NWP_JA_REDACTED.pdf

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

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

Only One Responsible Source and No Other Supplies Will Satisfy Agency Requirements

70Z08018R21051B00

Pursuant to the requirements of the Competition in Contracting Act (CICA) as implemented by

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, U.S. Coast Guard, Surface Forces Logistics Center

(SFLC), located at 2401 Hawkins Point Road, Baltimore, MD 21226-5000, proposes to enter into a contract on a basis of other than full and open competition.

(2) Nature and/or Description of the Action Being Approved.

The Coast Guard has a requirement on a sole source basis, for the acquisition of four (4) Esher-

Wyss (EW) Controllable Pitch Propeller (CPP) Hubs, two (2) each left hand (LH)NSN 2010-01-

118-8538 and two (2) each right hand (RH) NSN 2010-01-119-5469; the overhaul of “F” condition hubs, and the purchase of parts for stock at a total estimated value of $8,299,118.16.

This requirement will use other than full and open competition procedures in accordance with

Federal Acquisition Regulation (FAR) Part 6.3. The estimated period of performance will be

September 2018 through September 2023.

It is the Coast Guard’s intention to award a Requirements contract, with firm-fixed-priced delivery orders utilizing procedures established under FAR Parts 12 and 15 to:

NW Propeller Operations, Inc.

10902 25th Avenue South

Lakewood, WA 98499

Andritz Hydro is the Original Equipment Manufacturer (OEM) that owns and controls all proprietary data, drawings, specifications and manufacturing data of the Escher-Wyss

Controllable Pitch Propeller systems and all parts and components contained within the systems.

NW Propeller Operations, Inc. (NWP) is the only U.S. based company who has an established relationship with the OEM to receive all technical information and the ability to purchase genuine

OEM parts to use during overhauls.

Delivery orders will be individually funded with appropriated funds (45).

(3) Description of Supplies/Services.

The requirement is for the procurement of four (4) newly manufactured hubs, two (2) each LH

2010-01-118-8538 and two (2) each RH 2010-01-119-5469; the overhaul of hubs (two hubs per

CLAyers Text Box year); and the purchase of various stock items to be provided as Government Furnished Material

(GFM) during overhauls to avoid major delays caused by the long lead times of these parts required during overhaul. The hubs are a component of the propulsion system installed on the

270’ WMECs.

A list of parts intended for purchase is attached (IGCE, Tab titled “Parts”). These parts are expected to support projected overhauls throughout the life of this contract and cut down overhaul timelines by as much as six (6) months.

Individual estimated contract costs have been identified as follows:

Description NSN Estimated Total Value Manufactured EW Hubs 2010-01-118-8538/2010-01-119-5469 $2,870,400.00

Overhaul of EW Hubs 2010-01-118-8538/2010-01-119-5469 $3,699,879.36

Stock shelf items Various NSNs $1,728,838.80

Total value of all three procurement actions for one (1) base year and four (4) option years is valued at $8,299,118.16, broken down as follows:

Period Base Year

Duration 12 mo.

Total $5,171,639.92

Option Year 1 12 mo. $800,247.97

Option Year 2 12 mo. $738,217.37

Option Year 3 12 mo. $775,128.24 Option Year 4 12 mo. $813,884.66

Total $8,299,118.16

(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)(l) implemented by the Federal Acquisitions Regulation (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 270’ WMEC vessels contain EW CPP systems consisting of a hub, blade set, oil tubes, and oil distribution boxes that transfer hydraulic oil under pressure to the change the pitch of the propeller blades. Escher-Wyss provided the Coast Guard with complete CPP hub systems to include parts breakdowns and technical publications for the operation and maintenance of the systems as well as technical documentation for the provisioning and stocking of spare maintenance and overhaul parts. The overhaul portion of this requirement is solely for the hub component of the EW CPP system. None of the documentation provided contains proprietary technical information to enable non-OEM companies to adequately service the hubs or allow the

SFLC to evaluate third party parts as equal to the OEM.

NWP in Seattle, WA is the only entity in the United States that has direct access to the OEM proprietary drawings, wear limits, dimensional specifications, component composition and

CLAyers Text Box engineering support currently held by Andritz Hydro in Ravensburg, Germany. Andritz Hydro does not provide these OEM services, support, or parts to any other entities in the United States.

Without direct access to the assistance provided by Andritz Hydro, it would be impossible to ensure the hubs are overhauled and restored to satisfactory OEM standards and specifications or the genuine OEM parts and newly manufactured hubs are acquired. Inferior or third party parts and procedures could result in catastrophic failure of these vessels and disable entire propulsion systems rendering them unable to perform their missions.

In a letter (attached), dated 12 February 2018, Andritz Hydro identified NWP as the only overhaul facility and parts distributor in the United States for the EW hubs, who can obtain the technical data and assistance from Andritz Hydro if required, and detailed the history of how Andritz Hydro came into ownership of the data rights to the EW hub systems. This letter also addressed a letter of introduction submitted by Propulsion Systems, Inc. (PSI) on 2 January 2018. PSI’s introduction stated Andritz Hydro met with PSI and discussed the possibility of Andritz Hydro providing PSI with technical information on a case by case basis as well as sell an instruction manual for another EW system PSI currently works on. However, the 12 February letter from

Andritz Hydro dispels any misunderstanding of a relationship or potential relationship between

PSI and Andritz Hydro. The letter from Andritz Hydro also states that no information of any kind is for sale or will be for sale in the future to any entity.

Installing a new CPP hub system instead of overhauling the EW system currently installed would require all MEC vessels to be dry docked in order to replace the existing system. The current average price to dry-dock a cutter is approximately $128,000.00 and with thirteen (13) active 270’ cutters, replacing the CPP systems would also cost an additional $1.7M in dry-docks. The 270’

WMEC are on a four (4) year dry docking schedule. Adding the replacement of entire CPP system would add a very extensive work item during a dry dock that would most likely result in a longer than normal dry dock availability. In addition to the actual cost of dry docking a vessel there are logistical expenses involved in lodging and messing for the crews, and the Coast Guard would need to update engineering drawings and calculate any weight changes that may affect vessel trim and buoyance. Replacing the current CPP system would require provisioning and allowancing of repair and long lead time support parts, technical publication changes, drawing updates, warehouse and vessel spare parts on load and also crew and support personnel training.

The total cost of replacing the current systems, provisioning actions, spare parts for stock, purchase of spare hubs, dry-docking to replace the systems, labor, contracting, and all additional logistics involved, an estimated total of $27M, is not justifiable in comparison to the expense of maintaining and supporting the current systems. Most importantly, the Coast Guard has plans to decommission these vessels starting in 2030 and the benefits of replacing all of the installed CPP systems would have to be weighed against the existing service life of the vessels. These systems will be required to be supported through 2035 at a minimum even though decommissioning would begin sooner.

(6) Description of Efforts Made to Ensure That Offers are Solicited from as Many Potential

Sources as is Practicable.

A Sources Sought Notice was posted on FBO from 9 February 2018 with contractor interest

Text Box

CLAyers Text Box expressed in writing to be submitted by 19 February 2018. Only one (1) response was received from NW Propellers on 9 February 2018. Their response indicated their interest in the requirement and a letter from the OEM defining NWP relationship with Andritz Hydro.

(7) Determination by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable.

The contracting officer anticipates that the cost to the Government will be fair and reasonable based on prior acquisition history under contract number HSCG40-11-D-30088, in comparison to the Independent Cost Government Estimate (IGCE), price analysis, and/or through the use of other than certified cost or pricing data in accordance with FAR Part 15.

(8) Description of Market Research.

Market research as prescribed in FAR Part 10 was conducted by the Contracting Officer’s

Representative (COR) and the Contract Specialist (KS). The internet was searched for a list of contractors that possessed the necessary technical data, drawings, manufacturing data and specifications that could provide OEM parts and possess overhaul capabilities necessary to return the hubs to OEM like new condition. The market research revealed that only NWP possesses the required capabilities. The manufacturer or authorized sole authorized US company possess the required capabilities to ensure compatibility and/or interchangeability with existing hubs and replacement parts. The purchase or use of other than original equipment manufacturer (OEM) parts could result in faulty and/or nonstandard items. Additionally, the use of non OEM parts can lead to voiding of any existing warranty(s) and costs associated with additional overhauls.

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

As identified above, NWP is the only source authorized by the OEM to complete the overhaul of the hubs and to provide the required parts. If another manufacture’s controllable pitch propellers were utilized, extensive internal modifications to the propulsion shaft system would be required.

These modifications would not only be prohibitively expensive but would compromise the commonality and configuration of the 270’ WMEC class cutters. Additionally, these CPP systems rotate at high RPMs. If non-OEM parts or procedures are utilized, catastrophic failure could occur causing significant damage to the ship’s hull and surrounding equipment.

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

Acquisition.

NW Propeller Operations, Inc. responded to the Sources Sought Notice posted on FBO on 9

February 2018 (see attached response and OEM letter).

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

Barriers to Competition Before Any Subsequent Acquisition for the Required Supplies or

Services Required.

To date, the Government’s continued attempts to seek data rights for the hubs from the OEM have been denied and any future requests are deemed uncertain. Efforts must continue to be made to support these systems due to their current installation on the 270’ cutters.

These parts and services will continue to be an on-going need for the Coast Guard. The effort involved with re-capitalizing the CPP system is currently in process. As part of the preparations for the 270 Service Life Extension Projects (SLEP), the Engineering Services Division (ESD)/In-

Service Vessel Sustainment (ISVS) is conducting a study to determine the feasibility of replacing the Controllable Pitch Propeller system currently used on the WMEC 270’ B class vessels.