W9127823B0001 Consolidation DF FY23 Hopper (20221222) Final_Redacted.pdf

DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, MOBILE DISTRICT

DETERMINATION AND FINDINGS

REQUEST FOR CONSOLIDATION

W9127823B0001

INDEFINITE DELIVERY INDEFINITE QUANTITY (IDIQ) SINGLE AWARD TASK

ORDER CONTRACT (SATOC) FOR MAINTENANCE DREDGING, HOPPER DREDGE

AND ATTENDANT PLANT FOR DREDGING IN ALABAMA, MISSISSIPPI, AND

FLORIDA

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 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: Mobile District plans to solicit offers and award an Indefinite Delivery Indefinite Quantity (IDIQ) Single Award Task Order Contract (SATOC) for a hopper 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 with a maximum contract capacity of $20,000,000.00. The Mobile District has conducted market research that demonstrates the consolidation of this procurement is both necessary and justified.

2. Description of Procurement Action:

a. Project Description:

(1) The Mobile District 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. CESAM has utilized civil works funded, multi-year IDIQ SATOCs for over ten years 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 District that provides operations support, 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 Mobile District’s need to perform annual maintenance dredging at various shoaling locations of the Federal navigation projects of Mobile, Pascagoula, Gulfport, 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 $20,000,000.00.

The District 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 Mobile, Pascagoula, Gulfport, Pensacola, and Panama City Harbors, the District 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 $20,000,000.00. 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 District’s management of maintenance dredging in the prescribed Federal navigation projects, and that it will position the District 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 FY13 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 a use of 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. The definition applies to this procurement because a

W9127821D0083 W9127821F0402 Pensacola $4.53M

W9127822D0066 W9127822F0298 Pascagoula $2.40M

W9127822D0066 W9127822F0346 Mobile $7.24M

W9127822D0066 W9127822F0016 Pensacola $1.14M

The projects above are individual task orders issued under one consolidated SATOC covering Mobile, Pascagoula, and Pensacola. The scope for the previously consolidated contract listed above was 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 district’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 subsequent task orders bearing only 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 Mobile District 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 requirement to accomplish the work.

f. Rationale for Consolidation:

(1) In order 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 improve or enhance performance or efficiency, reduction in acquisition cycle time, and 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 business. 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 Mobile District’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 Mobile District to obtain binding pricing on the required dredging services and will enable the district to engage the successful contractor in a timely manner to execute requirements for harbor dredging in Alabama, Mississippi, and Florida. A substantial cost in a Federal navigation channel maintenance dredging project is the mob/demob of dredges into the project area. 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 in 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 eat into the dredging budget and impacts how much actual dredging can be accomplished. A reduction in dredging work can compromise safe navigational access to these channels, increase vessel delays, increase transport costs, and unnecessarily increase ship traffic delays. Additionally, consolidation of these dredging areas allows synchronization of operations, by improving the coordination and collaboration required to efficiently schedule dredges, accommodate environmental challenges, and restore project depths in the channel areas.

Lastly, since there are very few hopper dredge contractors available, the same contractors typically compete for the same dredging contracts around the nation. A contractor that wins a 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 instead of consolidating the requirements, particularly when the remaining contractors are committed to other contracts within or outside the Mobile District. Multiple solicitations can also significantly increase contract costs because the reduction in competition allows the remaining available contractors to increase their pricing. Consolidating this procurement actually enhances competition given the magnitude of the project and the limited pool of contractors. 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 Mobile District conducted market research that supplemented the District’s knowledge of capabilities based on prior similar acquisitions. A Sources Sought/Special Notice, W9127823L0005, was posted on SAM.Gov on 1 November 2022, requesting interested individual contracts are awarded for single requirements, the benefits of the SATOC approach substantially exceed the disadvantages of consolidation for the reasons outlined below. As discussed in Section 4, 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, historically only four contractors have responded to IFBs.

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 generally expended the following fiscal years may see a reduction in overall civil works funds available to the district. It is beneficial for the district to have a contract vehicle that allows expedient funding for task order awards. The District 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 relationship 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 through-out 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 times 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.

estimated contact value, and meet the requirements of FAR 7.107-2(d)(1)(i). Additionally, multiple SATOCs or “C” contracts would add to the acquisition timeline and increase administration time. A consolidated SATOC provides the best combination of competitive procedures, timely acquisition, cost efficiency, quality, and capable prime contractors to execute maintenance dredging.

6. Bundling Analysis:

a. Definition of Bundling. FAR 2.101 defines bundling as consolidating two or more requirements for supplies or services, previously provided or performed under separate smaller contracts, into a solicitation for a single contract that is likely to be unsuitable for award to a small business concern due to: (i) The diversity, size, or specialized nature of the elements of the performance specified; (ii) The aggregate dollar value of the anticipated award; (iii) The geographical dispersion of the contract performance sites: or (iv) Any combination of the factors described in paragraphs (i) through (iii) of this definition. "Separate smaller contract" as used in this definition, means a contract that has been performed by one or more small business concerns or that was suitable for award to one or more small business concerns.

b. Applicability of Bundling Principle. This acquisition does not meet the definition of bundling, as it does not attempt to consolidate “two or more requirements for supplies or services, previously provided or performed under separate smaller contracts that are likely to be unsuitable for award to a small business concern”. The requirements being consolidated have all been previously advertised as an Unrestricted IFB for consolidated or unconsolidated SATOCs and performed by large businesses.

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. In order 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 above, 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. As stated above, no small businesses responded to the Market Research (or are currently known) that are capable of performing this work. There are four