S_A12_FBO_HAZ_Natural_Gas_Utility_Service_FY-17.pdf

JUSTIFICATION FOR OTHER THAN FULL AND OPEN

COMPETITION

PUBLIC UTILITY – NATURAL GAS UTILITY SERVICE

FEDERAL CORRECTIONAL COMPLEX HAZELTON

BRUCETON MILLS, WEST VIRGINIA

Contractor: PS Energy

Period of Coverage: 12/1/2016 through 9/30/2017

Estimated Amount: $634,084.57

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

NATURAL GAS UTILITY SERVICE FCC HAZELTON

Pursuant to the Federal Acquisition Regulation (FAR) Subpart 6.302-1 (a)(1) and 6.302-1 (b)(3), and the

Bureau of Prisons Acquisition Policy (BPAP) Part 6.304 (b), the Federal Bureau of Prisons (BOP) has determined that the procurement of natural gas utility services for the Federal Correctional Complex

(FCC) Hazelton meets the criteria established for other than full and open competition. It is further determined that only one responsible source and no other supplies and or services will satisfy agency requirements. This limitation on competition is justified as supported by the following information in accordance with FAR Part 6.303-2:

1 Agency:

Department of Justice

Federal Bureau of Prisons

FCC Hazelton

1640 Sky View Drive

PO Box 450

Bruceton Mills, WV 26525

2 Nature and/or Description of Action Being Approved:

This action is for the acquisition of natural gas utility services supplied to the FCC Hazelton from the sole provider of such services. FCC Hazelton has a present and continuing requirement for natural gas utility services for the proper operation of the facility.

3 A description of supplies or services required to meet the agency’s needs:

Pursuant to FAR Part 41.202, the PS Energy Group, Inc. continues to provide the “entire natural gas utility service” (i.e., transmission, distribution, system operation and maintenance, metering, billing, etc.). The PS Energy Group, Inc. shall provide to the government facility at FCC Hazelton, natural gas utility services in a manner and form that is consistent with all applicable laws, rules, codes, industry standards, permits, and regulations, promulgated by any and all governmental authorities having jurisdiction. The PS Energy Group, Inc. shall provide services on an un-interruptible daily basis for 12 months. The PS Energy Group, Inc. will be responsible to maintain and/or repair all associated natural gas lines and equipment, including associated costs for such repair, to the delivery point or meter of

FCC Hazelton.

The service required is supply, distribution, and related services for natural gas utility services from

October 1, 2016, through September 30, 2017, subject to funds availability (FAR Clause 52.232-18).

The services will be procured by way of purchase order. The estimated cost for natural gas utility service is $634,084.57.

Contract Line

Item Number

Utility

Performance Period

Estimated Annual

Cost ($)

CLIN 0001 Natural Gas October 2016 $54,629.76

CLIN 0002 Natural Gas November 2016 $57,124.91

CLIN 0003 Natural Gas December 2016 $60,009.27

CLIN 0004 Natural Gas January 2017 $82,620.51

CLIN 0005 Natural Gas February 2017 $71,348.20

CLIN 0006 Natural Gas March 2017 $56,211.93

CLIN 0007 Natural Gas April 2017 $53,477.50

CLIN 0008 Natural Gas May 2017 $47,227.76

CLIN 0009 Natural Gas June 2017 $40,849.36

CLIN 0010 Natural Gas July 2017 $37,726.37

CLIN 0011 Natural Gas August 2017 $36,841.69

CLIN 0012 Natural Gas September 2017 $36,017.51

Total Estimated Cost: $634,084.57

4 An identification of statutory authority permitting other than full and open competition:

This justification to award as a sole source is prepared pursuant to the exception to full and open competition requirements in accordance with the statutory authority for these services that is found at

41 U.S.C. 253 (c)(1) and FAR 6.302-1(b)(3), when the supplies or services required by the agency are available from only one responsible source. When acquiring utility services (see 41.101), circumstances may dictate that only one supplier can furnish the service (see 41.202). Analysis of the market indicates that PS Energy Group, Inc., has proprietary rights up to the meter at FCC Hazelton.

In order for another provider to be capable of providing the service, significant capital improvements would be needed. The Bureau would be required to pay for the capital improvements, but it would not recover the costs of duplication of services, connection fees and infrastructure installation costs through competition. The current requirement is for follow-on services and does not include funding for capital improvements.

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

The PS Energy Group, Inc. is the sole provider of natural gas utility service for the FCC Hazelton.

The Natural Gas industry is governed by the Public Service Commission (PSC) of West Virginia (Title

150 Legislative Rule – PSC) and the Federal Energy Regulatory Commission. The PSC is the governing body that sets all rates and tariffs with the responsibility of natural gas utility service for the state of West Virginia. However, in its discretion by rule or order, the PSC does not regulate what is considered low pressure distribution systems (Rule 1.7.9) with limited customers like PS Energy

Group, Inc. In accordance with West Virginia State Code which states: each natural gas utility, to the extent covered by this title, must obey and comply with all requirements of every order, decision, direction, rule, or regulation made or prescribed by the PSC. PS Energy Group, Inc. currently owns and operates the natural gas pipeline connected to the FCC Hazelton meter. If it were possible to make an award to another natural gas utility provider, this new utility provider would have to install and maintain the infrastructure necessary to provide natural gas service for the proper operation of the facility. Having a single provider of natural gas for this area is the most cost efficient method of distributing natural gas.

6 A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable including whether or not a notice was or will be publicized as required by FAR

Part 5.2:

As stated in FAR Part 5.202 (a)(5), “the contract action is for utility services other than telecommunications services and only one source is reasonably available. Therefore, a notice is not required in the Government wide point of entry (GPE).” GSA, Energy Management Center of

Expertise, has previously determined that there are no area wide contracts for natural gas utilities and that no opportunity exists in the local area to compete the requirement.

7 A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable:

The estimated average monthly cost, which is based on invoice history, for the natural gas utility service is $52,840.38 with a total estimated usage for the 12 month period of $634,084.57. Prices will be analyzed by the Contracting Officer and Facility Manager in order to determine price reasonableness.

8 A description of the market research conducted and the results or a statement of the reason market research was not conducted:

This documentation is in accordance with FAR Part 10, which describes the policies and procedures for conducting market research in a process of finding viable sources of goods and services to meet government requirements and to find the most suitable approach to acquiring, distributing, and supporting supplies and services. This report is submitted in support of an acquisition with an estimated value in excess of the simplified acquisition threshold. Below are the findings of the market research for the above referenced requirement.

Background: A review of the obligation reveals the following – The Federal Correctional Complex

Hazelton (hereinafter referred to as “FCC Hazelton”) has a current and continuing requirement for natural gas utility service.

Title: Natural Gas Utility Servcie - FCC Hazelton.

Product or Service Code: S- Utilities and Housekeeping Services – S111 Utilities – Gas.

North American Industry Classification System (NAICS): 221210 Natural Gas Distribution = This industry comprises: (1) establishments primarily engaged in operating gas distribution systems (e.g., mains, meters); (2) establishments known as gas marketers that buy gas from the well and sell it to a distribution system; (3) establishments known as gas brokers or agents that arrange the sale of gas over gas distribution systems operated by others; and (4) establishments primarily engaged in transmitting and distributing gas to final consumers.

Standard Industrial Classification (SIC) Code: 4924 Natural Gas Distribution.

Deliver / Performance time: Pursuant to FAR Part 41.202, PS Energy Group, Inc. continues to provide the “entire natural gas utility service” (i.e., transportation, distribution, system operation and maintenance, metering, billing, etc.). PS Energy Group, Inc. shall provide to the government facility at FCC Hazelton, natural gas utility services in a manner and form that is consistent with all applicable laws, rules, codes, industry standards, permits, and regulations, promulgated by any and all governmental authorities having jurisdiction. PS Energy Group, Inc. shall provide services on an un-interruptible daily basis (365) days per year. PS Energy Group, Inc. will be responsible to maintain and/or repair all associated natural gas lines and equipment, including associated costs for such repair, to the delivery point or meter of FCC Hazelton.

Potential Sources: PS Energy Group, Inc. is the sole provider of natural gas utility service in the FCC

Hazelton area. I applied personal knowledge, interaction with knowledgeable individuals in local and Federal Government regarding market capabilities to meet the requirements, and research of generally accessible literature available on-line were the techniques used in researching this procurement for a supply/services of this type.

Commercial Item Determination: Natural Gas utility services are items that are of a type customarily used by the general public and by non-governmental entities for purposes other than governmental purposes.

Market Analysis: The results of market research have determined that the government’s needs can be met by an item customarily available in the commercial marketplace.

1. The following methods were utilized to conduct Market Research:

X Reviewed historical acquisition information.

X Personal knowledge in procuring supplies/services of this type.

X

Review of Government and/or commercial databases for relevant information; PS

Energy Group, Inc. and Public Service Commission (PSC) of West Virginia (Title

150 Legislative Rule – PSC)

X Searched database and contacted GSA Energy Center of Expertise; Found no area-wide or single point contract is available.

X Searched FPDS-NG; Found only the FBOP is purchasing natural gas service from

PS Energy Group, Inc. at FCC Hazelton and FCC Yazoo City.

X

Searched previous purchases of similar/identical acquisitions; Found the PS

Energy Group, Inc. is the current provider to FCC Hazelton and has provided service since 2003. This is a continuation of service.

X Searched the Internet; Found that PS Energy Group, Inc., is a for-profit public utility.

The market research conducted by the contracting office and the Facilities Department staff determined that a GSA area-wide nor a single point contract with PS Energy Group, Inc. is available in accordance with Title 31 USC § 1535. GSA is specifically authorized by law and regulation to purchase utility services on behalf of other agencies by providing an Assisted Acquisition. August

2010, in accordance with Title 40 USC § 121(d), GSA issued the FBOP a Delegation of Authority for nationwide authority to negotiate and execute utility service contracts at Federal facilities under the control and direction of the FBOP in accordance with Title 40 USC § 501(b)(1)(B). Search of previous purchases of similar/identical acquisitions shows PS Energy Group, Inc. is the current natural gas service provider for FCC Hazelton and has serviced the facility since dedication. Also, PS

Energy Group, Inc. is the only service supplier capable at this time of providing FCC Hazelton with natural gas services. No other company has presented itself with the capabilities nor the infrastructure to these utilities to the current connection site. No other sources have been located that are currently capable or that could acquire the capability of meeting the Bureau’s requirement.

Results: Based on the information provided by the sources detailed above, the following information outlines the conclusions and provides the basis for this procurement.

It is this Contracting Officers determination there is a source available that is capable of providing the required services. The procurement will be conducted in accordance with the procedures as outlined in FAR Part 12, 13, and 41. A Performance-Based Acquisition method will not be used for this procurement as it is determined not applicable. A PBA relies on the use of measurable performance standards and financial incentives in a competitive environment to encourage competitors to develop and institute innovative and cost-effective methods of performing the work.

One potential source is a local entity, the incumbent, which appears able to satisfy the requirement.

As a result of the original facility construction contract and service, PS Energy Group, Inc. is the only provider of natural gas utility services. PS Energy Group, Inc. is a small business.

The provision of natural gas utility service is essential for the orderly operation of FCC Hazelton.

History shows and economics dictate that the construction of facilities and infrastructure by multiple utilities in the same location would be extremely costly and disruptive to communities. The PS

Energy Group, Inc. ratemaking process provides the lowest reasonable rate for consumers while maintaining the financial stability of the utility. Under the law, the utility is entitled to recovery of its reasonable incurred expenses.

This requirement will not be posted to Fedbizopps as a combined synopsis solicitation to promote competition, broaden industry participation, and assist small business concerns in obtaining contracts for FCC Hazelton. This requirement meets the exemption at FAR 5.202(5) the proposed contract action is for utility services other than telecommunications services and only one source is available.

PS Energy Group, Inc. is the sole provider of natural gas utility service in the FCC Hazelton service area. Having a single supplier of natural gas service for this area is the most efficient method of providing these utility services. The Bureau does not have the state and local approval or the resources to provide the funding for another company to install the required infrastructure at the institution, another pipeline is not available, and no other contractor can provide natural gas service through the PS Energy Group, Inc. pipelines.

The U.S. General Services Administration has issued a Delegation of Contracting Authority to the

U.S. Department of Justice, Federal Bureau of Prisons to negotiate and execute utility service contracts. This includes the provision of natural gas utility services for FCC Hazelton.

I also make the determination that this procurement action “NOT” be set-aside for small business.

The Small Business Procurement Review for the purchase of utility services has been granted a waiver by the Office of Small and Disadvantaged Business Utilization to the FBOP for submitting routine procurements to the Office of Small and Disadvantaged Business Utilization for review in accordance with PGD 09-02.

Recommendation: The Government contemplates the single award of a firm-fixed price requirements type natural gas utility service purchase order resulting from this requirement.

Comments: The conclusions from this market research will be incorporated into the document for providing Natural Gas Utility Service for FCC Hazelton.

9. Other facts supporting the use of other than full and open competition:

The provision of natural gas utility service is essential for the orderly operation of FCC Hazelton.

PS Energy Group, Inc. is the current natural gas utility service provider for FCC Hazelton and has continuously serviced the facility since 2003.

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

There were no other sources which expressed an interest in this requirement. Natural gas utilities is regulated by the West Virginia Public Service Commission (PSC) that preserves options to utility customers and does not exclude small companies from providing an adequate distribution system.

11. Actions taken by the Agency to remove or overcome barriers to competition:

Contracting and requirement staff continues to conduct appropriate market research to determine if sources capable of satisfying the agency's requirement exist and to overcome competition barriers. Deregulation laws are presently nonexistent and no alternative source of service is currently available. A review of FPDS-NG shows only the FBOP is currently issuing purchase orders to PS Energy Group, Inc. for natural gas utility requirements. If opportunities arise in the future the BOP will take appropriate action to satisfy the agency’s requirement.

12. CONTRACTING OFFICER’S CERTIFICATION:

I hereby certify that this request for Justification and Approval of other than Full and Open

Competition is made in good-faith and that the supporting data and information are accurate and complete to the best of my knowledge and belief, and that I would not be making this request if it were feasible to fully compete this requirement. I further certify that this request is not the result of lack of advance planning or desire to expend funds while those funds are still available.

//SIGNED\\ 8/24/2016

Dennis Dempsey, Contract Specialist Date

Field Acquisition Office

I hereby certify that the supporting data, provided by the technical and requirements personnel which form the basis for this justification is complete and accurate to the best of my knowledge and belief.

Steve Funk, Facilities Manager Date

FCC Hazelton

Concurrence of:

Joe Coakley, Complex Warden Date

FCC Hazelton

Approved:

//SIGNED\\ 8/29/2016

Jill D. Ryan, Chief Date

Field Acquisition Office