Air Segment_JA_Control Number 24-43 Redactions Final.pdf

CUI

SOURCE SELECTION INFORMATION – See FAR 2.101 and 3.104

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Controlled by: USTRANSCOM Controlled by: Directorate of Acquisition CUI Category/ies: PROCURE Limited Dissemination Control: FED ONLY

POC:

JUSTIFICATION AND APPROVAL (J&A)

USTRANSCOM JUSTIFICATION FOR

OTHER THAN FULL AND OPEN COMPETITION

GLOBAL HEAVYWEIGHT SERVICES (GHS2) MODIFICATION

Control Number 24-43

1. CONTRACTING ACTIVITY.

United States Transportation Command (USTRANSCOM), Contract Airlift Division, Less Than Planeload Branch (TCAQ-CL), 508 Scott Drive, Scott AFB, IL 62225.

2. NATURE AND/OR DESCRIPTION OF ACTION BEING APPROVED.

The action being approved is a modification to remove language in the GHS2 Performance Work Statement (PWS) that “[A]ll shipments MUST include an air segment.” This Justification & Approval (J&A) is authorizing the continued use of Other Than Full and Open Competition for GHS2 transportation services awarded and administered by USTRANSCOM. Specifically, USTRANSCOM will uphold existing GHS2 contracts and continue to limit GHS2 participation to Department of Defense (DoD) Commercial Airlift Review Board (CARB) approved air carrier(s) participating in the Civil Reserve Air Fleet (CRAF), as authorized by Title 10, Chapter 961, the Civil Reserve Air Fleet (Fly CRAF) and/or the Defense Production Act, 50 United States Code (U.S.C.) § 4511 (DPA), and not in a suspended non-use status. USTRANSCOM may also award future contracts to DoD CARB approved air carrier(s) participating in CRAF, as authorized by CRAF Act and/or the DPA and not in a suspended non-use status, that submit acceptable proposals in response to the GHS2 solicitation onboarding procedures. However, the GHS2 PWS will be modified to allow the use of motor and rail mode substitution for airlift transportation services. If mode substitution is used, all other terms and conditions of the contract shall still apply. This action will be completed by modification to the existing GHS2 multiple award indefinite delivery, indefinite quantity (IDIQ) contract numbers HTC71123DC001 through HTC71123DC022. GHS2 is a firm-fixed-price contract.

3. DESCRIPTION OF THE SUPPLIES/SERVICES REQUIRED TO MEET THE

AGENCY’S NEEDS.

GHS2 is a multiple award IDIQ contract for commercial air transportation services. GHS2 provides door-to-door heavyweight commercial air freight services for international shipments over 300 lbs., domestic shipments over 150 lbs., and shipments for Alaska and Hawaii over 300 lbs.

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GHS2 was awarded with an eight-month base period (1 February 2023 – 30 September 2023) and nine subsequent one-year option periods (1 October – 30 September). GHS2 was awarded to twenty-two carriers, each awarded their own individual contract, and has an on-ramp provision for future contract awardees. The awarded value of the GHS2 program, including all option periods, is $1,503,340,117.57. The current GHS2 program is the second iteration of the program.

The current GHS2 program follows the predecessor GHS1 program, which was awarded on 19 March 2019, and expired on 31 January 2023. Prior to GHS1, this requirement was fulfilled by the International Heavyweight Air Tender (IHAT) program and the Category A Service (CAT A) program, both of which involved commercial air freight transportation of cargo. The period of performance for the GHS1 program began on 1 April 2019. The statement, “[A]ll shipments MUST include an air segment” was not included in the initial award of GHS1. Rather, upon initial award, GHS1 included international service only, as domestic service was still being provided under a different program. When domestic service was added to the GHS1 program via modification on 1 April 2020, the statement, “[A]ll shipments MUST include an air segment” was added to the PWS and did not include a mode substitution exception. This language carried over to the GHS2 solicitation and the resultant contract.

4. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION.

The statutory authority permitting the use of other than full and open competition for this acquisition is 10 U.S.C. § 3204(a)(3)(A), as implemented under FAR 6.302-3(a)(2)(i).

5. DEMONSTRATION THAT THE PROPOSED CONTRACTOR’S UNIQUE

QUALIFICATIONS OR THE NATURE OF THE ACQUISITION REQUIRES USE OF

THE AUTHORITY CITED.

The use of 10 U.S.C. § 3204(a)(3)(A), exception to full and open competition to achieve industrial mobilization, is essential to maintain adequate airlift services in case of a national emergency requiring activation of the CRAF. 10 U.S.C. § 9516 requires DoD to use CRAF eligible carriers for interstate or foreign air transportation unless the exception at 10 U.S.C. § 9516(d) applies. CRAF is a voluntary program through which the nation’s air carriers provide aircraft allocated or identified for allocation to the DoD under section 101 of the DPA (codified at 50 U.S.C. § 4511(a)), or aircraft that are made available (agreed to be made available) for use by the DoD under contracts issued IAW Fly CRAF to augment DoD airlift capability by the use of civil aircraft. As an incentive to participate in the CRAF program, air carriers that participate in the CRAF program are entitled to participate in the award of DoD’s peacetime airlift requirements to include GHS2. The continued success of the CRAF program is essential to national security and the ability to maintain airlift services in case of a national emergency.

CRAF participants provide civilian airlift assets needed to support military operations and mobilization requirements. This fleet of civilian aircraft is available to the military to meet peacetime requirements, surge needs, and mobilization requirements for major crises.

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The CRAF program was formalized through a series of Presidential Executive Orders and Memoranda of Understanding, the first of which was signed December 15, 1951. National Security Decision Directive 280, National Airlift Policy, issued on June 24, 1987 by President Reagan, reinforced the need for, and use of, the CRAF program. The national defense airlift objective is to ensure that military and civil airlift resources will be able to meet defense mobilization and deployment requirements in support of U.S. defense and foreign policies. The policy states that military and commercial airlift resources are equally important and interdependent in the fulfillment of this national objective. The National Airlift Policy provides that, where appropriate, U.S. policies shall be designed to enhance the mobilization base of the U.S. commercial air carrier industry. During peacetime, DoD requirements for passenger and cargo airlift augmentation shall be satisfied by the procurement of airlift from commercial air carriers participating in the CRAF program, to the extent DoD determines such airlift is suitable and responsive to military requirements.

In addition, DoD Instruction (DoDI) 4500.57, Transportation and Traffic Management, paragraph 4.5.a recognizes the partnership between the DoD and U.S. civil commercial air carriers is critical to mobilization, deployment, and sustainment of military forces, and that the alliance is embodied in the CRAF program. DoDI 4500.57, paragraph 4.5.b. further specifies that IAW 49 U.S.C. § 40118 [Fly America], 49 U.S.C. § 41106, 10 U.S.C. § 9516 [Fly CRAF], and regulatory guidance in DoDI 4500.53, DoD Components will ensure that all DoD acquisitions of commercial air transportation services require CRAF participation as a prerequisite for award to the maximum extent possible unless there is a documented negative critical mission impact. Carriers not eligible for CRAF may be used only when CRAF-participating carriers cannot meet mission requirements.

The Defense Federal Acquisition Regulation Supplement (DFARS) also supports the policy of acquiring air transportation requirements through CRAF carriers. DFARS 247.206 provides that evaluation factors concerning the offeror’s commitment of transportation assets to the CRAF program be considered when acquiring [air] transportation-related services.

The use of the exception to competition is also consistent with the statutory preference for use of CRAF carriers under the Fly CRAF Statute, 49 U.S.C. § 41106 and 10 U.S.C. § 9516. The Fly CRAF statute provides that transportation of passengers or property by CRAF-eligible aircraft in interstate air transportation1, between the United States and foreign location, or between two foreign locations outside the United States obtained by DoD through a contract for airlift services shall be provided by an air carrier that has aircraft in CRAF whenever such transportation is reasonably available. DoD commercial airlift needs include both planeload and less than

1 IAW 49 U.S.C.§ 40102 (25) “interstate air transportation” means the transportation of passengers or property by aircraft as a common carrier for compensation, or the transportation of mail by aircraft-

(A) between a place in-

(i) a State, territory, or possession of the United States and a place in the District of Columbia or another State, territory, or possession of the United States;

(ii) Hawaii and another place in Hawaii through the airspace over a place outside Hawaii;

(iii) the District of Columbia and another place in the District of Columbia; or

(iv) a territory or possession of the United States and another place in the same territory or possession; and

(B) when any part of the transportation is by aircraft.

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planeload (LPL) requirements. For LPL requirements, DoD cargo may be placed within the CRAF air carrier’s commercial transportation systems, where DoD property may be comingled with the carrier’s commercial cargo. The carrier’s commercial practices may include transport by the prime CRAF carrier, as well as its subcontractors, that may or may not participate in the CRAF program. The carrier’s commercial practices may also include mode substitution from air to motor or rail. Use of the industrial mobilization exception to limit USTRANSCOM airlift contracts to CRAF carriers effectively carries forth the NSDD 280 and DoDI 4500.57, and it is consistent with the Fly CRAF statute for the transport of passengers and cargo where transport by U.S. air carriers may otherwise not be reasonably available.

6. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS IS PRACTICAL.

Participation in GHS2 is open to all CRAF carriers, provided they are in good standing and maintain their Federal Aviation Administration (FAA) certificates and CARB approvals. All existing CRAF carriers were solicited for the GHS2 contract via the System for Award Management (SAM) website. The GHS2 contract also contains an on-ramp provision for any non-GHS2 CRAF carriers who wish to become a GHS2 carrier in the future. Interested parties may access the SAM website at www.sam.gov. All U.S. Flag carriers have the opportunity to join the CRAF program at any time. Therefore, the decision whether to join the CRAF and become eligible to compete for GHS2 opportunities is an internal business decision made by the carrier.

7. DETERMINATION BY THE CONTRACTING OFFICER THAT THE

ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND REASONABLE.

Competition is maintained among the GHS2 participants at the task order level. Historically, the program has between 22 and 26 multiple award contracts. This action will not involve any change to the awarded dollar value of the GHS2 program. The pricing under GHS2 was awarded based on not-to-exceed (NTE) rates for each lane and accessorial for which the carrier wished to provide service. NTE lane rates are all-inclusive transportation rates, which set the ceiling for how high a carrier can bid on a given shipment. All awarded NTE rates were determined fair and reasonable at the time of contract award. Carriers can escalate their awarded rates within an awarded escalation percentage and propose new rates for any previously unawarded lanes or accessorials each fiscal year. Any newly proposed NTE rates are determined fair and reasonable prior to being awarded. At the task order level, carriers place their bids on each individual shipment and may downward adjust from their NTE rates to appropriately charge for the shipment being solicited after considering the transportation logistics required for that shipment. Feedback from carriers indicate they do not currently bid on shipments unless they can guarantee the cargo will move via at least one air segment due to this requirement in the PWS. However, many shipments under GHS2 can move more efficiently if limited mode substitution were permitted. This action is expected to result in carriers placing bids on shipments they previously would not bid on due to the requirement for all shipments to include an air segment. As competition is maintained and possibly increased among GHS2 participants, the anticipated cost to the Government is expected to continue to be fair and reasonable.

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8. DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AND THE

RESULTS OR A STATEMENT OF THE REASONS MARKET RESEARCH WAS NOT

CONDUCTED.

In April 2024, a Request for Information (RFI) consisting of twelve questions related to commercial practices and the impact of the air segment requirement removal was issued from the GHS2 contracting team to all 22 GHS2 carriers. Of the 22 carriers, 12 submitted a written response to the RFI. Additionally, five carriers requested a meeting with TCAQ, TCJ5/4, and TCJA to further discuss this topic. Meetings with those carriers were held in early May 2024.

The feedback from carriers concluded in agreement that a mode substitution exception would have an overall positive impact on the program. The change will increase capacity to the Warfighter as well as provide cost savings and more efficient routing. GHS2 is a commercial contract and relies on air carriers’ commercial transportation networks to move cargo, and mode substitution is a common feature in current commercial transportation networks. Therefore, allowing mode substitution will further align with commercial practices.

Due to this language restricting the mode of transport without an exception, reporting showed a decrease in capacity on some lanes where carriers determined airlift was not appropriate.

Without an exception, those lanes often have ongoing “no bid” issues under the GHS2 program.

No bids occur when a shipper solicits a shipment in GFM (or manually) but receives no bids from any carrier despite carriers offering that service. There are many circumstances, both shipper- and carrier-driven, that could lead to shippers receiving no bids; however, market research showed that the restriction of requiring all shipments to include an air segment is likely one of many factors contributing to the no bid issue under GHS2. Allowing for limited mode substitution2 is expected to, in part, alleviate some instances of no bids, which would ultimately increase capacity to the Warfighter.

Based on the feedback from the commercial air industry, in commercial practice, the driving force behind air transportation of cargo is the requirement to meet the Requested Delivery Date (RDD) and not the strict adherence to a particular mode of transportation. It is the Government’s expectation that the majority of GHS2 shipments will continue to move via air with ground transportation only being used at the carriers’ discretion to meet the RDD when necessary, based on the commercial networks involved. This change will allow the GHS2 carriers to fully utilize the capacities and flexibilities in their commercial transportation networks and bring the GHS2 contract more in line with commercial practices.

9. ANY OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL AND

OPEN COMPETITION.

None.

2 The language permitting mode substitution will not include transportation by sea. The timelines for air freight are generally too short for ocean transportation and any transportation by sea on a foreign flag sea vessel would require a Military Cargo Preference Act waiver pursuant to 10 U.S.C. § 2631(b). IAW DFARS 252.247-7023(d), a contractor must submit any request to use a foreign flag vessel at least 45 days prior to the sail date, a virtual impossibility given the typical timelines associated with GHS2 LPL air freight shipments.

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10. A LISTING OF SOURCES, IF ANY, THAT EXPRESSED AN INTEREST IN THE

ACQUISITION.

As referenced in paragraph 8, several GHS2 participants have expressed interest in modifying the contract to allow both rail and motor transportation substitution. Any freight forwarders interested in the GHS2 program have the opportunity to team with a CRAF carrier and provide service as a subcontractor. As non-CRAF carriers express interest in these programs, they will be informed of the CRAF requirements for eligibility.

11. A STATEMENT OF ACTIONS, IF ANY, THE AGENCY MAY TAKE TO REMOVE

OR OVERCOME ANY BARRIERS TO COMPETITION BEFORE MAKING ANY

SUBSEQUENT ACQUISITION FOR THE SUPPLIES OR SERVICES REQUIRED.

Although USTRANSCOM plans to continue awarding contracts under 10 U.S.C. § 3204(a)(3)(A), maximum competition among CRAF carriers will still be solicited. The DoD relies on the U.S. air transportation industry to provide airlift support for DoD in time of emergency or war. A mobilization base for this airlift service, committed to USTRANSCOM by contracts, is essential to ensure the prompt and effective response of this industry when needed.

12. CONTRACTING OFFICER’S CERTIFICATION.

I certify that the data supporting the recommended use of other than full and open competition is accurate and complete to the best of my knowledge and belief.

Easten Holle Date Contracting Officer

13. TECHNICAL/REQUIREMENTS PERSONNEL CERTIFICATION.

I certify that the data supporting the recommended use of other than full and open competition is accurate and complete to the best of my knowledge and belief.

Date

Program Manager

10 Jul 2024

9 Jul 2024

HOLLE.EASTEN.

R.

Digitally signed by

HOLLE.EASTEN.R.

Date: 2024.07.10 07:19:37 -05'00'

Digitally signed by

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