B04-Consolidation_Memo-Ft.Harrison_PH1-_Redacted_2024.05.29.pdf

DETERMINATION AND FINDINGS

CONSOLIDATION MEMORANDUM

UNRESTRICTED (UNR) DESIGN-BUILD (D-B) CONSTRUCTION

VETERAN’S AFFAIRS MEDICAL CENTER (VAMC) CENTRAL UTILITY PLANT

AND PARKING GARAGE, FORT HARRISON, MONTANA

24 May 2024

I have reviewed this requirement and associated market research and determined that consolidation, in accordance with 15 U.S.C. § 657q, FAR 7.107-2, DFARS 207.170 “Consolidation of contract requirements,” and Army Federal Regulation Supplement (AFARS) 5107.170, “Consolidation of contract requirements,” is both necessary and justified. My review resulted in the following findings.

FINDINGS

1. Introduction: The U.S. Army Corps of Engineers (USACE), Omaha District (NWO) plans to solicit offers for a firm-fixed-price, design-build construction contract (D-B) for VA Medical Center Central Utility Plant (CUP) and Parking Garage (PG), Fort Harrison, Montana. The North American Industrial Classification System (NAICS) code for this acquisition is 236220 – Commercial and Industrial Building Construction with an SBA Size Standard of $45M. The total dollar value is estimated at for the CUP, PG, and secondary utilities corridor.

NWO has conducted market research demonstrating that consolidation of this procurement is necessary and justified for constructing the CUP in the same general vicinity in/on/around/adjacent to the PG structure and utilities corridor. Structures consist of various types, including but not necessarily limited to buildings, bridges, frameworks, or other objects that have been put together from different parts.

2. Project Description: The Ft Harrison Seismic Upgrade and Specialty Care Improvements project requires a multi-phase effort to correct seismic deficiencies, space issues, and infrastructure deficiencies at the Ft Harrison VA Medical Center, located at Ft Harrison, Montana. Phase I is to provide Design-Build construction of an approximately 15,700 GSF Central Utility Plant (CUP) with distribution utilities corridors and an approximately 660-space, three-story parking garage located to the north of the main hospital.

The new CUP will serve the heating/hot water and cooling needs of the main hospital, the new addition (to be constructed later), and the ancillary buildings, totaling approximately 400,000 Building Gross Square Footage (BGSF). The intent is to build a mission-critical facility capable of providing enough capacity to replace the existing heating and hot water systems and to replace the existing de-centralized chilled water systems with enough space for additional boilers and chillers to meet the needs of the new hospital addition, other ancillary buildings under construction, and provide for a 20% future expansion. The new underground utilities corridors will run from the new CUP to the main hospital (Bldg 154), the Community Living Center (CLC - Bldg 169), and the administration building (Bldg 141), with optional utilities corridor to the new OP Mental Health Facility (Bldg 173), and to the vicinity of the proposed new addition, south of the main hospital. The parking structure will accommodate additional patients and staff, replace parking spaces to be removed during construction, and replace campus parking spaces that must be moved to meet the requirements of the VA Physical Security Design Manual.

(ii) Two GCs may require simultaneous access to the same space in the construction area for different purposes, i.e., truck access for concrete placement. Coordinating that effort with two contractors would fall on the USACE RO. Having a single GC would transfer that risk and that effort to the GC from the government.

(iii) Two GCs may require deliveries at staggered intervals, causing traffic problems for patients and staff. Coordinating those deliveries would fall on the USACE RO. Having a single GC would transfer that risk and effort to the GC, meaning that deliveries and notifications to the Hospital would be better coordinated.

(3) Construction Administration. Two separate GCs would increase contract administration efforts for the USACE RO. In addition to the abovementioned items, two GCs operating simultaneously would have several other administrative effects.

(i) Two contracts will require separate QA efforts for each contract, increasing project staffing.

(ii) Two contracts will require separate efforts for schedule and invoice tracking, increasing project staffing,

(iii) Based on the abovementioned risks concerning design and construction, two contracts will likely lead to additional (unplanned) contract modifications, increasing the USACE RO's staffing requirements.

(iv) Two contracts would require two USACE RO offices. A single contract mitigates this risk.

g. Funding: The funding for this project will come from programmatic funding levels for the overall major program. The VA provided funding for this acquisition award through a modification of the existing 7600B to provide Construction Activity (CA) funding for the base award and contract contingency, plus Agency Managed (AM) funds for USACE supervision and administration labor. Additional funding for awarding the Parking Garage Option will be provided in FY25.

h. Extent of Consolidation: The proposed contract action will consolidate contract requirements for two discrete sites at the VA Medical Center on the Ft. Harrison VAMC campus in Ft. Harrison, Montana. Consolidation into a single contract will create business efficiencies for the Central Utility Plant and Parking Garage construction effort. Consolidation will mitigate the risks associated with multiple GCs working in the same vicinity, i.e., contractor inefficiencies accessing and working at the two sites, redundant management oversight between the separate contractors, greater risk of contractor disputes, and an extended project schedule.

4. Applicable Statutes/Regulations: 15 U.S.C. §657q, FAR 7.107-2, and AFARS 5107.170-2, Consolidation of Contract Requirements.

5. Results of Market Research: NWO conducted market research to confirm that sufficient qualified contractors are available to compete for this construction project and to establish general categories of contractors that could meet bonding requirements and minimal technical requirements.

a. Sources Sought: A Sources Sought notice was issued on 12 Dec 2022 and closed on 10 Feb 2023. The Government received eleven (11) responses; three (3) were Other Than Small Businesses (OTSBs), and eight (8) were small businesses. Only the OTSBs demonstrated relevant experience with similarly scoped/sized projects for the CUP, PG, or both simultaneously. The

c. DSBS Search: The Contract Specialist conducted a search of the DSBS database on 10 February 2023 using the following search parameters: the firm is small in any of these NAICS codes: 236220; the profile location is the United States, the profile's status is Active; Keywords is Utilities and Parking, and the firm has construction bonding (per contract) of at least

. This criterion revealed eight small businesses; however, none were in the Montana area and were located on either the East or West Coast.

d. Market Research Analysis: The technical team reviewed the responses to the Sources Sought Notice (SSN), answers to questions, and responses during the Industry Day briefing and provided their technical analysis of the capabilities and capacities of each of the 11 respondents to the SSN and a brief analysis of the DSBS search results to the Contracting Officer. While there are some small businesses (SBs) who submitted responses to the sources sought, it appears that only one of them has the potential to provide D-B services for the CUP and PG construction effort. It appears unlikely that there are two or more responsible SBs who are interested and capable of executing the project at a fair and reasonable price that will provide the best value to the government.

Therefore, the technical team recommended using an unrestricted RFP for this acquisition. (See Attachment 2, Market Research Report)

e. Impacts of Consolidation on Small Business: The Market Research did not demonstrate the interest of two or more responsible SB contractors capable of executing the CUP or PG as separate D-B efforts. This lack of SB interest/capability would lead to a separate unrestricted DB contract for each component, not a set-aside. The Contracting Officer coordinated with the NWO Deputy for Small Business and the SBA (using DD Form 2579), receiving SBA approval on 28 March 2023. (See Attachment 3, DD Form 2579) In accordance with FAR 7.107-2(a)(3) and 15 USC § 657q(c)(1)(E), steps that have been taken to ensure small business concerns are included in the Acquisition Strategy by setting small business subcontracting goals.

In accordance with FAR 7.107-2(a)(4) and 15 USC § 657q(c)(1)(D), the following procedures will be put into place:

(i) The Government will require that all firms responding to the solicitation include a Small Business Participation Commitment Document with their proposal. This document shall demonstrate how the firm intends to utilize various members of the Small Business Community

(SBC).

(ii) Small Business firms responding to the solicitation will receive the highest rating for this technical factor.

(iii) If selected, an OTSB firm must submit and obtain approval of its Small Business Subcontracting Plan before contract award.

(iv) The OTSB firm will be asked to demonstrate its commitment to using Small Business (SB), Small Disadvantaged Business (SDB), Woman-owned Small Business (WOSB), Hub Zone Small Business (HZSB), and Service-Disabled Veteran Owned Small Business (SDVOSB) in the execution of the resulting contract.

(v) The SSA and the SSEB will evaluate past performance, indicating the extent to which the offeror attained applicable previous proposed goals for small business participation and the extent of planned participation in the performance of the resultant contract.

consolidation is critical to the agencies’ mission success. Market Research indicates that it is not likely that two or more small business concerns would propose and be capable of fulfilling a consolidated or unconsolidated requirement for this project. Although market research determines this project is not suitable for a small business set-aside, small business concerns will have the maximum practicable opportunity to participate as subcontractors in accordance with FAR Subpart

19.2. Further details on the commitment to maximizing small business participation, to include the emphasis on maximizing small business subcontractor participation is outlined on page 6, section 3.e: Impacts of Consolidation on Small Business, and will be emphasized further in the Acquisition Strategy and Source Selection.

7. Bundling Analysis:

a. Definition. FAR 2.101 defines bundling as a subset of consolidation that combines two or more requirements for supplies or services, previously provided or performed under separate smaller contracts, into a solicitation for a single contract, a multiple-award contract, or a task or delivery order that is likely to be unsuitable for award to a small business concern (even if it is suitable for award to a small business with a Small Business Teaming Arrangement) due to:

(1) The diversity, size, or specialized nature of the elements of the performance specified;

(2) The aggregate dollar value of the anticipated award;

(3) The geographical dispersion of the contract performance sites; or

(4) 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 because the scope of this procurement is of a magnitude that small business concerns are not expected to propose or successfully perform, whether consolidated or performed separately.

Additionally, this requirement does not bundle requirements that were previously performed by small business concerns. The project’s technical complexity, magnitude, and logistical challenges create a project diversity, and specialized nature that make it unsuitable to set aside for small business concerns whether consolidated or separated into two requirements.

The Competition in Contracting Act (CICA) Bundling Principle.

a. Definition: This principle, as developed by 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 bundling is necessary to meet the agency need." (Vantex Serv., Inc., B-290415, Aug 8, 2002, and Outdoor Venture Corp., B-299675; B-299676, Jul 19, 2007.)

b. Applicability of CICA Bundling Principle. The CICA bundling principle is justified in that it is necessary to meet the needs of the Government. USACE finds consolidation of this effort essential because it provides the most cost-effective and efficient way to support USACE and the Veterans Administration. The contractor selected for this effort must be able to perform design and construction activities in order to ensure the mission is not hindered. Therefore, competition is restricted to contractors with the necessary capabilities to fulfill these requirements. By consolidating contract requirements, this contract only consolidates to the extent required to meet the government's minimum needs. The requirements being consolidated are not more than necessary, thereby not consolidating unnecessarily.

8. Considerations, facts, and reasoning supporting the determination: All facts, considerations, and rationale have been covered previously in the findings. The Contracting Officer coordinated with the NWO Deputy for Small Business and the SBA (using DD Form 2579), receiving SBA approval on 28 March 2023. All concur that consolidation of this requirement is necessary. (See Attachment 3, DD Form 2579)

9. Summary: As Alternative 3 provides a contract that provides urgent design and construction services for both the Central Utility Plant and the Parking Garage, any delays would result in mission degradation and would jeopardize support to our nation's veterans. This contract will provide necessary services to the Hospital at Fort Harrison. The CUP & PG must be constructed simultaneously to limit hospital services disruption, an essential constraint on project construction activities. The Fort Harrison VA Medical Center is located within a moderate high seismic zone, and previous assessment of the facility determined that numerous buildings are seismically deficient. Phase I of the project is to construct a Central Utility Plant and Parking Garage with utilities and access roads, providing critical infrastructure in support of Phase II, the Acute Care Building & Seismic Upgrades. Without this project, a significant seismic event would damage the structures and potentially harm patients and staff. As stated previously in this document, this contract will provide USACE and VA with the needed contract capabilities to provide mission-essential design and construction services to ensure the success of the VA mission.

USACE will ensure the contractor selected for this project has the technical expertise to provide the highest-quality design and construction. In addition, NWO has technical personnel capable of reviewing the designs submitted and ensuring the construction oversight personnel are well qualified to oversee the project.

Based on the facts and circumstances of the Central Utility Plant and the Parking Garage project, the recommended consolidation of contracts provides the most efficiency and best path forward to support the program. The consolidated contract discussed within this document is the most cost and time-efficient compared to the alternatives. It has been determined that the proposed consolidation of requirements awarded under the Central Utility Plant and the Parking Garage contract provides the right strategy to support the program. Qualitative and quantifiable benefits are documented for this procurement, but quantifiable benefits do not exceed the 5% threshold set forth in FAR 7.107-2(d). However, IAW FAR 7.107-2(e)(1), the expected benefits of the consolidated approach are critical to the agency’s mission success and the procurement strategy.

They are necessary and justified since the benefits of this plan substantially exceed the benefits of any alternative contracting approaches, as described above. This alternative provides approximately 31% in time savings. None of the other alternatives would allow the Government to produce contracts at the desired quality and timeliness needed for mission execution.

USACE will pursue utilizing small business concerns to the maximum practicable extent in accordance with FAR Subpart 19.2. Although this acquisition is not suitable for a small business set-aside whether consolidated, or separated, USACE will place a strong emphasis on maximizing small business participation throughout the acquisition throughout pre-award, contract award, and post-award phases of this acquisition.

Attachments:

1. Market Research Addendum

2. Market Research Report

3. DD For 2579

4. NWO PM Cost Estimation Spreadsheet

5. NWO PALT Master Spreadsheet

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