR 6.302-1(a)(2)(iii). The services sought are highly specialized and award of this requirement to another source at this time would likely result in substantial duplication of cost to the Government that is not expected to be recovered through competition, and would result in unacceptable delays in fulfilling the agency’s requirements.

5. Demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited (FAR 6.303-2(b)(5)):

The the current fuel services provided under this contract by the incumbent, . The customer requires continuous, high quality fuels management services. is an active Army post with many fueling services supporting the post each day. These services are of .

Timely fuel support, system maintenance, and quality control in accordance with (IAW) Army standards is required to meet the . The existing work force is trained and able to conduct operations . performance of these services at is acceptable based on the Contracting Officer’s Representative (COR) Contractor Performance Assessment Reporting System (CPARS) assessments. Additionally, currently possesses the facilities, equipment, and personnel to sustain the services during the period of performance IAW the current contract . A new contractor would need preparation time prior to beginning performance to acquire the infrastructure and permits, and be willing to obtain all associated risks of the facilities and any environmental concerns to perform the contract.

Furthermore, a new contractor would require time to develop and implement operations and training plans and to train personnel. Historically, newly awarded contracts for similar services have required preparation periods of up to 12 months after contract award prior to the start of COCO fuels storage services.

Conducting full and open competition for this follow-on contract is not in the best interests of the Government. Awarding this requirement through full and open competition would result in substantial duplication of cost to the Government that is not expected to be recovered through competition. The estimated start-up costs associated with COCO fuel facilities for two recent COCO storage services contracts respectively (based on IGCEs for these projects). Award of a contract to a new service provider at would result in duplication of costs commensurate with these estimates, as an incoming service provider would incur similar start-up costs in the course of establishing new COCO fuel facilities.

Award of these option periods is more cost effective than procurement of a new 30 year contract for the same services under 10 U.S.C. § 2922. The contract was awarded in 1998 for a period of twenty years, the maximum period authorized by statute at the time. The statute has since been amended to authorize a total period of 30 years, commensurate with the commercial useful life for these types of facilities.

The installation of and associated facilities is a primary cost element of the startup costs for a new contractor. The fact that the are covered by warranty essentially eliminates the cost risk associated with potential tank replacement. The extension of up to 10 additional years allows the Government to maximize the value of the start-up costs expended during the base period of the contract. While the Government will ultimately need to re-procure these services using full and open competition at the conclusion of the 27 year period, it is in the Government’s best interest to avoid this premature duplication of costs by taking advantage of the maximum commercial viability of the COCO facilities. has already identified a new site and begun site preparation activities, including installation of utilities, potentially extending roads, and various site surveying activities, however soliciting these services at this time would result in service interruption and by not including the additional option periods in the current contract. By extending the current contract as authorized by the National Defense Authorization Act for Fiscal Year 2018, the Government will avoid the interruption of services, will maximize on the value that has already invested in the currently available COCO facility by extending its use and will be saving on start-up costs that would’ve spent if a new contract was awarded.

In accordance with FAR 6.302-1, is currently the only known responsible source with the ability to meet the agency’s requirement without substantial duplication of costs or delays in obtaining services.

6. Description of the efforts made to ensure that offers are/were solicited from as many potential sources as is/was practicable, including whether a notice was or will be publicized as required by Subpart 5.2 and, if not, which exception under 5.202 applies (FAR 6.303- 2(b)(6)):

On November 17, 2017, a sources sought notice was posted to the Federal Business Opportunities website (FBO.gov) to provide notice of the follow-on contract requirement and to solicit capability statements from other potential vendors. DLA Energy received one response from

7. Determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable (FAR 6.303-2(b)(7)):

The Contracting Officer has determined that the anticipated cost to the Government will be fair and reasonable based on a comparison of offered price with historical prices paid by the Government for the same services per FAR 15.404-1(b)(2)(ii). offered price is comparable to the current prices being paid under the of contract after the applied twenty years worth of inflation. The Government also requested Other than Certified Cost & Pricing Data from and reviewed this information to determine individual price elements to be fair and reasonable in accordance with FAR 15.404- 1(b)(2)(vii). Based on this information, the Government negotiated alternate pricing arrangements for price elements which could not be determined fair and reasonable; major repairs to and removal of the facility will be negotiated as requests for equitable adjustment based on need during the period of performance. The revised price submitted by $5,072,436.00, is fair and reasonable based on a comparison with the historical prices paid by the Government per FAR 15.404-1(b)(2)(ii) and a review of other than certified cost and pricing data IAW FAR 15.404-1(b)(2)(vii).

8. Description of the market research conducted and the results or a statement of the reason market research was not conducted (FAR 6.303-2(b)(8)):

DLA Energy routinely solicits these services competitively, and is aware of companies who regularly offer. DLA Energy has conducted market research that indicates these services are available commercially. DLA Energy supplemented the information about general market conditions for these services by posting a sources sought notice to FBO.gov to determine whether there were additional firms who would offer on this requirement. The Government received one response to the sources sought notice.

9. Any other facts supporting the use of other than full and open competition, such as (FAR 6.303-2(b)(9):

(i) Explanation of why technical data packages, specifications, engineering descriptions, statements of work, or purchase descriptions suitable for full and open competition have not been developed or are not available.

Not applicable.

(ii) When 6.302-1 is cited for follow-on acquisitions as described in 6.302-1(a)(2)(ii), an estimate of the cost to the Government that would be duplicated and how the estimate was derived.

Not applicable.

(iii) When 6.302-2 is cited, estimated cost, or other rationale as to the extent and nature of the harm to the Government.

Not applicable.

10. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition (FAR 6.303-2(b)(10):

DLA Energy FESBA received one (1) response to the Sources Sought Notice, which came from

. The capability statement submitted by indicated that it possessed experience in COCO services, however, its estimated phase-in time is nine to twelve months depending on the depth of detail provided by the Government relative to GFE and CFE. This phase-in time will result in an interruption to the fuel services at .

11. Actions that may be taken to remove or overcome barriers to competition before any subsequent acquisition for the supplies or services are required (FAR 6.303-2(b)(11)):

There are no inherent barriers to competition for COCO fuels services at DLA Energy has recently solicited for similar services at , and received multiple offers in response to the solicitation. The Government is using other than full and open competition due to the substantial duplication of costs and delays in service that would be incurred using another contractor. The Government has determined that is the only responsible source to provide the services at as is currently the only source capable of performing acceptable services at without delays, additional costs, or other adverse risks to the Government. The modification to the contract will be executed on or before January 31, 2019, with performance beginning by February 1, 2019.

I hereby certify that the data which forms the basis for this justification is accurate and complete to the best of my knowledge and belief.

Contract Specialist Bulk Petroleum Supply Chain Services

Contracting Officer

Division Chief

I hereby certify that the data which forms the basis for this justification is accurate and complete and that the purchase request covers only the minimum requirements to satisfy the needs of the Government.

Chief, Facilities Management Branch

I have reviewed and concur with this Justification.

Director Bulk Petroleum Supply Chain Services

Assistant Counsel DLA Counsel-Energy

Approved:

Advocate for Competition