W9127823B0002 Consolidation DF FY23 REDACTED.pdf

DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, MOBILE DISTRICT

DETERMINATION AND FINDINGS

REQUEST FOR CONSOLIDATION

W9127823B0002

INDEFINITE DELIVERY INDEFINITE QUANTITY (IDIQ) SINGLE AWARD TASK

ORDER CONTRACT (SATOC) FOR 30-INCH CUTTERHEAD PIPELINE 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 a Firm Fixed Price Indefinite Delivery Indefinite Quantity (IDIQ) Single Award Task Order Contract (SATOC) for a 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 with a maximum contract capacity of . 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. The Mobile District 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 Mobile 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 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 . The Mobile District intends to consolidate these dredging requirements into one solicitation to be awarded to one contractor. The projects which the Mobile District maintains are funded on an annual or biannual basis. Due to the need to sustain existing civil works projects, the Mobile District 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, and Panama City Harbors, the Mobile 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 . 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 Mobile District’s management of maintenance dredging in the prescribed Federal navigation projects, and that it will position the Mobile 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 Mobile District 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 (FY) 13 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.

The Mobile District intends to consolidate the maintenance dredging of deep draft navigation projects for Gulfport Harbor, Pascagoula Harbor, Mobile Harbor, Pensacola Harbor, and Panama City Harbor into one solicitation for an IDIQ Dredging contract. Attachment 1 is a map identifying the locations of these navigation projects. By consolidating these requirements, the Mobile District will be able to efficiently coordinate and respond to the dynamic requirements of these dredging projects at a significant savings of cost and time, as well as accommodate the dredging environmental windows. This also allows dredging companies to organize their work more effectively, lower their unit costs due to economy of scale, and more efficiently schedule their dredging equipment for the most efficient regional approach to meet the needs of the Corps of Engineers dredging program.

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 less 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 Mobile 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 30” pipeline 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 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 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.

(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 three 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 are 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 Mobile District. It is beneficial for the Mobile District to have a contract vehicle that allows expedient funding for task order awards. The Mobile 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 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 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 (RFIs) 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 puts procurement and award schedules at greater risk of delay than task orders issued under SATOCs.

As illustrated above, the total procurement costs for the consolidated SATOC contract and five task orders (one per project location) would be approximately , while the procurement cost for awarding five “C” contracts would be . The savings achieved by awarding a SATOC contract with five task orders, in the amount of , represents over in savings on the administration cost of award.

(6) Conclusion: In summary, the savings in mob/demob for a consolidated SATOC total

In addition, the Government would also save an estimated in administration costs. Total anticipated cost savings of the consolidation approach equal in mob/demob plus administrative cost of ), or of the 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 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 four 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 Mobile District. These contractors are

Considering all four of these contractors responded to the market research, the Mobile

District fully expects these contractors to bid on this contract, given the scope of work is the same as it has been in past years. Additionally, the Mobile District has no information nor 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 Mobile District’s deep draft navigation channels. The quantifiable benefits of consolidation, of the estimated contract value, exceed the standard in FAR 7.107-2(d)(1)(i) and are further supplemented by the qualitative benefits. Standalone “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 Mobile District’s Contracting and Operations Divisions to administer one SATOC 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 in support of the Mobile District’s Civil Works program, and the consolidated approach provides advantages that substantially exceed the benefits of an approach that provides a lesser degree of consolidation in consideration of either the quantitative or qualitative benefits.