J&A_For_Posting.pdf

United States Department of the Interior

BUREAU OF LAND MANAGEMENT

National Operations Center

Denver Federal Center, Building 50 (OC-662) P.O. Box 25047

Denver, Colorado 80225-0047

In Reply Refer to:

OC-662

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

FOR PROCUREMENTS OVER $150,000

This document sets forth the justification and approval as required by FAR 6.301.

1. Identification of the Agency and the Contracting Activity:

The Department of the Interior, Bureau of Land Management (BLM), Amarillo Field office, requests the National Operations Center, Branch of National Acquisitions, Division of Business Services, to contract on a sole source basis to Cliffside Refiners, L.P. (CRLP).

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

The BLM Amarillo Field Office operates a 310 billion cubic feet (BSCF) gas storage reservoir that contains approximately 8 BSCF of injected Government and privately-owned helium in a partially depleted natural gas field. The storage reservoir is located approximately 15 miles northwest of Amarillo, Texas at the Cliffside site. A 425-mile crude helium gas transmission pipeline connects private grade-A and crude helium production plants to the storage reservoir.

The mission of the organization changed to start delivering and selling helium to Private Companies in about 1998. The BLM requires the ability to lease a helium processing plant, so that the Government can effectively deliver and sell helium to meet the mission.

This sole source contract will be one (1) Base Period of 12 months, two (2) 12-month option periods, four (4) 6-months. This break up in option years is due to BLM being required to sell the Helium reserve by March 31 2021. The additional option years are added in the event that there are unforeseeable circumstances that would prevent BLM to have sold the Reserve.

The estimated value of this contract for all 5 years is $45,000,000.00.

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

Select one of the following:

_X_ 41 U.S.C. 3304 (a) (1), only one responsible source and no other supplies or services will satisfy agency requirements as implemented by FAR 6.302-1.

__ 41 U.S.C. 3304 (a) (2)), unusual and compelling urgency as implemented by FAR 6.302-2.

__ 41 U.S.C. 3304(a) (3) (a), industrial mobilization; engineering, developmental, or research capability; or expert services as implemented by FAR 6.302-3.

__ 41 U.S.C. 3304 (a) (4)), international agreement as implemented by FAR 6.302-4.

__ 41 U.S.C 3304 (a) (5), authorized or required by statute as implemented by FAR 6.302-5.

__ 41 U.S.C. 3304(a) (6), national security as implemented by FAR 6.302-6.

__ 41 U.S.C. 3304 (a) (7)), public interest as implemented by FAR 6.302-7.

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

When the mission of BLM changed in 1998 to start delivering and selling helium to Private Companies, BLM turned to private industry to build an operational helium plant at the Bush Dome Reservoir. In 2001, BLM entered into an agreement with CRLP to engineer, design and build a crude helium enrichment unit (CHEU), which would enable the helium to be extracted from the reservoir. The agreement allowed the Government to pay CRLP to build and use the CHEU, but CRLP retained ownership of the CHEU; it did not become the ownership of the Government.

Because CRLP retains ownership of the CHEU, the Government has continued the agreement through Cooperative Agreements with CRLP, to pay for the use of the CHEU. In a past Inspector General’s (IG) audit, the IG stated the Government should not continue doing Cooperative Agreements for the use of this CHEU, and that continued used should be done through a FAR based contract. The current Cooperative Agreement ends March 31, 2018.

Therefore, a new FAR based contract has to be established to continue the use of the CHEU.

Because CRLP owns the CHEU, they are the only source available to lease the CHEU to the Government.

5. A description of efforts made to ensure that offers are solicited from as many potential sources as practicable, including whether a notice was or will be publicized as required by FAR Subpart 5.2 and, if not, which exception under FAR 5.202 applies:

A sources sought was published out on FedBizOpps requesting any interested parties to submit a capabilities statement. The sources sought was posted on March 22, 2017 and all responses were due back no later than April 5, 2017 at 9AM CT. Only two response were submitted. One by Cliffside Refiners, L.P. (CRLP) and one by REDD Engineering & Construction, Inc. CRLP stated they could meet the Government’s requirement. REDD Engineering & Construction, Inc.

was not able to meet the Government’s requirement, because they could not offer a new plant by March 2018, they wanted to help investigate, plan and design a new helium plant, which would take years to complete.

The Sources Sought was amended on May 11, 2017 to see if any of the plants close to BLM’s pipeline could process the crude helium and then send it back into the pipeline, by building a new line off BLM’s pipeline. The due date for this amendment was extended to May 18, 2017.

CRLP was the only vendor to submit a response to the amended sources sought.

Based on the market research completed, it has been determined that the only vendor that can fulfill the Government’s requirement is CRLP. They are the only vendor that can offer a realistic solution that allows the helium plant to stay operational; any other possible solution would not be feasible in the time frame, due to the congressional mandate for the Government to sell the helium plant by September 2021.

6. A determination By the Contracting Officer that the anticipated cost to the Government will be fair and reasonable:

The contracting officer determines that the anticipated cost to the government will be fair and reasonable. In instances when certified cost and pricing data are required, an analysis of cost information will be performed which will consider field pricing reports, commerciality, procurement history and other available cost and pricing information in determining price reasonableness. When certified cost and pricing data is obtained, it will be used to ensure reasonableness, completeness and realism of the proposed costs as required.

7. A description of the Market Research conducted (see FAR Part 10) and the results or a statement of the reason Market Research was not conducted:

It was determined that the best way to reach out to the helium industry was to send out a sources sought. A sources sought was published on FedBizOps for a total of 21 days to include an amendment.

The sources sought stated: BLM is conducting market research to determine whether vendors would have the ability to create a replacement helium plant at that location or to provide an alternative at that location (i.e.: PSA-Pressure Swing Absorption Plant or other ideas)

In addition, the sources sought was amended to attempt to include other possibilities. The amendment stated: The Government is amending the original sources sought to include the processing of the raw gas stream from the Bureau of Land Management (BLM) Bush Dome Reservoir. The raw gas with the composition seen in the original sources sought would be supplied through the 8” BLM pipeline and delivered to a natural gas plant via pipeline to make crude helium.

The crude helium would be required to be delivered back to the BLM pipeline via pipeline. An interested vendor must be located south of the Texas-Oklahoma border.

Only one vendor provided a reasonable response to the original sources sought notice and to the amendment; that vendor was CRLP.

8. Any other facts supporting the use of Other Than Full and Open Competition:, If the Government wanted to spend the time and money, a new helium plant could be built.

However, building a new plant would take years, and cost millions of dollars. This would not be feasible based on the following:

• Congress has mandated the Government shall sell the helium reservoir by September 30, 2021, so it is not reasonable to spend two plus years building a new plant, only to operate it for no more than two years.

• The BLM, Amarillo Field Officer is controlled by the Helium Stewardship Act (HSA) of 2013, which requires the Government to provide helium to private and Government entities. In order to comply with this Act, the helium plant must be operating to deliver the helium that is stored in the Government’s Bush Dome Reservoir. With the current CRLP Agreement ending March 31, 2018, the plant would have to shut down until a new plant is built. Shutting down the plant would mean the BLM is not in compliance with the HSA. In addition, BLM makes about $300,000.00 per day on helium sales and approximately an additional $25,000 per day on hydrocarbon sales. This money is lost every day that the plant is shut down.

Therefore, the only available option for the Government is to continue to lease the CHEU from CRLP, and to sole source this requirement to CRLP.

9. A listing of the sources, If any, that expressed in writing, an interest in the acquisition:

No other sources, besides the two vendors that responded to the sources sought notices, expressed any interest in the acquisition.

10. 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:

If the Government were going to continue to run the helium plant after September 2021, it would be feasible for the Government to pursue having a new plant built that the Government would own.

However, since the Government intends to sell the helium reserve by September 2021, there are no actions the Government can take at this time to remove any barriers to competition.