SP060003R0047_Redacted.pdf

DEFENSE LOGISTICS AGENCY

HEADQUARTERS

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6221

21-0020

Justification for Other than Full and Open Competition For Additional Utility Services at Joint Base Andrews

UNDER AUTHORITY OF

10 U.S.C. § 2304(c)(1) ONE RESPONSIBLE SOURCE

1. Summary/Introduction:

The Defense Logistics Agency Energy (DLA Energy), Utility Services (US) Division is the contracting activity for utility services in support of the Military Services’ utilities privatization programs for the Department of Defense (DoD). This is a justification for other than full and open competition (J&A) under FAR 6.303 for additional utility services under Terrapin Utility Services (TUS) Contract SP060005C8250. The out-of-scope contract modification is authorized pursuant to FAR 6.302-1 Only One Responsible Source and No Other Supplies or Services will Satisfy Agency Requirements. The estimated dollar value of the contemplated action is $43,609,492.00. The period of performance for the added utility services is from the date the modification is executed through January 31, 2056.

The water distribution and wastewater collection systems at Joint Base Andrews (JBA) were conveyed to TUS following a competitive procurement resulting in a 2005 contract for utility services. As the new owner, TUS brought the system up to regulatory and industry standards as required by the contract. The Air Force did not include Grease Traps (GTs) and Oil Water Separators (OWS) in the requirement that resulted in the privatization award to TUS because the Air Force’s policy at the time of the original privatization requirement classified GTs and OWS as building functions whose maintenance could be contracted separately.

The Air Force has since determined that it is in its best interest to convey OWS and GTs when privatizing utilities and, subsequently, acquiring utility services. This policy is memorialized in Air Force Manual (AFMAN) 32-1061, Ch. 7.3.2. In summary, Ch. 7.3.2 states that privatization solicitations must include whole systems where possible including all components which are part of the system. Further, 10 U.S.C. § 2688 (j) specifically permits a military department’s conveyance of additional utility infrastructure to a utility that previously purchased the utility system on the installation if the infrastructure cannot operate without being a part of the conveyed utility system, or operation by the utility is in the best interests of the Government.

2. Nature and/or description of the action being approved (FAR 6.303-2(b)(2)):

The action being approved is a contract modification requiring TUS to perform utility services on the 42 OWS and 11 GTs currently connected to TUS’s wastewater collection system. The OWS and GTs will be conveyed to TUS as provided in the contract and as required by 10 U.S.C.

Justification for Other Than Full and Open Competition (Cont’d) Page 2 of 9 (SP0600-05-C-8250 – Terrapin Utility Services)

§ 2688(j) in an “as is, where is” condition without any warranty, representation, or obligation on the part of the Government to make any alterations, repairs, or improvements.

3. Description of supplies or services required to meet the agency’s need (including estimated value) (FAR 6.303-2 (b)(3)):

TUS is required to provide utility services to the OWS and GTs after they are conveyed by the Air Force as set forth in the utility services contract. Utility services include, but are not limited to, all necessary labor, management, supervision, permits, licenses, certifications, equipment, supplies, materials, transportation, and any other incidental items or services required for the complete ownership of the OWS and GTs. The estimated dollar value of the contemplated contract action is $43,609,492.00 for the remaining period of performance on this contract.

The contracting officer will execute a modification after the Air Force executes a Bill of Sale conveying these assets to TUS. The modification, authorized by this justification, will expand the utility services to the OWS and GTs. TUS will perform operations and maintenance (O&M) and renewals and replacements (R&R). TUS will also make any necessary system deficiency corrections (SDCs) to the OWS and GTs. The parties will negotiate an increase to the contract’s fixed monthly utility services charge (USC) as payment for the expanded requirement.

4. Identification of the statutory authority permitting other than full and open competition (FAR 6.303-2(b)(4)):

10 U.S.C. § 2304(c)(1), as implemented by FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services will Satisfy Agency Requirements is the authority permitting other than full and open competition.

5. Demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited (FAR 6.303-2(b)(5)):

FAR 6.302-1(b)(3) states: “When acquiring utility services (see 41.101), circumstances may dictate that only one supplier can furnish the service (see (41.202).” Per FAR 6.302-1(b)(3), TUS is the only responsible source available to meet the needs of the Agency and perform the Government’s requirements. TUS owns the water distribution and wastewater collection systems at JBA and operates those utilities under a 50-year utility services contract administered by DLA Energy.

TUS is also the permit holder for the wastewater collection system responsible for complying with permit requirements. Because OWS and GTs are part of the same system, responsibilities under that permit for these assets is with TUS.

Separating the repair and maintenance of the OWS and GTs from operation of the wastewater collection system for performance by another party to meet the requirement would likely cause disruption to and negatively impact JBA’s mission. The Air Force is not willing to consider conveying these assets to another utility. First, the Air Force must “include all components that

Justification for Other Than Full and Open Competition (Cont’d) Page 3 of 9 are part of the system such as GTs [and OWS]” (see AFMAN 32-1061, Ch. 7.3.2). The infrastructure is currently connected to TUS’s wastewater collection system. While the Installation has previously awarded separate service contracts to remove accumulated oil and grease from the OWS and GTs, the infrastructure is in need of maintenance and risks damaging TUS infrastructure if not properly maintained. A separate contract for this portion of the overall wastewater collection infrastructure will conflict with TUS’s contract by increasing costs in the event TUS has to perform unforeseen repairs to its wastewater system. Further, the Government Accountability Office (GAO) has stated that agencies cannot competitively award a contract for operations and maintenance of utility system assets and then convey those assets to another entity (see, Veolia Water North America Operating Services, LLC (5/19/06) Comp. Gen. Dec.

Nos. B-291307.5 and B-298017). Whatever utility the Air Force conveys the assets to must be the utility who performs utility services on those assets. Because TUS already owns the wastewater collection system, it must be the utility who performs the requirement when the Air Force conveys the OWS and GTs. TUS’s contract already requires TUS to provide the same utility services that are required for the OWS and GTs, the procedures are already in place for TUS to maintain the OWS and GTs at a safe and reliable level.

Awarding the requirement to another contractor would duplicate contract administration efforts and increase costs because the Air Force would need to pay additional labor, overhead, and other general and administrative costs to a second utility contractor operating wastewater utilities that connect to TUS’s infrastructure. The OWS and GTs cannot operate unless they are connected to TUS’s utility system. It is far more economical for the Government to add the OWS and GTs utility services requirement to TUS’s contract. TUS is a reliable system owner and is capable of meeting the Government’s requirement.

6. Description of the efforts made to ensure that offers are/were solicited from as many potential sources as is/was practicable, including whether a notice was or will be publicized as required by Subpart 5.2 and, if not, which exception under 5.202 applies (FAR 6.303- 2(b)(6)):

TUS was awarded a 50-year utility services contract for the JBA water distribution and wastewater collection systems on September 30, 2005, after a full and open competition. The exception at FAR 5.202(a)(5) applies, as the proposed contract action is for utility services, and only one source is available. The exception at FAR 5.202(a)(11) also applies, as the proposed contract action is made under the terms of an existing contract that was previously synopsized in sufficient detail to comply with the requirements of FAR 5.207 with respect to the current proposed contract action.

7. Determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable (FAR 6.303-2(b)(7)):

The cost to the government resulting from this modification is anticipated to be fair and reasonable. Given the nature of the requirement and the underlying contract’s very long term, a fair and reasonable price cannot be determined through price analysis alone. In accordance with

Justification for Other Than Full and Open Competition (Cont’d) Page 4 of 9

FAR 15.404-1(a)(4), cost analysis will be used to evaluate data other than certified cost or pricing data to determine cost reasonableness or cost realism when a fair and reasonable price cannot be determined through price analysis alone. A price analysis, and cost realism analysis due to the long-term nature of the requirement will also be conducted pursuant to FAR 15.404- 1(a)(2) and FAR 15.404-1(d)(3), respectively.

8. Description of the market research conducted and the results or a statement of the reason market research was not conducted (FAR 6.303-2(b)(8)):

As previously noted, TUS was awarded a 50-year utility services contract following a competitive procurement. As part of the pre-solicitation effort, market research was conducted to include a Dynamic Small Business Search and Sources Sought Notice released on the Federal Business Opportunities website. No supplemental market research was conducted in search of other potential sources for the requirement, as the OWS and GTs are connected to the wastewater system owned by TUS.

9. Any other facts supporting the use of other than full and open competition, such as (FAR 6.303-2(b)(9)):

10 U.S.C. § 2688(j) authorizes the Secretary of a Military Department to convey additional utility infrastructure under the jurisdiction of the Secretary on a Military Installation to a utility or entity to which a utility system for the installation has been conveyed and has been determined that the additional utility infrastructure would be in the best interest of the Government.

(i) Explanation of why technical data packages, specifications, engineering descriptions, statements of work, or purchase descriptions suitable for full and open competition have not been developed or are not available.

A technical data package with specifications, engineering descriptions, and statements of work was initially developed for the original utility services requirement at JBA that was awarded in 2005. The Government will use these documents to assist in negotiating the requirement with TUS through measures other than full and open competition.

(ii) When 6.302-1 is cited for follow-on acquisitions as described in 6.302-1(a)(2)(ii), an estimate of the cost to the Government that would be duplicated and how the estimate was derived.

Not Applicable.

(iii) When 6.302-2 is cited, estimated cost, or other rationale as to the extent and nature of the harm to the Government.

Not Applicable.

Justification for Other Than Full and Open Competition (Cont’d) Page 5 of 9

10. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition (FAR 6.303-2(b)(10)):

No sources other than TUS have expressed interest in owning, operating, or maintaining the OWS and GTs on JBA.

11. Actions that may be taken to remove or overcome barriers to competition before any subsequent acquisition for the supplies or services are required (FAR 6.303-2(b)(11)):

Under competitive procedures and in accordance with 10 U.S.C. § 2688, TUS was awarded a 50-year contract for utility services and became the owner of the JBA water distribution and wastewater collection systems. Therefore, no additional actions will be taken to remove or overcome barriers to competition because no barriers exist due to the nature of the action.