JEFO_26-162_USMC_LCMS_Redacted.pdf

Source Selection Information – See FAR 2.101 and 3.104

Document # 26-162

JUSTIFICATION FOR AN EXCEPTION TO FAIR OPPORTUNITY

(ABOVE SAT)

1. Identification of Requiring Activity and Contracting Activity.

The requiring activity the United States Marine Corps (USMC) HQMC Installations & Logistics (I&L), Washington, DC. The contracting activity is NAVSUP Fleet Logistics Center (FLC) Norfolk, Contracting Dept., FM&C/BUMED Directorate.

2. Nature and description of contract action. This acquisition is conducted under the authority of 10 U.S.C. 3406(c)(5). This action is an exception to the fair opportunity process to be awarded as a sole-source Task Order under the Financial Improvement Program (FIP) IV Multiple Award Contract (MAC) IDIQ, N00189-22-D-Z014, with Kearney & Company. This task order will provide critical audit compliancy support to the USMC as it modernizes its logistics chain management system (i.e. Global Combat Support System, Marine Corps - GCSS MC). Kearney is currently supporting USMC and Department of the Navy (DON) in its audit remediation of the General Fund on other FIP IV Task Orders and is uniquely qualified to provide audit expertise in the USMC environment during this system modernization. The placement of a firm, fixed price task order is anticipated.

This procurement action relates to the support of USMC and DON financial reporting remediation services that are currently being performed under FIP IV Task Order N00189-24-F- Z808. That task order was awarded on a competitive basis to Kearney & Company on 25 July 2024. A new stand-alone task order is determined to be appropriate for this action so that the focus can be centered on the GCSS MC. The estimated value of the new task order is

, inclusive of options, and is expected to have a base PoP of 21 June 2026 thru 20 April 2027 (10 months), plus up to a 12-month Option period to end NLT 21 April 2028).

3. Description of Required Supplies/Services to meet the agency’s needs.

The USMC has achieved a clean financial statement audit opinion over the last several years by relying on manually intensive transaction-level remediation and testing. To create an economical, sustainable audit environment in the long term, the USMC must transition to a remediation strategy based on effective internal controls augmented by process automation.

To support this transition and sustain the USMC Unmodified Audit Opinion, the Marine Corps must modernize its logistics chain management system (LCMS) (i.e. GCSS MC). Critical to modernizing its logistics information technology portfolio, is a robust “over the shoulder” contracted capability that supports requirement generation, portfolio rationalization, data management, system interface analysis and audit compliancy. To meet the DON’s rapid acquisition strategy, this contracted capability must be acquired in FY26. To execute on this expedited timeline, USMC requires contractor support from an audit remediation contractor with intimate knowledge of the USMC audit environment. Kearney & Co is the only contractor with that level of experience and expertise. This acquisition will secure technical and audit-support services to develop a detailed, time-phased modernization plan for I&L’s business processes.

Specifically, the required USMC services encompass the following areas:

• Strategic Guidance and Support: Provide audit SME expertise in audit readiness, compliance, and internal controls. Deliver technical assistance and strategic guidance to USMC leadership to ensure auditability is maintained throughout systems modernizations and process changes.

• Sustainment and Process Improvement: Institutionalize and execute key internal controls for critical processes such as Funds Balance with Treasury (FBwT) and property reporting.

• Producing the USMC Financial Statements: Assemble the USMC's official annual and quarterly financial statements, ensuring they are accurate, supported by evidence, and delivered on time.

• Automation, Analytics, and Data Governance: Identify automation opportunities across audit-related processes to reduce manual effort and increase the efficiency of financial management operations. This includes developing automated data pipelines, reporting, analytics solutions, and integration frameworks that ensure strong data governance, accuracy, integrity, and auditability.

In summary, the USMC requires audit remediation expertise from a contractor with intimate knowledge and experience with USMC organization and audit readiness environment so that the systems modernization will result in an auditable outcome with audit requirements integrated directly into the new system design.

The base period of the resultant task order modification will be funded with Fiscal Year 26 Navy Operations & Maintenance (O&MN) appropriations. These funds are expected to be available in the current fiscal year. Any option period would be funded with the appropriate fiscal year funding.

4. Identification of the Exception to Fair Opportunity and Supporting Rationale - Including Demonstration of Contractor’s Unique Qualifications. The statutory authority that permits not providing each awardee a fair opportunity to be considered for each order exceeding the micro-purchase threshold issued under a multiple award contract is 10 U.S.C.

3406(c)(5), as implemented by FAR 16.507-6(b). The applicable exception to the fair opportunity process for this justification for the award of an order exceeding the simplified acquisition threshold is: FAR 16.507-6(b)(2), Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized.

The Audit Imperative and Unified Strategy Over the past several years, the DON has established a robust Financial Improvement and Audit Remediation Program (FIAR) encompassing all DON Major Commands. In the FY2024

National Defense Authorization Act, Congress mandated that all components of the DoW be auditable by FY28. In accordance with this deadline, SECNAV and SECWAR have established audit readiness as an “immediate imperative,” stating that anything less than achieving the 2028 goal is “unacceptable.”

For the DON’s audit to be successful in the short term and sustainable in the long term, it must implement a USMC-Navy unified strategy. Awarding a task order to Kearney & Co will enable close coordination with Kearney’s other USMC Audit Remediation efforts (e.g. Task Order N0018924FZ808) which is necessary to create a cohesive USMC-wide approach, allowing for shared strategies, preventing divergent paths, and laying the groundwork for cost-effective audit readiness across the department.

Demonstration of Unique Qualifications: Unmatched Audit Expertise This requirement is being pursued as a sole-source action because Kearney & Co possesses a highly specialized combination of audit and technical qualifications with respect to USMC that no other vendor possesses. Kearney is the primary provider of General Fund (GF) remediation services for the DON (USMC and USN), under competitively awarded task orders (N0018923FZ839, N0018924FZ808, N0018923FZ305, and N0018922FZ326). Kearney played a critical, hands-on role in helping the USMC achieve its clean audit opinion and has developed a unique understanding of both the USMC and Navy audit environments.

Awarding this effort to any other contractor would result in unacceptable programmatic delays and a substantial duplication of cost to the Government. A new vendor would require excessive time to understand the USMC’s current audit posture, rebuild an understanding of the USMC and DON future-state system requirements, and re-establish the technical and operational context.

Kearney & Company is currently embedded with USMC stakeholders, has established working data pipelines and review processes, and possesses the historical knowledge required to execute efficiently the next phase of system modernization. Given the congressionally mandated deadlines, the risks to performance and schedule associated with transitioning to a new contractor are unacceptable, making Kearney the only firm capable of delivering these highly specialized services on the compressed timelines required due to the direct synergy between their existing task order activities and the new task order requirement. This sole source action is necessary to prevent unacceptable mission risk.

5. Determination of Fair and Reasonable Cost.

In accordance with FAR 16.507-6(d)(2)(v), the contracting officer has made the determination that the anticipated cost to the Government will be fair and reasonable.

6. Any other facts supporting the justification. This procurement uses a MAC and will be solicited and awarded in accordance with FAR Subpart 16.507.

7. Actions Taken to Remove Barriers to Competition.

The Navy will overcome barriers to competition by reassessing the requirements in April 2028 at the conclusion of the current task order. As the control environment matures, it is likely that this effort will shift toward testing and validation rather than design. This shift in scope should result in future competition. As this effort proceeds, barriers to future competition will be sought to be reduced or removed. Any subsequent follow-on requirements to the ones covered by this EFO will be handled on a case-by-case basis and market research will be conducted for any future requirements to determine if there are any potential sources for competition.