SPMYM317D3026_Redacted (002).pdf

SPMYM3-17-D-3026 J&A for proposed P00006

Justification for Other Than Full & Open Competition

(November 2011)

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Agency and Activity: DLA Land and Maritime-KME in support of the Portsmouth Naval

Shipyard in Kittery, Maine.

2. The action being approved: A modification to contract SPMYM3-17-D-3026 on other than a full and open competition basis.

3. The supplies/services required to meet the using activity’s needs are described as follows:

This modification is to increase the amount of grit on the material CLINS and correct an ambiguity in the firm fixed price freight CLINS on contract SPMYM3-17-D-3026. The estimated amount of this action is

. As a result of this modification, the total value of the indefinite quantity contract is increased to

This modification:

[X] will include an option.

This modification is accomplishing three, unanticipated separate changes in the Shipyard’s grit requirements.

The first change is a significant increase in blasting operations on the Shipyard that has resulted in a surge of grit use that is not expected to cease during the remainder of the life of this contract. Without a modification, the contract would not be able to support the Shipyard. The second change is in Portsmouth operations that has identified an ambiguity in the terms of the freight CLINS 2002, 3002, and 4002. The third change is that the Shipyard wishes to split truck loads between their FWD and AFT hoppers, which allows them to unload grit to the most advantageous location upon arrival. CLINS 2005, 3005, and 4005 have been added to allow split deliveries. Please see the attached draft modification for the proposed changes.

Material Increase

When this contract was established, the Shipyard estimated 4000 tons of grit as the maximum for all five years. This was based on the Shipyard, on average, performing sandblasting operations on two hulls at a time, with the learning center also utilizing the grit. Due to a recent, unanticipated increase in work, the

Shipyard has started blasting three projects at a time in addition to the learning center, resulting in an increase to the amount of grit being requested. The customer advised that this increased workload is not going to change and has confirmed that an increase to the next two option years from 4000 to 5000 tons should address the increased demands. This would be the following changes:

Option CLIN 3001: 1000 additional tons at a price of ton. Total addition

Option CLIN 4001: 1000 additional tons at a price of ton. Total addition of

Total value of option CLIN material changes as a result of this modification action:

These changes also affect the estimated amount of deliveries covered on CLINS 3002 and 4002 as follows:

Option CLIN 3002: 40 additional deliveries at a price of a load. Total addition

Option CLIN 4002: 40 additional deliveries at a price of a load. Total addition of:

Total value of option CLIN freight changes as a result of this modification action:

Demurrage Charges

When this contract was established, it included five CLINS for freight, to cover all five years on the contract.

The CLINS are 0002, 1002, 2002, 3002, and 4002. The CLINS were negotiated as a firm fixed price NTE

CLINS that could only be billed for exact costs. The CLINS included language that if any delays or issues arose during delivery, that the vendor was required to notify the KO within 2 weeks of the occurrence. The expectation was that such delays or issues would be infrequent and addressed, as needed, through the changes clause. However, DLA Maritime Portsmouth has recently learned that such delays are common due to

Shipyard security and manpower limitations as well as limitations resulting from delivering around the

Shipyards’ operations. For instance, there were numerous instances of the vendor being held at the front gate and waterfront activities preventing the truck from getting to the delivery point, resulting in excessive wait times. As a result, each recent delivery order has been accompanied with a claim for demurrage fees.

For these delivery orders, the Government was found at fault for the delay and issued modifications to the delivery orders to cover the costs associated with the delays. Attached are reports of demurrage, to show history of hours incurred on several recent delivery orders.

Due to the way the language was worded on CLINS 0002, 1002, 2002, 3002, and 4002, the prime did not build in costs for demurrage because the CLIN was worded in such a way that gave the impression they would be compensated for Government’s delays as long as we are notified within 2 weeks of the occurrence.

At the time the language was built into the freight CLINS, it was never intended or expected that compensation be issued to the prime for delays this regularly. To normalize this process and remove it from the claims process, this modification will add CLINs to cover demurrage.

The attached draft modification adds CLINS to cover demurrage on this contract. The modification would cover the estimated remaining deliveries in the current year and next two option years. The CLINS (added as CLIN 2004, 3004, and 4004), would allow for demurrage up to an additional 4 hours on each load at the prime’s quoted price for the remainder of the life of the contract. CLIN 2004 would be effective immediately and CLINS 3004 and 4004 would be option CLINS. Demurrage charges would need to be confirmed by the project before signed off on, to ensure that if any delays are the fault of the prime or subcontractor, the Government does not absorb that expense. The CLINS would be priced as follows:

CLIN 2004: An estimated 100 deliveries remain. That is ) a load, for a total estimate o

OPTION CLIN 3004: An estimated 200 deliveries remain (based on 5000 tons). That is hour) a load, for a total estimate of

OPTION CLIN 4004: An estimated 200 deliveries remain (based on 5000 tons). That is hour) a load, for a total estimate of

Total for Demurrage CLINS to be added:

Split-Delivery Charges

Whenever the truck must deliver to one hopper and then disconnect and make part of the delivery into another, there is a for the work, in addition to demurrage incurred during the event. The contractor is currently prohibited from making split deliveries due to there not being a line item to put the charges against, or a demurrage CLIN.

The Shipyard would like to have split deliveries to maximize the use of the delivery location (s) of the grit, so if a load is coming and they have operations at both FWD and AFT locations, they can split their delivery up.

The CLINS would be price as follows:

CLIN 2005: 100 Split Deliveries . That is for a total of $

OPTION CLIN 3005: An estimated 200 deliveries remain. That is for a total of .

OPTION CLIN 4005: An estimated 200 deliveries remain. That is for a total of

Total for Split-Delivery CLINS to be added:

The total estimated dollar value of this modification is

The new estimated base and all options is

It is important to note that we have paid out demurrage fees already on serval orders, and the estimated base and all options of does not include those fees paid and any pending.

4. The acquisition is restricted to the only source(s) of supply known to have the capability of furnishing the required supplies/services. Source(s) are: (Include CAGE code)

Ensio Resources (Cage Code 4GE97)

97 River Road

Bow, NH 03304

5. The statutory authority permitting other than full and open competition is:

[X] 10 U.S.C. 2304(c)(1) - Available from only one or a limited number of sources.

This contract is for QPL sandblast grit identified as coal slag. The Shipyard has used an IDIQ contract since

2014. In 2017 when the latest IDIQ was established, there was only one offer received for the solicitation

(from Ensio).

Attached is the latest copy of the QPL for this material, identifying only 3 other sources of coal slag:

Harsco Corporation (Cage Code 1KMW9)

Mobile Abrasives (Cage Code 44FM4)

U.S. Minerals (Cage Code 6RVR4)

In 2017 when this contract was competed, the three other qualified sources were personally notified via email of the FBO solicitation. The solicitation was posted from April 28, 2017 to May 31, 2017. None of them protested the solicitation, submitted a quotation or protested the award notice that was posted on July 11, 2017.

In 2014, the previous IDIQ contract SPMYM3-14-D-3046 also attempted competition utilizing the same QPL.

There were two quotations received, one from Ensio, and one from Secure Components Inc. for a different type of grit (crushed glass).

The Shipyard has tested serval grit alternatives to include crushed glass, cast steel, aluminum oxide, and garnet. None of these options have met the profile criteria the Shipyard needs to have for these specific sand blasting operations, resulting in the continued use of coal slag.

The way the Shipyard requires grit be delivered is also a challenge for other offerors, primarily due to location. The Shipyard does not have any capability for the storage of coal slag, and the grit must be delivered regularly directly to the Shipyard by a truck that accesses the waterfront and pumps the grit directly into hoppers in the drydocks and learning center.

6. Efforts to ensure that offers are solicited from as many sources as practicable are:

[X] Other (Explain): Efforts were taken at the time the contract was solicited.

7. A market survey:

[X] was conducted: The QPL was checked on 1/24/2020. There are no new sources of coal slag.

A sources sought notice for this action was posted from January 28, 2020 to February 4, 2020. Four sources responded as follows:

Mission Janitorial: Cage Code 2N691, Providing Harsco Product

Blast One: Cage Code 68G96, Providing US Minerals Product

Norton Sandblasting: Cage Code 3L815, Providing Harsco Product

Mil-Spec Abrasives: Cage Code 832Q7, Providing Harsco Product

All four vendors were requested to provide pricing information for their product and given until COB on

Tuesday, February 11, 2020 to do so. Mission Janitorial did not respond. The three other sources information is as follows:

Company Price per ton Freight per Load

Blast One

Norton Sandblasting

Mil-Spec Abrasives

The current price per ton for grit is next year, and final year.

The current price for a freight load year, the final year.

The current prices are significantly lower than the estimates from the 3 interested sources, and at this time, it would not be feasible or in the best interest of the Government to pursue an award to another source.

As noted above, even though there are other qualified sources, these sources represent significantly more cost to the Shipyard. The contract is about to enter option years; to ensure that the Shipyard is adequately supported, the modification is necessary as Ensio is the only known source capable of meeting the Shipyard’s requirement in the short term. When the contract expires, the acquisition will be competed and DLA will consider ways to reformat the requirement to maximize competition.

8. Additional facts supporting other than full and open competition are:

None

9. A listing of sources, if any, indicating an interest in the modification are: (If none, so state)

Ensio Resources (Cage Code 4GE97)

97 River Road

Bow, NH 03304

Mission Janitorial (Cage Code 2N691)

9292 Activity Road

San Diego, CA 92126

Blast One (Cage Code 68G96)

4510 Bridgeway Avenue

Columbus, OH 43219

Norton Sandblasting (Cage Code 3L815)

1006 Executive Blvd.

Chesapeake, VA 23320

Mil-Spec Abrasives (Cage Code 832Q7)

3306 Peterson Street

Norfolk, VA 23509

10. The actions, being taken to overcome barriers to competition before any subsequent acquisitions are made are:

(If none, so state and explain why not.)

None at this time, although the customer is open to trying new types of grit as they become available in the marketplace. They did recently try another grit product based out of Canada and found it sufficient for their needs, but the location of the grit and the logistics involved with transport and delivery would not meet our needs. When the contract expires, the acquisition will be competed and DLA will consider ways to reformat the requirement to maximize competition.

11. I hereby determine that the anticipated cost to the Government will be fair and reasonable.

The contractor has agreed to honor pricing already established and found fair and reasonable on the base contract for the grit increases and freight charges that include one hour of delivery labor.

The demurrage charge of is considered fair and reasonable based on the following:

The delivery truck has a lengthy delivery process including pick up at the contractor’s plant, then delivery at the Shipyard. This includes going through security, navigating an industrial environment, and delivering the material on-site by connecting to Shipyard equipment and pumping the material into a hopper which requires the use of hoses and equipment on the truck. The material itself is hazardous and requires MSDS data with shipment. The driver, when on yard, is subject to the availability and ever-changing schedule of shipyard personnel and cannot act at will. When they are held on-yard, the company is unable to allocate the resources of the truck or employee to any other purpose during that time. There is also the expense of an idling vehicle (fuel costs).

Enclosed are printouts for average labor rates in different aspects of the field. The first is an average labor rate of , a hazard material handling specialist

. Averaged together, we arrive at an approximate labor charge just for labor.

This does not include a consideration of charges of expended fuel, lost business, administrative work associated with tracking the delivery person’s location and re-work associated with generating the freight cost changes when invoicing.

Ensio’s rate for demurrage has historically been the same rate charged directly to them by the freight company. This has been the rate since at least February of 2017. The rate offered by Ensio will not change for the remainder of the contract, despite the fact that a PPI for local couriers and deliveries shows a steady increase in the industry inflation since 2009.

12. Additional facts, if any, supporting this determination: It has been decided that a COR would be an appropriate addition to this contract to help manage deliveries and ensure we do not encounter any overages or undue charges. Although we are in the preliminary phases of narrowing down COR responsibilities, we have been ensured by the Shipyard that a COR will be provided once details regarding their expected responsibilities are ironed out.

APPROVAL

APPROVAL LEVELS OF THE JUSTIFICATION – FAR 6.304

[X] not exceeding $700,000 Contracting Officer

[ ] over $700,000 to $13,500,000 Competition Advocate

[ ] over $13,500,000 to $93,000,000 Head of Contracting Activity (HCA)

TECHNICAL/REQUIREMENTS PERSONNEL I certify that the facts and representations under my cognizance which are included in this justification are complete and accurate.

Technical Cognizance: (Requirements originator)

Name and Title Signature Phone Date

LEGAL REVIEW

The foregoing J&A has been reviewed for legal sufficiency and redaction prior to posting on FedBizOpps.gov..

CONTRACTING OFFICER

I hereby certify that the information contained in this justification is accurate and complete to the best of my knowledge and belief. If not exceeding $700,000, this signature serves as the approval.

COMPETITION ADVOCATE

I have reviewed and approve this Justification $700,000 to $13,500,000, or if above $13,500,000, hereby recommends that this Justification be approved:

HEAD OF THE CONTRACTING ACTIVITY

I have reviewed and approve this Justification $93,000,000 or below.