MACC Capacity Increase 22-JA-FECON-0003_Redacted.pdf

DEPARTMENT OF THE NAVY

NAVAL FACILITIES ENGINEERING SYSTEMS COMMAND FAR EAST

PSC 473 BOX 13

FPO AP 96349

Justification and Approval Number 22-JA-FECON-0003

JUSTIFICATION AND APPROVAL

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Activity.

Naval Facilities Engineering Systems Command (NAVFAC) Far East

2. Description of the Action Being Approved.

This justification and approval (J&A) seeks authority to increase the aggregate contract maximum Not-To-Exceed (NTE) capacity for the Design Build / Design-Bid-Build (DB/DBB) Iwakuni Multiple Award Construction Contract (MACC) by $90 Million, thereby increasing the NTE from $95 Million to $185 Million. The MACC includes the following five (5) Indefinite- Delivery, Indefinite-Quantity (IDIQ) contracts:

1. N4008420D0069, ACTY CO., LTD. (ACTY)

2. N4008420D0070, AMERICAN ENGINEERING CORPORATION (AEC)

3. N4008420D0071, MECCS MITOMO JV (MMJV)

4. N4008420D0072, NIPPO CORPORATION (NIPPO)

5. N4008420D0073, SANKYO REINETSU CO., LTD. (SANKYO)

This increase in the ordering capacity of the current IDIQ contracts under the MACC will ensure that sufficient capacity is available to competitively compete known, specific requirements which must be awarded in fiscal year (FY) 22 through FY23 Quarter 1 (Q1), and support reasonable potential modifications to such requirements as well as modifications to previously awarded task orders under the MACC. This action does not extend the period of performance of 15 April 2025.

3. Description of Supplies/Services.

The MACC provides authority to award task orders for design, repairs, alteration, construction and demolition work to shore facilities to include labor, management, supervision, tools, materials, equipment, incidental engineering, and transportation. The scope of work may include office renovation, building demolition, built-in equipment repair/replacement, piping repair/replacement, pipe lagging, electrical work, mechanical work, carpentry work, road pavement, fencing, roofing, painting, site work, concrete work, masonry, welding, and incidental removal and disposal of lead based paint and asbestos containing material at U.S. Marine Corps Air Station (MCAS) Iwakuni, Japan, MCAS Iwakuni controlled area around Iwakuni, and other locations within the Yamaguchi prefecture. The MACC consists of five (5) qualified Japanese construction contractor firms with IDIQ awards that independently compete for individual task order projects. The MACC historically functioned as the predominant and most viable tool used to successfully and effectively procure DB/DBB contracts to support requirements at MCAS Iwakuni. Increasing the contract capacity of the MACC was determined to be the only method

J&A No. 22-JA-FECON-0003 possible to ensure that the time sensitive, mission critical projects described herein are competitively procured and timely awarded in order to avoid possible negative impacts. The contract ordering capacity increase contained herein will be used to support the award of and possible modifications to the projects outlined herein as well as support necessary modifications to previously awarded task orders issued under the MACC.

The projects listed in paragraph 5 below are time-sensitive, mission-critical FY22 through FY23Q1 projects that are to be completed under the MACC through the ordering capacity increase under this J&A (Total Estimated Value = $90,000,000.00).

Critical projects included in this list provide needed repairs and improvements to facilities that support the warfighter and their families. If repairs and improvements cannot be completed there is a risk of failure that results in immediate negative impacts to installation mission, life safety, and quality of life.

The requiring technical activity (RTA), end users, and customers confirmed the criticality and time sensitivity which mandates that these requirements be awarded during FY22 and the first quarter of FY23. While the criticality of each requirement listed below varies, the aggregate award of all projects listed below is essential in order to meet the USMC’s infrastructure requirements for MCAS Iwakuni AOR in FY22 through FY23Q1.

4. Statutory Authority Permitting Other Than Full and Open Competition.

The statutory authority permitting other than full and open competition is 10 U.S.C. § 2304(c)(2), as implemented by FAR 6.302-2 – Unusual and Compelling Urgency. FAR 6.302-2 permits contracting without providing for full and open competition in situations where 1) an unusual and compelling urgency precludes full and open competition, and 2) delay in award of a contract would result in serious injury, financial or other, to the Government. As stated above, this increase supports requirements to be awarded during FY22 and the first quarter of FY23 and will not exceed one year, including all options.

5. Rationale Justifying Use of Cited Statutory Authority.

The original MACC with an aggregate capacity of $95 Million was competed on a full and open basis, and awarded to the five (5) firms listed in paragraph 2 above on 16 April 2020 for a five

(5) year ordering period. Each task order had a minimum guarantee of 500,000JPY / $4,498.26 (FY20 Budget Rate: 111.1542 JPY/$1). The task order range is from 50,000,000JPY / $500,000 to 1,000,000,000JPY / $10,000,000 (Current Rate: 100JPY/$1). The contract expiration date is 15 April 2025.

Per the RTA, the Iwakuni MACC is nearing its maximum capacity of $95 Million for task order awards due to the unanticipated heavy spike in workload for mission critical requirements in FY21. This unusual spike in work significantly decreased capacity of the MACC within its first two years. Moreover, the unusual volume of work projected for FY22 through FY23Q1 execution is beyond the remaining capacity of the current MACC. This was not due to the agency’s inability to plan as historical contract information shows that annual capacity burn rate for this contract vehicle ranges between Million to Million as shown in the table below.

The unusual spike in construction requirement in FY21, resulted in obligation of Million.

Table 1: Historical Iwakuni DB/DBB MACC Obligation

Fiscal Year Total Obligation

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

Increasing the Iwakuni MACC’s capacity for critical mission-essential projects targeted for FY22 through FY23Q1 projects include the following:

Table 2: Projected FY22 & FY23Q1 Requirements and Capacity Requirement:

Project Estimated Value DB Air Traffic Control

DB Minor Playground Modernization at CDC B#0635, 0636 & 0637(#4575742) DBB BLDG. 4800, Cracked Floors DB Repair Substation #1 (IW2201M) DB BEQ 1388 Renovation DB BEQ 1368 Renovation DB Midrise 1210 Renovation DBB CMV‐22B Renovation DB Atago Dog Park Renovation DB Storm Water Upgrades DB Provide Air Gap to Water Tanks DB Fire Protection and Ventilation for Stove Upgrades DB Install Electric Door Openers at Fire Station DB Replace VCB transformer in POL Compound

The previous market survey for the Iwakuni MACC indicated that all contractors’ prices were priced competitively and each demonstrated a proven track record for successfully completing projects with satisfied customers.

In the opinion of the RTA, increasing the contract value of the current MACC by $90 Million is the most advantageous way to fulfill the Government’s imminent and foreseeable contracting requirements while at the same time creating an environment for maximum participation for Iwakuni contractors. No other resource can satisfy the NAVFAC’s needs and the Marine Corp’s requirements as completely and cost-efficiently as the current MACC vehicle.

According to the RTA, if the additional capacity is not granted, the FY22 and FY23Q1 awards will have to be procured as standalone contracts. In the opinion of the RTA, this method would not be in the best interest of the Government because of the significant amount of time and resources involved to develop, solicit and execute these standalone contract actions. Opening the required projects up to full and open competition as standalone procurements is not likely to garner any significant savings beyond what competing on the MACC already provides, as there is more than sufficient competition between the five (5) contractors on the MACC.

Furthermore, without the increase in capacity, NAVFAC FE will be at great risk of losing authorized funding due to the inability to execute year-end targets timely and ultimately result in detriment to the Marine Corps mission to support our warfighters as there are no other contracting tools available that will satisfy NAVFAC FE’s time-sensitive and critical DB/DBB construction requirements within the task order range of the Iwakuni MACC.

Per the RTA, the follow-on Iwakuni MACC is currently scheduled for award in the second quarter of FY23, which will not be in time to accommodate the requirements named herein and other time-sensitive, critical requirements targeted for FY22 and FY23Q1.

ACTY, AEC, MMJV, NIPPO, and SANKYO, the contractors currently performing services under the MACC are already familiar with MCAS Iwakuni requirements, processes, security requirements, and are positioned to complete the projects required under this J&A with no undue delay, expeditiously addressing the potential impacts to installation mission, life safety, and quality of life concerns raised by the same. Moreover, the RTA estimates that issuing stand-alone contracts for these projects would likely take one year from publication of solicitation to completion of the contracts. Accordingly, a modification of the MACC to increase capacity in order to address these projects is the most effective and efficient way for the Government to proceed.

As described throughout this J&A, procuring requirements outlined herein through full-and-open competition outside of the MACC is neither practical nor achievable since it will result in potentially meaningful delays and substantial project cost increases while also exposing USMC installations to unnecessary risk and potentially negatively impacting the USMC’s mission objectives in Japan. Ultimately, increasing the ordering capacity of the MACC as described herein is essential to meet the infrastructure mission requirements at Iwakuni AOR.

The requiring technical activity (RTA), end users, and customers confirmed the criticality and time sensitivity which mandates that these requirements be awarded during Fiscal Year 2022 through FY23 Quarter 1 (Q1), and in order to mitigate immediate negative impacts to installation mission, life safety and quality of life. While the criticality of each requirement listed above varies, the aggregate award of all projects listed above is essential in order to meet the DON's infrastructure requirements for MCAS Iwakuni during Fiscal Year 2022 through FY23 Quarter 1 (Q1).

6. Description of Efforts Made to Solicit Offers from as Many Offerors as Practicable.

In an effort to facilitate competition for the requirements contained herein, the contracting activity shall competitively solicit the requirements contained herein from all current MACC contractors. The MACC ensures sufficient competition for new and repair work with five (5) MACC contractors and the increase in capacity does not create a sole source environment. As explained herein, this MACC is the only vehicle that enables NAVFAC to meet these urgent and compelling requirements within the estimated range of 50,000,000JPY / $500,000 to 1,000,000,000JPY / $10,000,000 (Current Rate: 100JPY/$1).

Synopsis of the proposed modifications were not published to the SAM.GOV Contract Opportunities website due to applicable exception under FAR 5.202(a)(6), which indicates that indefinite quantity contracts are not required to be synopsized.

In accordance with FAR 6.305, the approved J&A will be posted on Beta.SAM.GOV within 30 days after award of the contract modifications.

7. Determination of Fair and Reasonable Cost.

The contracting officer shall not award a contract for any of the requirements contained herein without first ensuring that the award amount is based upon a fair and reasonable price. The contracting activity will competitively solicit the projects contained herein from all MACC contractors and only those offers that were determined to be fair and reasonable will be awarded.

8. Actions to Remove Barriers to Future Competition.

The follow-on Iwakuni MACC is currently scheduled for award in the second quarter of FY23.

Accordingly, NAVFAC anticipates removing barriers to future competition through award of a new Iwakuni MACC with an aggregate ordering capacity of $495 Million.

In deference to competition, the contracting activity shall competitively solicit the requirements contained herein from all current MACC contractors.