Limited Source Justification_OPC - Deloitte_FINAL - Redacted_Redacted.pdf

Limited-Sources Justification

Pursuant to the Multiple Award Schedule Program (as authorized by 40 U.S.C. § 501), this justification is prepared in accordance with the requirements of Federal Acquisition Regulation (FAR) 8.405-6(c) for the use of sources limited to fewer than those required in FAR 8.405-1, FAR 8.405-2, and FAR 8.405-3. The circumstance justifying restriction is FAR 8.405- 6(a)(1)(i)(B) through the following facts and rationale:

(1) Agency and Contracting Activity.

The Department of Homeland Security (DHS), United States Coast Guard (USCG), Office of Contract Operations (CG-912) proposes to enter into an order on the basis of a limited-sources justification.

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

(a) Nature of action: USCG intends to limit competition to one source in accordance with FAR 8.405-6(a)(1)(i)(B).

(b) Name and address of the contractor: Deloitte & Touche LLP

1919 N Lynn St Arlington, VA 22209

(c) Contract type: Firm-Fixed-Price

(d) Estimated total value (including options):

Period Period of Performance

Unit Price Total

Base Year

9/30/25 – 9/29/26

12 mo.

$71,895.42

$862,745

Option Year 1 9/30/26 – 9/29/27

12 mo. $74,028.33 $888,340

Option Year 2 9/30/27 – 9/29/28

12 mo. $76,226.25 $914,715

Option Year 3 9/30/28 – 9/29/29

12 mo. $78,489.58 $941,875

Option Year 4 9/30/29 – 9/29/30

12 mo. $80,822.50 $969,870

Total $4,577,545

Note: These services were previously awarded via a Firm-Fixed Price (FFP) Blanket Purchase Agreement (BPA) (70Z02318AVFK00200) which includes a 12-month base year and one (1) ten-month option period to Deloitte & Touche LLP. The period of performance for this BPA started 17 Feb 2024 and ends on 16 Dec 2025.

(e) Type of funding: Procurement, Construction, and Improvement (PC&I)

(f) Year of funding: Fiscal Year 2025

(g) Solicitation number: 70Z02325Q93220002

(h) Background information about the requirement: As part of the relief package, in a memo from April 29, 2020, the DHS Secretary required the OPC Program Office to establish a third party to provide oversight and reporting of the use of the relief funds.

(3) Description of Supplies/Services.

The requirement is to provide accounting oversight of Public Law 85-804 funds as part of a funding relief package for the Stage 1 Offshore Patrol Cutter (OPC) contractor, Eastern Shipbuilding Group (ESG) (“the contractor”), as well as auditing services to monitor all aspects of the contractor’s financial system. Audit services are necessary to ensure the accurate expensing of funds used to support the relief efforts authorized under Public Law 85-804 for the USCG’s OPC acquisition program. Artifacts developed by the auditing services are reviewed by the USCG Program Office; USCG Senior Leadership; the Department of Homeland Security Office of the Chief Financial Officer (DHS OCFO); the Committee on Commerce, Science, and Transportation of the Senate; and the Committee on Transportation and Infrastructure of the House of Representatives as required by Section 1157 of Title 14, U.S. Code, “Extraordinary Relief”.

A Performance Work Statement documents the details of the services required.

(4) Identification of the justification and the rationale.

FAR 8.405-6(a)(1)(i)(B) – Only one source is capable of providing the supplies or services required at the level of quality required because the supplies or services are unique or highly specialized.

Due to the contractual history of this program requirement, Deloitte is inherently qualified having extensive knowledge of the contractor’s processes and accounts, as well as thorough understanding of how the 85-804 funds have been allocated to date. Deloitte is ingrained into the contractor’s financial systems and processes, audits the information, and presents the OPC PM with necessary data to manage the extraordinary funds or identifies financial concerns which are shared up through leadership and Congress. There is a substantial risk of inconsistent and incongruous reporting by onboarding a new contractor while they become acclimated to the contractor’s business processes and accounting methods. Additionally, transitioning to a new contractor would cause significant disruptions and delays in the timely delivery of the critical data, as ESG acclimates to a new entity handling their highly proprietary and sensitive information.

As of December 1, 2024, a majority of the P.L. 85-804 relief funds have been obligated. The contractor is expected to spend these funds and the remaining P.L. 85-804 funds through FY29.

Deloitte has been part of every step of the process both monitoring and tracking the use and expending of these funds. Given the nature of this unique circumstance, there is significant program and fiscal risk bringing on a new contractor:

- High risk of not being able to confirm whether the $659M was spent properly.

- High risk that the new contractor could miss indicators without having previous history and analyses, and the PM would not be able to inform leadership, DHS, and Congress in a timely manner.

- High risk that the new contractor would not have the long-standing insight to forecast possible problems.

Deloitte has collected information, conducted analyses, and reported findings and recommendations to the OPC PM, since February 2020. The reports produced consider the history and unique characteristics of the extraordinary relief funds. The incumbent has collected a history since the extraordinary relief began and has gleaned what trends are important and which are not. Training another company to recognize the same trends and produce similar reports would take a long time and would likely produce a continuity gap in what the Program currently provides to meet the monthly and quarterly reporting mandates. Deloitte’s reach into niche accounting fields is critical and their experience with the contractor makes Deloitte uniquely qualified as the only third party that is capable of providing uninterrupted service which Congress requires and the USCG must provide monthly. Any delay would be unacceptable as it would cause the Coast Guard to not comply with the Memorandum of Decision Eastern Shipbuilding Group Request for Extraordinary Contractual Relief (Public Law 85-804) mandate dated 10 Oct 2019 and signed by Kevin K. McAleenan, Acting Secretary, U.S. Department of Homeland Security.

(5) Determination by the ordering activity Contracting Officer that the anticipated order represents the best value consistent with 8.404(d).

The Contracting Officer has determined that issuing the proposed call order to Deloitte and Touche represents the best value and will result in the lowest overall cost alternative, considering price and administrative costs, to meet the Government’s needs. The ordering activity has considered the following:

a) Level of effort and the mix of labor proposed to perform the tasks is reasonable. The Contracting Officer’s evaluation of Deloitte's proposal for the USCG's Offshore Patrol Cutter (OPC) program highlights a comprehensive and positive technical approach that addresses the program's critical needs while mitigating associated risks. By leveraging multi-disciplinary expertise, Deloitte aims to enhance risk-informed decision-making through thorough data gathering and analysis as they have been since contract implementation in 2020. The implementation of flexible scenario and sensitivity analysis modeling, alongside the use of the D-Cast financial simulation tool, has allowed for accurate forecasting and adjustments based on historical trends and allowed for accurate accountability of all 85-804 funding. Monthly risk and financial analyses, including Business Transaction Reviews and strategic discussions with ESG leadership, ensure ongoing alignment and responsiveness to emerging challenges. Furthermore, Deloitte's commitment to regular updates through weekly meetings with USCG leadership and collaboration with earned value experts fosters transparency and proactive management.

The deployment of over 20 tailored analytic reports and an annual industry report on the commercial shipbuilding sector further equips USCG with essential insights for navigating potential risks. With a focus on qualified staffing and adequate resources, Deloitte's approach is poised to deliver significant value to the OPC program, ensuring its successful execution and alignment with national security priorities.

b) The total price is reasonable. The Contracting Officer (KO) determined the contractor's proposed rates align with its GSA contracted rates, which were determined as fair and reasonable at time of award. Additionally, the contractor has proposed an average discounted rate of 32% for the base period and all options, indicating pricing that is advantageous to the Government. Furthermore, these rates are consistent with the current rates being applied under the existing BPA Call Order, which incorporates a 3% escalation for option periods. Based on the above, the KO determined the proposed rates and total price is fair and reasonable for the scope of work required.

(6) A description of the market research conducted among schedule holders and the results or a statement of the reason market research was not conducted.

The USCG analyzed the current market, including the current single award BPA and determined that Deloitte’s in-depth knowledge of the requirement and continuity of service represents the best benefit for the Government. The USCG plans to issue a task order award for a one-year base period plus four one-year option periods issued off Deloitte’s GSA schedule contract.

(7) Any other facts supporting the justification.

There are no additional facts.

(8) A statement of actions, if any, the agency may take to remove or overcome any barriers that preclude the agency from meeting the requirements of 8.405-1 and 8.405-2 before any subsequent acquisition for the supplies or services is made.

The current audit services requirement ends when either: the shipbuilding contract with the contractor ends, which is scheduled to occur in FY 29; if the contractor delivers this requirement earlier; or if the contractor spends all of the P.L.85-804 funds, whichever event comes first. Once P.L. 85-804 relief is complete as predicted estimated by the close of FY29, there will not be a future need for this specific requirement.

(9) Contracting Officer’s Certification.