2023-01 - Ukraine M776 Chromium Nitride Coat Spindles - Urgency - 1-9-2023 - redacted.pdf

ACC-WVA

2023-01

DEPARTMENT OF THE ARMY

JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND

OPEN COMPETITION

1. Contracting Activity: Army Contracting Command – Watervliet Arsenal (ACC- WVA) is the contracting activity for this action.

2. Description of Action: This action is for a new firm fixed price (FFP) sole source contract with Phygen Coatings, Inc. of Minneapolis, MN, for the purchase of services to Apply Chromium Nitride Coating to the outside of 147 each M776 Spindles, per Drawing 11583062 Rev C, for the 155mm M776 Cannon. Award is projected for the first quarter of FY23. Foreign Military Sales (FMS) Ukraine funds will be used for this procurement.

3. Description of Supplies/Services: This requirement is for services to Apply

Chromium Nitride Coating to the outside of 147 each M776 Spindles, per Drawing 11583062, for the 155mm M776 Cannon, in support of FMS Ukraine and their ongoing military conflict with Russia. The estimated cost of each unit is $2,345.00, for a total estimated cost of $344,715.00.

4. Authority Cited: The statutory authority permitting other than full and open competition is 10 USC 2304(c) (2), as authorized by FAR 6.302-2, “Unusual and Compelling Urgency.”

5. Reason for Authority Cited: As described in FAR 6.302-2, procurement by other than full and open competition is necessary to expedite this requirement. Per the Statement of Urgency from the Watervliet Arsenal (WVA) Program Management Division, WVA has been tasked with supplying the Ukrainian military with 136 full up 155mm M776 Cannon Assemblies, along with the spare and replaceable parts necessary to maintain these assemblies, to aid in their ongoing military conflict with Russia. One of the most critical parts with the longest lead times are the Spindles (11583062 Rev C). The Chromium Nitride PVD Coating is required prior to assembly and this process is far superior to other treatments.

Currently WVA is short materials to meet urgent ongoing wartime demands in support of Ukraine. Due to the increased operational tempo and rates of fire, WVA must expedite production and manpower to produce cannon systems as quickly as possible. To mitigate both short- and long-term risk, contracts for all items, specifically items with the longest lead times like the Spindles, must be urgently placed. If WVA is not provided with a constant flow of these parts, production will cease, impacting critical functions such as Aberdeen Proving Ground test firing operations, logistical operations that will severely impact Ukraine repair, integration, assembly, and repair of the M776 Cannon Assemblies that go into the M777 Howitzer weapon system.

This will affect operations at OCONUS field and repair sites and in turn will jeopardize readiness for the Ukrainian military. Without an almost immediate influx of materials into the production line, WVA will have to pause the delivery of new manufactured Cannon Assemblies. While the monetary impact of any delivery delay is significant, the resulting political and global consequences are incalculable.

The Chromium Nitride PVD treatment process is not available at the Watervliet Arsenal and is a proprietary process to Phygen Coatings Inc. Spindles in the past have been coated with Chrome and Phosphate, however this new Chromium Nitride coating is far superior to the Chrome in regard to corrosion resistance. Phygen Coatings, Inc. has successfully provided this service on multiple contracts, including the most recent, W911PT18P0057, in January of 2018.

Under normal procurement procedures using full and open competition, the standard Procurement Acquisition Lead Time (PALT) for this type of service would be 120 days. It would then take 1-to-2-months per shipment for services to be completed with transit both ways, totaling 180 days for the first shipment. That does not include any pre-award survey that would be required from any contractor who has not produced this item which would add approximately 45 days to the process.

Current military operations in Ukraine and the demand on the United States to support this FMS customer have identified an urgent requirement for M776 Spindles to likely continue at the same level. As stated above, the non-availability of M776 Spindles will prevent the Ukrainian warfighter from maintaining operational readiness rates and likely result in serious injury/loss of life and political/global unrest. Phygen Coatings, Inc. is in a unique position to provide this service with an accelerated delivery as it already possesses the necessary technology, training, and proprietary process to successfully coat the parts to the current drawing revision. Phygen Coatings, Inc. is ready to start production and turn around the first shipment of deliveries in January 2023. Consequently, WVA will provide 155mm M776 Cannon Assemblies to the Ukrainian military as to maintain that critical operational readiness rate. It is imperative that production of 155mm M776 Cannon’s at WVA and for Ukraine continue without an extensive break or delay in production. The delivery of this item will enable WVA to continue to produce and provide monthly deliveries to support Ukraine.

6. Efforts to Obtain Competition: Competition will be restricted to Phygen

Coatings, Inc. in this instance as it is the only proven supplier who can provide the Chromium Nitride Coating on an expedited basis.

7. Actions to Increase Competition: Due to the urgency and demand for the Spindles, no competitive procurement will be issued at this time. However, any future procurement of these parts will be conducted on a full and open basis to try and develop additional sources that can provide this service. In addition, no action can be taken to increase competition at this time since the service provided is proprietary to Phygen Coatings, Inc. The current requirement for 147 each will be procured from Phygen Coatings, Inc. under the authority cited in paragraph 4 above, with deliveries starting within 1 month after award.

8. Market Research: Market research was conducted by the WVA Program Manager and this office in September 2022 for this item. The market research was based on previous procurements for Coating of the Spindles which provided the basis that available sources could satisfy the requirements (FAR 10.001(3)(i)).

9. Interested Sources: Due to the urgency of this requirement, a synopsis and publication in the System for Award Management (SAM) will be waived in accordance with FAR 5.202(a)(2). However, future requirements for this item will be synopsized/publicized to the SAM web portal as required.

10. Other Facts:

a) Procurement History:

1) W911PT18P0057 was awarded to Phygen Coatings, Inc. on 19 January 2018 for 500 each Chromium Nitride Coating services to Spindles, per Drawing 11583063.

This prior contract was placed as a small business set-aside with only one offer received.

No unusual patterns have been revealed by a review of the procurement history.

b) Other Facts: There are no other facts necessary to justify limiting competition that were not previously stated.

11 / 12. Technical Certification/ Requirements Certification: I certify that the supporting data under my cognizance which are included in this J&A are accurate and complete to the best of my knowledge and belief.

Name: David Blot

Title: Supervisor, WVA Production Planning & Work Group

12. Fair and Reasonable Cost Determination: I hereby determine that the anticipated cost or price to the Government for this contract action will be fair and reasonable based on price analysis. Certified cost or pricing data will not be obtained IAW FAR 15.403-1(c) (3).

Type Name: Matthew Pember Title: Contracting Officer

13. Contracting Officer Certification: I certify that this justification is accurate and complete to the best of my knowledge and belief.

Type Name: Matthew Pember Title: Contracting Officer

Approval

Based on the foregoing justification, I hereby approve the procurement of Apply Chromium Nitride Coating to the outside of 147 each M776 Spindles, per Drawing 11583062 Rev C, for the 155mm M776 Cannon, in the estimated total amount of $344,715.00, on an other than full and open competition basis from Phygen Coatings, Inc. pursuant to the authority of 10 U.S.C. 2304(c) (2), as implemented by FAR 6.302-2, subject to the availability of funds, and provided that the services and property herein described have otherwise been authorized for acquisition.

Matthew Pember Chief of the Contracting Office Army Contracting Command – Watervliet Arsenal (ACC-WVA)