W9127825RA022_Consolidation DF (Redacted).pdf

DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, MOBILE DISTRICT

DETERMINATION AND FINDINGS

REQUEST FOR CONSOLIDATION

W9127825RA022

INDEFINITE DELIVERY INDEFINITE QUANTITY (IDIQ)

SINGLE AWARD TASK ORDER CONTRACT (SATOC)

FOR SMALL CONSTRUCTION REQUIREMENTS AT COOPERATIVE SECURITY

LOCATION COMALAPA, EL SALVADOR

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 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), AFARS Appendix GG, and USACE Acquisition Instruction 5107.107- 2-100(b)(ii)(B). My review resulted in the following findings:

1. Introduction: Headquarters, U.S. Army Corps of Engineers, Mobile District, proposes to award a competitive unrestricted, best value IDIQ SATOC in the amount of $5,000,000. The SATOC will meet repair and Design Bid Build (DBB) construction mission requirements under North American Industry Classification System (NAICS) code 236220 for requirements at Cooperative Security Location (CSL) Comalapa, El Salvador. 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 in El Salvador at CSL Comalapa. 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:

(1) Mobile District performs studies, investigations, designs, repairs, and construction in El Salvador, many of which are performed at the CSL. Each project is assigned a Project Delivery Team (PDT) comprised of various organizational elements within the District, including technical

(Engineering and Construction Divisions), contracting, legal, project management, and the end user and facilities’ engineering organizations as applicable. From internal elements, the District fields an in-house staff that provides project management, technical, contracting, legal, and resource management services to support facility life-cycle programs. The District's contracting responsibilities for the facilities support include acquisition planning; procurement actions leading up to award of contracts with associated preparation of documentation and approvals; and administration of the resulting contracts, including award and administration of individual task orders.

(2) The purpose of this acquisition is to establish a highly responsive repair and construction contracting tool to support the District's facility mission at the CSL. The support to be provided for these facilities is generally Sustainment, Restoration, and Modernization (SRM) work, but could include new construction. The specific portion of the facilities’ mission addressed by this acquisition consists of full service repair and construction of real property facilities and/or their systems and components. The target project sizes will range from projects within the micro-purchase acquisition threshold to $500,000. This contracting effort, in conjunction with the stakeholder’s facilities maintenance program, ensures the facilities meet established Department of Defense (DoD) facilities standards. Furthermore, due to the enduring nature of the requirement to ensure compliance with these standards, the necessity for this contract is not expected to be impacted by current or future budget limitations.

b. Acquisition Strategy/Procurement Summary: To meet the demanding repair and construction project requirements of its customers at the CSL, the District intends to award a competitive, best value, IDIQ, Firm-Fixed-Price (FFP) construction SATOC in accordance with FAR 16.504(b), as the Government anticipates recurring requirements but cannot predetermine with precision the exact quantity, nor exact time period needed. The SATOC will be awarded in an amount not to exceed $5,000,000 for repair and construction work at Comalapa. The SATOC will have a five year ordering period. Individual task orders will be negotiated with the contractor. The Mobile District determined that a SATOC is the most effective manner of meeting the small project repair and construction mission at CSL Comalapa for several reasons. This acquisition approach will efficiently facilitate the District’s smaller repair and construction programs and will position the District to successfully meet short-fused, end of fiscal year requirements. 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 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 because a SATOC will be used to perform multiple construction projects, awarded on individual task orders, at two or more discrete sites at CSL Comalapa.

d. Requirements Being Consolidated: The planned SATOC will provide full service repair and construction of real property facilities and/or their systems and components. While most of the projects to be performed under the proposed contract are unknown at this time, known requirements include replacement of HVAC units in multiple buildings and replacement of CCTV components, as well as work on the public address system. Mobile District expects the vast majority of projects will all be maintenance and repair requirements funded by the US Navy, with some requirements for small scale construction. Some projects may also be funded by the United States Southern Command (SOUTHCOM) and its components, or by other tenant organizations working at the installation.

e. Procurement History:

(1) Per FAR 19.000(b)(1)(ii), Contracting officers may (rather than shall) apply this part outside the United States and its outlying areas when referencing Small Business programs. Given the Outside the Continental United States (OCONUS) location of this requirement, Small Business programs are not being used because historically the contractors that participate in these types of acquisitions are not certified as a concern by the definition of FAR Part 19.001. Despite this fact, the Latin America PDT applied a process similar to that conducted by the District for acquisition planning in its area of responsibility, considering the suitability of projects for smaller contractors comparable to Small Businesses in the U.S. in comparison to larger and more complex projects which would typically be performed by large businesses if performed in the U.S. Generally, larger, complex projects are procured through “C” contracts or placed in existing Multiple Award Task Order Contract (MATOC) pools. Less complex, smaller scale projects may be reserved for SATOC awards.

(2) The Mobile District currently administers a $49,000,000 Design Build (DB) MATOC for use in Central America. The MATOC was awarded in 2023 with a five-year ordering period, and may be used for requirements throughout Central America. The current MATOC pool has a remaining capacity of , with as much as in potential FY25 year-end construction requirements pending. A replacement Central America MATOC is in the final stages of award with the intent of award in time for year-end FY25 use. While the general scopes of work for the Central America MATOC and the proposed CSL SATOC are similar in terms of the type of repair and construction to be performed, the CSL SATOC is intended provide a faster and more cost-effective contracting vehicle to accomplish small construction requirements with a dollar value of $500,000 or less for stakeholders at CSL Comalapa. The more limited project size and geographic scope differentiate the planned procurement from the existing MATOC.

(3) This SATOC is for new repair and construction requirements at CSL Comalapa, and therefore no procurement history exists. To date, no similar IDIQs have been awarded specific to work in El Salvador or at the CSL.

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). See Section 5 analysis below for the 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) Utilizing a competitive SATOC in accordance with FAR 16.504 to consolidate the requirements for small repair and construction work at CSL Comalapa 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 force protection by minimizing the number of contractors accessing the U.S. portions of installations at any given time period. Use of an IDIQ contract is appropriate in accordance with FAR 16.50l-2(a), when exact times and/or exact quantities of future deliveries are not known at the time of award. FAR 16.504(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. The Contracting Officer should use an indefinite-quantity only when a recurring need is anticipated. It is anticipated that the SATOC will be used to fulfill routine stakeholder requirements at the CSL.

(3) In accordance with FAR 7.107-2(e)(1), when the benefits of consolidated requirements is 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. The work required under the proposed solicitation involves SRM and small-scale new construction in El Salvador. CSL Comalapa is one of two enduring locations in support of SOUTHCOM’s mission in both Central and South America. The installation leadership must be able to quickly respond to repair requirements and to ensure that the facilities and infrastructure remain operational to maintain mission readiness. The consolidated approach is critical to the success of not only SOUTHCOM’s mission in the region, but also the Mobile District. An IDIQ SATOC will provide a flexible and effective contract vehicle that can accommodate both the known and unknown repair and construction requirements of stakeholders at the installation.

Further, per FAR 19.000(b), Small Business programs only apply in the United States or its outlying areas. Therefore, given the OCONUS location of this requirement, Small Business programs do not apply to this procurement, meaning that there is no harm to Small Business programs. Though it is feasible to fulfill the requirements by awarding multiple stand-alone “C” contracts, which could perhaps be awarded to multiple contractors, given the limited dollar value of the actions intended for award under this contract ($500,000 and below), procurement costs would be prohibitive. The advantages of the SATOC tool fully support the intended approach.

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 District’s determinations on where to place projects, market research is performed for each acquisition. For this requirement, because Small Business programs do not apply, the primary focus of market research is on increasing competition. Experience on past acquisitions indicates that few U.S. contractors are willing to engage in construction in El Salvador.

Those which do accept the higher risk profile for what are typically smaller requirements compared to USACE projects performed in the Continental United States (CONUS) are reached through traditional notification methods. To reach the regional contractors which are much more likely to respond, particularly for a small requirement like the planned CSL SATOC, additional measures are required.

b. For the requirement at CSL Comalapa, the following market research techniques have been used and will continue up to the point of issuance of the solicitation package to promote competition in the procurement process:

(1) Provide information on the procurement at regional Industry Days. This requirement was briefed to participants at Industry Days in December 2024 in El Salvador, Honduras, Panama, and Guatemala, as well as at a virtual Industry Day. In total, more than 150 participants received a briefing on this proposed acquisition.

(2) Work with US Embassy agencies/offices to obtain information on contractors and conduct outreach. This includes requesting that US Embassy Economics and Commerce offices in Honduras publicize the requirement, as well as requesting publicity through US Embassy Public Affairs Office (PAO) team to include posting on local social media sites.

(3) Expand upon Mobile District PAO efforts for recent Latin America (LATAM) procurements promoting the upcoming acquisition on the District’s external website and social media platforms (in English and Spanish) with information on points of contacts, frequently asked questions, and system registration links.

(4) Expand upon contacts with local Chambers of Commerce, Construction Chambers/Organizations, Engineering Societies, etc. in Honduras to publicize opportunities.

c. Market research efforts indicate that adequate interest exists among qualified sources to fulfill competitive requirements.

5. Alternate Contracting Approaches Considered and Rationale for Rejection: Mobile District considered stand-alone “C-type” contracts on a project-per-project basis. However, based on reasons described herein, it was determined that a competitive SATOC was the best solution for satisfying the small repair and construction requirements at CSL Comalapa which are too small or have too short a timeline for performance under the existing Central America MATOC. The intent of this analysis was to address all alternative contracting approaches that would involve a lesser degree of consolidation, or no consolidation. See analysis below for the benefits of this proposed consolidated acquisition, which do not meet the standard set forth in FAR 7.107-2(d).

a. Alternative 1: Stand-Alone “C” Type Contracts: The District considered the award of multiple stand-alone contracts to perform the work at CSL Comalapa. 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 SATOC approach substantially exceed the disadvantages of consolidation for the reasons outlined below.

(1) Quality. The ability to work with a single contractor directly through a SATOC tool provides significant advantages in comparison to awarding multiple contracts where various contractors may be utilized. It is the District’s experience that the iterative process of negotiating and executing repair and construction efforts with a single contractor generates greater understanding between contractor and Government, resulting in more thorough proposals and quality projects. While “C” contracts give the Government the opportunity to avail itself of a wider range of potential contractors for each project, the anticipated size of the projects to be awarded under the proposed contract is so small that very limited competition would be expected on a solicitation for a single requirement which would still require registration in all U.S. Government systems and preparation of a detailed proposal. 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 the installation's and facilities' procedures, particularly when dealing with regional contractors. While the potential exists for the SATOC holder to end up being a poor performer, due diligence by the Government at the outset makes this risk highly unlikely, resulting in a “good to great” contractor for every project. Too, in the unlikely event that the SATOC contractor does not perform well, the Government can pursue another SATOC contractor or avail itself of other contract vehicles.

(2) Acquisition Cycle. A complicating element of the repair and construction program in El Salvador is the difficulty in estimating future year annual funding levels. The program is subject to significant annual fluctuations in funding, and to impacts on funding priorities by emerging DoD, using agency, partner nation, and installation-level issues and priorities. 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 voluminous solicitations and proposal submissions, as required for “C” contract procurements. As compared to awarding a stand-alone contract, it is estimated that placing task orders under a SATOC reduces acquisition time from 180 to 30 days on average for each project, as shown in the table below.

(b) Historically, the repair and construction requirements of the type contemplated at

CSL Comalapa are typically funded by annual appropriations that expire at the end of the FY. These projects are typically not identified, defined, and provided to the District for execution until the third and sometimes even the fourth quarters. The customer’s process of prioritizing and funding

(a) The SATOC approach maximizes the opportunity to directly negotiate high quality repairs and construction at fair and reasonable prices. While minimizing acquisition time, and performance and schedule risks, cost risks are minimized through open and thorough discussions of the description of work for each task order, resulting in a stronger mutual understanding of requirements. Additionally, Table 1 above and Table 2 below reflect the estimated total pre-award/award costs required for one stand-alone "C" type contract in comparison to a SATOC. These costs are based on standard regional labor costs developed by Mobile District Contracting for all procurements, along with historical average procurement support costs for Cost Engineering Division, Engineering Division, Construction Division, and Programs and Project Management Division.

(b) Additional hours/costs are required for “C” and “D” type contracts due to the selection of contract clauses and preparation of applicable Determinations and Findings. SATOC Task Orders do not require contract clauses or the same Pre-Award documents, and can therefore be accomplished in fewer hours and at a lower cost. Contracting Division costs are developed utilizing hourly rates for a The estimated hours are based on the complexity of the procurement and contract type. The estimated hours also include post award administration including performance and payment bond review, issuance of notice to proceed, review of monthly Contracting Officer Representative reports, and contract closeout. Cost Engineering Division and Engineering Division costs are developed utilizing hourly rates for a cost is developed per project, and includes development, review and approval of Independent Government Estimates and project plan and specifications processing. Construction Division costs are developed utilizing hourly rates for a

. The cost is based on the complexity of the scope of work, assistance in development of the independent government estimate, and preparation of the pre-negotiation objective memorandum, and price negotiation memorandum. Construction Division efforts include district office and resident office support. Project Management costs are developed utilizing hourly rates for a

The cost is based on a historical average of the effort required for acceptance of funds, preparation of purchase request and commitments, and coordinating District resources.

Table 2 – Cost to Award a Stand-Alone SATOC

ORGANIZATION LABOR TRAVEL

Contracting $- Cost Engineering $- Engineering $- Construction $- Project Management $- Subtotal $- Total Cost to Award Stand-Alone SATOC

Table 3 – Cost to Award a SATOC Task Order

Contracting - Cost Engineering - Engineering - Construction - Project Management -

Subtotal -

Total Cost to Award SATOC Task Order

Table 4 – Cost to Award a Stand-Alone “C” Contract

Contracting - Cost Engineering - Engineering - Construction - Project Management - Subtotal - Total Cost to Award Stand-Alone “C” Contract

Table 5 – Cost Analysis

Acquisition Approach SATOC Task Order Cost

Standalone “C” Contract Cost

Cost per Procurement of Task Order or “C” contract Anticipated Procurements* (Avg # Task Orders per

SATOC)

Subtotal Cost to award Basic IDIQ contract - Total Difference in Program costs to Award SATOC Task Orders vice Stand-Alone “C” Contract -

* Based the current projections for FY25 and subsequent fiscal years at CSL Comalapa.

As demonstrated in Table 5, the substantial increase in program costs to award a stand-alone “C” contract for each requirement is roughly three times the cost of utilizing a SATOC. The cost savings of consolidating these contract requirements amount to of the proposed contract value, and does not meet the standard set forth in FAR 7.107-2(d).

A SATOC contract maximizes the opportunity to acquire high quality, professional services at competitive prices, while minimizing acquisition time and performance and schedule risks. It also facilitates the Government’s rapid response to emerging and unforeseen requirements that arrive at year end, which is impossible under individual, stand-alone “C” contracts.

Table 6 – Analysis Summary

Benefit SATOC Definitive “C” Contract

Quality Highest Highest Acquisition Cycle* 30 days or less 180 days

Terms and Conditions No Difference No Difference Administrative Cost Lowest Highest

* Project Identification to Award

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. In accordance with FAR 7.107-3 and 7.107-4 bundling does not apply to this acquisition because it does not consolidate two or more requirements that were previously performed under separate smaller contracts. Therefore “bundling” within the meaning of FAR 2.101 is not applicable.

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 a 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 like and related construction and support, it is consistent with industry practice and necessary to satisfy the customers’ needs. This procurement will allow the District to leverage economies of scale, streamline acquisition cycles, and eliminate duplication of efforts by establishing a SATOC with a responsive and responsible contractor to perform individual task orders as the need arises.

7. Considerations, facts, and reasoning supporting the determination: All facts, considerations, and rationale have been covered previously in the findings.

8. Summary: Though this 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 repair and construction requirements in El Salvador at CSL Comalapa.

Stand-alone “C” contracts were considered but rejected as they would result in significantly higher administrative costs and increased acquisition cycle time. Although cost savings do not amount to 10% of the contract value, a consolidated SATOC, as opposed to using a stand-alone contract or other procurement strategies provides qualitative benefits including a significant increase in quality and acquisition cycle. Consolidating these requirements also provides significant cost savings up to in administration costs and additional cost savings during task order negotiations, as previously discussed.

If these benefits are not leveraged, the District will not be able to fully execute the small repair and construction requirements at CSL Comalapa, particularly in the fourth quarter, which constitutes the largest portion of the District’s small scale construction program. Failure to award these projects will result in the loss of critical District Supervision and Administration (S&A) income, which could negatively impact the District. Additionally, the CSL, Navy South, and SOUTHCOM will be drastically impacted with mission readiness, which will negatively affect the ability of the DoD to fulfill their missions not only in El Salvador, but in all of Central and South America due to the CSL’s key role. Therefore, the consolidated approach is critical to the regional success of not only the Navy and SOUTHCOM, but also the Mobile District.

Additionally, it is significantly less burdensome for the District’s Contracting and Construction 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 number of efforts to be executed at CSL Comalapa. The consolidated approach provides advantages that substantially exceeds the benefits of an approach that provides a lesser degree of consolidation.

DETERMINATION AND FINDINGS

REQUEST FOR CONSOLIDATION

W9127825RA022

INDEFINITE DELIVERY INDEFINITE QUANTITY (IDIQ)

SINGLE AWARD TASK ORDER CONTRACT (SATOC)

FOR SMALL CONSTRUCTION REQUIREMENTS AT COOPERATIVE SECURITY

LOCATION COMALAPA, EL SALVADOR

Upon the basis of the findings above, 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

2025.05.01 14:57:32 -05'00'