3Jan19_DEAMS_Sole_Source_JA__Redacted.pdf

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

FOR OFFICIAL USE ONLY

March 2018 FOR OFFICIAL USE ONLY Page 1 of 13

NOTE: If a Justification and Approval was approved for the preceding acquisition, a copy of the approved J&A for the predecessor action must be included in the staff package for approval of the instant J&A. This applies to J&A staff packages that are submitted for review and approval at a level above the contracting officer. The predecessor J&A will be used as a reference document by the approving official.

Is this a new or amended J&A Document? New Amended ( Prior to Award Only! )

Is this a Bridge Action as defined in the AF Bridge Action Reduction Plan? Yes No

Funding level for this acquisition:

Contracting Activity: AFLCMC/HIG

Purchase Request / Local ID Number: TBD

Program / Project (and PE, if applicable): Defense Enterprise Accounting Management System (DEAMS)

Program Type (PEO or Other Contracting): PEO Program

Authority: 6.302-1 – 10 USC 2304(c)(1), Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements

Estimated Contract Cost (including options): J&A Type: Class Individual

COORDINATION (AFFARS 5306.304(a) )

Date Program Manager

AFLCMC/HIG /

Signature

Date

03 Jan 2019

Contracting Officer

AFLCMC/HIKG /

Date

04 Jan 2019

Local Legal Reviewer

AFMCLO/JANO /

Date

07 Jan 2019

Chief of the Contracting Office (COCO)

AFLCMC/HIK /

APPROVAL (AFFARS 5306.304(a) )

Date

08 Jan 2019

Competition Advocate

AFLCMC/PK /

March 2018 FOR OFFICIAL USE ONLY Page 2 of 13

I. Contracting Activity.

AFLCMC/HIKG

4225 Logistics Ave.

Bldg 266, Rm A208 Wright-Patterson AFB, OH 45433

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

The Defense Enterprise Accounting Management System (DEAMS) uses a highly customized commercial-off-the-shelf Enterprise Resource Planning (ERP) software to provide accounting and financial management services and deliver a single integrated accounting capability for the Air Force. This Justification and Approval allows the Air Force to award a sole-source contact to complete an in-process technical upgrade of the DEAMS production software from Oracle E-Business Suite 11i to version R12.2.4 to Deloitte Consulting, LLC (1725 Duke St, Alexandria, VA 22314-3456), a large business. The contract will contain Cost Plus Fixed Fee (CPFF) pricing arrangement to allow Deloitte to complete the R12 upgrade effort, for which it was a technical subcontractor as of February 2017, which, in turn, allows the Government to achieve a necessary go-live event no later than June 2019. The anticipated period of performance is 01 January 2019 through 20 Jun 2019 at an estimated cost of

Oracle is a COTS product that has to be implemented, i.e., planned, coordinated, scheduled, deployed/installed and transitioned into an information system, which, in this case, is DEAMS. Once implemented, the product must continue to be customized. Oracle releases upgrades that have to also be integrated into the information system. Once implementation begins, or has to be altered, substantial risk to the viability and/or security of the information system is introduced. Thus, the programmer who is responsible for the programming associated with the implementation of Oracle upgrades provides the best opportunity for changes/upgrades to be successful. The technical upgrade of DEAMS from Oracle eBS 11i to R12 was substantially performed, but not completed, under a Firm Fixed Price (FFP) contract awarded in to a small business, with Deloitte Consulting (“Deloitte”) serving as its primary subcontractor (the Contract). Under the Contract, the prime contractor was responsible for executing the Oracle provided eBS R12 standard upgrade software to convert a DEAMS eBS 11i solution into a DEAMS eBS R12 solution; remediating existing DEAMS 11i customizations to allow for existing 11i functionality to properly operate on the eBS R12 solution platform; and testing the upgraded DEAMS R12 environment to ensure that all existing 11i functionality (both COTS and customizations) work properly on the eBS R12 platform. When software is upgraded/altered, each customization must be tested to ensure that the change/upgrade/alteration works across all modules of DEAMS. For example, an upgrade to the payroll module can affect the general ledger module and the system must be tested, validated and verified to ensure that all modules continue to work as configured.

Under the Contract, the effort successfully completed the initial Systems Engineering phase gates (System Functional Review, Preliminary Design Review, and Critical Design Review), and all contractor-led test events, although significant delays were experienced during the integrated testing phase of contractor-led developmental test.

For the R12 upgrade, as the Prime contractor, provided the programmatic and contractual oversight of the effort, but relied on their subcontractor (Deloitte) to provide the personnel with the necessary skill sets to perform the technical tasks required for the upgrade. As a subcontractor, Deloitte

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More specifically, Deloitte provided personnel with subject matter expertise in federal financial systems, including the DEAMS application; Oracle E-Business Suite, and the transition from 11i to R12; and provided the developers who remediated the DEAMS software code to provide functional software. In other words, Deloitte performed the verification and validated that the software upgrade was functioning as configured. Throughout the upgrade effort, this expertise remained wholly with Deloitte, as Deloitte continued to provide the developers and system administrators who tracked, assessed, and fixed issues related to the software upgrade that were discovered during the Government's developmental tests.

During the final contractor-led test iteration, which consisted of a thorough, end-to-end demonstration of the remediated DEAMS functionality, a higher than planned number of defects were identified. The effort to correct and retest these defects delayed successful completion of the test event by approximately , which, in turn, caused the projected go-live date to slip from

. This delay resulted in being unable to complete the Contract for the negotiated FFP amount. Despite efforts by both parties to work out a viable solution to complete the effort in a timely manner, this impasse could not be overcome and work on the upgrade ceased. The Contract was turned over to the Defense Contract Management Agency in December 2018 for termination and negotiation of final payment. The terminating contracting officer assigned will review work completed, adjust for work incomplete and negotiate a fair and reasonable termination agreement.

The requirement to complete the DEAMS R12 technical upgrade will be awarded to Deloitte as a new contract pursuant to FAR 6.302-1 Only One Responsible Source and No Other Supplies or Services will Satisfy Agency Needs. The work to be performed under this contract is pared down to represent the activities associated with the test support, test defect remediation, and go-live support. As a result of Deloitte's substantial role in the DEAMS R12 technical upgrade effort as a subcontractor to and with its recent and specific knowledge of the current state of the DEAMS R12 code baseline, to include its work already in progress to correct deficiencies identified during the Government's development tests, Deloitte is the only contractor capable of performing the unique and highly specialized services required to complete the effort without unacceptable delays and substantial duplication of costs, as described in Section IV of this J&A. This effort will be for a period no longer than 170 days to allow for the completion of Government test, test defect remediation (test, verification and validation of the upgrade), and to support the transition of the remediated software to the DEAMS production environment (implementation of the upgrade).

An Undefinitized Contract Action (UCA) is anticipated for this procurement. The UCA will be issued in with a not-to-exceed amount of

a. Overview of the Air Force DEAMS program

The DEAMS program is a BCAT 1 program under DoDI 5000.75. It is a joint, Office of the Secretary of Defense (OSD) approved, Deputy Chief Management Officer - Business Capability Lifecycle (DCMO-BCL) initiative to improve financial accountability across the Department of Defense (DoD), United States Transportation Command (USTRANSCOM), and the United States Air Force (USAF) and its supported Combatant Commands. The primary objective of DEAMS is to provide a modern integrated financial management system to record, summarize, and report

March 2018 FOR OFFICIAL USE ONLY Page 4 of 13 financial information to support business decisions while instilling confidence in the controls over financial resources. The Department's aging collection of legacy business systems are unable to meet management and accountability needs. These shortcomings resulted in the Air Force reporting a service-level material weakness over the reliability of its financial systems.

DEAMS serves as the target core financial system for all Air Force financial and mixed financial system modernization and development programs and has demonstrated progress towards mitigating the material weakness. The DEAMS program provides the Air Force with a modern financial management system that leverages Enterprise Resource Planning (ERP) Oracle software in a secure hosting environment. An ERP integrates and manages the efficient and effective use of resources by providing a total, integrated solution for the organization information-processing needs. For example, a supply chain system which tracks information from procurement and inventory to automatically raise purchase orders for approval; and is capable of generating multiple reports on a single click. ERP systems are capable of accessing data from all the modules and run it as an enterprise-wide system. ERPs tend to be very large, involve a multitude of stakeholders, and take a long time and considerable cost to implement.

As of November 2018, DEAMS was used by over eighty percent of the expected users.

The program has been deployed to over Active Duty, Reserve, Air National Guard and DFAS sites, worldwide. The DEAMS functionality is currently in use by elements of all Air Force and supported Commands. Funds tracking capabilities within DEAMS enabled the Air Force financial management community to have the best fiscal year close out ever, ending of funds obligated. However, while DEAMS is highly effective in its current deployed scope, the system requires additional development activities to provide complete all capabilities of the system to the AF user community, and these development efforts are dependent on the successful R12 technical upgrade. This J&A does not include the additional development activities. It only addresses completion of the software upgrade to R12. Until the capabilities planned for the current and follow-on DEAMS acquisition increments are completed, the Financial Management user community will have to continue to rely on obsolete legacy systems to complete mission requirements.

b. Critical Change History

The need for the software upgrade stems from the Critical Change activities that caused a material delay in the DEAMS program schedule. DEAMS was granted a Limited Deployment Decision (LDD) on to enable the Air Force to work through a remediation plan and to conduct a Verification of Fixes (VoF) test prior to returning for a Full Deployment Decision (FDD). The VoF test conducted in did not result in measurable improvement over the Initial Operational Test and Evaluation (IOT&E) results. The VoF results, coupled with recognition that the hardware and Oracle R12 eBS upgrades were going to drive changes to the program schedule, led to the conclusion that an FDD was not appropriate at that time. Via the 31 May 2016 Defense Acquisition Executive Summary (DAES) Report, the DEAMS Program notified AF Senior Officials that a Critical Change occurred in the DEAMS Program. As a result, the program underwent a Critical Change pursuant to 10 USC § 2445c(d)(3)(A). In the report, the Program identified a new path forward -- which included new estimates of cost, schedule and performance - that was substantially reliant on the Oracle R12 eBS upgrade. In late it was confirmed that the DEAMS Critical Change Report (CCR) had been delivered to Congress, and a new program baseline reflecting DEAM's post-critical change revised approach was approved by OSD AT&L in (the “Rebaseline”). The Rebaseline

March 2018 FOR OFFICIAL USE ONLY Page 5 of 13 schedule was focused on completing planned deployments of all applications, including the Oracle R12 upgrade, to Increment 1 users, by , so that the Program can pursue other requirements Based on the approved Critical Change Report, the Acquisition Milestone Decision Authority (MDA) established an Acquisition Program Baseline (APB) for DEAMS Increment 1, and set an objective and a threshold date for accomplishing a FDD (note: now referred to as Full Deployment Authority to Proceed [FD ATP] under DoDI 5000.75) of and , respectively. Program delays that result in an FD ATP beyond represent a breach of the APB and would, therefore, require the remaining program to be replanned and rebaselined again.

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

a. Contemplated Efforts

This contract action will provide for the completion of the DEAMS “technical-only” upgrade of the COTS Oracle eBS 11i software, along with existing eBS 11i-based customizations, to Oracle eBS

12.2.4. The Government is currently conducting Qualification Test and Evaluation on the software. During the course of this testing, as defects are discovered, the contractor will be expected to provide fixes to those defects in order to allow the Government to successfully complete QT&E. This effort is just for fixing issues found during Government test of the upgraded software already delivered. The most substantial part of QT&E is User Acceptance Test. Currently, the Government has successfully completed approximately of the test scripts planned for the test phase. There are approximately open defects from the UAT completed to date, though additional defects are anticipated to be discovered as the remaining scripts are executed.

When completed, the upgrade will deliver a working Oracle eBS R12 solution that reflects the transactional processing of the DEAMS previous EBS 11i environment, without any business process transformation. In other words, the upgrade will be completed, tested, verified and validated against the existing implementation of the eBS 11i software. Deloitte's support under this J&A is limited to the technical tasks associated with the software upgrade. This does not include management support to the FMO, PMO and SI under the DEAMS program. Tasks for this effort include:

• Providing technical support through the completion of User Acceptance Testing (UAT), to include resolution of Problem Reports (PRs) identified during test and appropriate knowledge transfer to the systems integrator (SI)

• Assistance with Go-Live of R12 into the DEAMS Production environment.

The days allotted for this effort include:

Complete R12 test support and PR resolution Finalize documentation and deliver final code baseline Support R12 Go-Live in DEAMS Production environment

b. Estimated Cost

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The period of performance for this effort is and FY19 Operations and Maintenance (O&M; 3400) funds are available. The following table outlines the projected CLIN, funding type, estimated dollar value, contract type, and estimated period of performance for the effort.

CLIN Cont Type Funding Type Est Value Est PoP R12 Completion CPFF 3400 Total Cost

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

This contractual effort is implemented by FAR 6.302- (1) Only One Responsible Source, because services are deemed to be available only from the original source in the case of a follow-on contract for the continued provision of highly specialized services when it is likely that award to any other source would likely result in the substantial duplication of costs that cannot be recovered through competition or present unacceptable delays. In this case, the required Oracle R12 eBS support is a follow-on contract as it requires the same Oracle 11i eBS to R12 eBS remediation work and test execution support that Deloitte had been performing as the technical subcontractor on the prior contract (FA8770-17-F-0510). As explained under Section II, it is critical to schedule that the contractor responsible for the current configuration continue because introducing a new contractor will result in undue delays and excessive costs, as is more fully explained herein.

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

a. Highly Specialized Capabilities and Unique Services

Deloitte possesses the highly specialized capabilities and qualifications necessary to successfully accomplish this unique effort, which cannot be replicated by any other company without significant delays. The DEAMS application is a highly customized version of the commercial Oracle software, which requires communication, interaction, and the ability to accurately process data from over 41 other financial systems used across the Department of Defense. Deloitte, as a subcontractor on the played a critical role in the current effort to perform the technical upgrade of DEAMS from Oracle eBS 11i to R12. Over the past 20 months of contract execution, Deloitte established a comprehensive understanding of this highly customized application. As mentioned above, understanding the information system that is being upgraded is critical to the success of the upgrade. As the subcontractor, Deloitte planned, organized, and executed test iteration events, each representing an increase in scope and complexity as remediation of the eBS code and DEAMS customizations progressed. As the customizations were tested, the final contractor-run test iteration, Test Iteration , was accomplished from . During Test Iteration , Deloitte's test personnel successfully executed over unique test scripts, which represented a comprehensive, end-to-end business process test of the remediated application. Test Iteration also represented the last major planned contractor developmental activity; with the successful completion of that event, the DEAMS R12 code was delivered to the Government for the Government's planned developmental test activities. Government testing progressed more slowly than planned, due to additional defects discovered in the downstream modules, but, otherwise, was smoothly performed; the DEAMS R12 upgrade successfully completed approximately of the final

March 2018 FOR OFFICIAL USE ONLY Page 7 of 13 phase of Government testing required before the new software can be deployed to the production environment. As mentioned above, this testing is important because a change/alteration/upgrade to one module affects other modules. Understanding those effects are critical to the success of the change/alteration/upgrade. In this phase, User Acceptance Test (UAT), the Government successfully completed approximately of the test scripts planned for the effort. The remaining scripts are comprised of approximately scripts that are unable to be run due to already-identified defects, and approximately scripts that failed will need to be re-accomplished after contractor fixes are delivered. No Severity 1 defects were identified during UAT, and Deloitte was in the process of providing fixes for all identified Severity 2 defects when the Contract period of performance ended and work on the effort ceased.

As the entity primarily responsible for providing technical expertise for the R12 upgrade, as well as the software developers and system administrators who accomplished the work, Deloitte developed a unique, deep, and specific understanding of the DEAMS R12 software application (both the information system and the software upgrade) through the course of their association with the effort. At this point, Deloitte is the only source that understands the current state of the system and what needs to be accomplished to complete the R12 technical upgrade and support transition to production (successful implementation) without unacceptable delays. Deloitte has the most complete experience, expertise and understanding of the complex DEAMS information system, including operations, system design/configurations, customized coding, and unique DEAMS interfaces, as it exists in development today. Therefore, Deloitte is the only known qualified source able to perform this Oracle R12 technical upgrade within cost and schedule constraints emanating from the Acquisition Program Baseline (APB), as described under Section IIb.

b. Unacceptable Delays and Substantial Duplication of Cost Not Recoverable through Competition

1. Unacceptable Delays

Award to any other source at this time would result in unacceptable delays based upon a complex learning curve associated with the DEAMS information system and the Oracle software original implementation and upgrade performed to date. In this case, `unacceptable delays' refers to a DEAMS R12 go-live date beyond June 2019. Go-live requires completion of all testing activities, defect resolution, and final code delivery necessary to result in a favorable Production Readiness Review no later than 31 May 2019. The June cut-off date is established by the functional customer for the DEAMS program, SAF/FM. With over of all financial transactions being accomplished in the last quarter of the fiscal year, the financial management community needs stable, functional financial systems to support the successful execution of the Department of Defense's missions. To prevent lost processing time and potentially degraded performance in this critical quarter of the fiscal year, the financial management community enacts a `freeze' period to prevent major changes to all systems during this time. If the DEAMS R12 software upgrade is not ready for successful go-live by June 2019, then it will be unable to do so until 1QFY20, when the annual freeze is lifted.

The DEAMS Critical Change Report from and the resulting APB established an objective Full Deployment Decision (FDD) date of February 2020, with a threshold of August 2020, as noted in Section IIb of this J&A. The FDD was predicated on the ability of the program to deliver a fully-remediated R12 solution, address the remaining Increment 1 development work (

), and successfully complete an independent operational test event (Follow-on Operational Test and Evaluation [FOT&E]). Both the remaining Increment 1 development work and FOT&E are themselves dependent on a deployed and stable DEAMS R12 baseline (i.e., upgrade). The remaining development work is expected to take approximately 12 months from delivery of a stable baseline (i.e., at Go-Live). The FOT&E event consists of required for system stabilization and user familiarization following go-live, followed

March 2018 FOR OFFICIAL USE ONLY Page 8 of 13 by of test execution and reporting (conducted by the Air Force Operational Test Center), for a total of of total planned effort.

Because Deloitte has recent experience providing the unique services required in Section III, and is the only source with specific knowledge of the details of the highly-customized DEAMS R12 software application, performance on a contract could begin immediately after award.

Due to Deloitte's demonstrated ability to provide the unique support the Government requires, to include the ability to deliver fixes to software problems uncovered during Government developmental test activities, this effort is expected to complete within of award.

An award to another contractor, however, would require time for the new contractor to establish teams, develop familiarity with the DEAMS information system, the ERP application and its implementation, and gain access and understanding of the environments and processes the Government utilizes. Based on Subject Matter Expert analysis (

, a minimum of 3 months would be required to accomplish these initial activities, though research provided to the Program Office indicates that 8 to 12 months is a more conservative estimate. Utilizing the assumption that another contractor selected to perform this work would likely have either substantial DEAMS information system or other federal financial ERP experience, the PMO believes that 5 months is a reasonable estimate of time to accomplish the initial familiarization. Following those 5 months, however, the Government would not expect the new contractor to be able to perform with the same efficiencies as Deloitte, since it will still be learning the system and the underlying code as it fixes identified problems. Furthermore, another contractor could potentially introduce different programming or fixes based on its prior experience on other ERP software implementation, and such activities would result in further testing and verification to assure compatibility with the existing implementation of the software and changes to date that were already tested. Due to the spin-up time required and reduced efficiency in performance, it is estimated that a new contractor would require a minimum of approximately 12.5 months to complete the same effort. This timeline is comprised of for familiarization, to complete the tech upgrade (due to lower efficiencies), and the same to deliver remaining documentation and support R12 go-live in the DEAMS production environment (implementation). Assuming a start date for the effort, the overall schedule effects are summarized below.

Approach Estimated Award Date Estimated R12 Completion Date Estimated FD

ATP Date

J&A

New Contractor

The remaining development work is expected to take approximately months from delivery of a stable R12 upgrade baseline (i.e., at Go-Live). Recognizing that the remaining effort to achieve a successful Full Deployment ATP milestone is dependent on a deployed and stable R12 baseline, a direct award to Deloitte, with a projected Go-Live date of June 2019, provides sufficient time to complete the development activities within the schedule thresholds established for the program through the Acquisition Decision Memorandum dated and subsequent APB, as set forth in Section IIb. A new contractor, however, would not deliver the same stable R12 baseline until approximately January 2020, with the remaining development not completing until approximately January 2021. This timeline breaches the APB schedule threshold and again places DEAMS at significant risk of breaching the limits

March 2018 FOR OFFICIAL USE ONLY Page 9 of 13 previously defined as a Critical Change pursuant to 10 USC § 2445c(d)(3)(A) (i.e., beyond 1 year of the objective date for the milestone). This is the most compelling justification for the award of this sole-source contract to Deloitte.

Furthermore, program delays will also affect the schedules of other financial, personnel, logistics and transportation IT programs that require concurrent development and integration with DEAMS as the core accounting system. Delays to the DEAMS program caused by an award to a contractor other than Deloitte will result in the user community and the SAF/FM sponsor not meeting its obligations to its other IT program and functional stakeholders. The impacts of those delays are not captured in this J&A, but reflect the high potential for driving additional cost to systems throughout the SAF/FM portfolio.

The current DEAMS acquisition increment includes development of system interfaces with disbursing systems owned by the United States Department of Treasury in an effort that is dependent on a stable DEAMS R12 baseline. A program delay of the Oracle R12 technical upgrade, beyond fiscal year 2019, will unacceptably affect the schedules and resources of both the Department of Treasury and the Defense Finance and Accounting Service that are critical partners in interfacing DEAMS payment information directly to Treasury for disbursing to commercial venders.

The DEAMS reporting tool based on the Oracle Discoverer software, while meeting current needs, is obsolete in terms of warranty and patch support from the Oracle Corporation. This unsupported condition creates increasing levels of sustainability risks to the program and to over DEAMS users. The program will be unable to achieve its goals of replacing this unsustainable tool with a supported version of the Oracle Business Intelligence reporting tool by without recovering the R12 technical upgrade schedule if the program has to confront delays caused by awarding the remaining development effort to a contractor other than Deloitte.

Moreover, the DEAMS information system risks becoming unsupported by continued Oracle sustainment and security software releases if it remains on the 11i eBS baseline past 31 December 2019. The DEAMS technical upgrade to R12 was necessitated by Oracle's change to its platform and the subsequent decision to end the support of the eBS 11i solution. This forced all Oracle platform users, including the Air Force, to upgrade to eBS R12 to maintain Oracle support of its software. Although the Program Office is currently contracting for extended support to cover the whole of calendar year 2019, Oracle has indicated that, after approximately March 2019, DEAMS will be the only major ERP remaining on 11i. While Oracle has not announced firm dates for discontinuing support for eBS 11i, the dwindling customer base and desire of Oracle to phase out older products puts DEAMS increasingly at risk of becoming unsupported for critical software security updates beginning in 2020. If this occurs, DEAMS will lose its Authority to Operate on Air Force and DoD networks, and will be unable to be utilized by any of the current users who rely on DEAMS for the processing of their financial transactions.

The Air Force and its DoD partners are also engaged in large IT acquisitions to modernize pay and entitlements to uniformed military members and implement logistics management systems. These major acquisition programs, along with numerous smaller initiatives, are interdependent on the DEAMS program schedule to provide complimentary functionality as the Air Force's core accounting system to record and report financial activities generated in these systems. Delays in completing the Oracle R12 software upgrade will prevent the DEAMS program from meeting the criteria to receive an Authority to Proceed to the next development increment necessary to integrate the accounting and finance process to support each of these system program schedules.

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2. Substantial Duplication of Cost

Deloitte 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 cost that could not be expected to be recovered through competition. Duplication of cost was estimated by analyzing the FY18 Program Office Estimate for level of effort type costs. Non-recurring costs, such as software purchases were not included as they are not affected by schedule slips. A monthly burn rate was developed based on three categories of costs; Program Management Office (PMO) Operations costs, Agile Development Contract, and the cost of continuing the contract supporting the DEAMS 11i production baseline.

General Assumptions:

• Estimated time to complete R12 upgrade if performed by Deloitte: 6 Months

• Estimated time to complete if performed by another contractor:

o familiarization with DEAMS o to complete the upgrade o delivery of documentation and support of R12 Go-Live o Total:

• All burn rate prior to Deloitte's anticipated R12 completion is a wash.

PMO Operations Burn Rate calculation: PMO Operations include the monthly burn of persistent DEAMS costs such as PMO and FMO manpower, Architecture Support, Software and Hardware Maintenance. These costs comprise the bulk of DEAMS' yearly expenditures.

FY19 costs for PMO Operations amount to over the full 12 months of the year. The monthly burn rate for PMO Operations equates to

Agile Development Contract Burn Rate calculation: If Deloitte does not complete the R12 Upgrade, then an Agile Developer would need to complete the Upgrade. This contract is currently in Source Selection, anticipated to complete in January 2019. If Deloitte completes the R12 upgrade, the Agile Developer can begin familiarizing themselves with DEAMS and start work on the Reporting, Disbursing, and Separation of Duties initiatives. If Deloitte does not complete the R12 effort, it is estimated that the Agile Contractor will take 13 months to reach R12 Go-Live compared to the estimated 6 months for Deloitte. The delay of Go-Live will translate to a delay of reaching a minimal viable product for the three initiatives mentioned herein. FY19 Costs for the Agile Contractor are currently estimated at starting in 2nd quarter FY19 continuing until the end of the year . The monthly burn rate for the Agile Development Contract equates to $

Additional 11i Support: Oracle 11i Maintenance is currently performed by Accenture Federal Services. This contract is currently scheduled to end in , but will need to be extended until R12 is fully implemented. The next available Option is priced at

. The monthly burn rate for additional 11i support equates to

The following table summarizes the calculation of the cost of a delay to implement R12 Go-Live without approval of this J&A to allow Deloitte to complete the upgrade:

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$M POP in Months FY19 POE Total Monthly Burn

PMO Operations 12

Agile 9

11i Support Option 2 6

Non-recurring

Total

The represents the cost associated with maintaining the existing 11i version of DEAMS, to include all program office costs, for an additional . This amount greatly exceeds the estimate for the effort outlined in this document, and therefore also greatly exceeds any savings that might be realized through competition.

In addition to the negative impact on the schedule, as detailed above, bringing on a new contractor at this critical juncture would result in serious costs for the remaining design, future modifications and deployment of the mission essential capabilities, as well as significantly impact DEAMS' progress toward Financial Statement audit. Without a properly functioning DEAMS, USTRANSCOM and the U.S. Air Force would continue to rely on outdated legacy financial systems and data. Without the R12 upgrade, both organizations would fail the CFO Auditability Requirements and be without a qualified financial system. Furthermore, DEAMS would be at increased risk of being unsupported for critical security updates from Oracle, since continued support for E-Business Suite 11i cannot be guaranteed past 31 Dec 2019.

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

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

The Government sought independent research from about the capability of other offerors to complete the R12 technical upgrade. Based on this independent research, other vendors may have Oracle COTS implementation experience, but none could be identified as having specific DEAMS information system experience, nor R12 technical upgrade programming experience that could be completed within the time frame required by the Critical Change APB. The specific details as described in Sections III and V above require this effort to be completed by Deloitte without encountering significant and unacceptable delays to the DEAMS program, and substantial duplication of costs.

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

For non-competitive acquisitions, sole source proposals will be evaluated for a determination of fair and reasonable utilizing cost analysis of the individual cost elements.

The Procuring Contracting Officer (PCO) will make a determination that the negotiated price for the Government will be fair and reasonable. This will be accomplished utilizing proposal analysis techniques per FAR 15.404-1. The proposal analysis techniques that will be utilized by the Government include:

Historical Data - A comparison of proposed hours with historical pricing data will be evaluated along with other factors such as price escalation, quantity, scope of work, etc., to get a perspective on whether proposed costs are in line with what has been proposed in the past on DEAMS. While actual historical data does not mean those actuals are reasonable, it can highlight whether costs are significantly different than what has been paid for in the past. When using historical data, care will be taken to consider inefficiencies, rework, and differing complexity levels of proposed tasks.

Technical Evaluation - The technical analysis will be conducted by Air Force Subject Matter Experts (SMEs) and will assist the PCO in evaluating whether the contractor's technical proposal is acceptable as a basis for negotiation. The technical team will determine whether requirements are being met and if the labor categories, labor hours, types, and quantities are adequate.

Cost Analysis - A cost comparison of previous proposals from the incumbent will review individual cost elements. Examples of the proposed comparisons follow:

(1) Actual costs previously incurred by the incumbent;

(2) Previous cost estimates from the incumbent or from other offerors for the same or similar items;

(3) Independent Government cost estimates by technical personnel; and

(4) Forecasts of planned expenditures.

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

Given the limited remaining time to complete the R12 upgrade effort, the Government engaged professional analysts from an independent consulting company, for an assessment of the time it would take for a new contractor to become familiar enough with DEAMS R12 to begin completing the upgrade effort. Based on the results of this research, the Government determined that the requirements described in Sections III and V above can be satisfied only by Deloitte without encountering significant and unacceptable delays to the DEAMS program, and substantial duplication of costs.

In accordance with PGI 206.302-1(b), when making a justification utilizing the authority at FAR 6.203-1, a sources sought shall be posted and the results included in the justification unless waived by the Head of the Contracting Activity. This requirement was waived in January 2019 for the effort herein.

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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.

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 DEAMS program recently completed a competition and is the process of contract award for all development and sustainment efforts of the DEAMS baseline post the technical upgrade. DEAMS will transition to the new contractor as quickly as possible.

XII. Certification by the Contracting Officer.

As evidenced by my signature above, I have determined this document to be both accurate and complete to the best of my knowledge and belief.

XIII. Certification by the technical/requirements personnel.

As evidenced by my (our) signature(s) above, I (we) certify that any supporting data contained herein, which is my (our) responsibility, is both accurate and complete.