Class JA for USAF Brand Name HVAC _signed_Redacted.pdf

Control No. LRL-FY23-30

FAR Part 6 Justification and Approval for Other than

Full and Open Competition

1. Contracting Activity: U.S. Army Corps of Engineers (USACE), Louisville District, 600

Martin Luther King, Jr., Place, Room 821, Louisville, KY 40201. Louisville District has prepared this document in support of construction contracts across the entire USACE

Enterprise.

2. Description of Action: USACE requests approval of a Class Justification and Approval (J&A) for Other than Full and Open competition to allow Contracting Officers to issue solicitations that specify the use of brand name Heating, Ventilation, and Air Conditioning (HVAC) equipment in the construction of new facilities, as well as equipment for sustainment, restoration, and modernization (SRM) projects for existing facilities, that are executed by USACE on behalf of the Air Force.

During Fiscal Years (FY) 2023 through 2027, USACE will award numerous Firm-Fixed- Price, Design-Build and Design-Bid-Build construction contracts utilizing Military Construction (MILCON), Operations and Maintenance (O&M), and SRM funding.

Therefore, this J&A is applicable to various types of facilities due to the numerous projects within the USACE Military and Air Force Reserve Area of Responsibility (AOR).

In accordance with mandatory standardization decisions made by the Air Force in accordance with their Category Management (CM) Program, HVAC equipment is being standardized throughout the Air Force on an installation-by-installation basis. The Government will not purchase the equipment directly, but will specify the requirement for offerors to utilize specific brands of HVAC equipment in competitive solicitations that will lead to new construction and SRM contracts for various Air Force renovation and construction projects. The contracts will cover new construction and SRM projects at Contiguous United States (CONUS) and outside the Contiguous United States (OCONUS) locations. The estimated dollar value of HVAC equipment in new construction projects is $60M and the estimated dollar value of HVAC equipment in renovation projects is $85M, for a total estimated value of $145M in HVAC equipment that is anticipated to be required during FY 2023 through 2027.

3. Description of the Supplies/Service: USACE executes MILCON and SRM construction projects on behalf of the Air Force and Air Force Reserve. The anticipated requirements to design/construct facilities, or perform SRM requirements, on Air Force installations for FY 2023 through 2027 is approximately $145M. The type of facilities will include, but are not limited to, hangars, training ranges, barracks, reserve training centers, maintenance complexes, headquarters complexes, fire stations, and all supporting infrastructure (gates, utilities, roads, drainage) across USACE AOR. As part of the design/construction or SRM efforts, new HVAC chillers will be installed in these facilities. To support the Air Force initiative of achieving economy and efficiency, this J&A supports the specification of brand name HVAC units to be incorporated into construction and SRM contracts from the approval date of this J&A through FY 2027. Periods of performance will be specified in each individual contract. In the performance of these contracts, awardees will be required to provide and install

Homestead ARS Carrier

Hurlburt Field Trane Inc.

Incirlik AB Carrier Corp. / Clivet (FORM, Midea Group)

JB Andrews Trane Inc.

JB Charleston Trane Inc.

JB Elmendorf-Richardson Trane Inc.

JB Langley-Eustis Trane Inc.

JB Langley-Eustis Trane Inc.

JB McGuire-Dix-Lakehurst Trane Inc.

JB San Antonio Trane

Kadena AB Carrier Corp.

Keesler AFB Trane

Kirtland AFB Johnson Controls Inc. (York, Quantech)

Kunsan AB LG

Lajes Field (Azores) Carrier Corp.

Laughlin AFB Trane Inc.

Little Rock AFB Trane Inc.

Los Angeles AFS Carrier Corp.

Luke AFB Carrier Corp.

MacDill AFB Carrier Corp.

Malmstrom AFB Trane Inc.

Maxwell AFB Trane Inc.

McConnell AFB Daikin Industries, Ltd. (McQuay International)

Minneapolis-St. Paul ARS Trane

Minot AFB Johnson Controls Inc. (York, Quantech)

Misawa AB Mitsubishi

Moody AFB Trane Inc.

Moody AFB Trane Inc.

Moron AB Carrier Corp.

Mountain Home AFB Trane Inc.

Mountain Home AFB Trane Inc.

Nellis AFB Carrier Corp.

Nellis AFB Carrier Corp.

Niagara Falls ARS Johnson Controls Inc. (York)

Offutt AFB Daikin Industries, Ltd. (McQuay International)

Offutt AFB Daikin Industries, Ltd. (McQuay International)

Osan AB AERMEC

Patrick AFB Trane Inc.

Peterson AFB Trane Inc

Pittsburgh ARS Carrier

RAF

Alconbury/Molesworth Uniflair Limited

RAF Croughton Carrier Corp.

RAF Lakenheath Carrier Corp.

RAF Mildenhall Carrier Corp.

Ramstein AB Trane Inc

Robins AFB Carrier Corp.

Schriever AFB Carrier Corp.

Scott AFB Trane Inc.

Seymour Johnson AFB Trane Inc.

Seymour Johnson AFB Trane Inc.

Shaw AFB Trane Inc.

Shaw AFB Trane Inc.

Sheppard AFB Trane Inc.

Spangdahlem AB United Technologies Corp. - UTC (CIAT)

Thule AB Exhausto/ Novenco

Tinker AFB Trane

Travis AFB Carrier Corp.

Tyndall AFB Trane Inc.

Tyndall AFB Trane Inc.

US Air Force Academy Trane Inc.

Vance AFB Carrier

Vandenberg AFB Trane Inc.

Westover AFB Carrier Corp.

Wheeler AFS Carrier Corp.

Whiteman AFB Trane Inc.

Wright-Patterson AFB Trane Inc.

Yokota AB Carrier Corp. (Toshiba-Carrier)

Youngstown ARS Trane

4. Authority Cited: 10 U.S.C § 3204(a)(1), as implemented by FAR 6.302- 1(a)(2), “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.”

5. Reason for Authority Cited: As described at FAR 6.302-1(a)(2), when the supplies or services required by the agency are available only from one responsible source and no other types of supplies or services will satisfy agency requirements, full and open competition need not be provided for. This J&A applies the Only One Responsible Source authority using the application of FAR 6.302-1(b)(4), which indicates that the use of FAR 6.302-1 is appropriate “When the agency head has determined in accordance with the agency’s standardization program that only specified makes and models of technical equipment and parts will satisfy the agency’s needs for additional units or replacement items, and only one source is available.”

a. Background:

(1) USACE is the servicing agency for USAF MILCON (MCAF), Minor MILCON (MMAF), Air Force Reserve MILCON (MAFR), Base Realignment and Closure (BCF), Air Force Family Housing MILCON/Investment (FHAF) projects executed in accordance with 10 USC 2851, “Supervision of Military Construction Projects”, and DoD

Directive 4270.5, “Military Construction”.

(2) In 2019, the Air Force established standardization requirements for the replacement of HVAC equipment across all Air Force installations. The Air Force Senior Procurement Executive approved a Class J&A on 7 August 2019, that requires Air Force procurements to utilize specific makes of HVAC equipment in their requirements. The J&A includes a spreadsheet that identifies the HVAC equipment manufacturers specified for each of the 107 Air Force installations. The Air Force Class J&A is valued at $370M and states that “[t]he Air Force is required to use the brand name exception to the Competition in Contracting Act (CICA) because the nature of the acquisition as a strategic vehicle for Category Management requires a pre-planned brand name approach to acquiring HVAC chillers.”

The J&A speaks to significant estimated cost savings in training expenses and efficiency improvements in mission performance that are projected to be achieved through HVAC standardization.

(3) FAR 17.503(d)(1) states that if a J&A or a Determination and Findings

(D&F) is required by law or regulation, the servicing agency shall execute and issue the J&A or D&F, though the requesting agency shall furnish the servicing agency any information needed to make the J&A or D&F.

Therefore, USACE, as the servicing agency, concluded that J&As in support of Air Force projects procured by USACE must be executed by the Army.

b. Justification:

(1) FAR 6.302-1(b)(4) permits use of the Only One Responsible Source authority when the agency head has determined in accordance with the agency's standardization program that only specified makes and models of technical equipment and parts will satisfy the agency's needs for additional units or replacement items, and only one source is available.

(2) In a memorandum signed on 22 June 2017, the Under Secretary of the

Air Force appointed the Deputy Under Secretary of the Air Force, Management and Deputy Chief Management Officer as the Air Force Category Management Accountable Official. On 14 July 2017, the Deputy Under Secretary of the Air Force, Management and Deputy Chief Management Officer, appointed the Civil Engineer Center Director (AFCEC/CL) as the Air Force Category Manager for the Facilities and Construction Category. On 16 May 2019, the AFCEC/CL directed the mandatory standardization of HVAC chiller systems and delegated manufacturer selection to the AFCEC Operations Director (AFCEC/CO).

(3) On 3 May 2019, the AFCEC/CO executed a Memorandum, Subject:

HVAC Chiller System Standardization, Single Manufacturer Selection, which set forth the AFCEC/CL intent to standardize HVAC chiller systems to a single manufacturer at the installation level. The memorandum explained that standardization of all HVAC chiller systems allows the Air Force to significantly reduce the total cost of ownership which includes the initial procurement, subsequent maintenance, and associated training costs to operate the system over its lifecycle. The memorandum went on to provide guidance for the evaluation, recommendation, and subsequent approval of a single manufacturer for HVAC chiller systems at each installation and stated that Base Civil Engineers (BCEs) were to request and provide justification for the recommended single HVAC chiller manufacturer. The memorandum concluded with a requirement to repeat the analysis after five years from the date of AFCEC/CO approval for a single manufacturer. The purpose of this secondary analysis is to document the installation's progress in standardizing HVAC chiller systems, consider any changes in the decision facts, and confirm no external factors exist that may drive a reconsideration of the approved single manufacturer.

(4) On 16 May 2019, the AFCEC/CL signed a Memorandum, Subject:

Mandatory Standardization of HVAC Chiller Systems. The memorandum directed the mandatory standardization of HVAC chiller systems to a single manufacturer at the installation level and reiterated the process laid out in the above referenced 3 May 2019 guidance. The memorandum also delegated the AFCEC/CL’s approval authority to the AFCEC/CO for the selection of a single manufacturer for HVAC chiller systems.

(5) In a Memorandum dated 10 September 2019, Subject: HVAC Chiller System Standardization, Single Manufacturer Selection, the AFCEC/CO approved the selection of specific brands as the single manufacturer for bases that fall in the USACE AOR. This selection, supported by the other memorandums summarized above, satisfies the FAR 6.302-1(b)(4) application of the Only One Responsible Source authority, as the Agency Head (delegee) has determined, in accordance with the agency's standardization program, that only specified makes and models of technical equipment and parts will satisfy the agency's needs for additional units or replacement items, and only one source is available.

c. Alternatives: The standardization determination executed by the Air Force compels USACE to include the base specific requirement in solicitations for the USACE. There is no alternative product that meets the Air Force’s need to standardize this equipment. The only alternative considered that would differ from the terms of this J&A was to purchase the HVAC equipment separately and provide it to the construction contractor as Government furnished equipment (GFE). This alternative would still involve the purchase of a specific brand name/manufacturer’s equipment on a sole source basis. Further, the effort associated with purchasing, storing, equipment warranty, conveying and managing the GFE was determined to both be inefficient and uneconomical. No other feasible alternative was identified.

d. Impact: If this J&A is not approved, USACE’s Air Force construction contracts will not be executed in accordance with the Air Force CM program. USACE will be unable to implement the Air Force’s standardization program. If the HVAC equipment is not standardized, the Air Force will not be able to realize the efficiencies and reduction of costs that have been targeted in the category management analysis. Anticipated advantages include reduced training costs for Air Force maintenance personnel, efficiencies in obtaining and storing spare parts, and decreased disruption to mission by rapid resolution of any HVAC system failures. This Class J&A alleviates the need for preparation and approval of multiple individual J&As.

6. Efforts to Obtain Competition: The Contracting Officer will publish the notices required by FAR 5.201, Publicizing Contract Actions, as described below, and any bids or proposals received shall be considered.

a. To the fullest extent practicable, solicitations for construction projects will be issued competitively. Though the brand name requirement for HVAC equipment will be stipulated in the solicitations, the HVAC equipment is a small component of the overall large construction project. Where required, Acquisition Plans shall be prepared to ensure the most effective approach to fulfill each requirement.

Effective competition will be achieved in multiple ways, including but not limited to full and open competition, small business set asides, and fair opportunity for task orders placed under multiple award task order contracts. This J&A will be posted with each solicitation that relies upon it. Through industry outreach events and initiatives, potential contractors will be made aware of the Air Force standardization decisions and the intent to issue solicitations that specify brand name HVAC equipment for each Air Force installation. This coordination will alert them to engage subcontractors that are certified installers. Approval of this J&A will have no specific impact on small businesses and will not preclude small businesses from any business opportunities for construction and SRM projects in support of the Air Force.

b. Though the use of specified items cannot be considered competitive regardless of the number of suppliers available, it is anticipated that multiple vendors will be available to provide, install and maintain the Air Force installation identified HVAC systems at the subcontracting level and this sole source will not affect the overall competition for the construction requirement.

7. Actions to Increase Competition: In accordance with FAR subpart 5.2, Synopses of

Proposed Contract Action, a Notice of Intent (NOI) under North American Industry Classification System (NAICS) 236220, Commercial and Institutional Building Construction, to include the brand name for HVAC Standardization, was posted to SAM.gov on 05 May 2021 and requested responses by 20 May 2021. Reference section 9 for Market Survey responses. The Air Force requirement to use one type of HVAC chiller at each installation means that only the identified standard chillers will be required. Due to this standardization requirement, there are no planned actions to increase competition for the requirement.

On 27 April 2022, a second NOI under NAICS 236220, Commercial and Institutional Building Construction, to include the brand name for HVAC Standardization, was posted to SAM.gov with requested responses by 12 May 2022. No submissions were received in response to this NOI.

8. Market Research: Market research indicated that competition among authorized suppliers for the brand name products will exist since the products are readily available in the commercial marketplace and there are multiple companies that are licensed to sell the products. Because there are multiple sources, it is reasonable to expect that a fair and reasonable price will result from adequate competition at the subcontracting level.

A NOI was posted to SAM.gov on 05 May 2021, and again on SAM.gov 27 April 2022, with a 15-calendar day response period for interested contractors. The government did not receive any objections to the intent to standardize HVAC chillers in accordance with the Air Force CM for the Facilities and Construction Category Program. A description of the requirement was provided in the SAM notices and advised any contractor that can provide the required were invited to submit a written response indicating ability to meet the requirement. Two sources expressed interest to the published notice dated 05 May 2021. The responses indicate that there are providers that can provide, install, and maintain the required items and no alternative sources were identified for the HVAC equipment that would meet the Government’s requirements. No sources expressed interest in response to the published notice dated 27 April 2022.

9. Interested Sources: To date, two responses have been received; Carrier and GCM.

The first response was received on 12 May 2021, from Carrier who stated that they “…were selected as a sole-source chiller supplier for a number of USAF bases.” The response stated they were happy to provide documentation requested but asked for additional clarification. USACE reached out providing clarification, however a subsequent response was not received from Carrier. The second response was received on 17 May 2021, from GCM. GCM provided a capability statement which indicated vast experience with chillers from 14 manufacturers. The 14 manufacturers identified represents the ability to provide, install and maintain 93% of the Air Force installations identified in the Air Force HVAC Standardization. The J&A will be posted with the issuance of each applicable forthcoming solicitation in accordance with FAR 5.102(a)(6).

10. Other Facts: Reasonable efforts were made to retrieve other facts from computer records, contract files, and other sources to support the use of other than full and open competition as follows:

a. Prior to the recent standardization efforts launched by the Air Force, there is no known history of sole source procurement of HVAC equipment on an Air Force installation-wide basis.

b. As previously stated, the Air Force Senior Procurement Executive approved a Class J&A on 7 August 2019 that requires use of brand name HVAC equipment in all requirements procured directly by the Air Force through 2024. The J&A encompassed all Air Force installations and specified a particular brand name as the designated single manufacturers for installations. The Air Force followed up with a formal HVAC Chiller System Standardization, Single Manufacturer Selection determination on 10 September 2019. This Class J&A implements the Air Force standardization determination for all construction projects executed by USACE through 2024.

Attachments:

Tab 1 – Justification and Approval for Air Force HVAC Standardization Tab 2 – Category Management 4 - HVAC Installation Standardization Memorandums Tab 3 – Notice of Intent dated 05 May 2021 Tab 4 – Notice of Intent dated 27 April 2022 Tab 5 – AF install estimate FY23-27 Tab 6 – AF SRM estimate FY23-27