Attachment_5_Brand_Name_Justification-_REDACTED.pdf

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

10 U.S.C. 2304(c)(1)

Pursuant to the requirements of the Competition in Contracting Act (CICA) as implemented by the Federal Acquisition Regulation (FAR) Subpart 6.3 and in accordance with the requirements of FAR 6.303-1, the justification for the use of the statutory authority under

FAR Subpart 6.3 is justified by the following facts and rationale required under FAR 6.303-2, As follows:

1. Agency and Contracting Activity.

The Department of Homeland Security (DHS), U.S. Coast Guard (USCG), Surface Forces Logistics Center (SFLC), Small Boat Product Line (SBPL), located at 2401 Hawkins Point Road, Baltimore, MD 21226 proposes to enter into multiple IDIQ contracts on a basis of other than full an open competition with vendors using only Original Equipment Manufacturer (OEM) parts and providing a separate warranty as detailed in the specification. The NAICS for this requirement is 333618.

2. Nature and/or Description of the Action being Approved.

The SFLC has a requirement for the supply of OEM parts with ancillary remanufacturing of Detroit Diesel/MTU 60 Series marine engines and 5114 Twin Disc Marine Reduction

Gears, as a single unit, currently used on the 45’ Response Boat Medium (RB-M). The original equipment manufacturer (OEM) for this requirement is MTU America. Products under this justification were previously awarded under Contracts HSCG40-13-D-50001 and HSCG40-13-D-51016. These were geographically separated and it was found to be of benefit to the government to do so for schedule purposes.

This brand name justification covers the engine parts and reduction gear parts with a total estimated shared value of $8,472,745.89. This requirement will award up to three (3) multiple award IDIQ contracts in accordance with FAR Part 12, Acquisition of

Commercial Items and FAR Part 15, Contracting by Negotiation. It is anticipated that funding will be provided through individual firm-fixed price delivery orders using AFC-

30. The period of performance will be from FY19 to FY22.

The name and address of the OEMs are:

MTU America, Inc.

39525 Mackenzie Drive

Novi, MI 48377

Twin Disc, Inc.

1328 Racine Street

Racine, WI 53403

Based on market research, there is a limited pool of vendors with capabilities to refurbish

Detroit Diesel/MTU 60 Series marine engines and 5114 Twin Disc Marine Reduction

Gears, as a single unit using OEM parts.

3. Description of Supplies/Services.

The requirement is for the remanufacture of Detroit Diesel/MTU 60 Series marine engines and 5114 Twin Disc Marine Gears as a single unit to support USCG, 45’ RB-M boats.

These small boat platforms are critical to Coast Guard operations, including search and rescue, marine safety, law enforcement and other multi-mission operations.

The estimated total value for this requirement is $8,472,745.89.

FY Base/Option Total

2018 Base Year $2,770,160.00

2019 First Option Year $2,823,901.10

2020 Second Option Year $2,878,684.79

Total $8,472,745.89

Escalation rate of 1.94% was used, corresponding to the Consumer Price Index as of

December 2018 which is the most recent, published rate. Pricing was mostly obtained through 5 years of tracking the remanufacture of the engines through the previous three contracts.

In addition, pricing of parts is made through historical parts contracts with MTU distributors under contract # HSCG40-13-D-50001 and HSCG40-13-D-51016. While these contracts are a valuable tool for assessing parts pricing it was also discovered through market research that MTU increased the price of many engine parts within the past 2 years up to 20%. With this research and contractual prices the Independent Government

Estimate was formulated to give a near accurate cost of these engines remanufactures.

Labor cost for the remanufacture of the engines was researched through different MTU distributors throughout the continental United States. While labor costs will vary from different regions of the country it is found that there usually isn’t that broad of a change.

Using labor cost from these various regions an average cost was formulated to be provided in the Independent Government Estimate.

4. Identification of Statutory Authority Permitting Other Than Full and Open

Competition.

The statutory authority permitting other than full and open competition is 10 U.S.C.

2304(c)(1) implemented by the FAR Subpart 6.302-1 entitled “Only One Responsible

Source and No Other Supplies or Services Will Satisfy Agency Requirements.”

5. Demonstration that the Nature of the Acquisition Require Use of the Authority Cited.

The Coast Guard does not possess the technical data required to evaluate non-MTU/Detroit

Diesel, Twin Disc parts. MTU/Detroit Diesel Twin Disc., are the only source(s) that possess the required capabilities, drawings, specifications, engineering control procedures and proprietary methods to ensure the latest design configuration, manufacturing and quality control required to produce parts to latest engineering specifications and requirements and to successfully remanufacture these engines and gears. The Government does not possess the technical data or drawings pertaining to the manufacturing or repair of the parts. All data is proprietary to the OEM. On 3 October 2017 an e-mail was forwarded to MTU requesting data rights. MTU’s response, Dated 3 October 2017, stated Daimler

(MTU parent company) owns all proprietary rights to MTU 60 series engines and have no plans to sell any portion of the proprietary rights in near future. A second e-mail request was sent on 11 October 2018, with a request for data rights. As of 13 Feb 2019, the OEM has not responded to the data rights request. Multiple requests went unanswered.

Considering non OEM parts requires a lengthy and expensive engineering change request process, and the government does not own the data rights, currently, no non OEM parts have been identified as a replacement.

6. Description of Efforts Made to Ensure that Offers are Solicited from as Many

Potential Sources as is Practicable.

In an effort to solicit as many potential sources as practical, a sources sought notice

HSCG4017Q53023 was posted on the Federal Business Opportunity (FBO) website on 16

August 2017. This notice provided other possible sources an opportunity to submit their capabilities to remanufacture these engines using genuine OEM parts. Six (6) potential sources responded and are identified in Section 10 of this document. Government market research has concluded that these engines can only be remanufactured by MTU/Detroit

Diesel or a responsible facility.

On 2 October 2018 a second sources sought notice 70Z04019Q56700B00 was posted to

FBO. The notice requested the same information as the 2017 release, but also requested the vendors verify the Mandatory and Contingency part numbers to mitigate any changes to the solicitation. As of 22 October 2018 the Contract Specialist received six (6) responses from the same vendors as the previous notice.

7. Determination by the Contracting Officer that the Anticipated Cost to the

Government will be Fair and Reasonable.

The Contracting Officer has determined that the anticipated prices will be fair and reasonable based on competition among responsible remanufacture facilities as well as price analysis utilizing a combination of techniques to include comparison to the

Independent Government Estimate (IGE) and available previous agency history. Language for other than certified cost or pricing data IAW FAR 15 shall be included in the solicitation to support negotiations should they be needed.

8. Description of Market Research.

Extensive and continuous market research as prescribed in FAR Part 10, was conducted by the Contracting Officer’s Representative (COR) and Contracting Specialist (KS). Internet searches and Government databases including a sources sought notice (in 2017 and in Oct

2018) has concluded that there is a limited pool of vendors with capabilities to refurbish

Detroit Diesel/MTU 60 Series marine engines and 5114 Twin Disc Marine Reduction

Gears, as a single unit using OEM parts.

9. Any Other Facts Supporting the Use of Other Than Full and Open Competition.

These vessels possess a sophisticated integrated control system identified as the Detroit

Diesel Electronic Control system (DDEC). The DDEC system is integral to the functionality of the vessel. Troubleshooting and repairing complex failures within the

DDEC system will be feasible only by a qualified vendor using Mariner III software and repair using only OEM parts.

10. A Listing of the Sources, if Any That Expressed, in Writing, an Interest in the

Acquisition.

As a result of sources sought notice published on FBO on 2 October 2018, the following sources expressed interest in receiving a copy of the solicitation when released. The

Contracting Officer has confirmed that all interested sources are authorized MTU/Detroit

Diesel distributor/dealer and also have access to twin disc OEM parts:

Clarke Power Services, Inc.

17 Liberty Pl

Pontoon Beach, IL 62040-2885

DUNS# 603462073

POC: Chad Phelps

(P): 270-831-8642

MTU Distributor: Yes

Twin Disc Distributor: No

Small Business

Johnson & Towers Inc.

500 Wilson Point Rd

Baltimore, MD 21220-4209

DUNS# 806028262

POC: Joe Summers

(P): 410-687-0500 ext. 642

MTU Distributor: Yes

Twin Disc Distributor: No

Small Business

Pacific Power Group, LLC

DBA: Pacific Power Products

805 Broadway St Ste 700

Vancouver, WA 98660-3301

DUNS# 059403154

POC: Dan Miller

(P): 253-520-5173

MTU Distributor: Yes

Twin Disc Distributor: No

Large Business

Stewart & Stevenson FDDA

DBA: John Deere Authorized Dealer

4141 SW 30TH Ave

Fort Lauderdale, FL 33312-6805

DUNS# 946365236

POC: Alice Sabin

(P): 954-327-4510

MTU Distributor: Yes

Twin Disc Distributor: No

Large Business

W.W. Williams Midwest, Inc.

3325 Libbey Rd

Lemoyne, OH 43441-000

DUNS# 007249147

POC: Tim Williams

(P): 614-228-5000 ext. 21131

MTU Distributor: Yes

Twin Disc Distributor: No

Large Business

Western Branch Diesel, Inc.

DBA: John Deere Authorized Dealer

3504 Shipwright St

Portsmouth, VA 23703-2428

DUNS# 003177086

POC: Rick Ezell

(P): 757-673-7102

MTU Distributor: Yes

Twin Disc Distributor: No

Large Business

11. A Statement of the Actions, if Any, the Agency May Take to Remove or Overcome

Any Barriers to Competition Before Any Subsequent Acquisition for Supplies or

Services Required.

The USCG does not own the rights to the OEM technical data to either MTU or Twin

Disc parts and is not resourced with the engineering staff, or funds required to reverse engineer the parts required to support the remanufacturing of these engines. These engines and gears are obsolete and cannot be procured new. The remanufacturing of these parts will continue to be an on-going need for the Coast Guard until the propulsion systems are replaced. The Coast Guard intends to replace the engines used on the 45’ RB-

M Service Life Extension Program which is currently in the acquisition planning stage.

Until such award, the Coast Guard must continue to remanufacture these engines and gears utilizing only OEM authorized parts.