Announcement for the Main Building & F Street Elevator Modernization (Design-Build Construction) solicitation

This determination is issued pursuant to the FDIC Acquisition Procedures and Guidance Manual (APGM) section 2.206, that consolidation is necessary and justified for an acquisition exceeding $2 million.

A. Background

Solicitation number: CORHQ-25-R-0235
Requirement: Main Building & F Street Elevator Modernization (Design-Build Construction)

B. Selection of Acquisition Strategy

The acquisition team performed the following steps and analyses in selecting the recommended acquisition strategy:

1. Market research:

   On October 24, 2024, the Contracting Officer issued a Sources Sought notice directly to ten vendors selected based on their experience performing on projects of similar scope and received six responses. The program office conducted capability assessments of the responses and concluded that all of those that responded appear capable of fulfilling the requirements. Including the original ten companies, the solicitation will be issued to a total of 14 companies (six small) that are known to provide similar services based on information gathered from their websites and USASpending.gov.

2. Alternative contracting approaches that would involve a lesser degree of consolidation:
   1. Independent or Coordinated Separate Contracts: The award of two independent contracts, while feasible, will likely lead to inefficiencies, an increased administrative and oversight burden, and increased costs. Awarding two separate contracts where each prime contractor is required to coordinate with one another would allow FDIC the flexibility to replace or renegotiate with a single contractor at one site if issues arise, rather than there being issues at both sites. The primes may also share subcontractors or resources (e.g. materials, equipment, labor, etc.) based on their own agreements. Additionally, coordinated contracts could use centralized scheduling to align project milestones and prevent conflicts. However, this strategy increases complexity of oversight and coordination (thereby increasing risk), introduces the potential for conflicts between primes being forced to coordinate, and may lead to inefficiencies and increased costs.
   2. Phased Awards: Another strategy is to award contracts in phases, with the option to consolidate or coordinate after initial phases based on performance. This strategy allows for assessment and adjustments based on contractor performance in initial phases. Furthermore,  hased contracts could reduce risk by not committing to consolidation from the start. However, this strategy also increases the complexity and burden of contract management and oversight in comparison to a single contract.

3. Negative impact by the acquisition strategy on contracting with small business concerns:

   A single contract may exceed some small business’ limited resources, working capital, bonding and insurance capacity, experience, and administrative and compliance capabilities. Therefore, a small business may not be able to provide competitive pricing against larger businesses and may struggle to manage the project within the required schedule and budget.

4. Steps taken to include small business concerns in the acquisition strategy:

   The solicitation will be issued to at least six small businesses. Given that FDIC does not conduct small business set-asides, available actions to maximize small business participation are limited. Offerors are encouraged to pursue Joint-Venture, Partnership, or Teaming Arrangements with small business(es). Teaming arrangements enable small firms with limited experience, capital, bonding capacity, etc. to leverage the strength of another firm. The small business partner can benefit from the requirement in a way that will increase their ability to compete on future procurements independently.

C. Benefits of Consolidation

1. Enhanced efficiency

   A single prime contractor managing both sites will allow for centralized management, streamlined communication and coordination of processes, thereby reducing the complexity of overseeing multiple contractors. Consolidating also allows for effective use of resources, including labor, equipment, and materials. This can lead to decreased downtime and increased productivity. Centralized planning and scheduling can optimize workflows, preventing bottlenecks, and ensuring that progress at both sites is coordinated.

2. Reduction in procurement and contract administration costs

   Managing a single contract instead of multiple contracts reduces administrative costs, including pre- and post-award contract administration, compliance monitoring, and reporting. Consolidation reduces the time spent processing and tracking requisitions, conducting market research and soliciting offers, negotiating terms and conditions, and results in fewer invoices being processed.

3. Project cost reduction

   A consolidated contract can leverage economies of scale, allowing the contractor to leverage bulk pricing and reducing the unit price of materials and services. Equipment and personnel can be shared between sites as needed, reducing the need for redundant resources or minimizing idle time due to inadequate resources. Furthermore, consolidation will reduce the cost of redundancy for certain tasks (e.g. design, mobilization, demobilization, submittal processing, etc.) and equipment.

4. Improved accountability and performance

   Having a single contractor responsible for both sites significantly reduces ambiguity in accountability, leading to better performance. A single point of contact improves communication between the contractor and FDIC project management team, facilitating quicker decision-making and problem resolution.

5. Strategic alignment and long-term benefits

   The consolidation supports efficiency, cost-effectiveness, and improved project outcomes as the Government will only need to align strategically with a single contractor. Successful consolidation may serve as a model for future projects of this nature by demonstrating the benefits and feasibility of managing multiple sites with similar work under a single contract. In the long-term, especially as the projects shift to the commissioning, warranty, and maintenance phases, the consolidation presents the opportunity to build a long-term relationship with the prime. Building this foundation leads to better collaboration and more successful outcomes in the post-construction phase (i.e. warranty and maintenance).

D. Cost savings or price reductions:

Some potential cost savings from consolidating versus awarding separate or phased contracts are summarized in the table below. Awarding separate or phased contracts would result in duplicate costs in comparison to a consolidated contract. For example, FDIC would pay for two design packages, two construction project teams, as well as mobilization and demobilization at separate sites. Additionally, Payment and Performance bond premiums, which are reimbursable at cost, are charged at a higher rate on smaller contracts. Therefore, FDIC could anticipate paying two to three times the premium of a single consolidated contract.

Consolidation also reduces costs related to equipment, materials, shipping, freight, and schedule delays. A single contractor can leverage economies of scale and share resources, including labor, across both sites to minimize idle time. In consideration of the factors above, consolidate will potentially result in 19% savings in comparison to separate contracts and 10% in comparison to phased contracts (assuming they are consolidated at the Construction phase).

E. Quality improvements that will save time or enhance performance or efficiency:

On a consolidated contract, a single contractor will implement uniform quality and safety standards across sites, ensuring consistent adherence to regulations and implementation of best practices. Consolidation allows for a centralized quality control program, which enhances monitoring and quicker resolution of conflicts. A unified safety plan can be more effectively managed and enforced, resulting in lower risk of accidents and ensuring a safer workplace for
employees.

F. Reduction in acquisition cycle times:

The anticipated procurement action lead time (PALT) for contracts from $1M to $20M is 180 days. For separate contracts, the PALT for each is 180 days plus increased administrative burden and complexity of having to conduct two technical evaluations and routing multiple awards and supporting documentation through the same reviews. For phased contracts, the PALT is 180 days for the initial awards and increased strain on FDIC resources to coordinate separate contracts or consolidate at a later time. Consolidating would be the most efficient approach as there would only be one acquisition cycle.

G. Better terms and conditions: N/A.

H. Other benefits: N/A

I. The total quantifiable savings as a percentage of the total estimated value of the contract are equivalent to 19% ($1,997,134) in comparison to separate contracts and 10% ($,1021,183) in comparison to phased contracts.

J. Determination

Based on the above facts, I determine that:

1. The necessary steps have been taken to support the need for consolidation;
2. The benefits of the acquisition substantially exceed the benefits that would be derived from each of the alternative contracting approaches identified under paragraph B.2. above, including benefits that are quantifiable in dollar amounts as well as any other specifically identified benefits; and
3. As a result, consolidation for the above referenced requirement is necessary and justified

/Signature is on file/
__________________________________
Nia M. Holloway
Contracting Officer, Acquisition Services Branch

Concur:

/Signature is on file/
___________________________________ 
Anirban Bhattacharyya
Oversight Manager, Corporate Services Branch

Approved:

/Signature is on file/
___________________________________ 
Shanna R. Webbers
Deputy Director, Acquisition Services Branch