JOTFOC_WAESCHE_Reduction_Gear_Inspection_Repair_redated_Redacted.pdf

SOLE SOURCE JUSTIFICATION

For Certain Commercial Items for Procurements Exceeding the Simplified Acquisition Threshold pursuant to FAR Subpart 13.5, Including Brand Name

Solicitation Number 70Z08519QP45H3100

Pursuant to the authority of 41 U.S.C. 1901 as implemented by Federal Acquisition Regulation (FAR) Subpart 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), Contracting and Procurement Division (CPD), Branch 2 in support of Long Range Enforcement Product Line (LREPL).

2. Nature/Description of the Action: SFLC CPD2 LREPL intends to solicit and negotiate a sole source contract with MTU America, Inc. (MTU), 39525 Mackenzie Drive, Novi, MI 48377- 1602, to purchase services and materials required to conduct the unplanned inspection and repair of the number one main reduction gear onboard USCGC WAESCHE. The total estimated value of this acquisition is . A firm-fixed price commercial solicitation will be issued using the procedures set forth in FAR Parts 12 Acquisition of Commercial Items, and FAR Subpart 13.5 Simplified Procedures for Certain Commercial Items. The period of performance is five weeks after contract award. Operating & Support funds for Fiscal Year 2019 will be utilized for this requirement.

3. Description of Supplies/Services: This requirement is for the contractor to provide all necessary materials, equipment and personnel and other such things to perform ship repair services onboard USCGC WAESCHE (see table below).

A breakdown of the government estimate follows:

CLIN Item Description Total 0001 No. 1 Main Reduction Gear, Troubleshoot and Repair, Perform (Performance Period: Five Weeks after contract award)

4. Identification of Statutory Authority: The statutory authority permitting other than full and open competition is 41 U.S.C. 1901 as implemented by FAR 13.5.

5. Demonstration that the Nature of the Acquisition Requires Use of the Authority Cited:

MTU is the only source for proprietary information, because the company is the original equipment manufacturer (OEM) and original integrator (OI) of the WAESCHE’s propulsion system. MTU is both the OEM of the main engines and the OI of the engines connections to the support generators. They are also the OI for the connection of both Main Propulsion Diesel engines to the controls for the controllable pitch propellers. At the time the MTU 20V, 20-cylinder 9,730 horse power engines were purchased for all the WSML’s from MTU America, the Coast Guard’s Surface Force Logistics Center did not acquire the related drawings and data supporting the engine and its design that integrated them into the propulsion system. The engine parts have very tight tolerances and the correct assembly procedures are critical to the performance of the engines. There are no other firms that possess the manufacturer drawings, specifications, and other technical data that include the updates and technical bulletins which are pertinent to the maintenance of the MPDEs. In an effort to maximize competition, on 2 July 2019, the USCG asked a representative from MTU whether they would be willing to release proprietary data. MTU responded by indicating that they and their parent companies were unwilling to release any manufacturing drawings, specifications, or other technical data related to the maintenance of the MPDEs. This proprietary data would be required in order to open competition for these services to any other vendor, because attempting to perform maintenance and inspection services without access to this technical data, which includes performance tolerances / characteristics / parameters, would create a significantly increased risk of engine failure.

If a third party vendor were to perform the repairs without access to the OEM proprietary data, chances of an engine failure in open waters is significantly increased. If the MPDEs were to fail while on patrol in open water and propulsion systems were to fail, not only would the congressionally mandated operational schedule be placed at risk due to delays associated with the repair, but also the crew could be placed in harm’s way awaiting that repair.

If the MPDEs on USCGC WAESCHE were to fail, the following mission capabilities would be placed at risk.

- Search and Rescue: This is the most common and visible mission of the United States Coast

Guard. Since these missions deal with life and death, the Reduction Gear must meet an exceptionally high standard for reliability and performance.

- Counter Narcotics Operations: When intelligence is received or a target is located, the MPDEs will be ramped up, so the cutter can respond as fast as possible. Not maintaining the MPDEs, or limiting its performance due to symptoms (ex: overheating, unusual noise, high vibration), will significantly degrade the cutter’s ability to respond.

- Fisheries Enforcement: These are endurance operations that require the MPDEs to either be sprinting to the next fishing fleet, or be in standby, while the cutter station-keeps alongside a fishing vessel with a boarding team onboard. Fisheries Enforcement patrols will require the MPDEs to be constantly engaged with predictable performance.

- Defense Operations: Defense Operations are extremely high tempo with an exceptionally slim margin for error. While in a precarious situation, halting the MPDEs for even short periods to correct minor casualties is unacceptable. They must be performing at their peak.

Delays due to engine failures could result in schedule impacts that could significantly reduce the ability of USCGC WAESCHE to support US interests around the globe.

Most importantly, the reason for the sole source status of MTU on the WAESCHE for maintenance is they hold the technical expertise, manufacturing drawings, specifications, and all other technical data as it relates to the WAESCHE’s engines.

6. Description of efforts made to ensure that offers are solicited from as many potential sources as is practicable: In an effort to promote competition a Sources Sought was posted on Fedbizopps (70Z08519QP45H3100) on 1 July 2019.

Additionally, this procurement is posted as DHS-Acquisition Planning Forecast System (APFS) No. F2019046885 at http://apfs.dhs.gov.

7. Determination by the Contracting Officer that the anticipated cost to the Government will be Fair and Reasonable: The Contracting Officer anticipates that the price will be fair and reasonable price based on a price analysis comparison with the Independent Government Estimate and extensive acquisition history with MTU America. Additionally, in accordance with DHS policy, the offeror may be required to submit Data Other than Certified Cost or pricing Data (FAR 15.403-3) to support price negotiations.

8. Description of Market Research: Market research was conducted on 1 July 2019 to 8 July

2019. Market research included a review of acquisition history, commercial and government databases (Fed Log, Inventory Locator Service research tools, internet research and FedBizOpps). A Sources Sought Notice was posted on Fedbizopps on 1 July 2019 with a response due date of July 8th. No responses were received except for MTU. In addition, MTU shared their qualifications with the Contract Specialist and they stated that they would not sell engine propriety data to 3rd party companies. Market research confirmed that MTU America does not have any authorized distributors or certified service centers for this model engine.

9. Any Other Facts Supporting the Sole Source Action: The Coast Guard possesses the MTU special tooling on the cutter; this is for the convenience for the MTU technician. The special tools were initially purchased for storage on the vessel. By doing this, the CG saves the expense of MTU’s shipment of these tools to jobsites for each project. Neither the Coast Guard nor any marine engine repair company has the expertise to use these tools. The Coast Guard is completely dependent on MTU.

During market research, the Coast Guard learned that (non-OI) vendors do not have access to the MTU tech data, which is the proprietary information. Additionally, updates/upgrades to this data are incorporated periodically to ensure continued reliability and safe operation of the main engine propulsion system. These updates are not available commercially, e.g. there are no dealers of MTU parts and technical data.

10. A listing of sources, if any, that expressed, in writing, an interest in the acquisition.

As a result of the sources sought notice #70Z08519QP45H3100 posted on FBO on 1 July 2019, an email from MTU was received on 8 July 2019. MTU stated having the capability, tooling, parts, and expertise to perform all required Main Diesel Engine (MDE) maintenance.

Between MTU America Inc. and their parent company, Rolls Royce Power Systems/MTU Friedrichshafen, they have the service capability of performing up to a QL4 maintenance level on the 20V1163TB93 engines currently installed in the US Coast Guard's National

Security Cutters (NSC). MTU is the sole certified repair company in the United States for the MTU 20V1163 engine series. They will review the work requirements, and submit a quote.

No other responses were received. The Contracting Officer has determined no other company will have access to proprietary specification information, and therefore MTU will be the only company who can satisfy the Government requirement in accordance with the terms and conditions of this contract.

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: Due to the fact that MTU America continues to retain proprietary ownership of the technical data necessary for performing the required services on the WAESCHE’s diesel engines and has declined to release the data to the USCG, USCG anticipates that it may be difficult to obtain competition in future procurements.. However, USCG Contracting will continue to advertise future requirements through FBO and will continue to seek access to the technical data sufficient to enable competition.

12. Technical/Requirements Personnel Certification:

I certify that this requirement meets the Government’s minimum need and that the supporting data, which forms a basis for the justification, is accurate and complete.

Availability Project Manager Date

13. Contracting Officer’s Certification:

I certify that the data supporting the recommended use of other than full and open competition is accurate and complete to the best of my knowledge and belief.

Contracting Officer Date

14. Legal Review

I have reviewed this justification and deemed it legally sufficient.

Attorney Date

15. Level-Above Contracting Officer Concurrence:

Section Chief Date