UNITED STATES GENERAL SERVICES ADMINISTRATION REGION 1 Public Building Service, Acquisition Management Division (1PQ) JUSTIFICATION AND AUTHORIZATION FOR INCREASE OF IDIQ MAXIMUM CONTRACT VALUE Background On January 25th, 2013, the General Services Administration Region 1 Acquisition Division issued Solicitation Number GS-01P-13-BZ-D-0003, which requested proposals for the provision of Construction Services for the General Services Administration, Public Buildings Service, Region 1, Boston Service Center. The services required would provide for the award of individual Delivery Orders for the execution of various construction projects in the Boston Service Center area of responsibility, namely, all federally-owned and leased buildings in the Metropolitan Boston, Massachusetts area. The successful awardees would provide all labor, materials, equipment, transportation, supervision, disposal and all other costs necessary to fulfill the requirements of each individual Delivery Order awarded to it. The type of work envisioned under the resulting contract included, but was not limited to, general construction, demolition (including asbestos abatement), carpentry/finishing, electrical, general functions, plumbing and pipefitting, HVAC and mechanical, roofing, fire suppression systems, etc. The resulting contract periods will be one (1) base year and four (4) option years. The Government expected to make up to five (5) awards under this single solicitation, and advised potential Offerors that the total combined amount of all the contracts over the potential 5-year term would not exceed $30,000,000.00. Individual Delivery were estimated to range from the simplified acquisition threshold to approximately $2,790,000.00. Individual Delivery Orders would be competed amongst all successful awardees, unless an exception to fair opportunity existed. The applicable NAICS code was 236220, with a small business size standard of $33.5 million. The evaluation criteria consisted of the following: Price; Past Performance; Similar Experience; Technical Plan; and Socio-Economic Status. There was a seed (representative) project contained within the solicitation for which all prospective Offerors were required to submit a proposal. The price submitted for this project was one of the bases for evaluation by the Government of the evaluation factor "price." The Solicitation was conducted under the total small business set-aside procedures of FAR 19.5. On July 8th, 2013, the General Services Administration Region 1 Acquisition Division awarded 5 Indefinite Delivery / Indefinite Quantity contracts as a result of Solicitation GS-01P-13-BZ-D-0003: - Contract GS-01P-13-BZ-D-0003, with CCB, Inc., of Westbrook, Maine; - Contract GS-01P-13-BZ-D-0012, CTS Inc., of Danvers, Massachusetts; - Contract GS-01P-13-BZ-D-0013, with Cornerstone Construction Services, LLC, of Reading, Massachusetts; - Contract GS-01P-13-BZ-D-0014, with Maron Construction Co, Inc., of Providence, Rhode Island; - Contract GS-01P-13-BZ-D-0015, with Watermark Environmental, Inc., of Lowell, Massachusetts These contracts were awarded for a 1-year base period with four 1-year options. The entire potential term of the contracts was July 9th, 2013 through July 8th 2018 (with a potential extension to January 8th, 2019). Section I.C.1 of the contract(s) state(s): "Maximum Contract Value: The total amount of all Delivery Orders issued under the individual base contracts combined will not exceed $30,000,000.00 over the potential 5-year term of the Contract. As more Orders are issued under one Contract, the value of Orders which can be issued under the remaining Contracts drops by an equal amount. Individual Delivery Orders will range from $100,000.00 to $2,790,000.00. However, in accordance with FAR 52.216-19 ("Order Limitations"), the successful awardees will not be required (but may elect) to honor any Requests for Proposal below or above the stated limits." Findings Presently, the total value of all Orders against the referenced contracts is approaching the Maximum Contract Value (MCV) of $30 million, yet 25% of contract time remains, during which time the Government will still require ongoing construction services for new projects. All five Contractors have been performing satisfactorily, and all Options to date have been elected. Determination Based on past procurement history, vendor interest, and competition (and other regulatory) requirements, a new contract vehicle would not be able to be executed in time to satisfy the current and ongoing need for construction services, nor would such services be available on an expedited basis for emergency requirements. However, raising the MCV by $10 million (for a total of $40 million) would allow the Region to receive uninterrupted construction services, preserve competition, and further GSA's socioeconomic goals (since four of the five small business awardees separately represent an additional socioeconomic category: Woman-Owned Business; Service-Disabled Veteran-Owned Small Business; HUBZone; Small Disadvantaged Business concern). After review of all salient facts related to this issue, it is determined that with regard to this change: 1. The increase in MCV does not represent a material difference between the modified contract and the contract as originally awarded; a. Per Section IDIQ I.C.2 ("Minimum Guarantee") contract Awardees are only guaranteed $1,000.00 per individual contract, and all Awardees have exceeded the minimum guarantee. The contract does not contain any limitation on how many Delivery Orders (either consecutively or in total) can be awarded to each Awardee, nor any dollar limits (other than the MCV) on awards to any individual Awardee. b. Additionally, while Section I.C.1 states that Awardees are not required to honor any Requests for Proposal below $150,000 or above $2.79 million, they are permitted to. 2. The type of work is not changed. The scope is still for construction services up to a between $150,000.00 and $2,790,000.00, with the Awardees retaining the ability to respond to projects outside this range. 3. The performance period is not changed. The total maximum term remains 5 years and (potentially) 6 months; 4. Costs are unaffected. The only costs directly tied to the IDIQ contracts are contract year ceiling rates for General Conditions, Project Management, Superintendence, Overhead, Profit, Bond, and Insurance, none of which would be affected by raising the capacity. 5. The original contract did not specifically address changes to the maximum contract value but that figure was a best estimate of usage at the time of award. While the eventual maximum contract value was an educated estimate, the term of the contract (5 years) was definitively known. With the 5-year-term being fixed, it would have been reasonably anticipated that the MCV might have to be adjusted to accommodate the term. 6. It is extremely unlikely that the proposed Modification would have changed the original basis of award or impacted the competition for such. a. Since all five Awardees compete for Delivery Orders, a substantial amount of uncertainty in terms of individual capacity is built into the IDIQ Delivery Order competition process. Historically (though this is not a guarantor of future awards or IDIQ conditions or opportunities), an individual Contractor's percentage of the total award share over the life of the contract has varied from 9% - 36% (or approximately $2 million - $10 million, a difference of $8 million). This uncertainty is reflective of the business risk in the construction industry at large. b. Furthermore, the potential for Modifications (which are also reflective of risk in the construction industry at large) based on unforeseen conditions or changed tenant requirements increases the variability of potential awards. Historically (ibid, no guarantor), Modifications to an individual Contractor's percentage of awards over the life of the Contract has varied from 1% - 14% (or approximately $30,000 - $1.4 million, a difference of $1.4 million). c. Therefore, when combining the competition risk and the performance risk, each Awardee faced a potential variation in award share of $9.4 million, nearly the amount of the proposed MCV increase of $10 million. As referenced, the original contract contained no mechanical limits on awards other than the MCV, and the proposed Modification would not add any further restrictions, nor change the mechanism of the MCV. d. Given that $8 million (or 29% of the total awards) separates the most- and least-successful Awardees, a reasonable person would be hard-pressed to argue that a $10 million (or 30% of the MCV) raise to the MCV would have affected their original business decision whether or not to submit a proposal. e. At the time of the Solicitation, potential Offerors had no way of knowing with any certainty who their competition would be (since this business decision would be made prior to award) or how much competition they would face at any given time during the performance of the Contract (since the Contract didn't constrain how much any one Awardee could be awarded in any given contract year or any other contract lifetime cap, other than the MCV). f. The volatility of the construction industry (even with the limited competition of a small pool of awardees) would make a business decision that hinged upon such a granular numerical level simply unreliable in terms of managing risk. g. Accordingly, based on this data, one could reasonably argue that changing the contract ceiling by this magnitude would have no substantial effect upon the extent and nature of the original competition, since the diversity of the potential work requirements, the estimating process, and the impact of competition on the capacity already represents so much risk to an individual Offeror that changing this one variable has very little impact (if any) on the aggregate level of risk, or the potential capacity needed. Based on the above findings, it is determined that an increase of $10 million to the maximum contract value from $30 million to $40 million is in the best interest of the Government and does not materially change or alter the terms of the original award.
