QSRA-RFQ-18006_Grainger_PNW_LSJ_-_Follow-on_BPA_(REDACTED).pdf

General Services Administration Federal Acquisition Service

General Supplies and Services Office of Acquisition Management

Internal & Emergency Acquisition Division

LIMITED SOURCES JUSTIFICATION

DESCRIPTION OF ACTION – LOGICAL FOLLOW-ON

GSA SCHEDULE 51V CONTRACT NUMBER: 47QSHA18D000G

RFQ: QSRA-RFQ-18006

The General Services Administration (GSA) makes this Limited Sources Justification (LSJ) pursuant to Federal Acquisition Regulation (FAR) 8.405- 6(a)(1)(i)(C).

1) Identification of Agency and Contracting Activity:

Client Agency:

General Services Administration (GSA) General Supplies and Services (GSS) Retail Operations (RO)

Contracting Activity:

Internal & Emergency Acquisition Division Office of General Supplies and Services GSA Federal Acquisition Service 1800 F Street, NW Washington, D.C. 20405

2) Nature and/or description of action being approved: GSA is establishing a logical follow-on Blanket Purchase Agreement (BPA) in accordance with FAR 8.405-6(1)(i)(C).

GSA previously competitively established multiple BPAs using Federal Acquisition Regulation (FAR) 8.405 Federal Supply Schedules procedures, on behalf of the GSA, Office of General Supplies and Services (GSS), Enterprise Supply Chain Solutions (ESCS), 4th Party Logistics (4PL) program as part of the GSA Enterprise Supply Chain Management (ESCM) 4PL program to deliver a comprehensive 4PL supply solution to Government activities located in the Pacific Northwest and Arctic areas, as well as Hawaii and Guam. BPAs were established with multiple GSA Schedule 51V Contract holders, including W.W. Grainger (Grainger).

As established, the BPAs do not authorize the BPA Holders to begin 4PL operations at specific BPA locations. Rather, the BPAs indicate that, as GSA determines it is necessary to implement 4PL solutions at individual BPA locations, GSA will competitively award a modification to one BPA Holder, authorizing that

Limited Source Justification Solicitation –Logical Follow-on BPA

BPA Holder to begin performance at that specific location. The original multiple-award BPAs were established for five years, and had one (1) five year option period which had been determined necessary to meet program requirements.

In February 2017, Grainger was competitively awarded a modification authorizing them to begin performing 4PL operations at Joint Base Elmendorf Richardson (JBER) in Anchorage, AK. Grainger began onboarding processes that same month.

In August 2017, Grainger was competitively awarded a modification authorizing them to begin performing 4PL operations at the ServMarts located on Andersen Air Force Base (AFB) in Guam, Naval Base Guam (NBG), and Joint Base Pearl Harbor Hickam (JBPHH) in Hawaii.

Grainger’s MAS 51V contract expires in February 2019, and pursuant to FAR 8.405-3(d)(3), Grainger’s current BPA will end on that date. At that time, Grainger will have been providing 4PL operations to these locations for less than two years.

This LSJ supports a logical single-award follow-on BPA with Grainger pursuant to FAR 8.405-6(1)(i)(C), under their new MAS 51V contract number 47QSHA18D000G, authorizing them to perform 4PL operations at the four locations identified above (JBER, Andersen AFB, NBG, and JBPHH) for a one (1) year base period and one (1) year option period. With this logical follow-on, Grainger will provide 4PL operations at these locations for nearly four (4) years total. This limited source, single-award follow on BPA is in the interest of economy and efficiency for the reasons outlined below. The estimated volume of purchases for the potential two year follow-on BPA is $43,256,699.89; this estimate is based on average annual sales and potential surge and sustainment requirements.

3) A Complete Description of Supplies/Services Required to Meet Agency’s Need:

As established, the multiple-award BPAs were intended to assist GSA in supporting its DoD customers by providing more favorable pricing, “just-in-time” inventory, an increased breadth of products, standard ordering processes, packaging, documentation, and billing operations for requisition of industrial products and supplies. The competitive modification model was chosen as the best acquisition method to provide this support to GSA’s DoD customers, as it allows GSA to establish BPAs with multiple MAS 51V contractors by region or program, and then competitively authorize performance at specific locations as they become eligible for conversion to the 4PL model.

Under its current BPA, Grainger provides GSA and its DoD customers with vendor‐owned/vendor‐ managed inventory (VMI) and related in-store services at these 4PL locations. In-store services include on-site management, maintaining adequate inventory levels, stocking/restocking of shelves, customer service, processing referral orders for non-stocked and not-in-stock items, etc. Grainger’s VMI products are industrial in nature, to include, but not limited to: paints and

CarolynMLong Sticky Note Accepted set by CarolynMLong accessories, preservatives, sealants; adhesives; oils and abrasives; tools including, but not limited to, power tools, accessories, and hand tools; hardware; building supplies; safety products; precision tools and equipment; machinery and tooling components; tool holding and work holding equipment; outdoor equipment and accessories; material handling; tooling components; fire‐fighting and rescue equipment; protective gear; and wild-land fire items.

This limited source justification and approval will authorize Grainger to continue providing these products and services, to ensure continuity of operations at these locations for approximately four (4) years. As the supporting rationale in the following section demonstrates, this logical follow-on BPA will avoid duplication of previously incurred costs; will allow GSA and its DoD customers to realize the cost savings and other benefits associated with continued performance; and will ensure continuity of operations for GSA’s DoD customers.

4) The Authority and Supporting Rationale:

This action is conducted under the authority of the MAS program. Sources will be limited in accordance with:

o FAR 8.405-6(a)(1)(i)(C) – In the interest of economy and efficiency, the new work is a logical follow-on to an original Federal Supply Schedule order provided that the original order was placed in accordance with the applicable Federal Supply Schedule ordering procedures. The original order or BPA must not have been previously issued under sole-source or limited-sources procedures.

The current BPA was competitively solicited and established as a multiple-award BPA under GSA’s MAS program. The modifications authorizing performance at these four specific locations were competitively awarded in accordance with the procedures outlined in the multiple-award BPAs.

This logical follow-on BPA is in the interest of economy and efficiency because it will avoid substantial duplication of previously incurred costs that are not expected to be recovered through competition; it allows the Government to realize the cost savings and other benefits associated with continued performance; and it will ensure GSA’s DoD customers enjoy continuity of services and uninterrupted access to mission critical industrial products.

GSA’s DoD customers spend approximately annually on industrial supplies through the four locations covered in this follow-on BPA. GSA’s data demonstrates that customers save on the top selling industrial supplies by purchasing through these GSA 4PL locations, as compared to GSA Advantage!.

Those savings equate to millions of dollars that the DoD can use for other requirements. Implementation of the 4PL program at customer locations allows the customers to significantly reduce the number of individual, local acquisitions that must be made to acquire this volume of product.

The Government incurred significant costs in establishing the multiple-award BPAs, awarding the competitive modifications, and onboarding Grainger at these 4PL locations. This includes acquisition costs and Government resources necessary to establish the BPAs, award the modification, defend a protest, as well as travel costs incurred by GSA to visit the 4PL locations to establish specific site requirements and monitor onboarding procedures.

Onboarding Grainger at the 4PL locations took several months and consisted of both system and operational onboarding. As part of the onboarding process, Grainger completed various system requirements such as Electronic Data Interchange (EDI) testing and validation and product catalog loads to allow merchandise to sell within the GSA point of sale systems. Operational onboarding included product research and sourcing, installation of equipment and shelving, complying with installation security access requirements, transporting adequate product to the 4PL locations, and stocking the shelves and staging inventory. At a minimum, the onboarding process takes 90 days to complete, but can take longer depending on geographical regions, complexity of the requirement, number of locations, and amount of required product. Grainger has completed the onboarding processes at these locations. Awarding to a new vendor would require complete duplication of these onboarding tasks.

To adequately stock these locations, Grainger was required to transport more than worth of inventory to these 4PL locations. At the time Grainger’s MAS 51V contract ends, and the BPA ends along with it, Grainger will have been performing at these locations for approximately two years. This follow-on gives the Government and Grainger time to recoup the costs that have been incurred in establishing 4PL services at these 4PL locations. Award to another source after such a short time will substantially duplicate the resources, product, equipment, and merchandising costs, and lead time previously expended. These costs will not be recovered through re-competition.

This logical follow-on BPA will allow Grainger to perform at these locations for nearly four (4) years total. This gives GSA’s DoD customers opportunity to purchase the in on-hand industrial inventory that Grainger has already transported to the 4PL locations. Further, it will increase efficiency for the vendor, customer, and GSA because it allows the Government to continue to realize Grainger’s previously established product category discounts and location-level discounts. This benefits GSA, their customer, and ultimately the tax payer, because the cost savings to the Government increase as the period of performance continues.

Further, acquiring these services through a new competitive acquisition carries a risk that GSA’s DoD customers will experience disruption of services. As noted above, the 4PL program allows GSA’s customers to significantly reduce the number of individual, local acquisitions that must be made to acquire this volume of product. If there is a lapse in service, the customers at these 4PL locations will be required to conduct a significant number of localized acquisitions to acquire these products. Conducting individual procurements for these items increases the risk that required products may not be available in the quantities and timeframes required to meet GSA’s customers’ mission requirements. This logical follow-on will ensure that GSA’s customers are able to continue to seamlessly purchase these required items without any disruption to services.

Establishing a new BPA through competition presents an additional risk of disruption of service because many eligible MAS 51V vendors’ hold MAS 51V contracts that will expire in the near future. Therefore, awarding to another vendor carries a risk that GSA will again be in the situation of having to recompete the requirement shortly after a vendor has been on-boarded and begun performance.

Establishing this logical follow on BPA with Grainger for up to two (2) years allows vendors additional time to obtain new MAS 51V contracts, thus allowing for more and better competition when this requirement is recompeted at the conclusion of the logical follow-on BPA.

Overall, this logical follow-on BPA is in the interest of economy and efficiency because it will avoid substantial duplication of already incurred costs that are not expected to be recovered through competition; it allows the Government to realize the cost savings and other benefits associated with continued performance; and it will ensure GSA’s DoD customers enjoy continuity of services and uninterrupted access to mission critical industrial products.

5) Determination by the Ordering Activity Contracting Officer that the Order Represents the Best Value Consistent with FAR 8.404(d):

Establishing a logical follow-on BPA with Grainger represents the best value to the Government and results in the lowest overall cost alternative (considering price, special features, administrative costs, etc.) to meet the Government’s needs. As stated above, establishing a logical follow-on BPA with Grainger is in the interest of economy and efficiency because it avoids substantial duplication of costs to the Government, allows the Government to realize cost savings and other benefits associated with continued performance, and ensures continuity of services for GSA’s customers.

Grainger has vast experience in this area and is already onboarded and established at these locations.

It is not in the Government’s best interest to duplicate the costs, efforts, and resources involved onboarding Grainger and obtaining performance at these 4PL locations. It is in the Government’s best interest to establish a logical follow-on BPA with Grainger pursuant to FAR 8.405-6(1)(i)(C).

6) Description of the Market Research Conducted Among Schedule Holders and the Results of the Research:

Recent Market Research has shown that the MAS 51V schedule program continues to be the best acquisition alternative to the GSA 4PL program for industrial products. Vendors who are awarded all three (3) SINs that are