W9127825RA046_Consolidation DF_Camp Pendleton OM (Redacted).pdf

DEPARTMENT OF THE ARMY

U.S. ARMY CORPS OF ENGINEERS, MOBILE DISTRICT

DETERMINATION AND FINDINGS

REQUEST FOR CONSOLIDATION

W9127825R0028

Operation & Maintenance (O&M) with Incidental Repair and Minor Construction, in Support of the Defense Health Agency (DHA) Naval Hospital Camp Pendleton, California

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 $2,000,000 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) 5107.107-2(b)(ii), AFARS Appendix GG, and USACE Acquisition Instruction 5107.107-2-100(b)(ii)(B). My review resulted in the following findings:

FINDINGS

1. Introduction: Headquarters, U.S. Army Corps of Engineers, Mobile District (CESAM), plans to solicit offers for a stand-alone “C” contract to support the Mobile District’s Defense Health Agency (DHA) facilities mission by providing Operations & Maintenance (O&M) and repair to the Naval Hospital Camp Pendleton, California. The work will be performed at facilities located in Yuma, AZ; Ventura County, CA; Twentynine Palms, CA; and Barstow, CA to meet the O&M requirements of Naval Hospital Camp Pendleton under North American Industry Classification System (NAICS) code 236220. The total estimated amount is . 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. CESAM 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, O&M with repair and minor construction in support of the DHA program. Each project is assigned a Project Delivery Team (PDT) comprised of various organizational elements within the Mobile District, including technical (Engineering and Construction Divisions), contracting, legal, project management (including the Deputy for Small Business), as well as the end user and facilities’ engineering organizations. From internal elements, the Mobile District fields an in-house staff that provides project management, technical, contracting, legal, and resource management services to support facility life-cycle programs. The Mobile 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.

Requirements include preventive, predictive, unscheduled, and emergency maintenance of all facility systems and components including architectural, mechanical, electrical, and instrumentation. Work will require extensive knowledge of the technical requirements, code and accreditation compliance, and patient-related risk. Factors such as patient privacy, infection control, contamination and dust control, noise mitigation, short or no-notice disruption of work due to medical emergencies, interim life safety requirements for incapacitated patients and responsible staff members, and similar issues impact a contractor’s ability to efficiently perform the required work. Contractors without experience working in a functioning, occupied medical facility are typically not adequately prepared for, or capable of, effectively responding to these requirements.

Congress passed the National Defense Authorization Act (NDAA) in 2017, and by 2021, the phase-in process started shifting control of the military medical commands, like the Army Medical Command (MEDCOM) and other military medical facilities, to DHA. The purpose of this acquisition is to establish responsive contracts to facilitate the District’s continuing support of the DHA program nationwide for O&M with repair and minor construction capability at major medical centers, clinics, and laboratories. The intent is to award Firm Fixed Price (FFP) contracts using selection procedures in FAR Part 15, under product service code Z1DA, Maintenance of Hospitals and Infirmaries. The requirements include repair of real property installed equipment (RPIE), preventive, predictive, demand maintenance, and emergency maintenance of all facility systems and components including architectural, mechanical, electrical, and instrumentation areas of military healthcare and research laboratory facilities in a cost-effective manner. Additionally, minor construction and repairs incidental to the O&M mission is required. This contracting effort, in conjunction with the installation 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.

DHA’s program of O&M with repair and minor construction of medical/healthcare facilities is complex due to the special requirements not found in typical commercial O&M services or construction. Construction and maintenance performed in an occupied healthcare facility is unique from other facility types in technical requirements, code and accreditation compliance, and patient-related risks. Patient privacy issues, infection, contamination and dust control, noise mitigation, short or no-notice disruption of work due to medical emergencies, interim life safety requirements for incapacitated patients and their responsible staff members, and similar issues impact a contractor’s ability to perform the required work.

In addition to patient care, some other requirements involve different complexities, such as Bio Safety Laboratories (BSL) and facilities governed by the Association for Assessment and Accreditation of Laboratory Animal Care (AAALAC).

b. Acquisition Strategy/Procurement Summary: Due to the NDAA, as described in paragraph (2), the Mobile MST now supports a wider range of military medical facilities – including those of the Air Force, Navy, Coast Guard, and Marine Corps – in addition to Army Medical Command. To meet the demanding O&M with repair and minor construction project requirements of its customers, the Mobile District intends to award a Firm-Fixed-Price (FFP) “C” contract in accordance with FAR Part 16.202. The period of performance will be a one-year base period with four one-year option periods, for a total of five years. The subject solicitation is an O&M with repair and minor construction requirement. Currently, there is an active stand-alone “C” contract at Naval Hospital Camp Pendleton awarded in the amount of $34,114,598.49 set to expire on 31 October 2025 (base year with three one-year options). Based on market research, with coordination from SBA Procurement Center Representative (PCR) and with approval from the Small Business Advocate, the District intends to advertise this procurement as an 8(a) competitive requirement. NAICS code 236220 is the appropriate classification for this procurement.

Additionally, it should be noted the Mobile District’s customer, the Army MEDCOM, has been absorbed into DHA. This change has increased the demands and end users supported by the Mobile District MST. The Mobile District MST must be flexible and have the ability to anticipate the needs of the customer. The Mobile District MST is working diligently with DHA to determine which new end users the Mobile District MST will acquire and the contracting vehicles that can best support new and existing end users. The proposed O&M with repair and minor construction Firm-Fixed- Price (FFP) “C” contract will provide the Mobile MST a tool to answer the DHA’s evolving requirements for Naval Hospital Camp Pendleton and its outlying medical facilities.

This acquisition will be a replacement contract to the current USACE Mobile District O&M contract for Navy Hospital Camp Pendleton (NHCP), W9127821C0034, which was awarded on 29 September 2021 and received adequate competition under the 8(a) program. The current O&M contract covers all the sites listed above (all fall under the Navy Hospital Camp Pendleton umbrella) but will expire 31 October 2025. A consolidated “C” contract is the best feasible solution for mission success to support NHCP, which is a newer Mobile District customer.

O&M with repair and minor construction must be provided on a consistent basis and at the highest standard to meet DHA’s health facilities’ accrediting benchmarks established by the Joint Commission, it is of key importance to DHA that the quality of the level of work performed in its facilities is consistent throughout its inventory. DHA was established by the U.S. government to improve the quality and standardization of the Military Health Care System for all branches of the U.S. Armed Forces. As a key funding agency, the DHA mandates that military health facilities maintain accreditation from the Joint Commission (TJC), which sets national standards for healthcare organizations. TJC accreditation is essential for military healthcare organizations, including those that serve Medicare beneficiaries, as it ensures compliance with safety, quality, and operational standards. By adhering to TJC standards, these healthcare facilities can ensure high-quality patient care, improve safety, and foster continuous improvement in health services, all of which ultimately lead to better patient outcomes. This accreditation also enhances the reputation and sustainability of military health institutions. The Joint Commission evaluates healthcare organizations across various sectors, including hospitals, medical centers, ambulatory care centers, and behavioral health facilities. TJC focuses on key areas such as patient care, medication safety, infection control, and consumer rights. Regular on-site surveys by TJC assess healthcare organizations’ compliance with these standards. Without this accreditation, military healthcare facilities cannot operate, underscoring the critical importance of maintaining TJC accreditation for operational and regulatory compliance.

This is not a new procurement method for supporting this type of program. The Mobile District currently administers a suite of stand-alone “C” type contracts for facilities O&M and repair and construction performed by contractors from various socio-economic categories. Use of a “C” type contract provides more flexibility and 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. This acquisition constitutes consolidation because the “C” contract will be used to perform construction at multiple sites throughout the assigned NHCP facilities, and the total value of that work exceeds $2M.

d. Requirements Being Consolidated: The planned contract will provide full-service O&M and repair of real property facilities and/or their systems and components, to include known requirements and requirements traditionally received from other customers at NHCP, as indicated in the chart below. It should be noted DHA’s program of O&M with repair and minor construction of healthcare facilities (medical, dental, veterinary, behavior, and laboratories) is complex due to the special requirements not found in typical commercial O&M and construction. Construction and maintenance performed in an occupied healthcare facility is unique from other facility types in technical requirements, code and accreditation compliance, and patient-related risks. Since the facilities will be in full operation, the contractor will be required to minimize interference with the daily operation of the facilities and will be required to implement containment measures as required for each specific laboratory. Requirements of several regulatory and accrediting agencies such as the AAALAC that governs animal care must be met, including maintenance of records of preventive maintenance on all critical systems and implementation of the facility's utilities management plan.

(2) Utilizing a single FFP “C” contract to consolidate the requirements for Naval Hospital Camp Pendleton O&M work 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, and assures operational continuity throughout the Naval Hospital Camp Pendleton medical and dental facilities which is vital to the medical and dental care of patients. The Naval Hospital Camp Pendleton facilities are centrally managed by the Naval Hospital Camp Pendleton headquarters in order to ensure that all facilities are maintained and performing at the required level of quality. Potentially having a different contract and contractor at each facility increases the possibilities that a facility will not achieve the required performance requirements.

(3) In accordance with FAR 7.107-2(e)(1), when the benefits of consolidating 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 being critical to the agency’s mission success and that the procurement strategy provides the maximum practicable participation by small business.

(4) The work required under the proposed solicitation involves architectural, mechanical, electrical, instrumentation, security and safety areas of military healthcare and research laboratory facilities at various DHA supported healthcare facilities throughout the Naval Hospital Camp Pendleton umbrella. The consolidated approach is critical to the success of not only the Mobile District but the DHA program. A single FFP “C” contract will provide a flexible and effective contract vehicle that can accommodate DHA’s anticipated but unknown repair and construction requirements and provides maximum practicable participation by small business concerns.

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

4. Results of Market Research: It was determined by Small Business Administration (SBA) that the incumbent contract has been under the 8(a) program for 14 years and as such it would remain in the 8(a) program. Adequate competition was obtained with the previous acquisition. Historical data is available that support the determination of competition for the subject requirement. Further Market Research was not necessary to be conducted. Authorized by 15 U.S.C 637(a), the 8(a) program enables contract award to be made to small business concerns determined eligible for the 8(a) programs by the Small Business Administration. The SBA reviewed and accepted per FAR Part

19.8 an Offer Letter placing this recent Mobile District requirement with SBA San Diego District Office. The Offer was accepted by SBA San Diego on 08 November 2024.

The market research supports the determination to issue this solicitation as competitive 8(a) in accordance with FAR 19.805. There is no evidence that reducing the consolidation by breaking the requirements into smaller, less consolidated areas would improve competition, however the consolidation of these requirements does not negatively impact competition among small businesses based on the most recent acquisition. Based on the findings of the market research, the SBA concurred with this acquisition approach.

5. Alternate Contracting Approach Considered and Rationale for Rejection: The District considered another acquisition alternative, specifically the use of stand-alone “C” type contracts for each individual facility. While there are applications for the use of stand-alone “C” type contracts for individual sites, there must also be the 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 stand-alone “C” type contract approach substantially exceeds the disadvantages of consolidation for the reasons outlined below.

a. Alternative: Multiple Individual Stand-Alone �C� Type Contracts: The Mobile District considered the award of multiple individual stand-alone “C” Type contracts to vendors to perform the work for Naval Hospital Camp Pendleton and its outlying facilities. While this approach could provide a lesser degree of consolidation, or no consolidation at all if individual contracts are awarded for each discrete site, the benefits of the choosing the alternative substantially exceeds the benefits of a multiple individual “C” type approach for the reasons outlined below.

(1) Quality. Establishing a single contract for all locations to service the DHA NHCP facilities assures a higher degree of consistency in the quality of performance. The contractor will be selected based on their experience performing maintenance and repair services in similar type healthcare and medical research facilities. While offerors on single facility “C” contract 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 NHCP facilities puts such contractors in a perpetual learning curve that would negatively impact the facilities, because of varied standards of contractor performance, resulting in increased oversight and administrative costs.

(2) Acquisition Cycle. A “C” type procurement takes approximately 223 days from scope development to award. Of these 223 days, 150 equate to actual man hours worked.

Accordingly, if a “C” contract is required for each of the eight locations these requirements would require 5 people full time between contracting, program management, and engineering division in order to move the requirements along at the same time or an additional 1,792 hours if the same persons worked all eight locations.

In addition to the qualitative benefits that result from the iterative process of negotiating and executing repair and construction efforts with multiple contractors, the greater certainty of regular work places the contractor in a stronger position to stabilize relationships with their bonding company(s) and subcontractors, thus reducing risk to the Government during execution.

(3) Cost Savings. Per FAR 7.107-2(d)(3), “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.

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. While this procurement constitutes consolidation in that it combines construction requirements at two or more discrete sites, it does not meet the definition of bundling since the Government is not consolidating two or more requirements for supplies or services, previously provided or performed under separate smaller contracts into a single contract unsuitable for a small business. This procurement was previously set aside for a single 8(a) award.

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 O&M with repair and minor construction, it is consistent with industry practice and necessary to satisfy the customers’ needs. This procurement will allow the Mobile District to leverage economies of scale. This is critical given the mission of the DHA in providing patient care. The single “C” contract approach, though consolidating requirements at several facilities into one contract, provides the best aspect of “C” contracting, that is competition, with streamlined acquisition cycles, low risk for overall mission failure, and high quality contractor performance, to satisfy DHA’s need for a responsive, yet cost-effective approach to meeting its mission requirements for the Naval Hospital Camp Pendleton facilities.

CUI

7. Considerations, facts, and reasoning supporting the determination: All facts, considerations, and rationale have been covered previously in the findings. All concur that consolidation of this requirement is both necessary and justified.

8. Summary: Although this acquisition approach 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, and quality. This approach also supports the District’s aggressive small business goals. Although the quantifiable benefits of consolidation are not estimated to meet or exceed an amount considered substantial in accordance with FAR 7.107-2(d), the qualitative benefits of a consolidated “C” contract, as opposed to using multiple “C” contracts at each discrete site, is necessary to meet the needs of DHA’s mission. Consolidating these locations also provide significant cost savings, estimated in the amount of . The findings of the market research, procurement history, and the documentation provided herein support the conclusion that consolidation is necessary and justified as it is critical to the agency’s mission success and the procurement strategy provides for maximum practicable participation by small businesses.

DETERMINATION AND FINDINGS

REQUEST FOR CONSOLIDATION

W9127825R0028

Operation & Maintenance (O&M) with Incidental Repair and Minor Construction, in Support of the Defense Health Agency (DHA) Naval Hospital Camp Pendleton, California

Upon the basis of the findings above, I hereby determine, pursuant to the authority of FAR 7.107-2, 15 USC § 657q, and Army Federal Acquisition Regulation Supplement 5107.107- 2(b)(ii) “Consolidation,” that the proposed consolidation of the requirements for a O&M with repair and minor construction for the DHA’s Naval Hospital Cam Pendleton (NHCP), CA, is both necessary and justified and will serve the best interests of the Government.

Carl Wade Chief, Contracting Division, Mobile District