PEECO_redacted_JA_EXTENSION_to_HSCG40-13-D-11011.pdf

NON COMPETITIVE EXTENSION TO 13-D-11011 Page 1

SOLE SOURCE JUSTIFICATION

For Certain Commercial Items for Procurements Exceeding the Simplified

Acquisition Threshold pursuant to FAR Subpart 13.5, Including Brand Name

REQUEST FOR NON-COMPETITIVE CONTRACT EXTENSION TO HSCG40-13-D-11011

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), Patrol Boat Product Line (PBPL) and Contracting and Procurement

Division, located at 2401 Hawkins Point Road, Baltimore, Maryland 21226-5000, proposes to enter into a contract extension on a basis other than through full and open competition.

2. NATURE/DESCRIPTION OF THE ACTION:

The SFLC anticipates awarding a non competitive contract extension for six (6) months to current contract HSCG40-13-D-11001 to the Original Equipment Manufacturer (OEM), Philadelphia Electrical Equipment Company (PEECO), for the procurement of 60kW 450VAC

3-Phase Ship Service Diesel Generators (SSDG’s) designed and manufactured by PEECO for use onboard the 87’ Coastal Patrol Boat (CPB) class USCG Cutters. The estimated total cost of this acquisition is $xxxxxx for an estimated quantity of 16 units. The USCG intends to use 2018

AFC 45 funds to award to Philadelphia Electrical Equipment Company, a Small Business located at 300 East Main Street, Suite 600, Norfolk, Virginia 23510. The NAICS code is 335312 and the

PSC code is 6115.

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 PEECO 60kW 450VAC 3-

Phase Ship Service Diesel Generator is a marine generator designed specifically to integrate and interface with existing auxiliary fuel and cooling water systems as well as space constraints found on the WPB-87 Patrol Boat. This generator has successfully passed 1st article & prototype testing and is approved for installation on the WPB-87 Patrol Boats under current contract

HSCG40-13-D-11011.

Below is a summary of the estimated cost for the total value of the contract:

CLIN P/N - DESCRIPTION QTY COST/UNIT TOTAL COST

0001 Ship Service Diesel Generator

DSSJDM-65-60MX - Port 8 $

NSN: 2815-01-F13-3325

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CLIN P/N - DESCRIPTION QTY COST/UNIT TOTAL COST

0002 Ship Service Diesel Generator

DSSJDM-65-60MX - STBD 8 $

NSN: 2815-01-F18-5408

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:

The Government’s requirement is for the replacement of Ship Service Diesel Generators

(SSDGs) which were designed and manufactured by Philadelphia Electrical Equipment

Company (PEECO) under current contract HSCG40-13-D-11011 for the WPB-87 Patrol Boat

Fleet. The USCG PBPL has an ongoing requirement for the continued manufacturing of PEECO

SSDGs that will not be fulfilled during the remaining time left on original contract. A six (6) month extension is required to prevent an interruption in service. Acquisition planning is underway for a new contract to purchase this equipment. However, due to the threshold of the new requirement, significant administrative delays in review of the procurement documents will prevent a timely award before the current contract expires.

This SSDG is only available from the OEM and is the only SSDG that the USCG PBPL has approved for replacement on the WPB-87 Patrol Boats. The USCG previously spent over $280k for the USCG Yard to perform the tear out of the existing SSDGs and installation of the PEECO manufactured prototype SSDGs on CGC GANNET, along with over $22k in costs for PEECO onsite technical support during prototype installation. The award to any vendor other than

PEECO for new SSDGs 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. Substantial duplication of cost and man hours would be incurred should the government choose to solicit industry again, for another vendor to design another SSDG. The man hour duplication would easily exceed thousands of man hours expended by PBPL Engineering, PBPL Support Staff and Contracting and Procurement Division

(CPD) personnel to create specifications, solicit, award, manufacture and test another First

Article from the new vendor. Not only would this cost not be recovered through competition, but having another vendor develop a prototype, complete First Article Testing, and then begin production, would require approximately 8 to 12 months from time of award. This would cause an unacceptable delay, on an already overdue WPB-87 Patrol Boat fleet SSDG system replacement. This delay would expose the USCG to unacceptable risk in its ability to maintain

USCG Patrol Boat availability in support of various Homeland Security missions, with a worst-case scenario being the new design fails to meet USCG requirements for this urgently needed replacement SSDG.

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The PBPL is now 5 years behind the intended SSDG installation on the WPB-87 fleet, with numerous WPB-87s running with SSDGs well beyond their recommended operational hours while awaiting replacement. In 2013 the WPB-87 Patrol Boat fleet began the process of replacing the currently installed outdated and out of production MAN Diesel Ship Service Diesel

Generators (SSDGs). On 17 April 2013 contract HSCG40-13-D-11011 was awarded to

Philadelphia Electrical Equipment Company (PEECO) for the design and manufacture of a new replacement WPB-87 SSDG. The first prototype was delivered and installed on CGC GANNET in August 2014. Due to initial prototype functional issues, PBPL initiated a new separate requirement for design and manufacturing of a modern replacement Ship Service Switchboard compatible with the PEECO generator. This development and testing of new Ship Service

Switchboard severely delayed anticipated purchases of PEECO generators during the current contracts performance period. The PBPL was unable to execute the required number of generator purchases during the current contract and has resulted in a need to solicit PEECO for another requirements contract in order to fulfill the requirement.

Additionally, In accordance with SFLC’s Configuration Management Process Guide CGTO PG-

85-00-670-S the WPB-87 and all USCG Surface Assets adhere to a strict doctrine of maintaining identical configuration of systems and equipment on each class of cutters. Identical configuration of the SSDG is absolutely critical across all WPB-87s for operation. These SSDG’s must be manufactured using the OEM specifications, standards, software and programming and must be identical in all aspects to the previously mentioned manufactured and tested First Article

Prototype.

6. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE SOLICITED FROM

AS MANY POTENTIAL SOURCES AS IS PRACTICAL:

Pursuant to FAR Subpart 5.2 in an effort to solicit as many potential sources as practical, a

Sources Sought notice was posted on Federal Business Opportunities (FBO) on 29 November

2017 and closed 06 December 2017 under previously used North American Industry

Classification System (NAICS) code 336320- Motor Vehicle and Electronic Equipment

Manufacturing. The sources sought notice was amended and reposted on 11 December 2017 under a more appropriate NAICS code, 335312- Motor and Generator Manufacturing.

Additionally, any responsible vendor may submit a quote and all responsible offers will be considered. If any responses are received as a result of this solicitation, the file will be documented accordingly and the requirement competed among all eligible offerors.

7. DETERMINATION BY THE CONTRACTING OFFICER THAT THE ANTICIPATED

COST TO THE GOVERNMENT WILL BE FAIR AND REASONABLE:

The Contracting Officer determines that the anticipated price will be fair and reasonable based upon the application of the price analysis techniques described in FAR 15.404-1(b), which may include comparison with the Independent Government Estimate (IGE), historical pricing of the previous contract for the prototype, and, if necessary, analysis of data other than certified cost or pricing data. The IGE’s base year was derived by applying a 5% escalation to actual prices found fair and reasonable under the 4th option year of the current contract HSCG40-13-D-11011. A 5%

NON COMPETITIVE EXTENSION TO 13-D-11011 Page 4 escalation rate was added to the subsequent option years of the IGE to arrive at a total estimated contract value. There is no catalog pricing available for purchase of these items.

8. DESCRIPTION OF MARKET RESEARCH:

Market research was conducted from September 2017 throughout December 2017 by searching companies on the internet and through Federal Supply Schedules. A Sources Sought notice posted on Federal Business Opportunities (Fed Biz Ops) on 29 November 2017 and closed on 15

December 2017 yielded two (2) responses. PEECO and Kraft Power responded expressing their interest and intent to quote. Kraft Power proposed an alternate or similar SSDG. However, as stated above, identical configuration of the SSDG is absolutely critical across all WPB-87s for operation and maintainability. PEECO’s response stated they are the OEM with no authorized dealers.

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

COMPETITION:

The 87’ WPB SSDG system parts must conform to design, materials and operational requirements. The USCG competitively awarded a contract to PEECO for the original prototype to be installed onboard an 87’ WPB. As stated above, proprietary software which is installed on the SSDG and proprietary licensing for the hardware are proprietary to PEECO and were not previously obtained. The use of parts not manufactured in accordance with OEM specifications, materials, tolerances, etc. could cause equipment failure rendering the vessel unable to complete mission requirements and place the crew in a hazardous environment possibly causing injury or death.

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

IN THE ACQUISITION:

A Sources Sought notice was posted on Federal Business Opportunities (FBO) on 29 November, 2017 and closed 06 December, 2017 under previously used North American Industry

Classification System (NAICS) code 336320, Motor Vehicle and Electronic Equipment

Manufacturing. The sources sought notice was amended and reposted on 11 December, 2017 under a more appropriate NAICS code 335312 Motor and Generator Manufacturing.

The following vendors responded:

1. Philadelphia Electrical Equipment Co., Inc. (PEECO) – Original Equipment Manufacturer

14 Mount Pleasant Road

Aston, PA 19014

DUNS: 06-274-5773

Small Business

*PEECO provided a statement in an email dated 11 December 2017 refusing to sell proprietary data rights to the software they created which operates all functions on the SSDG as well as

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OEM proprietary rights to the manufacturing. This prevents USCG from utilizing another vendor to manufacture SSDG’s based on this design.

2. Kraft Power

241 West Parkway

Pompton Plains, NJ 07444

DUNS: 04-841-1128

Large Business

*This vendor was informed that the USCG is not soliciting for alternate SSGD’s and that the requirement is for the specific model designed by PEECO due to configuration management requirements.

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:

PEECO, the OEM, responded to the Sources Sought with a letter outlining their proprietary data rights to the software they created, which operates all functions on the SSDG, as well as OEM proprietary rights to the manufacturing. The Contracting Officer’s Representative contacted

PEECO to investigate the possibility of the Government purchasing their proprietary data rights.

On December 11, 2017, PEECO responded in an email refusing to sell proprietary data and that they are the OEM with no authorized dealers. The USCG will continue to engage PEECO for the release of proprietary data prior to any subsequent acquisition. In the future, if PEECO quotes a price for the proprietary data rights, the USCG will weigh the benefits of purchasing the data rights at that time.