Approved_Exception_to_Fair_Opportunity_15-9357.pdf

FAIR OPPORTUNITY EXCEPTION (FOE) JUSTIFICATION

I. Contracting Activity

This Fair Opportunity Exception Justification requests authority to use Other Than Full and

Open Competition to support Sustaining Engineering requirements generated by the C-130

Tactical Airlift Engineering Division (WLNE). The program name is C-130 Engine

Reliability Centered Maintenance (RCM). The contracting activity for this effort is

AFLCMC/WLKCA. The Purchase Request (PR) number is FD2060-15-93574.

This is an Exception to Fair Opportunity Justification.

II. Nature and/or Description of the Action Being Processed

Due to the circumstances described below, this activity requests authority to acquire the sustaining engineering services as prescribed by FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements. This sole source requirement will be purchased from the following company:

Standard Aero Incorporated

3133 General Hudnell Drive Ste 100

San Antonio, TX 78226-2026

CAGE Code 4AGM7

Large Business

A new order on DESP III contract FA8222-12-D-0021 is contemplated. This order will consist of a 12 month basic and two (2) 12 month priced options. CLINs are anticipated to be firm fixed price, except for Travel which will be Cost-Reimbursable No Fee.

III. Description of the Supplies/Services Required To Meet the Agency’s Needs

This order will provide maintenance data analysis of the C-130 Propulsion System using the

Reliability Centered Maintenance RCM program to AFLCMC/WLN, AFLCMC/LPS, and the

Major Commands (MAJCOMs) for use in isochronal (ISO) and high-velocity maintenance

(HVM) preparation, engine management, preparation for the T56 Users Group, the Propeller

Conference, the Product Improvement Working Group, the -6 Conference, and the System

Safety Group. The contractor shall provide an overview of all analysis provided to the

MAJCOMs and program offices in monthly status reports.

The estimated dollar amount is $3,900,000. Projected period of contract performance for this requirement is three years (one-year basic period and two one-year options at $1,300,000/year).

Sustaining Engineering 3400 EEIC 583 appropriations will be used to fund the proposed contracting action.

IV. Authority Permitting a Fair Opportunity Exception

FAR 16.505(b)(1)(i) requires the Contracting Officer to provide each awardee under a multiple award contract, a fair opportunity to be considered for each order exceeding $3,000 unless a statutory exception applies. The specific exception that precludes the fair opportunity process for this acquisition is FAR 16.505(b)(2)(i)(B): only one such contractor is capable of providing the services or supplies at the level of quality required because the service or supplies ordered are unique or highly specialized.

V. Demonstration of the Contractor’s Unique Qualifications or Nature of the

Acquisition Requires the Use of the Authority Cited Above to Provide the Required

Supply/Service (Applicability of Authority)

Only one such contractor is capable of providing the services required, at the level of quality required, because the services ordered are unique or highly specialized. Standard Aero has previously provided specialized T-56 RCM maintenance analysis services support for WLN under Contract FA8504-12-C-0005. As subcontractor, Standard Aero has worked for Rolls

Royce and Lockheed under numerous contracts issued by Tinker AFB OK for T-56 Engine

Engineering support. Standard Aero uses proprietary software/algorithms as a predictive maintenance tool, which has increased aircraft availability, predicted less than 900 hours remaining engine life on aircraft being inducted into Isochronal (ISO) inspections, and eliminated unscheduled engine removals on aircraft. Tinker attempted prior to 2006 patent filing to acquire data, but patent law blocked opportunity to acquire. Tinker acknowledged in a contractual document in 2011 that the contractor used private funding for development and owned data rights.

Standard Aero specialists have gained experience during fifty (50) years of servicing the T-

56 Engine. The company’s specialists have knowledge in working with the T-56 Engine complex components that are difficult to evaluate and repair/overhaul. They have in-depth knowledge in utilization of statistical reliability analysis techniques developed by Standard

Aero. Highly specialized employees make precise decisions on maintenance of the engine and engine parts, and have the ability to use the company developed and patented system to determine maintenance and reliability.

Access to the T56 engine overhaul depot is necessary to perform required services. Inherent to the successful use of this RCM tool is the ability to track manufacturing and process discrepancies down to the core problems and issues. This is not a problem at the intermediate level maintenance facilities at Hurlburt Field and at Little Rock AFB nor is it a problem at the

54H60 propeller overhaul depot.

This is a significant problem related to the T56 engine overhaul depot because it requires direct and unrestricted access to Standard Aero shop floors, and unrestricted access to proprietary process specifications developed and used to overhaul both the engines and the quick engine change kits (QECs). Standard Aero overhauls the T56 engine and QEC as a subcontractor to

Lockheed Martin Kelly Aviation Center (LMKAC). Standard Aero has successfully blocked

LMKAC’s access to their shop floors and overhaul processes by a restraining order issued against Lockheed by the Texas State Court. Other contractors are not allowed access.

http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/16.htm%23P399_69627

Highlight

Tinker AFB managed the development of an RCM based tool to support the T-56 engine and many of the Quick Engine Check (QEC) components. T56 QEC and the 54H60 propeller must be included in the existing RCM software before engineering and technical support can be competed. Tinker attempted to resolve that issue through the Maintenance In-Depth Collection

System (MIDCS), an RCM tool developed by the United States Air Force (USAF). Originally

MIDCS was supposed to become part of a propulsion data repository in an USAF system called

J-RAMS, but funding was not available. Standard Aero has its own version of a Maintenance

Data Collection System, which the contractor internally supports, but the USAF has no working copy of a MIDCS to provide other contractors.

Further substantiation that T-56 services performed by Standard Aero are unique and specialized is reflected in the contractor’s patent filings. In 2012, Standard Aero’s Invention Patent for prediction of maintenance operations on an aircraft engine, relating to a method and a system for anticipating or predicting maintenance operations on an aircraft engine, was published. Initial draft patent was filed in 2006. The company’s patent covers a precise prediction of maintenance operations on an aircraft engine without disadvantages of systematically assigning a workscope based on Weibull statistical failure curves.

Standard Aero’s specialized method takes into account the causes of failure and full expression of their effects to discriminate one engine from another and to associate a technical workscope specific to each engine in a much more detailed manner. This enables a prognostic and planning of maintenance operations with greater precision.

The contractor’s patent relates to a proprietary computer program comprising code instructions for implementation of the prediction method based on the above characteristics when it is run by processing means. The patented invention relates to a system for predicting maintenance operations on a current aircraft engine, which is comprised of:

A processing means to compare a set of failure models adapted to said current engine, selecting a relevant failure model with a failure age defining the age of said engine at the time of the failure.

A processing means to associate decision rules about the workscope on said current engine with said relevant failure model, as a function of a set of parameters related to said current engine.

A processing means to determine the required maintenance workscope to be applied to said current engine, as a function of said decision rules.

Reverse Engineering is not possible on patented software, and there is no similar program which can be used for comparable reverse engineering. In this case, it is the RCM software program developed and patented by Standard Aero. The essence of the right granted by a patent is to exclude others from exploiting the invention patented. The patent holder is the only one who may make, use, or sell the invention. Thus far, Standard Aero operates under a restraining order issued by Texas State Court which prohibits access to the overhaul depot and processes, and they do not offer a patent license agreement.

Highlight

Considering Standard Aero began developing a T-56 engine improvement software program in

2003, and patent filing dates, it would take a new contractor approximately 6-9 years to duplicate this capability. Considering development time and comparable effort expended under contracts at

Tinker and Robins, duplication of an estimated $3.8M to $5.6M cost would occur in determining reliability, developing failure data matrix, collecting data and performing analyses on Engine and

QEC systems. An average of $625K expended per year was applied to the approximate time to duplicate. Timeframe to duplicate capability would force AFSOC to completely restructure their current engine management process in the interim.

Award to any contractor other than Standard Aero would result in loss of critical RCM reliability analysis data, and non-support of C-130 fleet missions and critical programs. It would result in unacceptable fulfillment of Air Force requirements due to delays in including the T56 QEC and

54H60 propeller in the RCM software for the T56 engine; reduced aircraft availability in the

AFSOC fleet; restructuring of the AFSOC engine management process; restructuring of the

USAF engine management process and lapses in the analysis support for the existing RCM software; and degrading the fidelity of the RCM software used on AFSOC aircraft going into ISO.

VI. Description of Efforts Made To Ensure Competition Between All Awardees

In accordance with FAR 16.505(a)(1), orders under indefinite-delivery contracts do not have to be synopsized. Paragraph V, above, justifies why competition among all awardees is not possible for this acquisition. Additionally, Paragraph XI describes the upcoming events that will eliminate the current barriers to competition.

VII. Determination by the Contracting Officer That The Anticipated Cost to the

Government Will Be Fair and Reasonable

The cost of this acquisition will be fair and reasonable. Actions anticipated to ensure reasonableness of the price will be accomplished with the procedures and criteria contained in the Federal Acquisition Regulation under Parts 30 – Cost Accounting Standards, and 31 –

Contract Cost Principles and Procedures, and Subpart 15.4 – Contract Pricing, as appropriate.

Further actions will be under the guidance of the Contract Pricing Reference Guides jointly developed by the Federal Acquisition Institute and the Air Force Institute of Technology. The

AFMC Guide for Price Negotiation Memorandum/Price Competition Memorandum

(PNM/PCM) will also be used, as appropriate. Detailed documentation and justification of price reasonableness will be disclosed in the official PNM/PCM, to be prepared upon completion of negotiations.

VIII. Description of Market Research Conducted Among All Awardees and the

Results Or A Statement of the Reason Market Research Was Not Conducted

Market research was conducted 20 April 2015, pursuant to FAR Part 10.001 and 10.002.

Market Research was accomplished by the engineering staff using the United States Census

Bureau North American Industry Classification System (NAICS) search http://www.census.gov/cgi-bin/sssd/naics/naicsrch, the Small Business Administration

(SBA) Dynamic Small Business Search (DSBS) www.sba.gov, contract review, internet search, and telephone contact. Capability exists in the marketplace because RCM is a well-founded approach to use historical data as a tool to predict and forecast maintenance requirements which has been embraced by industry throughout the world. The North

American Industry Classification Code (NAICS) for this proposed action is 541330 –

Engineering Services. An internet search of “reliability centered maintenance,” “RCM,”

“conditioned based maintenance,” and “propulsion” yielded many technical institutions, research organizations, and industrially based companies which have adopted or developed

RCM based tools available to the “customer.” Search results narrowed to the following for consideration:

CACI International Inc, 1100 North Glebe Road, Arlington, VA 22201 703-841-

7800 http://www.caci.com CAGE 9M062

Isograph Inc, 2020 Main Street Suite 1180, Irvine, CA 92614 949-502-5919 www.isograph-software.com CAGE 1TQN1

Markem- Imaje GA, 1650 Airport Road, Suite 101 Kennesaw, GA 30144

Telephone: 770 421 7700 www.markem-imaje.com NH CAGE 38360, OFA99 CAGE for Charlotte NC Markem Corp location.

Reliasoft,450 S. Eastside Loop, Tucson, AZ 85710-6703 520-886-0410 www.reliasoft.com CAGE 00PR3

Wyle Aerospace Group, 2309 Exploration Drive, Lexington Park, MD 20653-2013

301-863-4200 CAGE 376PO www.wyle.com/aerospace-group.html

Standard Aero, 3133 General Hudnell Drive, Suite 100, San Antonio, TX 78226-

1898 210.334.6066 http://standardaero.com

Capability exists for some RCM efforts, Weibull analysis, or condition based maintenance.

Five sources did not have the data/software program, specialized experience, and depot access required to perform this effort. Standard Aero does have the capability and specialized experience to provide required sustaining engineering services in support of T-

56 Engine RCM. Standard Aero overhauls the T-56 engine. The contractor has successfully blocked access to Lockheed and any other contractor to their shop floors and overhaul processes by a restraining order issued by the Texas State Court, and through patents.

After all search results, market research indicates that Standard Aero is the only source capable of providing sustaining engineering services in support of this C-130 aircraft propulsion system RCM task.

Procedures at DFARS 216.505-70 and AFFARS 5316.505-70 for placing orders under multiple award contracts on a competitive basis and obtaining written justification and determination for waiving the requirement have been met. AFMC Mandatory Procedure javascript:__doPostBack('ctl00$cphMainPageBody$linkButtonWebsiteData','') javascript:__doPostBack('ctl00$cphMainPageBody$linkButtonWebsiteData','') http://www.markem-imaje.com/ http://www.reliasoft.com/ http://www.wyle.com/aerospace-group.html http://standardaero.com/

(MP) 5316.505(b)(1) provides an “Exception to Fair Opportunity Template” which has been utilized for justification to waive fair opportunity on this requirement.

IX. Other Facts Supporting the Justification

None.

X. List of Any Awardee That Expressed Interest in the Acquisition

See Section VI above.

XI. Actions the Agency May Take to Remove or Overcome Any Barriers To

Increasing Fair Opportunity Before Any Subsequent Acquisition For the Supplies or Services

Tinker AFB T-56 office is planning an acquisition for a bridge contract that will extend the overhaul support. At the conclusion of proposed FY15 contract, the T56 program office will stand up a 100 percent organic engine overhaul capability at Tinker AFB. Changes from

Organizational-Level to Intermediate-Level are in process for some maintenance actions on the

T-56 Engine. This impacts workload considered for the overhaul depot Tinker plans to stand up.

Tinker is working on a Business Case Analysis (BCA) based on maintenance workload changes.

BCA must include information regarding risk and risk mitigation if the depot is moved from

Standard Aero plant in San Antonio TX to Tinker AFB. The additional information on risk of moving the depot was required after a GAO review, initiated by a request from a U.S. Senator from Texas. Considering a BCA is underway, and the time it took to develop and stand up another organic engine depot, T-56 Engine organic maintenance capability will not be in place until approximately 2018. Access to the shop floor and overhaul processes will provide information needed for RCM analysis support, either organic or through competitive solicitation.

XII. Contracting Officer’s Certification

The contracting officer’s signature on the signature page evidences that he/she has determined this document to be both accurate and complete to the best of his/her knowledge and belief.

XIII. Technical/Requirements Personnel’s Certification

As evidenced by their signatures on the signature page, the technical and/or requirements personnel have certified that any supporting data contained herein which is their responsibility are both accurate and complete.