23GWP87_JA_REDACTED.pdf

IN REPLY REFER TO:

CJ&A No. CR-22046 Code: 024

P. R. Number: N0016422RWP87

CLASS JUSTIFICATION AND APPROVAL (CJ&A)

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

JUSTIFICATION

1. Contracting Activity

Naval Surface Warfare Center (NSWC), Crane Division, Spectrum Warfare Contracting Division, Radar & Infrared and Radio Frequency Systems Contracts Branch, Code 0241.

2. Description of the Action Being Approved

Establishment of a five-year Basic Ordering Agreement (BOA) on an other than full and open competition basis to procure engineering services and supplies in support of United States (U.S.)

and Foreign Military Sales (FMS) Navy new ship construction, U.S. and FMS Land Based Test Sites (LBTS), and U.S. Navy and FMS sustainment, from Lockheed Martin Rotary and Mission Systems (Lockheed Martin RMS), Moorestown, NJ. Authority to act under this Class Justification and Approval (CJ&A) expires 28 February 2028.

3. Description of Supplies/Services

Lockheed Martin RMS shall provide supplies, including replacement and upgraded system components, such as the AEGIS Weapon System (AWS) and AN/SPY radar processor components. Lockheed Martin RMS shall provide services, including engineering support for design changes to enhance capability and performance of the AWS; AN/SPY processor and ancillary equipment; engineering analyses and trade studies to define a technology refresh or technology insert support; developing Engineering Change Proposals to fielded systems for maintenance and obsolescence requirements; design and engineering upgrades for replacement of obsolete system components. U.S. programs for this procurement consists of the AWS, AN/SPY radars, and ancillary equipment.

This new contracting effort will deploy these warfighting capability upgrades to the AWS and AN/SPY radar systems at U.S. Navy LBTS, AWS Training Facilities, and to U.S. Navy ships, as well as FMS ships and LBTS.

Lockheed Martin RMS is the current developer of the Baseline 9 (BL9) AEGIS Modernization (AMOD) program for and as well as new construction Under NAVSEA Integrated Weapons Systems (IWS) 1.0 Contract N00024-09-C-5103 and the follow-on contracts N00024-16-C-5102, N00024-17-G-5100, and N00024-20-C-5101, Lockheed Martin RMS is upgrading the AWS and AN/SPY system on new ships, ships undergoing

J&A No. CR-22046

5. Rationale Justifying Use of Cited Statutory Authority

Pursuant to 10 U.S.C. 2304(d)(1)(B), Lockheed Martin RMS is the only responsible source capable of satisfying the Navy’s requirements for the AWS, AN/SPY, and ancillary equipment, because the Government does not own the complete Technical Data Packages (TDPs) for these systems, including testing and integration procedures, that would enable competition of these requirements. Recent inquiries in 2021 to Lockheed Martin RMS by the program office (IWS1AP) in conjunction with the N00024-21-R-5129 solicitation indicated that Lockheed Martin RMS was not willing to sell any of their proprietary intellectual property used in the development of these TDPs. Any redesign or high-level engineering improvement efforts for these systems would require Lockheed Martin RMS support.

Developing a second source would cause substantial duplication of costs to the Government that is not expected to be recovered through competition, and unacceptable delays in fulfilling the Navy’s requirements.

Lockheed Martin RMS, as the original equipment manufacturer, developer, and Combat System Engineering Agent for the AWS, including the AN/SPY signal processor and ancillary equipment, holds all the proprietary design and document rights. They have been the sole manufacturer of the AEGIS system, including the AN/SPY, for more than 40 years.

Additionally, Lockheed Martin RMS has developed an extensive infrastructure at its Moorestown, NJ, facility to support AWS development, capability improvements, production and system tests.

This infrastructure, including Production Test Facility, AEGIS SubSystem Engineering Test Station (ASSETS), AEGIS Near-Field Antenna Systems Test (ANFAST), AN/SPY antenna column test station, qualified supplier base, special test equipment, data networks, system test environments, producible engineering workstations, etc., also supports the separate Lockheed Martin RMS contractual responsibilities for AEGIS development, FMS AWS production, U.S. Navy and FMS in-service engineering, and other depot operations. The U.S. Navy has invested over $22M in capital at the Lockheed Martin RMS facility, including construction of a 3800sf ElectroMagnetic Interference (EMI) shielded facility in 1996, Non-Recurring Engineering (NRE), and Special Test Equipment (STE) for development, and testing and integration for classified AEGIS development and testing.

The cost of replicating this infrastructure at another supplier could not be recouped through a competitive award.

Development of a new source would incur significant duplicative costs for somewhat comparative infrastructure and special test equipment, though the Lockheed Martin RMS infrastructure would not be truly replicable. For example, the Government estimates that award of this BOA to a source other than Lockheed Martin RMS would result in approximately $23.1M in duplicative non-recurring costs in the form of Special Tools and Test Equipment (STTE) required for AWS developmental efforts and based on past experience with similar NAVSEA BOA orders and the STTE required in their execution. The estimate includes costs for the following based on historical infrastructure investments under the orders referenced:

Infrastructure Investment Est. Cost Historical Basis

STTE to test Multi-Mission Signal Processor (MMSP) within the AEGIS Sub-System Engineering Test Station (ASSETS) $9.3M N00024-12-G-5123-0014

AEGIS Near-Field Antenna Systems Test (ANFAST) environment $12.1M N00024-12-G-5123-X701

STTE to support the antenna column test station under $1.7M N00024-12-G-5123-0003

In order to offset these duplicative costs through competition for the BOA orders for these requirements, the Government would need to achieve an average savings of more than 46% across all of the orders placed against this BOA within the 5 year ordering period. It is unrealistic to expect this level of savings to result from competition of these requirements with companies less mature in development of capabilities than Lockheed Martin RMS. As such, the duplicative costs are not expected to be recovered through competition.

In addition to the above significant investments, the infrastructure costs would include the duplication of the classified AEGIS real-time network, equipment for the development and integration facility, various AEGIS AWS stimulators and simulators, as well as recurring expenses associated with, software licenses, test equipment maintenance, site support, and other operation costs that have averaged $1M annually.

A second source, if developed, may eventually gain the level of engineering expertise and proficiency currently found at Lockheed Martin RMS, but the AEGIS infrastructure on-site at Lockheed Martin RMS and the synergistic benefits of Lockheed Martin RMS's role in AWS production, AEGIS system engineering, and Fleet support would not be truly replicable.

Lockheed Martin RMS is the only source with extensive experience in the development of each capability associated with BL9. Because of the concurrent nature of the BL9 capability development and system production, only Lockheed Martin RMS can meet the Navy's requirements without unacceptable delays to the ship upgrade program. The Government estimates 30 months would be required to qualify a second source, including 18 months minimum to conduct the competition, i.e., issue an RFP and conduct a source selection, and another 12 months minimum to hire experienced staff, develop equivalent capabilities and technical understanding of AWS. This delay in award of the follow-on BOA will delay ship upgrade schedules, degrading the operation effectiveness of the AWS and AN/SPY system leading to potentially catastrophic results against a more capable adversary.

6. Description of Efforts Made to Solicit Offers from as Many Offerors as Practicable

There is one known source for this requirement, Lockheed Martin RMS. As part of market research, a Request for Information/Sources Sought was posted to the Government Point of Entry, Beta SAM website on 18 NOV 2021 with a response suspense date of 02 DEC 2021. No potential sources expressed an interest in this requirement. Individual orders to be issued under this BOA will be published on the Beta SAM website.

No additional market research was conducted, because it is not practicable for the reasons discussed in paragraph 5 above, for any company other than Lockheed Martin RMS to provide the required services.

7. Determination of Fair and Reasonable Cost

The Procuring Contracting Officer (PCO) will determine the anticipated cost to the Government of the supplies/services covered by this CJ&A fair and reasonable. Crane contracting office will use cost and price analysis to determine a fair and reasonable price. As cost or pricing data is required, assistance from the Defense Contract Audit Agency and the Defense Contract Management Agency may be used to analyze, evaluate, and assist in negotiations based upon detailed cost and pricing data which will be certified at the conclusion of negotiations for applicable orders.

8. Actions to Remove Barriers to Competition

For the reasons set forth in Paragraph 5, NSWC Crane Division, Spectrum Warfare Contracting Division has no plans at this time to compete future contracts for the types of supplies/services covered by this document. In accordance with FAR 6.303-1(d), the circumstances surrounding the need to obtain the required supplies/services without providing full and open competition will be reviewed annually by the PCO. If another potential source emerges, the NSWC Crane Division, Spectrum Warfare Contracting Division will assess whether competition for future requirements is feasible.