Redacted_JA18-033_SAP_MaxSecure_831811994_Final.pdf

JUSTIFICATION FOR OTHER THAN FULL AND

OPEN COMPETITION (OTFAOC)

Federal Acquisition Regulation (FAR) Part 6 Justification & Approval (J&A), Supporting Procurements under FAR Part 12, FAR Subpart 13.5, and FAR Part 15

Purchase Request Number: N0003918MP00152 Contract Number: To be determined Task/Delivery Order Number: Not Applicable Procurement Title: Systems, Applications, and Products (SAP) MaxSecure Support Services Estimated Value: $6,321,231 Statutory Authority: 10 U.S.C.2304(c)(1). (FAR 6.302-1/DFARS 206.302-1)

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION (OTFAOC)

Justification for OTFAOC Number: JA18-033

Upon the basis of the following justification, I, as Procuring Activity Competition Advocate, hereby approve the use of other than full and open competition of the proposed contractual action pursuant to the authority of 10 U.S.C.2304(c)(1). (FAR 6.302-1/DFARS 206.302-1).

1. REQUIRING AGENCY AND CONTRACTING OFFICE:

Requiring Agency:

Navy Enterprise Business Solutions Program Office Washington Navy Yard 1325 10th Street SE Bldg. 196, Suite 400 Washington, D.C. 20374

Contracting Office:

Defense Information Systems Agency (DISA) Defense Information Technology Contracting Organization (DITCO) Scott, PL8312 2300 East Drive, Building 3600 Scott AFB, IL 62225-5406

2. NATURE/DESCRIPTION OF ACTION(S): This procurement is for SAP MaxSecure support services for the Navy. The contract type will be Firm-Fixed Priced for a base period of one year, with two 1-year options. FY18 Operations and Maintenance funds will be used for this procurement.

3. DESCRIPTION OF SUPPLIES/SERVICES: This J&A authorizes and approves the issuance of a sole source contract for SAP MaxSecure Support Services. The SAP MaxSecure service contract will provide the Navy Enterprise Resource Planning (ERP) program with rapid response times to support request from SAP. The service will provide resources whose sole focus will be to understand the Navy ERP system and react to any issues related to the software affecting the production system. This will support the mission with respect to minimizing downtime and impacts to the user base for the Navy ERP enterprise business system. Other requirements

SAP MaxSecure Support Services-JA18-033

Page 2 of 8 Pages include assistance in standing up a certified Navy ERP SAP competency center and recommendations for improvements within the Navy ERP SAP system with regard to system performance. Description of the specific support services include:

• SAP Government Support and Services (GSS) Secure Back Office Infrastructure and

Remote Support: With standard SAP maintenance under the software license, customer messages may be viewed and addressed by SAP global support, without restrictions. When connection is needed to the licensee network in cases where login is required for problem resolution, licensee requires that login can only be performed by Department of Defense (DoD) cleared resources over an approved communication channel that terminates in the continental United States (US). Under this requirement, SAP GSS provides this secure channel and maintains a controlled area from which the secure connection will terminate in a GSS-provided, or, if agreed, a licensee-provided, personal computer (“PC”). This PC shall contain and be prepared to run the agreed upon and licensee-provided Client Virtual Private Network software, which will enable the SAP GSS secure connection to the licensee solution infrastructure.

• SAP GSS On-Site Technical Quality Manager: Includes, but is not limited to:

o Full understanding of the US Navy solution, security, business processes and landscape to be able to address top issues proactively.

o Central point of contact from SAP support at US Navy and interfaces into the SAP back office.

o Coordinates integration and testing with US Navy ERP.

o Ensures access to the right resources at SAP (expertise on demand).

o Escalation path into SAP to ensure fast issue resolution.

o Coordinates experts from SAP during service delivery.

o Manages top issues to ensure resolution and, if necessary, appropriate escalation paths.

o Monitors and reports engagement to US Navy and SAP management.

• SAP GSS Safeguarding and Subject Matter Expert Services: Analyzes, evaluates, and provides findings and recommendations for further knowledge transfer, mentoring and best practices.

The Period of Performance (POP) and estimated cost are as follows:

Year Period of Performance Estimated Cost Base FY 18 January 18, 2018 – January 17, 2019 $2,104,077 Option 1 FY19 January 18, 2019 – January 17, 2020 $2,104,077 Option 2 FY20 January 18, 2020 – January 17, 2021 $2,104,077 Total Life Cycle Estimated Cost

$6,312,231

Page 3 of 8 Pages

4. IDENTIFICATION OF STATUTORY AUTHORITY: Only one responsible source and no other supplies or services will satisfy agency requirements, 10 U.S.C.2304(c)(1). (FAR 6.302-

1/DFARS 206.302-1);

5. DEMONSTRATION OF CONTRACTOR’S UNIQUE QUALIFICATIONS:

(a) Description of events. In December 1998, the Secretary of the Navy Revolution in

Business Affairs Commercial Business Practices Working Group established four ERP pilots as enablers for reengineering Navy ERP business processes. Each Navy pilot program focused on selecting a commercial ERP product that contributes to the Navy’s mission. SAP, Oracle and PeopleSoft were candidates considered by each pilot. These four ERP pilots independently selected the commercial-off-the-shelf vendor SAP as the system solution. The Navy’s estimated total investment in these four pilots was approximately $1 billion. In 2003, the Assistant Secretary of the Navy-Research Development Acquisition directed the convergence of the pilots to standardize business processes on a Navy-wide basis and chartered the Navy ERP Program Management Office to oversee the acquisition and fielding of a Navy-wide ERP implementation using the SAP solution. The Navy ERP Program includes and expands upon the functionality implemented in the original pilot projects. SAP provides unified business processes and automated information systems supporting material management, plant maintenance, whole sale supply, financial management, program management and workforce management. In 2004, the Navy began to develop an ERP system that was built using SAP ERP core software products. The proposed sole source contractor, SAP National Security Services (NS2), has been providing the required MaxSecure support since 2008. The Navy’s ERP system uses core integrated software products from SAP to support its solution. The specialized support provided by SAP NS2 ensures the sustainment of SAP integrated software products is managed by the highest skilled technicians. To this end, SAP MaxSecure has provided excellent service to Navy ERP since 2008. MaxSecure’ s approach to onsite total quality management has resulted in very rapid responses to any issues the Navy has had with the SAP product as well as providing exceptional performance improvements to the overall Navy ERP system, both of which have resulted in increased productivity to Navy ERP end users.

(b) Justification.

(1) Minimum Government requirements. In order to prevent a break in service and support for the Navy’s SAP-based ERP system, MaxSecure support is required to be in place by January 18, 2018. Even if time allowed for competitive acquisition procedures, SAP NS2 would still remain the sole source provider of the services required.

(2) Proposed sole source contractor. SAP NS2 has been the incumbent contractor providing the required MaxSecure support since 2008 across multiple contracts as discussed in the procurement history (paragraph (a) of section 11) below. SAP NS2 does not authorize any resellers or channel partners to provide the required services in support of their software, as discussed further below. If award were not made to SAP NS2, the Navy would incur substantial duplication of cost in acquiring and developing a new ERP system that is based on an alternative to SAP products and software

Page 4 of 8 Pages licenses. Moreover, the only solution to obtain open competition for SAP MaxSecure Support Services for the Navy ERP system would be to re-develop the existing SAP software infrastructure, resulting in an unacceptable delay in fulfilling the Navy’s requirement in addition to duplication of cost. From 2000 to 2004, the Navy invested $1 billion on market research and pilots of ERP software products. Since 2004, Navy ERP has invested an additional estimated $2.4 billion ($240 million annually) to develop and deploy the Navy ERP system built using SAP ERP core software products. In addition, to development and deployment cost, Navy ERP has invested $51 million in SAP software licenses and maintenance. While other software with similar functionality is commercially available, a reinvestment into a different software suite would be cost prohibitive. Procuring alternative software would cost at least $51 million, assuming a similar pricing structure as that for SAP software. This cost would be minor when considering the investment required to transition existing data to a new format, re-developing the solution using the new software; performing regression testing; and implementing, deploying, and re-training the workforce. Based on the time to initially deploy the Navy ERP system (2004-2007), it would take a minimum of four years to deploy using an alternative solution. The Navy would also incur a break in service and, during the four years it would take to transition to a new system based on an alternative software product, the current system would be unsupported.

(3) Discussion regarding cause of the sole source situation. The Navy’s ERP software is based on SAP integrated software products and the software licenses have been acquired through SAP. As such, the maintenance support required for this software must be SAP-based. This support is provided exclusively by SAP NS2 through SAP’s MaxSecure Support service. In an e-mail dated January 2, 2018, Greg Simon, SAP NS2’s Vice President, stated that, "SAP National Security Services (SAP NS2) is the only organization that is authorized to deliver the MaxSecure Service." As such, SAP NS2 is the sole source for providing the required MaxSecure Support.

(4) Demonstration of unique source. As described above, only SAP NS2 is authorized to provide the required MaxSecure Support for the Navy’s previously-acquired SAP software products. Therefore, SAP NS2 is uniquely capable of providing the required source.

(5) Procurement discussion. The current service agreement for MaxSecure support expires on January 17, 2018, so the new agreement must be in place by January 18, 2018 to avoid a break in coverage. As described above, SAP NS2 is the sole provider of these support services and they do not authorize any resellers to provide the required support services. Thus, this effort is a continuation of the service currently being provided by SAP NS2. As long as the Navy fields a SAP-based ERP system, support for SAP products will be required. Until SAP NS2 authorizes other resellers or channel partners to provide the required support for their products, they will remain the sole source provider.

Page 5 of 8 Pages

(6) Impact. Navy ERP is a mission essential business system currently supporting approximately 71,650 end users across multiple Navy Commands: Naval Air System Command, Naval Supply Systems Command, Naval Sea Systems Command, Space & Naval Warfare Systems Command, Strategic Systems Program Office and Office of Naval Research. Navy ERP is considered the Navy’s financial system of record and responsible for all the Navy’s managed materials. Navy ERP directly supports the war fighter by ensuring the efficient and timely appropriation, tracking and deployment of supplies. Without access to the level of support provided by SAP MaxSecure, the Navy will lack the dedicated support and SAP direct access necessary to resolve problems that may arise with the Navy ERP System in a timely manner. Additionally, the financial posture of the Navy would be jeopardized and its ability to support the warfighter would be compromised. Given the business critical role of the Navy ERP system and the significant investment and reliance by the US Navy, it is imperative that the availability of the system not be in question. A critical component of the solution to ensuring the continuous delivery of ERP services is the sustainability of the application configuration and the underlying business data.

6. FEDBIZOPPS ANNOUNCEMENT/POTENTIAL SOURCES: A Sources Sought Announcement was posted on FEDBIZOPPS January 4, 2018 with responses due no later than January 10, 2018. No other responsible sources were identified.

7. DETERMINATION OF FAIR AND REASONABLE COST: A price analysis will be conducted prior to contract award to ensure the price paid represents a fair and reasonable cost to the Government in accordance with FAR 15.404-1 Proposal Analysis Techniques. The contracting officer will make a determination that the anticipated prices are fair and reasonable.

8. MARKET RESEARCH: In accordance with FAR 10.002, market research was conducted to analyze the Government's need for the maintenance requirements. Further market research included reviewing General Services Administration (GSA) and the DoD Enterprise Software Initiative Blanket Purchase Agreement to determine if existing contracting vehicles could be used to procure the services required. SAP MaxSecure support was previously purchased off of the GSA schedules; however, that option is no longer available for these services. The services are now only commercially available through SAP NS2 directly.

Market research was conducted in October 2017 through January 2018, through a sources sought, internet searches, communication with other information technology companies, and communication with SAP to verify authorized resellers. It was determined through market research that SAP NS2 is the only SAP subsidiary authorized to deliver the MaxSecure Support and that no company contacted demonstrated an ability to meet the requirements.

9. ANY OTHER SUPPORTING FACTS: None

10. LISTING OF INTERESTED SOURCES:

Page 6 of 8 Pages

Not authorized to provide service

11. ACTIONS THE AGENCY MAY TAKE TO REMOVE OR OVERCOME BARRIERS

THAT LED TO THE EXCEPTION TO FULL AND OPEN COMPETITION:

(a) Procurement History. The following is a list of previous contracts for the requested SAP

Support Services; all of which were awarded as a sole source to SAP NS2:

(1) HC1028-15-P-0042, January 18, 2015-January 17, 2018, $3,022,875

Base, January 18, 2015 – January 17, 2016 $906,467 Option Year (OY) 1, January 18, 2016 – January 17, 2017, $882,467 OY2, January 18, 2017 – January 17, 2018, $908,941 MOD (add hours) Award to-January 17, 2018 $325,000

(2) HC1028-11-P-0151, January 14, 2011 – January 17, 2015, $4,842,281 Base, January 14, 2011 – January 17, 2012, $1,167,931 OY1, January 18, 2012 – January 17, 2013, $1,425,931 OY2, January 18, 2013 – January 17, 2014, $1,167,931OY3, January 18, 2014 – January 17, 2015, $1,080,488

(3) HC1028-10-P-2030, January 07, 2010 – January 06, 2011, $1,296,931

(4) HC1028-09-P-2046, January 07, 2009 – January 06, 2010, $1,526,000

(5) GS-35F-5891 HC1028-08-F-2122, January 04, 2008 – January 03, 2009, $1,526,000

(b) At this time, there are no other authorized re-sellers of SAP MaxSecure support. Navy

ERP will continue to conduct market research as new SAP requirements emerge to

Page 7 of 8 Pages determine if SAP has authorized any other vendors to sell MaxSecure support. If future market research indicates that there are authorized re-sellers, Navy ERP will compete the requirement. If future market research indicates that an alternative ERP software solution is more appropriate, or if there are authorized re-sellers, Navy ERP will compete the requirement.

12. REFERENCE TO THE APPROVED ACQUISITION PLAN (AP): In accordance with the exceptions under DISA Acquisition Regulation supplement 7.103 (S-91)(1)(i), an AP is not required.

Page 8 of 8 Pages

TECHNICAL CERTIFICATION: I certify that the supporting data under my cognizance which are included in the J&A are accurate and complete to the best of my knowledge and belief.

NAME: Leonard Meredith SIGNATURE: See separate signature page

TITLE: Navy ERP Technical Architecture Sustainment Team PHONE: 202-433-9344

REQUIREMENTS CERTIFICATION: I certify that the supporting data under my cognizance which are included in the J&A are accurate and complete to the best of my knowledge and belief.

NAME: Leonard Meredith SIGNATURE: See separate signature page

TITLE: Navy ERP Technical Architecture Sustainment Team PHONE: 202-433-9344

CONTRACTING OFFICER CERTIFICATION: I certify that this justification is accurate and complete to the best of my knowledge and belief.

NAME: Matthew R. Cassady SIGNATURE: See separate signature page

TITLE/ORGANIZATION: Contracting Officer, PL8312

PHONE: 618-229-9713 DATE:

PROCURING ACTIVITY COMPETITION ADVOCATE APPROVAL: I have reviewed this justification and find it to be accurate and complete to the best of my knowledge and belief.

Since this justification does not exceed $13.5M, this review serves as approval and my written determination that the aforementioned FAR circumstances apply.

NAME: Gay Arnold SIGNATURE: See separate signature page

TITLE/ORGANIZATION: PACA/DISA

PHONE: 618-229-9517 DATE:

ALL QUESTIONS REGARDING THIS JUSTIFICATION ARE TO BE REFERRED TO

Carmelyn Anne L.G. Bryan, 618-229-9237, carmelynanne.l.bryan.civ@mail.mil mailto:carmelynanne.l.bryan.civ@mail.mil