W9127823R0115_Consolidation DF (Redacted).pdf

DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, MOBILE DISTRICT

DETERMINATION AND FINDINGS

REQUEST FOR CONSOLIDATION

W9127823R0115

FISCAL YEAR (FY) 23

CONSOLIDATED COMMUNICATIONS CENTER

PATRICK SPACE FORCE BASE, 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) 5107.107-2(b)(ii), “Consolidation.” My review resulted in the following findings:

1. Introduction: Headquarters, U.S. Army Corps of Engineers, Mobile District, proposes to award a stand-alone Firm Fixed Price (FFP) single phase design-bid-build (DBB) “C” type contact in the estimated amount of . This award will be utilized to construct a 95,000 sf three story Consolidated Communications Center (CCC) at Patrick Space Force Base (SFB), FL. This contract meets the requirements for General Construction under North American Industry Classification System (NAICS) code 236220 - Commercial and Institutional Building Construction. This procurement constitutes consolidation of requirements per 15 U.S.C. § 657q(a)(2)(B) in that it involves construction at two or more discrete sites on Patrick SFB. The Mobile District has conducted analysis and market research that demonstrates consolidation of requirements in this procurement is both necessary and justified.

2. Description of Procurement Action:

a. Project Description: The base contract includes the construction of a 90,230 sf three- story Space Communications Facility, estimated at and a 28,250 sf Consolidated Maintenance Storage Building on a different site, estimated at and five options estimated to total for 1) Furniture Fixtures and Equipment (FF&E) CCC building, 2) Audio Visual Equipment, 3) Security Equipment, 4) Facility UPS, and 5) Furniture Fixtures and Equipment (FF&E) CE building. This facility holds paramount importance as the central communications hub at Patrick SFB, playing a critical role in supporting the space launch mission. Additionally, it serves the missions of the Air Force Technical Applications Center, establishing connections to global sites, facilitating the 920th Rescue Wing's combat search and rescue mission, and providing support to the Department of

State, Defense Information Systems Agency, Space & Missile Center. The facility is instrumental in delivering essential network operations and control center switching services to Patrick SFB, Ascension Auxiliary Airfield, Cape Canaveral, and the broader Eastern Range. It is imperative to note that the construction of this facility is contingent upon the prior demolition and relocation of the Civil Engineering Maintenance Facility. The successful execution of this project is crucial for maintaining and enhancing critical communication capabilities essential for the varied missions and functions conducted at Patrick SFB.

b. Acquisition Strategy/Procurement Summary: The District intends to award a stand-alone FFP DBB “C” type contract, which is typical for construction contracts of this scope and scale. This contract type shifts cost risks to the contractor once the contract has been awarded. The Government expects adequate price competition. Normally, effective price competition results in fair and reasonable pricing, and a fixed-price contract is ordinarily in the Government’s best interests. This is a regularly executed standard construction method. As such, the Contracting Officer has determined that the procurement will proceed on a FFP basis. USACE traditionally performs FFP procurements and has an excellent history in executing this type of contract.

A single FFP DBB construction contract will provide the capability and performance required to meet the objectives of this action. CESAM plans to award a construction contract to complete all the construction work for the project to provide a complete and usable facility. This construction contract is not planned to be used for any other project.

c. Applicability of Consolidation: As implemented in FAR 2.101, consolidation or consolidated requirement means a solicitation for a single contract, a multiple-award contract, a task order, or a deliver 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 as this procurement requires the construction of a Space Communications Facility and a Consolidated Maintenance Storage Building, both of which are on two discrete sites and of which the estimated total value of the contract exceeds $2M.

d. Requirements Being Consolidated: The procurement will support the construction of a 90,230 sf three- story Space Communications Facility, estimated at and a 28,250 sf Consolidated Maintenance Storage Building on a different site, estimated at .

e. Procurement History: This project is a new Military Construction (MILCON) requirement for new construction of the CCC and supporting site development at Patrick SFB, FL.

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 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, better terms or conditions, or any other supportable benefit. 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 the expected benefits of the consolidated approach are 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 do not meet the threshold set forth in FAR 7.107-2(d)(1)(ii); however, the benefits of consolidation do meet the requirements of FAR 7.107-2(d)(2). See Section 5 analysis below for the qualitative benefits of this proposed consolidated acquisition. Although the quantitative benefits are not met, the qualitative benefits of the consolidated approach are critical to the success of the Mobile District.

(2) In accordance with FAR 7.107-2(e)(1), when the benefits of consolidated requirements are not quantifiable as stated at FAR 7.107-2(d)(1), the consolidation must be determined to be necessary and justified based on the anticipated benefits of being critical to the agency’s mission success and that the procurement strategy provides the maximum practicable participation by small business. The work required under the proposed solicitation involves the construction of a Space Communications Facility and Consolidated Maintenance Storage Building, The consolidated approach is critical to the success of not only the Mobile District but also the Air Force. Utilizing a stand-alone DBB FFP “C” type contract is necessary to meet the mission objectives because it provides for a contracting vehicle that minimizes acquisition planning and contract execution costs, shortens contracting lead time, assures operational continuity, and improves post security by minimizing the number of contractors accessing the post at any given time period.

3. Applicable Statutes/Regulations: 15 U.S.C. § 657q, FAR 7.107-2, and AFARS 5107.107-2.

4. Results of Market Research:

a. To support the Mobile District’s determinations on where to place projects, market research was conducted that supplemented the Mobile District’s knowledge of capabilities based on prior similar acquisitions. A Sources Sought Notice was posted under RFP W9127823R0115 to SAM.gov on 31 July 2023 with a closing date of 15 August 2023 and requested interested contractors to submit a statement of their capabilities, information regarding their business size and category, and their experience with work similar to this project. The requirement was posted with NAICS code 236220 and size standard $45 million.

Responses and technical comments are listed below. Nine responses were received in response to the Sources Sought notice.

Responses were received from five small businesses, three large businesses, and one firm whose business size was not provided. Two of the five small businesses provided long haul trucking and masonry services and were therefore not considered during the evaluation. One of the small businesses did not have the bonding capacity to support this procurement. Of the remaining two small business, both of which had proper bonding capacity, only one had past experience of the same size, magnitude, and type of work required of this procurement. FAR 19.502-2 (b) (1) requires that a contracting officer have a reasonable expectation that at least two (2) qualified small businesses will submit proposals. Based on the analysis contained herein, no set aside was recommended, and this project shall be solicited on an unrestricted basis.

Please see Market Research report for further details.

The proposed acquisition will require the submission of, and compliance with, a subcontracting plan for all large businesses, as well as a small business participation plan for all businesses. Overall, this proposed acquisition will provide a positive impact to all business concerns with the ability to operate within the United States. It was determined this procurement will be advertised as an unrestricted procurement.

5. Alternate Contracting Approaches Considered and Rationale for Rejection: If consolidation were precluded in the performance of this requirement at the Patrick SFB, the Mobile District would have to implement contractual mechanisms for each individual facility (discrete site). Consequently, in the analysis of the possible acquisition strategy alternatives, the Mobile District considered a stand-alone “C” type contract for each facility. The analysis of this alternative approach is further detailed below:

a. Alternative 1: Stand-Alone “C” Type Contract (each site): The Mobile District considered the award of multiple stand-alone “C” type contracts to contractors to perform the work at each individual facility. While there are applications for the use of stand-alone “C” type contracts for individual sites, there must also be resources, both monetary and labor, available to execute the acquisitions within the district. While this approach could provide a lesser degree of consolidation, or no consolidation at all, if individual contracts are awarded for single requirements, the benefits of the single consolidated stand-alone “C” type contract approach substantially exceeds the benefits of a separate stand-alone “C” type contract for each discrete site.

(1) Quality. Establishing a single contract for all locations to service the Patrick SFB facilities assures a higher degree of consistency in the quality of performance. The contractor will be selected based on their experience constructing multiple facilities. While offerors on single facility “C” contracts would be selected on similar past performance experience, a contractor has less certainty of being awarded multiple contracts and thus the quantum of critical experience would not be shared or achieved across all facilities. Multiple contractors performing at the Space Communications Facility and Consolidated Maintenance Storage Building puts such contractors creates a learning curve that would negatively impact the facilities, because of varied standards of contractor performance, resulting in increased oversight and administrative costs.

The benefit of the end user only working and coordinating with a single prime contractor will improve the operational readiness of the facilities, eliminate redundancies which could result in higher costs to the customer.

(2) Acquisition Cycle. A negotiated “C” type procurement takes approximately 140 days from scope development to award. Of these 140 days, 100 equate to actual man hours worked.

Accordingly, if a “C” contract is required for both locations these requirements would require approximately five people full time between contracting, program management, and engineering division in order to move the requirements along at the same time or an additional 100 hours (approximately) if the same persons worked both locations.

(3) Terms and Conditions: Between the two alternatives, there is no appreciable difference in the contract terms and conditions.

(4) Cost Savings: In accordance with FAR 7.107-2(d)(3)/15 U.S.C. § 657q(c)(2)(B), “savings in administrative or personnel costs alone do not constitute a sufficient justification for a consolidation of contract requirements” unless the total amount of the cost savings is expected to be substantial in relation to the total cost of the procurement. The single stand-alone “C” contract approach creates a higher degree of consistency in the quality of performance, reduces acquisition timelines and manpower requirements, allows the contractor to establish stable relationships with their subcontractors, and maximizes competition creating the opportunity to directly negotiate high quality construction at fair and reasonable prices.

A single contract will also minimize acquisition time and performance and schedule risks. Table 1 below reflects the estimated total pre-award/award costs required for one stand-alone "C" type contract. The cost is developed per project, and includes development, review and approval of Independent Government Estimates and project plan and specifications processing.

Table 1 – Cost to Award a Stand-Alone “C” Contract

ORGANIZATION LABOR TRAVEL

Contracting Cost Engineering Engineering Project Management

Subtotal Total Cost to Award Stand-Alone “C” Contract

The existing design and specifications package has been finalized under the assumption that a single contract would be issued for this procurement. If the CCC project is not consolidated and subsequently two “C” type contracts are issued, an adjustment will need to be made to the existing Architect/Engineer (A/E) task order. This modification would involve separating the appropriate design and specifications for each package, which is estimated at a cost of . The A/E task order would need to be modified to add these costs. Table 2 below reflects the estimated costs required to modify the AE task order. Beyond costs incurred, an extension of approximately nine months would need to be added to the procurement schedule to account for the re-design process and contract modification.

Table 2 – Cost to Modify AE Task Order

ORGANIZATION LABOR TRAVEL

Contracting Cost Engineering Engineering Project Management

Subtotal Total Cost to Modify AE Task Order

The anticipated award date for the CCC, which includes the consolidation and construction of both the Consolidated Maintenance Storage Building and Space Communications Center is currently set for March 2024, with the Notice to Proceed (NTP) expected in April 2024. The construction of the Space Communications Center hinges on the successful completion of the new Consolidated Maintenance Storage Building, relocation of equipment to the new facility, and the demolition of the existing Consolidated Maintenance Storage Building. The estimated timeframe for the construction and demolition activities of the Consolidated Maintenance Storage Building alone spans approximately 750 days. Once work on the Consolidated Maintenance Storage Building is complete, the contractor can begin work on the Space Communications Center. The estimated timeline for the entire CCC is 1150 days.

As noted above, if these projects are not consolidated under one contract, the award date for the Consolidated Maintenance Storage Building alone will be moved back to December 2024 with an NTP date of January 2025 to reflect the nine month delay to be incurred by the Government to account for the AE for re-design and contract modification. Assuming no delays are encountered, the Consolidated Maintenance Storage Building will be complete in January 2027 at which time construction on the Space Communications Center can commence. The work on the Space Communications Center cannot begin until the Consolidated Maintenance Storage Building is completed; therefore, work cannot be worked concurrently on two “C” contracts. While issuing awarding two “C” contracts in December 2024 for the Consolidated Maintenance Storage Building and Space Communications Center is feasible, it is unlikely the awardee of the Space Communications Center will hold pricing for nearly two years. Based on this analysis, the Space Communications Center contract will likely be awarded in mid to late 2026 with an NTP date of January 2027. With these delays to award, the Government will likely incur higher construction costs due to inflation.

The Tri-Service Index and UFC 3-701-01 DoD Facilities Pricing Guide is projecting an inflation rate of 6.5% in 2024-2026. This rate is based on Inflation rates for military construction budget authority per "Inflation Guidance – Fiscal Year (FY) 2024 President's Budget" published by USD (Comptroller) on 07 February 2023. The escalation factor for each year is the cumulative (compounded) annual inflation rate from the base year. These factors are used to escalate project estimates using unit costs to the expected midpoint of construction, in accordance with UFC 3-730-01.

With the initial delay of nine months to award the Consolidated Maintenance Storage Building contract, the Government anticipates inflation costs in the amount of for an estimated contract value of for the Consolidated Maintenance Storage Building. The original estimate for this requirement has accounted for inflation of the Space Communications Center through 2025 as work on this facility cannot begin until the Consolidated Maintenance Storage Building is complete. Assuming the Space Communications Center is then awarded in mid-2026, the Government would incur additional inflation costs in 2026 in the amount of that were not originally accounted for.

This value was derived by applying a rate of (half of as the award will likely be made in mid-2026) to the estimated cost of for the Space Communications Facility and the estimated costs of for the five options.

Inflation costs of for the Space Communications Facility and five options coupled with those inflation costs of for the Maintenance Storage Building equate to total inflation costs of

Table 3 below includes a comparison of the costs the Government will incur should one “C” contract be issued vs. two “C” contracts. The estimated additional cost to the Government is should the two construction sites not be consolidated under one contract. This quantifiable value does not exceed the financial benefits of $9.4 million as required in FAR 7.107-2(d)(1)(ii), but still represents an objectively significant estimated additional cost to the Government, which further justifies the consolidation of these two facilities under one contract.

Table 3 - Stand-Alone “C” Contract Approach Versus Stand-Alone “C” Contract Approach for Each Discrete Site

ACQUISITION APPROACH One “C” C

Two “C” Contracts Labor

Cost of AE mod/labor Estimated inflation $0.000 Total Difference in Program costs to Award one “C” contract versus two “C” contracts

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.

b. Applicability of FAR Bundling Definition. This acquisition does not meet the definition of bundling since it is not an attempt to consolidate two or more requirements previously provided or performed under separate contracts into a single contract unsuitable for a small business.

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).

CICA requires solicitations to provide for full and open competition except where restrictions on competition are necessary to satisfy the procuring agency’s needs. In such a case, restrictions on competition are allowed. Bundled procurements combining separate requirements into one contract have the potential to restrict competition by excluding firms that can provide only a portion of the bundled requirement. However, combining like and related efforts to achieve economies of scale and eliminate duplication of effort, consistent with industry practice and market research is reasonable basis for bundling requirements, though it may have the effect of restricting competition. All the acquisition approaches discussed above implicate CICA bundling, though in varying degrees.

d. Applicability of CICA Bundling Principle. Although this action constitutes CICA bundling by combining construction of the Space Communications Facility and Consolidated Maintenance Storage Building, it is necessary to satisfy the customer’s needs. This procurement will allow the Mobile District to streamline the acquisition cycle and eliminate duplications of efforts by establishing a single “C” contract approach, through consolidating requirements at both buildings into one contract. This is low risk for overall mission failure and will satisfy Patrick SFB’s need for a timely and cost effective approach to meeting its mission requirements for the Space Communications Facility and Consolidated Maintenance Storage Building.

7. Considerations, facts, and reasoning supporting the determination: All facts, considerations, and rationale have been covered previously in the findings. The DD2579 has been signed by the Contracting Officer, Deputy for Small Business, and Small Business PCR. All concur that consolidation of this requirement is both necessary and justified.

8. Summary: Although the quantifiable benefits do not meet the dollar threshold amounts set forth in FAR 7.107-2(d)(1), the other qualitative benefits justify consolidation in accordance with FAR 7.107(d)(2). Also, the estimated cost savings in the amount of still represents an objectively significant quantifiable benefit to the Government.

As previously detailed, consolidation is both necessary and justified as the benefits of consolidation substantially exceed the benefits of the alternative contracting approach. Fulfilling this requirement through separate, standalone contracts would result in considerable risk of higher procurement costs as well as resources and scheduling constraints to the Government.

Attempting to meet this requirement through two separate, stand-alone contracts will escalate procurement costs and extend the schedule for this requirement. Market research has identified multiple large contractors capable of undertaking the required work. The documented findings not only support the necessity of consolidation but also emphasize its justification based on sound business judgment. This judgment is grounded in the recognition of the intricate nature and scheduling impacts of the projects to be executed, with the consolidated approach providing distinct advantages that significantly outweigh those of less consolidated alternatives. Finally, it is noteworthy that Patrick SFB has expressly sought a competitive approach to maximize the project scope within the available MILCON funds, emphasizing the critical nature of this work to their mission.

DETERMINATION REQUEST FOR CONSOLIDATION

W9127823R0115

CONSOLIDATED COMMUNICATIONS CENTER

PATRICK SPACE FORCE BASE, FLORIDA

Upon the basis of the findings above and with the concurrence of the SBA, I hereby determine, pursuant to the authority of FAR 7.107-2, 15 U.S.C. § 657q, and Army Federal Acquisition Regulation Supplement 5107.107-2(b)(ii) “Consolidation,” that the proposed consolidation of two or more discrete construction projects for the Department of Defense and other Federal Agencies within the Mobile District is both necessary and justified.

Carl Wade Chief of Contracting Office, Contracting Division, Mobile District