19-08-18_Dev_Procurement_JA_Redacted_FINAL_.pdf

Justification and Approval (J&A) for Other Than Full and Open Competition

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I. Contracting Activity.

Department of the Air Force Air Force Materiel Command Air Force Life Cycle Management Center F-15 Division (AFLCMC/WWQ) Bldg 553, Area B 2725 C Street Wright-Patterson AFB, OH 45433-7424

This is a Class J&A for Other than Full and Open Competition.

II. Nature and/or description of the action being processed.

This Class Justification and Approval (J&A) is for the award of multiple contracts to The Boeing Company (hereafter referred to as Boeing) for the acquisition of the F-15EX weapons system. The F-15EX program will begin using the National Defense Authorization Act (NDAA) Section 804 Rapid Fielding authorities with an Acquisition Category (ACAT) IB-equivalent designation, and later transition to traditional Department of Defense Instruction (DoDI) 5000.02 authorities. The objective of this program is to rapidly develop, integrate, and field the F-15EX weapon system to refresh/replace aging F-15C/D aircraft. A decision to also refresh F-15E aircraft has not yet been made, but remains an option. The F-15 fleet is in dire need of a refresh, in particular the F-15C/D fleet, which without an expensive service life extension, will run out of airframe flying hours in The F-15EX will refresh the existing fleet to provide a seamless transition for F-15 operations and maintenance squadrons to improve readiness. It will also allow the United States Air Force (USAF) to use existing air combat infrastructure to maintain fighter aircraft capacity. Maintaining capacity and increasing capability allows the USAF to meet the National Defense Strategy by protecting the homeland and preserving peace through strength. Refreshing the existing F-15 fleet (versus transitioning to a new advanced fighter aircraft) with F-15EX will dramatically reduce disruption to the logistics and sustainment infrastructure, as well as operational training and Mission Ready status of current F-15 units, by taking advantage of inherent familiarity with the existing aircraft, which will allow focus on the new and improved systems. The F-15EX program leverages more than $4B of foreign partner investments in nonrecurring costs and capability enhancements. The F-15EX configuration is largely based on the F-15QA Qatar Foreign Military Sales (FMS) configuration with added USAF capabilities. F-15EX is designed to be integrated with all current USAF upgrade programs of record for the F-15 by leveraging existing development work and United States Government (USG) investment, thus minimizing the need for additional development. The initial contract for aircraft, associated equipment, nonrecurring engineering, and support is expected to be an Indefinite Delivery contract, most likely an Indefinite Delivery, Indefinite Quantity (ID/IQ) type contract with a five-year ordering period, and a ten-year Period of Performance (PoP). The contract will include an option to extend the ordering period for another five years (for a total ordering period of ten years). A separate contract may be awarded for training systems. The total estimated ceiling amount of $22.89B covers the entire ten-year ordering period (base plus option) for the ID/IQ contract and separate training systems contract(s). The planned contracts will utilize multiple contract-type arrangements, as approved during Acquisition Strategy briefings, affording maximum flexibility to tailor contract type to cost, technical, and schedule risks, as appropriate for the specific effort to be performed.

III. Description of supplies/services required to meet agency needs.

The F-15 System Program Office (SPO) intends to award contract(s) for the F-15EX weapon system, including, but not limited to, nonrecurring development, integration, and test efforts, Low Rate Initial Production (LRIP) and Full Rate Production (FRP), training systems, management, systems engineering, technical support, initial spares, support equipment, training for operators and maintainers, technical orders for operations and maintenance, Interim Contractor Support (ICS) of F-15EX-unique components, organic depot standup, technical data, Diminishing Manufacturing Sources (DMS) resolution, Engineering Change Proposals (ECPs), and production cut-ins. Throughout these efforts, Boeing will substantiate technical and integration risks, validate Critical Technology Elements (CTEs), Technology Readiness Levels (TRLs), and Manufacturing Readiness Levels (MRLs) through design and manufacturing readiness reviews. Development, integration, and testing will initially focus on the integration of the USAF Suite 9.1 Operational Flight Program (OFP) and Eagle Passive/Active Warning and Survivability System (EPAWSS) into the F-15QA baseline, although follow-on upgrades to the OFP are also expected during the life of this contract. LRIP will

March 2018 Page 4 of 8 consist of establishing an initial product baseline, production of the aircraft required for Initial Operational Capability (IOC), and activities required to prepare for the orderly increase in production rate. The Rapid Fielding Requirements Document (RFRD) defines the IOC quantity as eight aircraft and Full Operational Capability (FOC) quantity as 44 aircraft.

The FRP phase of the program will consist of delivering the remaining F-15EX aircraft as well as the transition from ICS to organic sustainment. The RFRD requires three years of ICS in the base contract with two one-year options, for a total of five years. Development and integration efforts will be funded with 3600 appropriations, while both the LRIP and FRP efforts will be funded with 3010 appropriations.

The requested $22.89B J&A ceiling is based on a March 2019 F-15 SPO Rough Order of Magnitude (ROM) estimate for the maximum ID/IQ quantity of 200 aircraft, excluding the engines which will be purchased separately. The ROM projects costs to be The development, integration, production, and deployment phases of the F-15EX program will take several years to complete, thus requiring the obligation and expenditure of funds over multiple fiscal years. The total PoP for this program is expected to be from Fiscal Year (FY) 20-FY31, assuming all 200 aircraft are purchased.

Procurement quantities will be established at a Most Probably Quantity (MPQ) of 144 aircraft, with ID/IQ pricing after the first year to be established during negotiations, in order to accommodate such quantities as may be authorized and appropriated by Congress. Aircraft and associated support will be purchased in FY20 as a part of the initial contract; the out-years will be included in an ID/IQ Pricing Matrix attached to the basic contract. The planned ID/IQ aircraft production quantities are shown in the table below. The J&A ceiling is based on the maximum quantity of 200 aircraft. Although the table below depicts eight years of ordering, this J&A allows a maximum of 10 years of ordering.

There is the possibility that the quantities per year could vary and extend to 10 years of ordering, but the maximum quantity of 200 is the ceiling regardless.

FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 Total

MPQ 8 18 18 18 18 18 24 22 144

MAX 8 24 24 24 30 30 30 30 200

The following table depicts a preliminary estimate of Research, Development, Test, and Evaluation (RDT&E) and Production costs across 10 years of ordering based on the aforementioned MPQ and maximum quantities.

FY20 FY21 FY22 FY23 FY24 FY25

Quantity 8 18 18 18 18 18

FY26 FY27 FY28 FY29 Total Quantity 24 22 0 0 144

FY20 FY21 FY22 FY23 FY24 FY25

Quantity 8 24 24 24 30 30

FY26 FY27 FY28 FY29 Total Quantity 30 30 0 0 200

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Note: This is a preliminary estimate and is intended to serve as placeholder pending more accurate information. In addition, need to update to include trainers.

IV. Statutory authority permitting other than full and open competition.

All contracting actions covered by this Class J&A fall within the authority found of 10 U.S.C. 2304(c)(1), as implemented by Federal Acquisition Regulation (FAR) 6.302-1 Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

V. Demonstration that the contractor's unique qualifications or nature of the acquisition requires the use of the authority cited above (applicability of authority).

Boeing has been the sole designer, developer, and manufacturer of the F-15 aircraft since 1969. Boeing is the only contractor capable of providing the supplies and services described in Section III above without the USAF, Air Combat Command, and Air National Guard experiencing unacceptable schedule delays and cost prohibitive investment in fulfilling the RFRD requirements. Only Boeing possesses the unique and highly specialized capabilities and qualifications necessary to successfully develop, integrate, test, and manufacture the F-15EX aircraft within the required delivery schedule. Boeing is the only contractor with the technical expertise, design documentation, facilities, production tooling, and detailed knowledge of the F-15 weapon system operations and maintenance procedures to meet the RFRD requirement. Boeing has an established supplier base and proven manufacturing processes to produce the F-15EX weapon system. In addition, Boeing’s configuration management, supplier management, and parts obsolescence management of the multiple existing F-15 configurations is critical to the successful introduction of F-15EX aircraft into the fleet. Loss of Boeing’s management of these interdependencies introduces operational and safety risks due to the increased likelihood of a critical systems conflict.

Award to any other source would result in unacceptable program delays. If the F-15 SPO was required to develop an alternative source, the Government would experience an unacceptable delay estimated at a minimum of four to eight years. This delay is based on the amount of time required to obtain restricted and unrestricted data from Boeing and its subcontractors (~1 to 2 years), conduct a source selection (~1 to 2 years), and qualify the new sources’ facilities, personnel, and processes comparable to Boeing’s existing infrastructure (~2 to 4 years), before the selected source could achieve Boeing’s capability and capacity to produce F-15 aircraft. Furthermore, transferring the classified requirements of the F-15EX program to another contractor would likely cause significant delays related to facility accreditations and personnel clearances.

The schedule impact if there is no refresh is exacerbated by the fact that the average age of the F-15C/D fleet is 35 years. The fleet’s structural integrity is rapidly degrading due to the high-g flight profile used during training and operations. One Wing Commander imposed a g restriction due to a loss of confidence in the safety of the fleet. The condemnation rate of key structural components like longerons and wings is higher than originally projected by mechanical engineers. Readiness rates are consistently below standards due to time-consuming structural inspections and repairs. It takes approximately 150 days to replace a set of longerons, significantly degrading aircraft availability. In 2007, the cockpit section of an F-15C separated from the aft section due to an in-flight longeron failure. In summary, a 4 to 8 year delay to obtain data and accomplish a competition would only exacerbate the substantial safety risks for F-15 operators.

In addition, award to any other source would result in substantial duplication of costs not expected to be recovered through competition. If the Government awarded to another source to produce aircraft through competition, the Government would incur substantial duplicative costs associated with the re-qualification and ground and flight testing of another aircraft, as well as set-up of the production line. If a new prime contractor for aircraft was unable or unwilling to use the same major subcontractors for critical subcontractor components, such as Advance Display Core Processor (ADCP) II and Eagle Passive/Active Warning and Survivability System (EPAWSS), additional duplication for testing and production line set-up for those major systems would also be incurred. The F-15 SPO estimates the duplicate cost to be upwards of $4.94B based on $3.19B in negotiated/proposed prices for the F-15SA and F-15QA nonrecurring engineering and flight test programs, and $1.75B in negotiated prices for the Radar Modernization Program, ADCP II, and EPAWSS Technology Maturation and Risk Reduction (TMRR) and Engineering and Manufacturing

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Development (EMD) programs.

Furthermore, selection of a new source would require Government acquisition of a data package with sufficient rights to enable a competition. The Government is not currently in possession of such a data package, but the F-15 SPO did ask Boeing in April 2016 for a cost estimate to obtain an unlimited data rights package. In its response, Boeing declined to provide a cost estimate to support the competition of an earlier modernization ID/IQ contract (Eagle TALON II).

Boeing maintained that given the breadth of known and unknown development, sustainment, and special program effort activity during the Eagle TALON II PoP, providing unlimited data rights is not feasible as its suppliers have consistently no-bid, citing DFARS 227.7103-1(c). DFARS 227.2013-1(c) states that offerors shall not be required, either as a condition of being responsive to a solicitation or as a condition for award, to sell or otherwise relinquish to the Government any rights in technical data related to items, components, or processes developed at private expense.

Accordingly, Boeing is the only firm capable of providing the supplies and services described in Section III above without the U.S. Air Force experiencing substantial duplication of costs, which could not be expected to be recovered through competition, and unacceptable delays in fulfilling its requirements.

Additionally, no other aircraft will satisfy the government's requirements. Through extensive operational analysis and wargaming, the USAF has determined that a mix of 4th generation capacity and 5th generation capability is necessary in balancing near and mid-term readiness with future needs. The USAF has further concluded that performing a refresh of the existing F-15C/D fleet, is the only way to improve readiness and to maintain the USAF fighter aircraft capacity.

The required F-15C/D fleet refresh, to be feasible, must leverage aircraft that are currently in production. The USAF examined whether any other airframe currently in production would meet agency requirements and achieve the necessary mix of 4th generation capacity and 5th generation capability. After consideration of options, the USAF concluded the F-15EX is the only airframe currently in production that can reasonably meet agency needs.

Utilizing a different airframe that is currently in production would require a cost-prohibitive and time-consuming effort to replace the existing F-15 air combat infrastructure. Indeed, the USAF estimates that refreshing the F-15C/D fleet with F-15EXs will save the USAF $3B over the FYDP compared to replacing that fleet with F-35s by avoiding significant transition costs required for a new aircraft (i.e. MILCON, aircraft unique facilities, operator and maintenance transition costs, etc.). Moreover, refreshing the existing F-15 fleet with F-15EX (versus transitioning to a different fighter aircraft) will dramatically reduce disruption to the maintenance, logistics and sustainment infrastructure, as well as operational training and mission ready status of current F-15 units, by taking advantage of inherent commonality with the existing F-15 aircraft. The USAF estimates that it will take six months or less to transition from the F-15C/D to the F-15EX given the significant commonality between the F-15C/D and F-15EX aircraft components and ground support equipment, while the transition time from F-15s to the F-35 (or any other airframe) will take approximately 18 months for an Active Duty squadron and 36 months for an Air National Guard squadron. Accordingly, from both an economic and readiness perspective, no other aircraft will satisfy the USAF requirement to refresh the F-15C/D fleet.

VI. Description of efforts made to ensure that offers are solicited from as many potential sources as practicable.

Due to the specificity of the F-15EX RFRD, it was determined that posting a sources sought waiver was not an efficient use of acquisition planning resources. DFARS PGI 206.302-1(d) states that “When utilizing the authority at FAR 6.302-1, the Contracting Officer shall post a request for information or a sources sought notice, and shall include the results of this inquiry in the justification required by FAR 6.303. This requirement to post may be waived by the Head of the Contracting Activity, or designee. The waiver authority may not be delegated lower than a general or flag officer or a member of the Senior Executive Service.”

Air Force Federal Acquisition Regulation Supplement (AFFARS) Mandatory Procedure (MP) 5301.601(a)(i) further delegates this responsibility to the Senior Contracting Official (SCO) or the Senior Center Contracting Official (SCCO) only if the SCO or SCCO is a General Officer or Senior Executive Service civilian.

In accordance with DFARS PGI 206.302-1(d) and AFFARS MP 5301.601(a)(i), the requirement for posting a Request for

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Information/Sources Sought for the F-15EX acquisition was determined not to be in the best interest of the United States Government and approval to waive the requirement was approved by the AFLCMC SCCO on 4 March 2019.

VII. Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The F-15 SPO Contracting Officer has determined that the Government can obtain and negotiate fair and reasonable prices for the F-15EX weapon system (as defined in Section III above) acquired from Boeing on a sole source basis.

Thorough technical, price, and/or cost analyses will be performed as necessary by the F-15 SPO (with the assistance of the AFLCMC Pricing Division), the Defense Contract Audit Agency (DCAA), and the Defense Contract Management Agency (DCMA). The F-15EX program may utilize the DCMA Integrated Cost Analysis Team (ICAT) team for technical evaluation, pricing, evaluation, and negotiation support, if warranted. Boeing will be required to furnish certified cost or pricing data for proposals meeting the threshold for submission of such data (FAR 15.403-4), including subcontractors in which no exception to certified cost or pricing data applies. Assist audits, rate reviews, and other evaluations of major subcontracted efforts will be accomplished, as necessary, by the cognizant DCAA and DCMA organizations. DCAA and DCMA analyses will be combined with F-15 SPO analyses and used in the substantiation of fair and reasonable prices. For those subcontracts not meeting the thresholds for submission of certified cost or pricing data, data other than cost or pricing data will be obtained from the contractor in sufficient detail to support evaluation by means of cost analysis. The Contracting Officer will verify that the anticipated cost to the Government is fair and reasonable based on the enterprise assessment of this data.

VIII. Description of the market research conducted and the results, or a statement of the reasons market research was not conducted.

Market research consists of definitive Government knowledge of market capabilities in specific regard to the F-15. The F-15EX RFRD was approved by the CSAF on 1 February 2019. The RFRD requires F-15EX aircraft to “initially refresh aging F-15C/D aircraft; a decision for refresh of F-15E aircraft has not been made but remains an option.” The Air Force is planning to leverage the existing F-15 production line and operational/sustainment infrastructure to minimize costs.

As previously described, Boeing is the original equipment manufacturer (OEM) of the F-15 aircraft. As the OEM and sole designer, developer, integrator, and producer of the F-15 aircraft, Boeing is the only contractor with an established supplier base, production line, management, and engineering and manufacturing processes necessary to produce the F-15EX. Although this will be the first time that F-15EX aircraft have been produced, Boeing has produced nearly 84 F-15SA aircraft (production ends Sep 2019) and currently has orders for 48 F-15QA aircraft (first aircraft will be delivered Oct 2019), which serve as the primary baseline for the F-15EX aircraft. The F-15 SPO estimates 90-95% commonality between the F-15QA and F-15EX aircraft.

Extensive market research for the F-15EX acquisition would not result in the identification of viable alternative sources capable of meeting the Government’s needs within the required time-frame without substantial duplication of costs to procure these aircraft and associated support and training equipment through any other source.

IX. Any other facts supporting the use of Other Than Full and Open Competition.

None.

X. List of any sources that expressed, in writing, an interest in the acquisition.

See Section VI above.

XI. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before making subsequent acquisitions for the supplies or services required.

The F-15 SPO continually searches for opportunities to compete or break out components from the F-15 prime contractor. A senior F-15 SPO management team will review all future efforts being considered for modifications to the

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F-15EX. Individual program managers will be required to present their market research results during the senior management review prior to requesting a proposal. In all cases, the Contracting Officer will review the J&A and determine if sole-source award of the proposed effort to Boeing is within the scope of this J&A.

Actions have been taken—and more are planned—for competition at the subcontractor level. The F-15 SPO successfully oversaw Boeing’s recent competitions at the subcontractor level for the EPAWSS and Infrared Search and Track (IRST) programs so that the Government could benefit from the competitive environment. In support of the FY24 Lot order, the F-15 SPO plans to establish direct contractual relationships with key suppliers and provide more of the major subsystems to Boeing as Government-Furnished Equipment (GFE).

In addition, Open Mission Systems (OMS) compliance requirements are planned for the subject F-15EX contract with Boeing. A more modular architecture will enable the Government to integrate new capabilities into the F-15EX with less Boeing support. The Government also plans to pursue a Public-Private Partnership (PPP) between the Avionics Integration Support Facility (AISF) at Robins AFB and Boeing, also as part of the subject contract. The intent of this PPP is to increase the organic management capability for the OFP.

XII. Certification by the Contracting Officer.

As evidenced by her signature above, I have determined this document to be both accurate and complete to the best of her knowledge and belief (FAR 6.303-2(b)(12)).

XIII. Certification by the technical/requirements personnel.

As evidenced by their signatures, the technical and/or requirements personnel have certified that any supporting data contained herein, which is their responsibility, is both accurate and complete (FAR 6.303-2(c)).