Justification and Approval 70Z08520CP4504500 Redacted_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 70Z08520RP4504500

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 The Department of Homeland

Security (DHS), United States Coast Guard (USCG), Surface Forces Logistics Center (SFLC), Contracting & Procurement Division, Contracting & Procurement Branch 2 in support of the Long Range Enforcement Product Line (CPD2 LREPL) proposes to enter into a contract on a sole source basis.

2. Nature and/or Description of the Action being Approved. A short paragraph describing the effort to be placed on contract, or the modification action.

(a) Nature of the action: The Government intends to award a contract on a sole-source basis to Wartsila Defense Inc. (Wartsila) for a technical representative (tech rep) and shop overhaul services in support of the CGC HEALY Main Diesel Engine (MDE) Maintenance under Request for Proposal (RFP) 70Z08520RP4504500.

(b) Name and address of the contractor:

Wartsila, 3617 Koppens Way, Chesapeake, VA 23423

(c) Type of action: A firm-fixed price commercial solicitation will be issued using the procedures set forth in FAR Subpart 13.5 Simplified Procedures for Certain Commercial Items.

(d) Estimated total value (including options): The total estimated value of this acquisition is with a period of performance of January 8, 2020 to February 12, 2020 plus four days for dock side testing to be determined by the Contracting Officer’s Representative (COR). There are no option years.

(e) Type of funding: Operating and Support funds

(f) Year of funding: Fiscal Year 2020

(g) Solicitation number: Request for Proposal (RFP) 70Z08520RP4504500

(h) Background information about the requirement: Wartsila is the Original

Equipment Manufacturer (OEM) of the USCGC HEALY’s Main Diesel Engines (MDEs). Wartsila holds the proprietary data rights to the MDE and as a result is the only contractor able to perform the requirement.

3. Description of Supplies/Services. The USCG requires the use of a Wartsila authorized

Tech Rep and certified overhaul shop for the maintenance and repair of four (4) Marine Diesel Engines (MDE) aboard the USCG Cutter (USCGC) HEALY (WAGB-20). The engines are Sulzer 12ZAV40S Diesel Engines that were originally manufactured by Wartsila Defense, Inc. Each engine is comprised of twelve (12) cylinders and rated for 7,920 kW. In particular, the Tech Rep overseas the CGC HEALY’s crew during the repairs and provides the OEM proprietary information for use and assists in proper repair methods, and ensure compliance with manufacturer's procedures and standards during disassembly, inspection, repair, modification, calibration, and reassembly of the equipment/system.

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. 3304(a)(1) implemented by FAR Subpart 6.302-1, “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.”

5. Identification of Exception to the Buy American Statute. (Section is required to be completed when the J&A includes the exception listed under FAR 25.103(b)(2) or FAR 25.202(a)(2)). Identify the nonavailability exception listed under FAR 25.103(b) or FAR 25.202(a)(2). Not exempt.

6. Demonstration that the Proposed Contractor’s Unique Qualifications or the Nature of the Acquisition Require Use of the Authority Cited.

Wartsila is the OEM of the MDE installed on CGC HEALY and possesses the proprietary design data, drawings, and knowledge to complete the required work and certify these systems for operation. Wartsila is the only source for a certified repair shop and certified technical representatives.

If a third party vendor who does not have access to proprietary data and certified shop services were to provide engine maintenance and repair oversight, chances of an engine failure would be considerably increased, posing an unacceptable and entirely avoidable risk to the cutter, crew, and mission. An engine casualty would threaten completion of several National Science Foundation funded missions and possibly strand the CGC HEALY in the Arctic.

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

Potential Sources as is Practicable.

The procurement is posted on the DHS Advanced Planning Forecast System (APFS) record No. F2019047155 ( ). Additionally, as required by FAR Subpart 5.2, a sources sought notice was posted on the Federal Business Opportunities (FedBizOpps) web site on September 16, 2019. The notice detailed the work expected and notified industry of the future acquisition. It also invited vendors with the expertise and required knowledge for this work to submit information discussing such capabilities. The notice closed on September 23, 2019. ( ).

An intent to sole source notice was posted on the FedBizOpps website on September 24, 2019 and closed on October 09, 2019 ( ). This Sole Source Justification will be posted on FedBizOpps website in accordance with FAR 6.305.

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

Government will be Fair and Reasonable. The Contracting Officer determines that the anticipated prices received will be fair and reasonable in accordance with FAR subpart

12.209. A price analysis will be conducted comparing the proposed prices received to the Independent Government Estimate and comparison to historical prices paid. Previous contract 70Z08519PP4540300 was awarded March 15, 2019 for $608,514.00 and will be used for comparison purposes. 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.

9. Description of Market Research. Market research is required by FAR Part 10, and the results of the market research should be summarized here. Include the following information:

Market research was conducted by the project manager to determine if there were any other viable resources available to meet the needs of this justification; however, due to the proprietary nature of the systems involved only the OEM certified tech reps and shops will be capable of performing the repairs.

An email was sent to Wartsila’s on September 09, 2019 to inquire on proprietary data rights ( ). He responded back to our inquiry with responses via email on September 09, 2019:

1. Does Wartsila hold the rights to the proprietary data for HEALY's Sulzer Diesel Engines

(Type 12AV40S)? Yes. Wartsila bought Sulzer to become Wartsila NSD (New Sulzer Diesel) and eventually reverted to just Wartsila Oy.

2. Would you allow the USCG to use that data for free? Sorry, the merger cost many millions . Sorry.

3. Would you sell the USCG the data rights? I can ask, but I expect the answer is no and if it were yes could be 100's of millions.

In response to an additional market research inquiry made via email on September 16, 2019, responded back via email on September 18, 2019 that “Capability to Perform Work: Wartsila Oy , WDI’s parent via Wartsila Holding, Inc., is the sole OEM for Z40AS engines through merger with Sulzer about 25 years ago. Our last service completed in July 2019. We have serviced the Healy exclusively since 1998. We hold all patents and licenses and do not provide privilege or knowledge to any aftermarket firms because of the hundreds of millions of euro/dollars expended to develop these engines. We have more than 250 of these engines in service in North America”.

10. Any Other Facts Supporting the Use of Other Than Full and Open Competition. This section presents an opportunity to strengthen the justification by presenting supplemental or supporting information. Do not summarize or duplicate information already stated in previous sections. This section should include information such as:

The Coast Guard does not possess the technical data, knowledge and/or drawings pertaining to the manufacturing or the maintenance of the Sulzer Main Diesel Engines. These engines are designed, engineered, and built to close tolerances and have undergone numerous shop tests and rigorous operational testing before being certified and approved by the OEM for use by the end user. The OEM, Wartsila, and their distributors are the only known sources possessing the original drawings, specifications, engineering control procedures and proprietary methods to ensure the design configuration, manufacturing and quality control required to ensure these engines operate in accordance with engineering specifications and requirements. Using other than the OEM to provide these services would significantly increase the chances of an engine failure thus preventing the CGC HEALY from performing her mission.

11. A Listing of the Sources, if Any, that Expressed, in Writing, an Interest in the Acquisition.

A synopsis was issued in FedBizOpps on September 16, 2019 requesting that parties express their interest in writing to the contracting officer. Only Wartsila responded.

Business Category Name of Potential Source(s)/Other POC

Information Large Business Wartsila Defense Inc.

3617 Koppens Way, Chesapeake, VA 23423.

Richard Reynolds at (206) 227-2114.

Email:

Richard.Reynolds@wartsiladefense.com

Small Business Small Disadvantaged Business Section 8(a) Business Woman-Owned Business HUBZone Small Business Veteran-Owned Small Business Service-Disabled Veteran-Owned Small Business

12. 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. Include a statement of actions taken or that will be taken to increase competition for future acquisitions of the same item/service. Address information such as:

The USCG has not been able to procure data rights from the OEM and has no plans at this time to mailto:Richard.Reynolds@wartsiladefense.com pursue a configuration change that would allow purchasing of data rights. In the future, if Wartsila provides a price for the proprietary data rights, the Coast Guard will weigh the benefits of purchasing the rights at that time.

Signature page is redacted in its entirety.