W9127822B00006 Consolidation DF_Redacted.pdf

DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, MOBILE DISTRICT (CESAM)

DETERMINATION AND FINDINGS

REQUEST FOR CONSOLIDATION

W9127822B0006

INDEFINITE DELIVERY INDEFINITE QUANTITY (IDIQ) SINGLE AWARD TASK

ORDER CONTRACT (SATOC) FOR 27-INCH TO 30-INCH CUTTERHEAD PIPELINE

DREDGE AND ATTENDANT PLANT FOR DREDGING IN ALABAMA, MISSISSIPPI, AND

FLORIDA

Federal Acquisition Regulation (FAR) 2.101 defines consolidation or consolidated requirement as a solicitation for a single contract, a multiple-award contract, a task order, or a delivery order to satisfy — (i) Two or more requirements of the Federal agency for supplies or services that have been provided to or performed for the Federal agency under two or more separate contracts, each of which was lower in cost than the total cost of the contract for which offers are solicited; or (ii) Requirements of the Federal agency for construction projects to be performed at two or more discrete sites. FAR 7.107-2 requires that consolidation of requirements with an estimated total dollar value exceeding $2 million shall be supported by a written determination that consolidation is necessary and justified in accordance with 15 United States Code (U.S.C.) § 657q.

I have reviewed this requirement and associated market research and determined in accordance with 15 U.S.C. § 657q and FAR 7.107-2 that consolidation is both necessary and justified. This approval is made in accordance with the approval thresholds set forth in Army Federal Acquisition Regulation Supplement (AFARS) 5107.170, “Consolidation of Contract Requirements.” My review resulted in the following findings:

FINDINGS

1. Introduction: CESAM plans to solicit offers and award a Firm Fixed Price (FFP) Indefinite Delivery Indefinite Quantity (IDIQ) Single Award Task Order Contract (SATOC) for a 27-30” pipeline dredge and attendant plant for dredging in Alabama, Mississippi, and Florida. The primary requirements are several deep draft Federal navigation channel dredging projects. The SATOC will meet dredging requirements under North American Industry Classification System (NAICS) code 237990 and is estimated not to exceed $49,000,000.00. The CESAM has conducted market research that demonstrates that the consolidation of this procurement is both necessary and justified.

2. Description of Procurement Action:

a. Project Description:

(1) The CESAM is tasked with maintaining area harbors, rivers, waterways, channels, and bays within Alabama, Mississippi, and Florida. Among these are requirements for deep draft dredging of Federal navigation channels. For over ten years, CESAM has utilized civil works funded, multi-year IDIQ SATOCs to provide flexible and effective management of deep channel dredging requirements on both a scheduled and an as-needed basis. Each project is assigned a Project Delivery Team (PDT) comprised of various organizational elements within the CESAM that provides operations, technical, contracting, legal, and resource management services to support the project.

(2) The purpose of this acquisition is to provide a contracting tool to support the CESAM’s need to perform annual maintenance dredging at various shoaling locations of the Federal navigation projects of Gulfport, Pascagoula, Mobile, Pensacola, and Panama City Harbors. These dredging locations will be identified based on channel conditions and the need to restore specific reaches to their project depth. The solicitation will be advertised as unrestricted, and the contract duration will be fourteen months with a maximum capacity of $49,000,000.00. The CESAM intends to consolidate these dredging requirements into one solicitation to be awarded to one contractor. The projects which CESAM maintains are funded on an annual or biannual basis. Due to the need to sustain existing civil works projects, CESAM does not anticipate current or future budget limitations to impact this program.

b. Acquisition Strategy/Procurement Summary: To meet the demanding requirements for maintenance dredging at various shoaling locations of the Federal navigation projects of Gulfport, Pascagoula, Mobile, Pensacola, Panama City Harbors, the CESAM intends to award an unrestricted IDIQ SATOC. This consolidated procurement will be advertised as an unrestricted, Firm Fixed Price, Invitation for Bid (IFB) with a maximum contract capacity of $49,000,000. The construction duration will be fourteen months and no options are anticipated. An IDIQ SATOC is the most effective manner to meet the above requirements for several reasons including that this acquisition approach will efficiently facilitate the CESAM’s management of maintenance dredging in the prescribed Federal navigation projects, and that it will position the CESAM to successfully meet urgent and end of fiscal year requirements or respond to emergency situations. While the funding for dredging is “no-year” money, the CESAM Operations Division is allotted a specific amount per fiscal year and nearly all those funds are expended. The use of a SATOC tool is in the best interest of the Government with respect to timeliness, oversight, and administrative costs.

c. Applicability of Consolidation: As stated above, Sec 1671 of the Fiscal Year 13 (FY13) National Defense Authorization Act (NDAA) amended the definition of consolidation as set forth in Sec 44 of the Small Business Act, 15 U.S.C. § 657q., and as implemented in FAR 2.101, “consolidation or consolidation requirements” means the use of a solicitation for a single award contract, a multiple award contract, a task order, or a delivery order to satisfy (i) two or more requirements of the Federal Agency for supplies or services that have been provided to or performed for the Federal agency under two or more separate contracts, each of which was lower in cost than the total cost of the contract for which offers are solicited; or (ii) requirements of the Federal agency for construction projects to be performed at two or more discrete sites. The definition applies to this procurement because a SATOC will be used to perform multiple construction projects, awarded on individual task orders, at two or more discrete dredging sites in Alabama, Mississippi, and Florida.

CESAM intends to consolidate the maintenance dredging of deep draft navigation projects for

W9127820D0078 – W9127821F0016

Mobile $13.2M

Since the FY22 SATOC contract is still ongoing, the completed FY21 SATOC contract was used for this comparison since it is the most recent completed SATOC contract. The projects in Table 2 are individual task orders issued under one consolidated SATOC covering Mobile, Gulfport, and Pascagoula. The scopes for these contracts were substantially the same for maintenance dredging as a non-consolidated contract. However, the scope was not limited to a single Federal navigation project but included any Federal navigation channels within the CESAM’s area of responsibility.

Following award of the contract, individual task orders for each Federal project were issued with bid items for hourly rates for the specific work requirements, the dredge and associated equipment and estimated hours. The initial task order bore the mobilization cost, with the subsequent task order bearing a much lower cost for bar-to-bar mobilization. After completion of the final task order work, demobilization is paid under the final task order.

None of the deep draft channels have been performed or are able to be performed by small businesses. Consolidated contracts enable the CESAM to successfully address and respond to the maintenance needs of the navigation projects and promptly fund the project sites as needed throughout the contract period. The work tasks were scheduled within a given fiscal year based on available funds and critical needs precipitated by unknown/unplanned events. The contractors were able to effectively respond to the task orders and specific requirements to accomplish the work.

f. Rationale for Consolidation:

(1) To be determined necessary and justified, the benefits of the consolidated acquisition must substantially exceed the benefits that would be derived from alternative contracting approaches that involve a lesser degree of consolidation. Such benefits may include qualitative or quantifiable cost savings or price reductions as well as other benefits, regardless of whether quantifiable in dollar amounts, to include quality improvements that will save time or enhance performance or efficiency, reduce acquisition cycle time, and result in better terms or conditions. Benefits that are quantifiable are considered substantial if they meet the dollar amounts set forth in FAR 7.107-2(d). If the quantifiable benefits do not meet these thresholds, the approving authority may determine that consolidation is necessary and justified if critical to the agency’s mission success and the procurement strategy provides for maximum practicable participation by small businesses. For this procurement, the quantifiable benefits of consolidation exceed the standard set forth in FAR 7.107-2(d). See Section 5 analysis below for the benefits of this proposed consolidated acquisition.

(2) The CESAM’s decision to consolidate the requirements under this proposed solicitation is primarily based on the anticipated cost savings of mobilization and demobilization (mob/demob) costs. Utilizing an unrestricted IFB process will allow the CESAM to obtain binding pricing on the required dredging services and will enable the CESAM to engage the successful contractor in a timely manner to execute requirements for harbor dredging in Alabama, Mississippi, and Florida. The mob/demob of a dredge into a project area is a substantial cost in a Federal navigation channel maintenance dredging project. Consolidation allows the Government to realize greater savings by using a single contractor’s dredge equipment to maintain a group of project areas concurrently, which reduces the cost of moving dredges unnecessarily into and out of the areas, as only one mob/demob will be allowed under the contract. If the mob/demob costs are not combined as they are in a consolidated procurement, the overall price to perform the work will increase. With limited funds available for dredging work, the mob/demob costs subtract from the dredging budget which reduces the amount of actual dredging that can be accomplished. A reduction in dredging work can compromise safe navigational access to these channels, increase vessel delays, increase transport costs, and increase ship traffic delays.

Additionally, consolidation of these dredging areas allows synchronization of operations by improving the coordination required to efficiently schedule dredges, accommodate environmental challenges, and restore project depths in the channel areas. Lastly, since there are very few 27-30” pipeline dredge contractors available, the same contractors typically compete for the same dredging contracts around the nation. A contractor that wins a “C” type contract for a certain geographical area will have a significant advantage over future competitions in that area due to mob/demob costs. In the case of dredging, competition can actually be limited when multiple solicitations are issued without consolidation, particularly when the remaining contractors are committed to other contracts within or outside of the CESAM. Multiple solicitations can also significantly increase contract costs because the reduction in competition allows the remaining available contractors to increase their pricing. In effect, consolidating this procurement enhances competition given the magnitude of the project and the limited pool of contractors.

The use of an IDIQ contract is appropriate IAW FAR 16.50l -2(a), when exact times and/or exact quantities of future deliveries are not known at the time of award. FAR l6.504(b) indicates that the Contracting Officer may use an indefinite-quantity contract when the Government cannot predetermine, above a specified minimum, the precise quantities of supplies and services that the Government will require during the contract period, and it is inadvisable for the Government to commit itself for more than a minimum quantity. Accordingly, the above justification falls in line with consolidating these dredging efforts.

3. Applicable Statutes/Regulations: 15 U.S.C. § 657q, FAR 7.107-2, and AFARS 5107.170.

4. Results of Market Research: To ensure that small business concerns are given appropriate opportunities to participate as prime contractors and subcontractors in Federal procurements, the CESAM conducted market research that supplemented the CESAM’s knowledge of capabilities based on prior similar acquisitions. A Sources Sought/Special Notice, W9127822L0001, was posted on SAM.GOV on 6 October 2021, requesting interested contractors to submit a statement of their capabilities, information regarding their business size and category, and their experience with maintenance dredging of inland river systems and coastal harbors, rivers, bays, and bar channels. The requirement was posted with a NAICS code of 237990 and size standard $30 million. were the only two large businesses to respond to the market survey. Two small businesses, , did respond to the market survey.

appears to be more experienced in road/bridge work and did not list any dredging equipment other than to say they can partner with . did not list hopper dredging and the cutterhead listed was 18”, which does not meet the needs of the CESAM’s current projects.

Therefore, the two small business were deemed not capable. The Sources Sought did not specifically request contractors to respond whether consolidating these requirements would affect their ability to bid on the project. However, historically, contractors will respond to these notices indicating this type of concern and provide a rationale supporting their claim. No such concerns were received regarding the Sources Sought.

As stated above, the 27-30” pipeline requirement is deemed necessary and appropriate to effectively and efficiently perform the required maintenance dredging at the various shoal locations in Gulfport, Pascagoula, Mobile, Pensacola and Panama City Harbors, and therefore is required to satisfy the minimum needs of the Agency. This market research, as well as procurement history, indicates that there are no interested small businesses that can fulfill this requirement, and therefore supports the decision to advertise this requirement on an unrestricted basis. The CESAM typically bids one 27-30” pipeline dredge contract every year. Solicitations for these dredge projects have typically yielded three bidders due to the limited pool of contractors capable of meeting the equipment requirements. The following contractors typically respond to these types of IFBs:

. Based on procurement history, the targeted pool of contractors is fully capable of performing the consolidated requirement and their ability to compete will not be negatively impacted by this approach. Based on both the market research and extensive knowledge of the major players within this industry, the CESAM is confident that no small businesses exist that can perform the requirement whether it is consolidated or not. Therefore, given the magnitude of the project and the limited pool of contractors, the benefits of consolidation outweigh any negative impact to small businesses and enhances competition.

5. Alternate Contracting Approaches Considered and Rationale for Rejection: The CESAM considered alternative contracting approaches including multiple consolidated SATOCs (one per state) and to a lesser degree a stand-alone “C” type contract. Multiple SATOCs (issuing one per state) would be nearly equivalent to using a “C” type contract for each harbor, given that the scope of this award would cover only five harbors: (1) Gulfport, MS; (2) Pascagoula, MS; (3) Mobile, AL; (4) Pensacola, FL; (5) Panama City. The stand-alone contract, one for each harbor, is rejected due to the mob/demob and scheduling impacts identified below. A Multiple Award Task Order Contract (MATOC) approach is not considered as a viable alternative because it would not represent a lesser degree of consolidation and would not achieve the mob/demob savings possible with a single contractor.

a. Alternative: Stand-Alone “C” Type Contracts (SATOCs): The CESAM considered the award of multiple stand-alone “C” type contracts to perform the required maintenance dredging work. While this approach could provide a lesser degree of consolidation, or no consolidation at all if individual contracts are awarded for single requirements, the disadvantages of the SATOC approach substantially exceed the advantages of consolidation for the reasons outlined below. As discussed in Section 4 – Results of Market Research, there is a very limited known pool of contractors who are capable of performing the required scope of work, and most of those contractors are engaged in other maintenance dredging operations nationally, so competition can be very limited.

(1) Quality: While “C” contract competitions generally give the Government the opportunity to avail itself of a wider range of potential contractors for each project, that does not necessarily hold true for dredging because of the limited contractor base and capacity from which to pull. As indicated earlier, only three contractors have responded to IFBs historically. Moreover, as also noted above, the iterative process of working with one contractor under a SATOC tends to generate a more thorough shared understanding between the contractor and Government for the Government's requirements and procedures.

(2) Acquisition Cycle: Civil works funds are not tied to a specific fiscal year appropriation and is not a substantial factor in determining requirements; however, while the funding does not generally expire, if they are not expended, the following fiscal years may see a reduction in overall civil works funds available to the CESAM. It is beneficial for the CESAM to have a contract vehicle that allows expedient funding for task order awards. The CESAM addresses this budgetary uncertainty with regular IDIQ acquisition actions to create capacity to accomplish a customer’s known requirements, and to respond to those that arrive on short-notice.

(a) In addition to building capacity, the use of task orders under a SATOC streamlines the procurement process under a regimen that is significantly more expeditious than a “C” contract scheme. Specifically, task orders under a SATOC do not require advance notice, voluminous solicitations and proposal submissions, and the evaluations can be streamlined. As compared to awarding a stand-alone “C” contract, it is estimated that placing task orders under a SATOC reduces acquisition time from 140 to 30 days on average for each project.

(b) In addition to the quality benefits resulting from the iterative process of negotiating and executing maintenance efforts, contractors are in a stronger position to stabilize relationships with their bonding company(s) and subcontractors when awarded larger, more predictable, contracts thus reducing risk to the Government during execution. Contracts for dredging have a unique advantage in that the proposed rates remain constant throughout the life of the contract. The Government knows the exact cost of the effort and thus the negotiations are based upon level of effort and not a fluctuating cost of various labor rates. Additionally, SATOC contracts have the unique advantage in that after receipt of proposals, the Government has the ability to virtually conduct continuous scope and cost negotiations to arrive at the best scope and cost for the work in an efficient manner. In the formal acquisition process for a “C-Type” contract, the ability to react quickly and as needed by mission requirements cannot be accomplished in the same expedited manner. Information flow is restricted to formal Requests for Information (RFI) with responses provided to all potential offerors. Answers to RFIs often result in more RFIs and the process drags

on. As a result of this rigid process for the advertisement of MATOCs and “C” contracts, it is much more time consuming than a SATOC advertisement.

(3) Terms and Conditions: Other than request for proposal (RFP) requirements and proposal submissions, there is essentially no difference between the contractual terms and conditions for a construction or repair project executed under a SATOC or a “C” contract. However, in accordance with Sec 835 of the NDAA of 2017, task orders are not subject to Agency or Government Accountability Office (GAO) protests under $25M. On the other hand, all “C” contracts, regardless of value, are subject to protest for any number of reasons. The use of “C” contracts thus put procurement and award schedules at greater risk of delay than task orders under SATOCs.

(4) Mobilization and Demobilization Cost Savings: The average bid price for mob/demob for a 27-30” pipeline dredge based on the unconsolidated contracts listed in Table 1 is .

The average price for mob/demob for a 27-30” pipeline dredge based on the consolidated contracts listed in Table 2 is . Aside from the initial mob/demob costs, the consolidated contract also includes a mobilization line item to move the entire dredge and attendant plant from project to project on a per mile rate. The average cost of mobilizing a 27-30” pipeline dredge from project to project (bar-to-bar mob) is per mile. The total distance from project to project for the proposed consolidated SATOC contract (bar-to-bar mob from Gulfport Harbor to Pascagoula Harbor to Mobile Harbor to Pensacola Harbor to Panama City Harbor) would be 217 miles. A comparison chart with the mob/demob costs associated with a stand-alone “C” Contract and a consolidated SATOC is

c. Definition of the Competition in Contracting Act (CICA) Bundling Principle: This principle, as developed by the Government Accountability Office (GAO) case law, focuses on whether the combined requirement (new, old, or otherwise) restricts competition, and whether the agency is consolidating or bundling a new requirement unnecessarily. To justify CICA Bundling the agency must show "a reasonable basis for why the bundling is necessary to meet the agency need." (Vantex Serv., Inc., B-29041 5, Aug 8, 2002, and Outdoor Venture Corp., B-299675; B- 299676, Jul 19, 2007.)

d. Applicability of CICA Bundling Principle: This procurement is intended to be a full and open, unrestricted IFB. Bundled procurements combine separate requirements into one contract; thus, they have the potential to restrict competition in violation of CICA by excluding firms that can provide only a portion of the bundled requirement. However, substantial cost savings achieved through the reduction of duplicative efforts and operational efficiency can be a reasonable basis for restricting competition where requirements are bundled. As demonstrated in the previous sections, substantial cost savings will be accomplished through consolidation of these requirements. These projects have been consolidated in the past into an IDIQ contract. This action does not unreasonably restrict competition to small businesses. As stated above, no small businesses responded to the Market Research, or are currently known, that are capable of performing this work. There are three known dredging contractors with the ability and equipment to perform this work, all of which are large businesses and who historically bid on contracts for work within the CESAM. These contractors are

. Although only one of these contractors responded to the market research, the CESAM fully expects all these contractors to bid on this contract because the scope of work is the same as it has been in past years. Additionally, the CESAM has no information nor has received any comments from the dredging community to suggest that placing each navigation project under separate contracts, or regrouping them in some other manner, would create interest and allow other contractors to perform this work.

7. Considerations, Facts, and Reasoning Supporting the Determination: All facts, considerations and rationale have been covered previously in the findings. The Small Business Coordination Record (DD Form 2579) has been signed by the Contracting Officer, Deputy for Small Business and SBA Procurement Center Representative. All concur that consolidation of this requirement is both necessary and justified.

8. Summary: Although this unrestricted IDIQ SATOC constitutes consolidation in that it combines construction at two or more discrete sites in one contract, this approach provides the best combination of competitive procedures, timely acquisition, cost efficiency, quality, and capable prime contractors to execute maintenance dredging for CESAM deep draft navigation channels. The quantifiable benefits of consolidation, or of the estimated contract value, exceed the standard in FAR 7.107-2(d)(1)(i) and are further supplemented by the qualitative benefits. Stand alone “C-Type” contracts were considered but would result in significantly higher costs and increased acquisition cycle time. Additionally, it is significantly less burdensome for the CESAM’s Contracting and Operations Divisions to administer one SATOC contracts than numerous “C” contracts. The findings of the market research and the documentation provided herein support the conclusion that consolidation of requirements is both necessary and justified based on sound business judgment in view of the size, complexity, and potential number of efforts to be executed. The consolidated approach provides substantial quantitative and qualitative advantages that far outweigh those of an approach that utilizes a lesser degree of consolidation.

Attachment 1 – Deep Draft Navigation Projects Locations