JA_26-0047_Red_Stone_Aresenal_signed_Redacted.pdf

CUI

DEFENSE LOGISTICS AGENCY

ENERGY

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6221

Controlled by: DLA Energy FEE CUI Category: PROCURE

Distribution/Dissemination Controls: FED ONLY

POC:

Source Selection Information – See FAR 2.101 and 3.104

J&A Tracking Number 26-0047

Justification for Other than Full and Open Competition Utilities Privatization, Contract SP060024C8360

1. Summary/Introduction:

The Defense Logistics Agency Energy (DLA Energy) Utility Services Division is the contracting activity for utility services in support of the Military Services’ Utilities Privatization (UP) programs for the Department of War. This is a justification for other than full and open competition (J&A) under 10 U.S.C. § 3204(a)(2), as implemented by Federal Acquisition Regulation (FAR) 6.103-2, Unusual and Compelling Urgency, for a 12-month period of performance extension to contract SP060024C8360 for the privatized wastewater utility services at Redstone Arsenal, AL. This contract expires on November 9, 2026. The 12-month extension of the period of performance is from November 10, 2026 to November 9, 2027, and will increase the contract value by from to .

As the owner of the wastewater utility system at Redstone Arsenal, Mission Critical Environmental, LLC (MCE) is required to provide reliable and dependable wastewater utility services 24 hours a day, seven days a week. MCE is also required to maintain, repair, and make necessary upgrades to its system to reach or maintain industry standards.

This J&A has been approved and publicized after award, in accordance with FAR 6.103-2(d).

Due to the unusual and compelling nature of this requirement, preparation and approval of this J&A prior to award would have unreasonably delayed the acquisition.

2. Nature and/or description of the action being approved (FAR 6.104-1(a)(2)):

The extension by contract modification will not change the contract type, which is Fixed Price with Economic Price Adjustment. Only MCE, as the sole owner of the wastewater utility system, can provide such privatized utility services. Once the period of performance of the contract is extended, MCE will continue to own, operate, maintain, renew, and replace the wastewater utility system at Redstone Arsenal. The 12-month extension will be executed via bilateral contract modification. MCE has not performed any work related to the 12-month extension.

The Army will be providing fiscal year 2027 funds to cover services provided under the 12-month extension.

Justification for Other Than Full and Open Competition (Cont’d) (SP0600-24-C-8360 – Mission Critical Environmental, LLC)

3. Description of supplies or services required to meet the agency’s need (including estimated value) (FAR 6.104-1(a)(3)):

The Army requires commercial wastewater utility services at Redstone Arsenal. Services will be acquired pursuant to FAR Part 41, Acquisition of Utility Services. MCE will be required to provide utility services on its wastewater utility system. This includes, but is 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 conveyed wastewater utility assets. The estimated dollar value of the contemplated 12-month period of performance extension is . The 12-month extension value was calculated by multiplying the current monthly fees by 12 months as follows:

Service Monthly Fee 12-Month Total Operations and Maintenance

Renewals and Replacements

Treatment Charge Total

DLA Energy and MCE will execute a bilateral modification establishing the agreed monthly service charge. The Government will continue to pay the existing monthly rate for the first 6 months of the extension. Effective May 9, 2027, prices will be adjusted pursuant to tailored Economic Price Adjustment (EPA) terms incorporated into the modification. Because the existing contract clause did not contemplate post-expiration adjustments, the parties have mutually agreed upon tailored baseline and current index calculation formulas utilizing published Bureau of Labor Statistics (BLS) indices consistent with the predecessor contract structure.

The resulting contract will be funded using annual operations and maintenance appropriations throughout the period of performance in compliance with 10 U.S.C. § 3133.

4. Identification of the statutory authority permitting other than full and open competition (FAR 6.104-1(a)(4)):

This J&A is based upon the authority of 10 U.S.C. §3204(a)(2), as implemented by Federal Acquisition Regulation 6.103-2. Unusual and compelling urgency precludes full and open competition, and delay in award of a contract would result in serious injury to the Government.

5. Demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires using the authority cited (FAR 6.104-1(a)(5)):

MCE has the appropriate qualifications to furnish the required services. MCE will continue to own the wastewater utility system and provide utility services at Redstone Arsenal. After the award of the 12-month period of performance extension, the contract will continue to be administered by DLA Energy.

In accordance with FAR requirements, the urgency necessitating this non-competitive 12-month contract extension is not the result of a lack of advance procurement planning by the requiring activity or contracting office. Rather, the need arises from external circumstances beyond the direct control of the current contracting office, which could not have been reasonably anticipated or prevented through standard acquisition forecasting.

Specifically, the 12-month extension is necessary due to the following contractual events:

1. Unanticipated Delays in the Novation Process:

During the period of performance of the contract, PDR Properties, Inc. (PDR), the predecessor owner of the wastewater utility system, sold the wastewater utility system and operating business to MCE, necessitating a formal novation agreement. The statutory novation review under FAR Part 42 required corporate due diligence, facility physical asset validation, and regulatory compliance determinations. Although finalized on June 17, 2026, the extensive technical baselining required to audit the transferred utility assets left insufficient lead time to conclude bilateral negotiations for the follow-on 10-year contract prior to the November 9, 2026 expiration date.

2. Technical and Statutory Complexity of 10 Year Follow On Contract:

MCE is preparing a proposal for a follow-on, 10-year contract, to be awarded immediately after the expiration of this contract. Because the follow-on contract spans 10 years of utility infrastructure renewal, replacement, and capital upgrades under 10 U.S.C. § 2688, the Government and MCE require sufficient time to complete thorough cost realism evaluations, environmental compliance reviews, and bilateral pricing negotiations. Executing a 12-month extension preserves continuity of utility operations while safeguarding the Government's interests during final follow-on negotiations

Preventing a lapse in mission-critical utility operations while the parties complete technical due diligence and finalize terms for the subsequent 10-year contract requires immediate execution under FAR 6.103-2. A failure to execute this 12-month extension would result in an immediate lapse of vital wastewater utility services at Redstone Arsenal. The harm resulting from any service disruption is severe, irreversible, and directly affects national security operations:

Disruption to Essential Base Operations:

Public Health, Safety, and Environmental Hazards:

A failure or stoppage of wastewater collection and treatment facilities creates an immediate biological and environmental hazard. Untreated discharge or sewage backups pose severe public health risks to thousands of military, civilian, and contractor personnel, while exposing the Government to catastrophic environmental liabilities, regulatory enforcement actions, and severe civil penalties under the Clean Water Act and state environmental protection statutes.

Economic Harm and Infrastructure Degradation:

Wastewater utility networks require continuous, uninterrupted monitoring, maintenance, and chemical treatment. A sudden cessation of operational coverage could cause physical system damage, pipe clogs, pump failures, and contamination, which would require extensive and costly emergency remediation well in excess of the cost of contract continuation.

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 5.1 and, if not, which exception under 5.101(b) applies (FAR 6.104- 1(a)(6)):

The Army privatized Redstone Arsenal’s wastewater utility system and awarded a utility services contract to PDR who subsequently transferred ownership to MCE. MCE has owned Redstone Arsenal’s wastewater utility system since June 17, 2026.

The exception at FAR 5.101(b)(1)(vi) applies because the proposed contract action is for utility services for which only one source is available, and the Government would be seriously injured if it complied with standard public notice timeframes. As a result, a synopsis of the 12-month extension will not be publicized in the Government Point of Entry, SAM.gov. A redacted version of this J&A will be made publicly available in accordance with FAR 6.301 within 30 days after contract award.

7. Determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable (FAR 6.104-1(a)(7)):

The Contracting Officer has reviewed MCE’s current prices, which were determined fair and reasonable by the Government when the predecessor contract W9124P23C0002 was awarded.

Previous prices were determined fair and reasonable based on procurement history and comparison with historical prices paid for the same utility services under FAR 15.404-1(b)(2)(ii).

Based on previously determined fair and reasonable prices, the Contracting Officer has determined the price to be paid by the Government during the 12-month period of performance contract extension is fair and reasonable.

To validate price reasonableness for the extension period pursuant to FAR 15.404-1(b)(2)(ii), the Contracting Officer evaluated the time elapsed and changes in market economic indices since the 2022 award. The historical monthly baseline rates, adjusted via published Bureau of Labor Statistics (BLS) indices, demonstrate that the continuation of current rates for the first 6 months, followed by formulaic EPA adjustment, reflects fair and reasonable pricing for this 12-month period.

8. Description of the market research conducted and the results or a statement of the reason market research was not conducted (FAR 6.104-1(a)(8)):

Market research was conducted in accordance with FAR Part 10 by reviewing the real property conveyance documents associated with Modification P00022 under 10 U.S.C. § 2688, property deeds, installation easements, and regulatory authority within the State of Alabama. This research confirmed that MCE holds exclusively deeded ownership of the physical wastewater utility system at Redstone Arsenal and possesses the requisite environmental permits. Because the Government does not own the treatment plant or collection network and possesses no statutory authority or appropriation to re-acquire the assets, MCE is confirmed as the only practicable and available source capable of providing uninterrupted wastewater utility services across the installation.

9. Any other facts supporting the use of other than full and open competition, such as (FAR 6.104-1(a)(9)):

(i) When 6.103-1 is cited for follow-on acquisitions as described in 6.103-1(c)(2), an estimate of the cost to the Government that would be duplicated and how the estimate was derived.

Not applicable.

(ii) When 6.103-2 is cited, estimated cost, or other rationale as to whether and how much the Government would be harmed.

A failure to execute this contract extension prior to expiration would immediately halt wastewater collection and treatment for over 40,000 military, civilian, and contractor personnel at Redstone Arsenal. The quantified and operational harm includes:

1. Direct violation of the installation's National Pollutant Discharge Elimination System

(NPDES) permit, exposing the Army to civil penalties of up to $64,618 per day under the Clean Water Act (33 U.S.C. § 1319).

2. Emergency environmental containment and wastewater hauling services are estimated to exceed $250,000 per day.

3.

10. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition (FAR 6.104-1(a)(10)):

To date, no other sources have expressed, in writing, an interest in this acquisition.

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 6.104-1(a)(11)):

MCE was awarded a contract for privatized wastewater utility services at Redstone in accordance with 10 U.S.C. § 2688. The Contracting Officer has determined that MCE, as the sole owner of the wastewater utility system, is the only source capable of providing wastewater utility services at Redstone Arsenal. Pursuant to 10 U.S.C. § 2688, ownership of the wastewater utility assets was permanently conveyed to the privatized owner. Because the contractor owns the physical distribution and treatment assets, competition for direct utility operation is not practicable for the duration of the privatized utility lifecycle.

I hereby certify that the data which forms the basis for this justification is accurate and complete to the best of my knowledge and belief.

I hereby certify that the data which forms the basis for this justification is accurate and complete and that the purchase request covers only the minimum requirements to satisfy the needs of the Government.

I have reviewed and concur with this Justification.

Approved: