O Rings- Memo Consolidation_Redacted.pdf

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SOURCE SELECTION INFORMATION – SEE FAR 2.101 AND 3.104

CONTROLLED UNCLASSIFIED INFORMATION (CUI)

requests to support the customer requirements. Continuing to award regular, recurring individual purchase orders, valued near the SAT, could be viewed as splitting requirements, which is a prohibited practice.

Additionally, limitations to traditional purchase orders are noted as it relates to the industry support for the requirements. Transactional buys limit the manufacturer’s ability to forecast demand thereby also decreasing the contractor’s ability to maintain an efficient production cycle. Requirements are typically fulfilled by the contractor using small production lots with correspondingly higher production costs and longer lead times due to increased set-up time in the production facility.

Alternative Approach 2 – Separate Long-Term Contracts (LTCs) or Indefinite Delivery Purchase Orders (IDPOs) for each NSN

• A second, less-consolidated alternative is to award an IDPO or LTC for each separate item to support the requirements. LTCs are preferred at DLA to support items with high Annual Demand Frequency (ADF) and Annual Demand Quantity (ADQ), and Annual Demand Value (ADV) as they are considered flexible vehicles that reduce buyer workload and provide documented, reduced administrative and production lead times². The two required items are candidates for LTCs or IDPOs. LTCs and IDPOs both offer the same level of support systemically. The contract term for IDPOs is typically two years or five years for LTCs. The greatest benefit of the LTCs and IDPOs relates to the post-award advantages of both vehicles. Requisitions are automatically processed and generate systemic delivery orders against LTCs and IDPOs resulting in reduced buyer workload and the reduction of pre-award administrative lead-times.

Under Alternative Approach 2 – Separate LTCs or IDPOs for each NSN, would be required for pre-award processing and post-award administration. The Total Estimated Cost for Alternative Approach 2 is and reflects the estimated costs to complete two individual long-term contracts required for pre-award and post-award actions.

Total dollar values (based on the annual estimated quantity (AEQ) and estimated unit price) for each of the individual IDPOs or LTCs would exceed the SAT³. The pre-award administrative lead-time (based on TTA goals) to award each LTC or IDPO is approximately 145 days. Awarding multiple LTCs and IDPOs for the single item procurements would require considerable administration time, oversight, a potential duplication of effort and would drastically increase the pre-award administrative workload as Acquisition personnel would be needed to solicit, evaluate, award, and document the acquisition process (via combined or individual Pre- Negotiation Briefing Memoranda (PBMs) and Price Negotiation Memoranda (PNMs)). Awarding individual LTCs or IDPOs would require the management of multiple contracts thereby resulting in an increased post-award administrative workload and administrative lead-time.

²Source: Defense Logistic Agency Annual Financial Report Fiscal Year (Unaudited) 2016 ³Total dollar of the two required items would exceed the SAT under individual IDPOs, all the required items would exceed the SAT under individual LTCs.

An added limitation to awarding multiple LTCs and IDPOs is the administrative burden on the contractor during the pre-award and post-award phases of the acquisitions. The contractor would be required to submit a quote for each solicitation and possibly engage in discussions for multiple acquisitions. If individual IDPOs or LTCs are awarded, the contractor would be required to meet the varied terms and conditions of each award.

Any costs associated with the increased pre-award and post-award administrative burden to the contractor(s) in

P a g e | 5 single contract vehicle with clearly established terms and conditions and would maximize the contractors’ ability to efficiently support the customers’ needs.

The proposed strategy is responsive to the Federal Acquisition Regulation (FAR) system which encourages communication and collaboration among all members of the Acquisition Team to optimize customer support.

The administrative processes required for large dollar value LTCs inherently benefits all members of the Acquisition team throughout the acquisition cycle. For the proposed acquisition, the benefits of these interactions were realized early in the acquisition planning process. During market research, it was revealed that current market trends were causing significant price increases throughout the global supply chain. Through communications with industry and a collaborative effort with DLA Troop Support oversight teams, C&E was able to develop an acquisition strategy that reflects current commercial practices and provides sufficient flexibility to protect the interests of the contractor and the Government. In contrast, for high volume, lower dollar value individual purchase orders, collaboration with industry and oversight teams generally is not practicable and typically does not occur until the post-award phase which significantly reduces the ability to proactively resolve administration and processing challenges.

Consolidating the requirements under a multiple award LTC will include post-award administration requirements that will benefit the customer, contractor, and Government. Under the proposed strategy, a Contractor Performance Assessment Report (CPAR) will be completed annually at the end of the base period and each option year which will document Government ratings pertaining to contractor compliance with contract terms and conditions including delivery and quality performance. CPARs provides an added benefit to the Government as the reports afford source selection officials with essential information to make adequate decisions in the selection of contractors. Moreover, contractors understand the importance of the CPAR rating in obtaining future Government contracts and are, therefore, incentivized to comply with contract terms and conditions and, at a minimum, provide satisfactory support in fulfillment of the requirements.

The greatest limitation of the proposed strategy is the pre-award administrative lead time. According to TTA goals, acceptable award lead-time for LTCs valued at is days; the acquisition timeline for the current acquisition is approximately days to account for oversight reviews throughout the acquisition process. The long-term benefit of the proposed strategy outweighs this limitation. Delivery orders processed against the awarded LTC will significantly reduce buyer workload and administrative and acquisition lead-times. Additionally, the current approach of processing transactional purchase orders can be utilized until a LTC is awarded thereby optimizing the benefits of both acquisition approaches to assure seamless, continuous support of the customer requirements. Lastly, a multiple award LTC approach with post award competition amongst vendors is the FAR Part 6 preferred method of promoting full and open competition, which will guarantee the Government is receiving the best prices at the time each delivery order is issued.

Consolidating the requirements under a multiple award IDIQ acquisition represents the best alternative for the Government in achieving its goals. The estimated savings exceed 10% of the estimated contract dollar value and constitutes a substantial benefit in accordance with FAR 7.107-2(d)(1)(i).

4. Small Business Considerations:

This acquisition of the O-rings has competitive item descriptions and is set aside 100% for small business which maximizes opportunity for small business concerns. The proposed strategy will result in a consolidated acquisition that is not bundled. As demonstrated in the Market Research, consolidating the requirements under a multiple award LTC does not negatively impact small business and does not preclude small business concerns from being able to perform under a resultant contract nor is the solicitation unsuitable for small business.

DETERMINATION

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For the reasons state above, I hereby determine:

- This proposed acquisition constitutes a consolidation of contract requirements as defined in FAR 2.101.

- The contract requirements being consolidated exceed $2 million. The maximum contract value for the consolidation is $10M and requires approval by the Director of Procurement Process Support in accordance with DLAD 7.107-2(b). The acquisition strategy has been coordinated with the Small Business Office and has addressed any potential negative impact on small business, has addressed the results of Market Research and has identified alternative contracting approaches as required by FAR 7.107-2(a).

- The benefits of consolidating the contract requirements substantially exceed the benefits of any alternative less-consolidated approaches (15 U.S.C. 657q(c)(2)(a)).

- The consolidation of the contract requirements is necessary and justified (FAR 7.107-2(a)).

DATE JOHN M. FAFARA

Director, Procurement Process Support