Justification_ _Approval__SPE60013Q0812_.pdf

LIMITED SOURCE JUSTIFICATION

Under

GSA Multiple Award Schedule Contract No. GS-00F-0067N

INTRODUCTION: The contracting activity is the Defense Logistics Agency Energy (DLA Energy), a field activity of the Defense Logistics Agency. The action being approved is the issuance of a sole source follow-on task order to Guernsey under the Multiple Award Schedule Program (MASP) for analytical support services for the post-award contracting activities of three utility services contracts (USCs) in Alaska. Ongoing contract actions and litigation involves the preparation of various reports, documentation, and testimony for current contract actions including, but not limited to, the current tariff rate case, requiring thorough knowledge of the historical, financial, technical, and regulatory requirements associated with the Alaska USCs. These contracts employ an array of complex tools and methodologies that are unique. These required analytical support services are critical to the successful continuation of these USCs in Alaska.

DLA Energy’s Alaska USCs provide critical utilities for customers in this unique and harsh environment. Ultimately the customers are the Office of Secretary of Defense (OSD), the U.S. Army Assistant Chief of Staff for Installation Management (ACSIM), the U.S. Army Installation Management Command (IMCOM), two (2) Army Major Commands, Headquarters Air Force (HAF), Pacific Air Force (PACAF), and DLA. Most importantly, the well-being of service members performing mission critical tasks is supported by the ultimate services of these contracts.

Installations and utility systems covered under this task order are: Fort Wainwright, AK (central heating and power plant, steam distribution and condensate collection system, water treatment and distribution system, wastewater collection system, and electrical distribution system); Fort Greely, AK (central heating plant, standby generation plant, steam distribution and condensate collection system, water treatment and distribution system, wastewater treatment and collection system, and electrical distribution system); and Joint Base Elmendorf Richardson, AK (natural gas distribution system, water collection dam and reservoir as well as treatment and distribution system, wastewater collection system, landfill gas electric generation plant, standby diesel generation and electrical distribution system).

DESCRIPTION OF AGENCY NEED: The Government’s requirement is the continuation of detailed technical evaluation and analysis of the USCs’ activities and systems. Due to ongoing tariff rate proceedings and the complexity of these site-specific actions as well as delays resulting from Regulatory Commission of Alaska’s mandated schedule, the work extends beyond the end of the performance period for the current task order. Guernsey has already performed the majority of the work under previously awarded task order SP0600-09-F-8250, and is substantially involved with DLA Energy in the completion of discovery requests, rate proceedings, and negotiations already underway. The required services are necessary to ensure that the Government’s position remains uncompromised by meeting all of the information, time/schedule requirements imposed by the Regulatory Commission of Alaska (RCA), the Utility Service Provider (USP), and the Alaska Attorney General’s Office. This effort requires documentation, evaluation, and analysis be completed in a timely manner by individuals with the requisite professional technical and financial expertise and credentials as well as the situational awareness of the existing physical and regulatory environment. A loss of momentum would be disastrous for the Government in terms of both irreparable damage to its reputation and in terms of money which could be lost by setting precedent for the remaining 45 years of these 50-year contracts. The total cost of these remaining technical and

Justification for Other Than Full and Open Competition (Cont’d)

SPE600-13-Q-0812

analytical support services is estimated in the amount of annually, for a total of . The anticipated period of performance for this acquisition is from June 1, 2013 through May 31, 2014 for the base year and three (3) option years from June 1, 2014 through May 31, 2017. The value of the overall USCs for 12 utilities in Alaska exceeds . Without a continuance of the existing Utility Support Services Contract (USSC) the risk of failure is high and the value of that which is at risk is also very high. Given this risk assessment, the cost of continuing the USSC is insignificant compared to what is at stake.

AUTHORITY TO LIMIT SOURCES: The authority for this action is Federal Acquisition Regulation (FAR) 8.405-6(a)(1)(i)(B) and (C), and 16.505(b)(2)(ii).

The services to be performed are a logical continuation of work already being performed by Guernsey. As previously stated, this is a highly complex technical and analytical support requirement, involving specialized expertise and a detailed knowledge of ongoing regulatory proceedings already underway for the Alaska USCs. The existing Alaska USCs were awarded with a 50-year term and have approximately 45 years of remaining performance. The complexity of both the USCs and the various policy issues that have arisen during the implementation and execution of these contracts in the unique Alaska regulatory environment require that these contracts be supported by an organization with the requisite technical expertise, and have specific historic, situational, and site-specific, regulatory, and physical knowledge of existing environment. Guernsey is already immersed in ongoing tariff rate proceedings, for which it has reviewed tariff filings, analyzed data, participated in discovery, provided expert testimony and otherwise gained unique expertise relative to installation/service specific requirements and the utility systems privatized. No other vendor would have the historical and systems knowledge that Guernsey has developed in working with DLA Energy, the USP, and Installations on these 12 utility systems in Alaska. Additionally, the USP has informed the Government of its intent to file an additional rate case with the RCA prior to the end of the current task order. This means that at the end of the current task order, Guernsey will be immersed in not one, but two, rate cases for these complex contracts.

Awarding to a new contractor would result in substantial duplication of cost as DLA Energy would be paying a new contractor to develop expertise and a very substantial knowledge base that DLA Energy has already paid Guernsey to develop. Additionally, these costs are not likely to be recovered through competition because market research has shown that there is little difference in prices among competitors for work of this nature. Irrespective of any competitive action, the Government would be required to issue a sole source effort for litigation of the rate cases in effect at the time the current task order expires. Furthermore, and of greater importance, the time another contractor would require to gain the necessary expertise in an ongoing procurement process would create unacceptable delays, costs, and inefficiencies to the Government’s schedule and its ability to be responsive to the RCA and/or the Alaska Attorney General. Therefore, this order must be issued on a sole source basis in the interest of economy, efficiency, and impact on the standing of the Government in the ongoing proceedings. It is likely that award to any other source would result in substantial duplication of cost and effort to the Government that is not expected to be recovered through competition and would create unacceptable delays in fulfilling the agency’s regulatory requirements.

BEST VALUE DETERMINATION: The contract type proposed is Firm-Fixed Price. The DLA Energy Supervisory General Engineer confirmed that the labor mix and skill categories incorporated into the price are appropriate to meet the Government’s minimum need. In accordance with FAR 8.404(d), the Contracting Officer has determined that this order represents the best value to the Government and will result in the lowest overall cost alternative to meet the Government’s needs.

Justification for Other Than Full and Open Competition (Cont’d)

SPE600-13-Q-0812

As noted above, historically there has been little variation in prices among competitors, and therefore, any unit price benefit the Government might realize from competing the order is far outweighed by the actual costs and delay that would be incurred to bring a newcomer up to speed.

Accordingly, the Government believes the best value will be realized by taking advantage of Guernsey’s experience and familiarity with Utilities Privatization (UP) - specific and unique installation-specific requirements in Alaska.

MARKET RESEARCH/EFFORT TO OBTAIN COMPETITION: While market research indicates there are several technical service firms capable of performing technical support for the UP program, none were currently located in Alaska. The brevity of the performance period and considerable learning curve for another contractor to understand the underlying business processes, functional requirements and evaluation tools, as well as familiarize themselves with existing contracts and installation-specific requirements in an extreme Alaska climate, and complex regulatory environment, make Guernsey uniquely qualified to continue performing this effort.

Engaging another contractor for this performance period would add unacceptable delays, costs, and inefficiencies.

ACTIONS BEING TAKEN TO OVERCOME BARRIERS TO COMPETITION: DLA-

Energy competitively awarded the original task order awarded to Guernsey on November 26, 2008.

This order will be issued for one year with three (3) one-year options. Guernsey will continue and complete specific tasks associated with the review analysis, evaluation, and documentation of ongoing contract actions that it has already begun and continue its support of the Government’s efforts in all ongoing rate cases. No work outside of these awarded contracts will be assigned to Guernsey under this task order, and DLA Energy will evaluate the support requirements for other efforts to ensure maximum practicable competition is achieved. It is important to note that although full and open competition is expected to be sought for new task orders, there may still be a requirement to limit sources for work remaining on existing UP efforts at critical times during these contracts’ course when ongoing actions from a prior award need to be continued in order to avoid duplication of costs, inefficiencies and ineffectiveness to ensure the Government meets its obligations/commitments and obtains the best value services overall.