A.02.05 J&A for Sole Source_PDF_Redacted.pdf

CUI//SP-PROCURE/FED ONLY

JUSTIFICATION REVIEW DOCUMENT

OTHER THAN FULL AND OPEN COMPETITION

PROJECT/EQUIPMENT: Bluestone Lake Dam Crest Gearboxes and Couplings

CONTROL NO: LRH-FY24-42

AUTHORITY: 10 U.S.C. 2304 (C) (1) as implemented by Federal Acquisition regulation (FAR) FAR 13.106-1(b)-Only once source reasonably available, used in conjunction with FAR 13.501 Special documentation requirements.

AMOUNT:

Prepared by: James M. Holstein Contract Specialist Email: james.m.holstein@usace.army.mil

(304)399-5078

Contracting Officer: Cynthia A. Oxley Contracting Officer Email: cynthia.a.oxley@usace.army.mil

(304)399-5337

Technical Robert. S. Kinzel Mechanical Engineer Email: robert.s.kinzel@usace.army.mil

(304)399-6973

Requirements: Eric S. Jones Assistant Operations Manager Email: eric.s.jones@usace.army.mil

(304)710-7317

1. Contracting Activity. The responsible contracting agency is the U.S. Army Corps of Engineers (USACE), Huntington District, 502 8th Street, Huntington, WV 25701-2018

2. Description of Action. This Justification and Approval (J&A) is being prepared for the use of a sole source item, Philadelphia Gear, for ten (10) gearboxes, ten (10) couplings, and accompanying parts for a new contract. This contract will be a Firm-Fixed Price (FFP) supply contract and is funded through Operations and Maintenance funds. This equipment supply contract is not planned to be solicited among no other vendors or dealers. The gearboxes and couplings have been specifically designed for the application of which it will be used for at the Bluestone Dam Location.

This procurement will not be advertised on the SAM.gov website.

3. Description of Supplies/Services. The requested gearboxes are identical replacements for those currently in use at the Bluestone Dam project. The current gearboxes were fabricated by Western Gear, who sold their business, designs, and intellectual property rights to Philadelphia Gear in the 1990s.The total estimated cost of these supplies is approximately dollars which includes ten (10) gearboxes and ten (10) couplings.

Gear Boxes

WORM GEARBOX: 10 Replacement Worm Gearbox Budget Price based on information provided Western WB-17 Worm Gearbox Ratio 40:1

Total cost per gearbox and per coupling

4. Authority Cited. FAR 13.106-1(b)-Only once source reasonably available, used in conjunction with FAR 13.501 special documentation requirements.

5. Reason for Authority Cited.

a. Background. The original gearboxes at Bluestone Dam were produced by Western Gear Works. Philadelphia Gear purchased Western Gear Works in 1996 and is the only proprietary source of genuine Western and WesTech parts. The Bluestone Project office needs to acquire the same gearboxes as the existing ones to meet the same specs. Further, in FY20, the region began identifying the need for standardizing equipment specifically regarding a standardization effort to minimize complexity between projects for the maintenance crews and allow the same spare parts to be used at different projects. Additionally, Bluestone Dam awarded a contract sole source to Philadelphia Gear for 11 gearboxes and couplings in 2023. This contract replaced 11 of the existing gearboxes and now additional funds have allowed for a second contract for the remaining 10.

b. Justification. FAR 13.106(b) is the authority cited because of the intellectual rights that Philadelphia Gear possess with the gearbox design. Therefore, Philadelphia Gear is the only vendor that will satisfy the agency's needs for additional units or replacement items, and only one source is available.

Gearboxes are critical to the site because they control the crest gates of the Bluestone Dam. The existing gearboxes have been in service for between 70 and 80 years. Philadelphia Gear has the design rights to the existing gearboxes and have all the design and rating data with them.

Bluestone Dam needs a drop-in replacement of these gearboxes, mainly because of compatibility, standardization, the phenomenal performance, and life of the existing gearboxes, as well as saving time, effort, and Government funds. After discussion with Philadelphia Gear, it was concluded that there will not be any design changes. However, there will be material changes due to significant advancement in the material industry in the past 80 years. Any other manufacturers will have to create a design from scratch and will have to provide a gearbox with a different design. In 2018, a single gearbox was competed and procured through a Request for Quote (RFQ). This gearbox was fabricated by Atlanta Gearworks, a well-known gearbox supplier, but upon receipt of the gearbox, many changes were deemed necessary. These changes included drilling and modifications that weakened the integrity of the gearbox. Thus, any other manufacturer or design will pose significant risks, such as the 2018 procurement. In 2023, a contract was awarded to Philadelphia Gear to manufacturer 11 new gearboxes of the original design as direct replacement and this request for 10 more gearboxes will fully replace the aged gearboxes at Bluestone Dam without modification of the system and maintaining uniformity of the gate operating systems. The gearboxes are approaching the end of the mechanical lifecycle and need to be replaced before mechanical failure so as not to adversely impact flood risk management.

c. Alternatives. It would be a substantial cost to the Government if the Government were to use another manufacture to fabricate the gearboxes. This can be highlighted by the 2018 procurement where a gearbox fabricated by Atlanta Gear needed significant modifications in order to be serviceable, leading to delays and a substantial cost to the Government. An attempt to use another manufacturer to fabricate the gearboxes would cause delays, need additional funds, and would pose a risk to the Government. The model and brand of gearbox that this sole source is seeking are already in service at the Bluestone Dam location. Sole Source Justification of this gearbox contract would allow Bluestone Dam to rehab the existing gearboxes based on the condition and use them as spare gearboxes for future use. This sole source would save the Government funds, time, and would give the opportunity to recycle the old gearboxes. However, this can be only achieved if the new gearboxes are the same design as the existing ones.

d. Impact. A new design, involving changing the design of a proven working methods, would come with significant risk. There would be new performance, features, product life and so many other unknowns. The Government would be taking a big risk by changing the designs of the existing gearboxes. Additionally, lifecycle O&M costs would increase by having the same operating system include different gearbox types that do not match.

If this J&A is not approved, USACE will not be able to realize the efficiencies and reduction of costs associated with streamlining the process for procuring gearboxes. If Philadelphia Gear is not utilized for this contract the Government would be required to use significant resources to find and approve a contractor to design and fabricate replacement gearboxes from scratch at significant risk.

6. Efforts to Obtain Competition. In FY22, this action was advertised by utilizing Small Business (SB) Request for Quote (RFQ) procurement method and was awarded to a small business. The small business, which won the award, was not able to comply with the FAR clauses and the Contracting team ended up terminating the Contract.

a. Notice of Intent to Sole Source: On 13 August 2024, the Contract Specialist and the Contracting Officer posted a Request for Information (RFI) on SAM.gov to identify interested Contractors or Vendors for this procurement. Multiple Vendors responded to the RFI. While it is possible for other vendors to produce products that are functionally equivalent to the designated gearboxes and couplings, it would be a substantial cost and risk to the Government to have a new contractor to design, build, and test these gearboxes. For example, please see section labeled “Alternatives” listed above that describes a previous procurement. Philadelphia Gear has already built, designed, and tested the required gearboxes, which will save the Government time and resources and reduce risk.

b. Effective competition. Based upon the information in paragraph 5, competition for this action is not feasible. Philadelphia Gear is the only vendor that can supply the components for a reasonable market value.

c. Subcontracting competition. No sub-contracting is required or applicable for this contract activity.

7. Actions to Increase Competition. Competition for this service is not feasible as only one source, Philadelphia Gear, owns the rights to the gearboxes required. See paragraph 5 above for more details.

8. Market Research. Prior to the issuance of a solicitation in both 2018 and 2022, Contracting completed Market Research to see how many potential vendors there were that could supply the required gearboxes. There were numerous vendors that showed up under the NAICS code that was chosen in both instances (333612), many of which were small businesses. Therefore, Contracting issued both solicitations as a small business set aside. A single gearbox was purchased from Atlanta Gearworks in 2018 and that gearbox is in operation. However, that Atlanta Gearworks gearbox required modifications and drilling that weakened the integrity, and therefore the lifespan, of the gearbox. When the solicitation was issued in 2022, Philadelphia Gear recognized the specs and gearboxes, stating that they had the original drawings, patents, and specs that were completed back when the gearboxes were manufactured in the 1940s under Western Gear. In the 1990s, Philadelphia Gear purchased Western Gear and all of their designs, drawings, and intellectual property rights. This means that Philadelphia Gear holds the rights to all original drawings and specifications needed to accurately build and manufacture the gearboxes required under this procurement. Philadelphia Gear partnered with a small business in order to compete in the 2022 procurement, and they were awarded the contract, however the sub-contractor (and partner) was not able to meet the Non-Manufacturer Rule that was included in the solicitation and the award. This led to a termination and many discussions on how to proceed moving forward. In order to ensure reliability, lowest cost to the Government, and the lowest risk, it has been recommended to sole source this procurement to Philadelphia Gear, the owner of the patents, drawings, and intellectual property rights of Western Gear and the original gearboxes.

9. Interested Sources: Per the FAR requirement, on 13 August 2024 the Contract Specialist and the Contracting Officer posted a Request for Information (RFI) to identify interested contractors or vendors for this procurement. Multiple vendors responded to the RFI with all the requested information. However, the gear designs are intellectual rights of Philadelphia Gear, the sole owner of the Western Gear Gearbox and these cannot be reproduced without a substantial cost to the government. Although there are other vendors that are interested in this procurement, there is only one vendor that can provide the specific gearboxes to which the Government requires. The sole vendor is Philadelphia Gear.

10. Other Facts: Please see paragraph 5 and 8 above for history of this procurement. Due to Philadelphia Gear owning the rights to the designs of these gearboxes, it is recommended to sole source this procurement to Philadelphia Gear.

11. Technical Certification: I certify that the supporting data under my cognizance, which are included in the justification are accurate and complete to the best of my knowledge and belief.