iXBlue_J&A_70Z08018Q11001B00_redacted.pdf

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SOLE SOURCE JUSTIFICATION

For Certain Commercial Items for Procurements Exceeding the Simplified

Acquisition Threshold pursuant to FAR Subpart 13.5, Including Brand Name

RFQ Number: 70Z08018Q11001B00

Pursuant to the requirement of the authority of 41 U.S.C. 4901, as implemented by

Federal Acquisition Regulation (FAR) Part 13.501 and consistent with the content requirements of FAR 6.303-2, the following facts and rationale support this justification:

1. AGENCY AND CONTRACTING ACTIVITY:

The Department of Homeland Security, United States Coast Guard (USCG) Surface

Forces Logistics Center (SFLC), located at 2401 Hawkins Point Road, Baltimore, MD

21226 proposes to award a contract on a sole source basis.

2. NATURE/DESCRIPTION OF THE ACTION:

The SFLC anticipates awarding a sole source, firm fixed price requirements contract for one (1) base year and four (4), one (1) year option periods to overhaul the Octans Fiber

Optic Gyrocompass installed onboard the 87' and 110' Coast Guard Patrol Boats (WPB).

The contract will include an option to purchase new if a unit is determined beyond economical repair (BER) as a result of the open and inspect report. This acquisition will be achieved in accordance with FAR Part 12, Acquisition of Commercial Items, utilizing the procedures established under FAR Part 13.5 Simplified Procedures for Certain

Commercial Items at an estimated cost of $XXXXX. The USCG intends to use 2018

AFC 45 funds to award to the Original Equipment Manufacturer (OEM), iXblue, 11 Erie

Drive, Natick, MA 01760. The NAICS code is 334511 and the PSC Code is 6605.

3. DESCRIPTION OF SUPPLIES/SERVICES:

This action involves a mission requirement associated with maintaining USCG Patrol

Boat availability in support of various Homeland Security missions. The requirement is for the purchase and overhaul of the following Octans gyrocompasses to support 87' and

110' WPB Patrol Boat Fleet:

Part

Number

NSN DESCRIPTION

KAA00052 6605-01-558-

Octans Gyrocompass

All parts must be provided by the Original Equipment Manufacturer to overhaul or purchase Octans Gyrocompass in accordance with specification # R-426-0632, entitled

U.S. Coast Guard 87WPB and 110WPB Octans Fiber Optic Gyrocompass Overhaul.

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Below is a summary of the estimated cost for the base year and all four (4) option years utilizing an escalation rate of five (5) percent per year to account for inflation and risk in long term, fixed pricing:

Clin Description QTY Unit Price Total Price

Base Year

1st Option year

2nd Option year

3rd Option year

4th Option year

0001 Inspection

And

Diagnosis

0002 Labor and

Overhaul

Costs

0003 New

Purchase of

Octans

Gyrocompas s NSN

6605-01-

558-7250

4. IDENTIFICATION OF STATUTORY AUTHORITY PERMITTING OTHER

THAN FULL AND OPEN COMPETITION:

The statutory authority permitting other than full and open competition is 41 U.S.C. 1901 implemented by FAR Subpart 13.501, Simplified Procedures for Certain Commercial

Items.

5. DEMONSTRATION THAT THE NATURE OF THE ACQUISITION

REQUIRES USE OF AUTHORITY CITED:

It is imperative the Coast Guard work in partnership with the OEM, IXBLUE in procuring or overhauling the Octans gyrocompasses on the 87' and 110’ WPB's as they are highly complex commercial systems comprised of hundreds of interrelated parts, designed and manufactured by IXBLUE. The original procurement of Octans gyrocompasses was for a commercial item, not based on Government technical data, and the Government did not procure the technical data associated with the gyrocompasses.

The Government cannot purchase that technical data from IXBLUE. The 87’ and 110'

WPBs are the only vessels that use this equipment in this particular configuration. There are many other Gyrocompasses out in the commercial market place but they are all configured to their particular application. Other than basic part/component descriptions

(part numbers, etc.) provided by IXBLUE, the Government does not possess technical data descriptions adequate for competitively soliciting for overhaul of the WPB configured Octans Gyrocompasses.

The use of a non-OEM overhaul source would be a huge risk as this Fiber Optic

Gyrocompass is a very sensitive, technically complex and expensive piece of equipment, which provides the cutter with vital navigational information. The results of a third party

70Z08018Q11001B00 Page 3 of 5 attempting to perform overhauls on this equipment, without access to the OEM’s proprietary technical data, could result in failure of the gyrocompass to provide accurate navigational information while cutter is underway and could result in a catastrophic navigational accident. The required technical data to manufacture or overhaul this equipment is proprietary to the OEM. IXBlue Inc. is the only vendor that possesses the proprietary information and technical data required to manufacture the items and perform overhauls.

Any iXBLUE OCTANS gyrocompasses determined beyond economical repair can only be replaced with an identical, new iXBLUE OCTANS gyrocompass because the navigation system on the patrol boats is uniquely configured to use this equipment. The navigation systems on the WPB 87’ and 110’s are both comprised of multiple pieces of equipment that function together with the iXBLUE OTANS Gyro. These gyrocompasses were originally procured by PBPL for these systems. They went thru first article testing, prototype evaluation, and were subsequently integrated onto all WPB-87’ and 110’ navigation systems. Buying any other brand of gyrocompass would require another solicitation for design and prototype manufacturing, another 1st article test, another installation of the system on a cutter, and another prototype evaluation period onboard the cutter. Upon acceptance of the prototype, a Time Compliant Technical Order (TCTO), an engineering change required to switch equipment, would have to be drafted and implemented to begin installing another brand of gyrocompass. This would result in unacceptable delays to the fleet as failing navigational equipment could place the vessels and crew at risk.

6. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS DEEMED

PRACTICAL:

Pursuant to FAR Subpart 5.2, in an effort to solicit as many potential sources as practicable, a sources sought notice was published on Federal Business Opportunities

(FBO) on 7 June 2017 under HSCG40-17-S-11004. The industry was informed of the

Government's belief that authentic Octans gyrocompasses could only be overhauled or purchased from IXBLUE, OEM, unless other sources could provide verification of their capabilities to fulfill this requirement. IXBlue responded in a letter, expressing their interest and stated they are the only overhaul source, outlining proprietary data rights, as well as OEM proprietary rights to manufacturing.

7. DETERMINATION BY THE CONTRACTING OFFICER THAT THE

ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND

REASONABLE:

The Contracting Officer anticipates the price will be fair and reasonable based upon prices found fair and reasonable on the current contract HSCG40-13-D-11005 along with comparison to the Independent Government Estimate (IGE) and the cost of similar overhauls in the marketplace. There is no catalog pricing available for overhaul or purchase of these items. The IGE’s base year was developed by using the average cost of

70Z08018Q11001B00 Page 4 of 5 the most expensive overhauls performed under the fourth option year of the current contract HSCG40-13-D-11005. A 5% escalation rate was applied to the IGE’s subsequent option years to account for inflation as well as the fluctuating prices of materials used to manufacture the parts to perform the overhauls. If necessary, the Contracting Officer will request data other than certified cost or pricing data in accordance with FAR 15.403-3, to support negotiations.

8. DESCRIPTION OF MARKET RESEARCH:

Market research was conducted for the Octans gyrocompasses between June 2017 and

October 2017 using a sources sought posting on FBO and searching available companies through Federal Supply Schedules, and companies selling similar items. No other sources were located as a result of an internet search. IXBlue Inc. is the only vendor who responded to the sources sought. It was determined that only the OEM, IXBLUE can overhaul and manufacture the Octans gyrocompasses.

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

AND OPEN COMPETITION:

The Octans gyrocompasses must conform to design, materials and operational requirements. Proprietary data rights were not obtained under the previous contract. The use of parts to perform the overhauls not manufactured in accordance with OEM specifications, materials, tolerances, etc. could cause equipment failure rendering the vessel unable to complete mission requirements.

10. LISTING OF SOURCES, IF ANY, THAT EXPRESSED, IN WRITING, AN

INTEREST IN THE ACQUISITION:

A sources sought synopsis was issued in FBO on 7 June 2017 requesting that parties express their interest in writing to the Contracting Officer. The vendors were asked to respond with a positive statement of their intent to submit a quote while documenting their ability to provide genuine OEM parts. The only response to the synopsis was from the OEM, IXBlue. IXBlue stated they are the only overhaul and manufacture source for the Octans Gyrocompass in accordance with specification #R-426-0632, entitled U.S.

Coast Guard 87WPB and 110WPB Octans Fiber Optic Gyrocompass Overhaul. IXBlue also outlined their proprietary data rights, as well as OEM proprietary rights to the manufacturing. However, any responsible vendor may submit a quote and all responsible offers will be considered.

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

REMOVE OR OVERCOME ANY BARRIERS TO COMPETITION BEFORE

ANY SUBSEQUENT ACQUISITIONS FOR SUPPLIES OR SERVICES:

The Contract Specialist contacted IXBlue to investigate the possibility of the Government purchasing their proprietary data rights. On June 20, 2017, IXBlue responded with a letter stating that they do not wish to sell or license their proprietary information.

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However, they stated they are happy to provide the Coast Guard with their public specifications, operating manuals, technical offerings, and other public/customer technical information and support just as they have been doing for the past 4 years. The

USCG will continue to engage IXBlue for the release of proprietary data prior to any subsequent acquisition.