Attachment 05 - Brand Name Class JA - Final_Redacted.pdf

Justification and Approval (J&A) for Other Than Full and Open Competition

CONTROLLED UNCLASSIFIED INFORMATION

August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 1 of 8August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 1 of 8

Was a J&A approved for the preceding acquisition where that acquisition required a J&A? Yes No

! ! Attach the preceding J&A in the staff package for this J&A. The preceding J&A will be used as a reference document.

Is this a new or amended J&A Document? New Amended ( Prior to Award Only! )

Is this a Bridge Action as defined at DAFFARS 5302.101? Yes No

Dollar Value of this Acquisition:

Contracting Activity: AFSC/PZIM Tinker

Purchase Request (if available) / Local ID Number: H4WP80

Program / Project (and PE, if applicable): Computer Numerical Control (CNC) Milling Machines and Flexible

Manufacturing System (FMS) Blanket Purchase Agreement (BPA)

Program Type (PEO, Enterprise, of Operational): Enterprise

Authority:

6.302-1 – 10 USC 3204(a)(1), Only One Responsible Source - No Other Supplies or Services Will Satisfy Agency Requirements Estimated Contract Cost (including options): J&A Type: Class Individual

! ! Provide estimated cost of all contracts.

COORDINATION ( DAFFARS 5306.304(a))

August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 2 of 8August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 2 of 8

APPROVAL ( DAFFARS 5306.304(a))

August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 3 of 8August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 3 of 8

I. Agency and Contracting Activity.

Department of the Air Force, Air Force Materiel Command, Air Force Sustainment Center Maintenance Contracting Branch AFSC/PZIM 3001 Staff Dr, Tinker AFB OK 73145

II. Nature and/or description of the action being approved.

The Department of Defense, United State Air Force has a brand name requirement to procure commercial Starrag or Starrag subsidiary subtractive manufacturing grinding, lathes, and milling machines Flexible Manufacturing System (FMS), accessories, and associated services. These machines include, but are not limited to, Computer Numerical Control (CNC) 5/6-axis milling machines, vertical grinding machines, and vertical turning lathe machine. The CNC machines shall be configured for use as a standalone machine or integrated into an FMS. This requirement will support new machine procurements and associated services for Fiscal Year (FY) 2024 through FY 2033. Estimated award date is August 2024. The maximum ceiling value of this brand name class J&A is not to exceed

While some items have been previously purchased, this is not a follow-on contract as the items have been minimally updated. All items will be firm fixed price. In addition, it will limit sources to Starrag distributors and Starrag for specific efforts not authorized as distributors associated with FMS. Sole source efforts will include FMS Base Modules, Extension Modules, Load Stations and Initial, Follow-Up, and Advanced Training.

A class J&A is appropriate based on the expectation that there will be multiple in-scope contracting actions from multiple agencies. Tinker PZIMC will retain control of the brand name class J&A.

III. Description of supplies/services required to meet agency needs.

This Class J&A covers new CNC machine and FMS purchases from the effective date of this Class J&A through 30 August 2034, which is for supplies with incidental services. These items will aid in manufacturing will aid in maintenance, repair, overhaul of aerospace structural components and turbine engines related parts for C-17, F-16, E-3, B-52, B-1B, KC-135, and KC-46 as well as various organizations within Oklahoma City Air Logistics Complex (OC-ALC) and Defense Logistic Agency (DLA). CNC purchases made during the effective period of this Class J&A are expected for an estimated quantity of 17 units with the potential for procurement of additional units and FMS, which are comprised of multiple items, not to exceed the maximum ceiling value. Individually issued contract actions may be placed through the use of Purchase Order, Indefinite Delivery, Blanket Purchase Agreement (BPA), or Definitive vehicles, utilizing this Class J&A. Specific funds/appropriations and contract type will be identified on each individual contract action utilizing this Class J&A. The maximum ceiling value of this Class J&A is not to exceed This class J&A covers all contract actions including options, BPA calls, delivery orders, and individual purchase orders for all items.

This is calculated based on the Air Force forecasted demand and estimates provided by the Original Equipment Manufacturer (OEM) for each line item adjusted for inflation over a period of 10 years. Projected funding is Working Capital Funds (WCF), however additional funds may be used depending on the purchasing organization.

Projected Cost:

Fiscal Year (FY) Estimated Total

FY 24

FY 25

FY 26

FY 27

FY 28

FY 29

FY 30

FY 31

FY 32

August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 4 of 8August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 4 of 8

FY 33

Total

IV. Demonstration that the contractor's unique qualifications or the nature of the acquisition requires use of the authority cited above.

Air Logistic Complex(es) (ALC) require the use of the “brand name exception” to Competition in Contracting Act (CICA) to allow standardization of 5/6 axis CNC milling, CNC vertical lathe, and CNC vertical grinding machines to Starrag machines.

The nature of the organization's mission requires standardization to increase cost effectiveness of depot maintenance activities and enhance mission capability. ALC's seeks the establishment of standardized machine cells to achieve their mission of flexible and responsive manufacture and repair of warfighter aerospace components. Standardizing to Starrag brand machines will continue the savings already realized by the existing modern, high functioning, and operational Starrag machines that presently reside within the ALC. Reducing the number of CNC manufacturers will allow the realization of the minimum, immediate mission needs of the organization. These brand name acquisitions are integral to generating significant estimated cost savings in acquisition, operations, maintenance, and turnover & rework costs. In addition, these brand name acquisitions are essential to mission capability enhancements not otherwise available under full and open competition; increased uptime, utilization, enabling joint-use capability, and enhanced cellular shop flow.

The FMS Base Modules, Extension Modules, Load Stations and Initial, follow-up, and Advanced Training will be sole source to Starrag.

The FMS requirements were not written to be brand specific. However, Starrag is the only choice for providing these items since Starrag has far more experience with FMS installation than any other CNC production FMS installation company. Given Starrag's experience, they are the only company able to properly match the United States Government's (USG) equipment requirements to the most suitable FMS vendor. Because the USG must integrate the FMS into the shop environment over time, meaning the USG simply cannot purchase a “whole” FMS at one shot, the USG has the potential for more than one contractor providing different parts of an FMS. Therefore, the possibility exists that contractors source FMS components from different vendors e.g., contractor A sources an FMS Base Module from one contractor and contractor B sources an Extension Module from another contractor. Both contractors are FMS vendors whose components are incompatible with each other. Having Starrag as the sole source for the FMS components is the only way to ensure system integration and compatibility for future replacement and expansion.

For the FMS training, Starrag is an experienced OEM in the business of manufacturing equipment for aerospace structural and turbine engine component manufacturing/repair. Starrag is the expert on how to operate their equipment and understand best how to apply their equipment in our work environment. A contractor outsourcing our training requirement to a different vendor will definitively reduce the quality of the training and likely eliminate any application support the USG would gain. In addition, a 3rd party contractor would have to work directly with Starrag to become familiar with the FMS or subcontract to Starrag to provide the training. However, with Starrag on the contract as a source for our training, the USG would have the guarantee of getting the best application support during the transition of our workload from the existing equipment to the new equipment without impacting ability to meet production targets.

Procuring any other brand of equipment other than Starrag would result in significant duplication of costs to the government which is not expected to be recovered through competition. Acquisition costs will be reduced by a total estimate of The “one-time-per machine” acquisition cost reductions are obtained through volume discounts, streamlined initial operator training, and the prevention of lost work due to excessive acquisition lead times that occurred under prior strategies. Market research has shown that on average, 10% discount on unit price savings and associated ancillary services/support (e.g. software, tooling, foundation, tech data, IUID tag, installation, incidentals, end user admin, and shipping) will occur with volume buying (historical average of /machine). Procuring of standardized equipment through AF contracting allows the ALC to garner additional saving upwards of 8.9% on associated ancillary services and third- party acquisition fees (historical average of /machine). Furthermore, standardizing machines will yield a common machine and machine controller platform. Common platforms result in the continuous strengthening of a machinist functional knowledge rather than its distribution across multiple platforms. Standardizing these machines, machinist will require less exposure to training for new machines of similar build resulting in a reduction in initial training cost of 69% from to ( /machine). These savings will be continued in recurring training that is

August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 5 of 8August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 5 of 8 captured under operations cost (see below).

Operation costs will be reduced by a total estimate of . The “annual per machine” savings gained are through cost reductions in machining consumables (coolant and tools), machinist labor (operator) turn-over labor (training), lost production (CNC reprogramming), and energy consumption. Specifically, capacity requirements for milling coolant, an essential fluid used during subtractive machining, will be reduced by approximately 1,500 gallons. As a result, waste handling cost will drop from to ( /machine); energy consumption cost will be reduced from to ( machine); and machine tooling costs will lower from to machine). The principal factor contributing to lower tooling cost is attributed to on-machine tool management features available with these machines that optimize tool life usage. Additionally, due to the reduced number of machines needed to perform the current workload, the direct labor cost associated with machine operation will be reduced from to

( /machine). Finally, by standardizing these machines and, consequently, the machine controllers, the transfer of workload from one machine to another is simplified, leading to cost savings and greater efficiency. Currently, when a nonstandard machine becomes inoperable, organic manpower is required to remove the part to be machined from the pallet of the inoperable machine and place it on the pallet of a dissimilar, but operational, machine. Programmers, on average, work 1-2 weeks to reprogram the job to the operational machine. Standardizing these machines, part transfer between machines is seamless and does not require reprogramming. Production losses due to reprogramming is eliminated for a savings of ( /machine).

Maintenance costs will be reduced by a total estimate of . The “annual per machine” saving are gained through improvements in corrective downtime actions. Factors such as material (parts), maintenance labor, administrative contracting actions as well as the impact of unscheduled machine downtime on production throughput contribute to the overall cost of machine maintenance.

Standardizing these machines will drive qualitative improvements in preventative maintenance actions due a reduced machine inventory, improved mechanic functional knowledge. Modernizing the inventory with machines that possesses predictive health monitoring as well as built-in mishap protective measures promotes the transition from reactive to proactive maintenance, fewer contracting actions needed. Allow for the application of an OEM specific extended warranty coverages that include condition-based maintenance, material, labor and storage of parts. For reference, a survey of machine tool industry leaders yields that Starrag is the only OEM currently offering a full factory 10-year extendable warranty with a 95% availability guarantee. By standardizing these machines, maintenance cost will reduce from to ( /machine). These savings include the annual cost of an extended warranty for each machine. The benefit of a 95% availability guarantee is the limiting of unscheduled machine downtime to an annual max of 438 hours per machine.

Rework and turnover costs will be reduced by a total estimate of . The “annual per-machine” savings are attributed to cost reductions due to common machine/controller platforms and machine modernization. Time required to cross-train new operators as well as reoccurring annual training (recertification) for existing operators will lower due to common machines and CNC controllers. Historically, the high variability in both machine and controllers that exist within the current machine inventory, limits growth in operator proficiency and the ability to cross-train. Standardized common machine/controller platforms permit machinists to continually build upon their existing experience thus promoting an elevation of skill from generalist to expert. Additionally, having common machine/controller brands across the ALC, as will occur with standardizing these machines, machinist transitioning from one organization to another will not require the lengthy initial operator training (240 hour/machine) typical of today.

Mission capability will improve through gains in machine utilization, machine availably, and improvement in Mean Time to Repair (MTTR). Specifically, replacing multiple, single function machines with single machines capable of performing multiple functions e.g., machines capable of milling, turning, and grinding, will result in fewer machines needed to perform the existing workload. At present, the OC-ALC uses 70 machines to accomplish its workload with an annual average of 212 hours of run-time per machine. Standardizing and replacing their existing inventory with 12 multi-function machines will result in an 83% (~5.8 to 1) reduction in the number of machines needed to perform the existing workload. This consolidation will reduce labor cost associated with remedial maintenance as fewer machines are needed to be maintained.

Furthermore, consolidation will result in a 33% (16,500sqft) reduction of industrial floor space currently occupied by the existing machines. Moreover, incorporating these machines into an FMS will increase machine operational run-time without the commensurate increase in work shifts. For reference, an FMS is an OEM specific aggregate “cell” of CNC machine tools integrated into a single robotic material transport/storage system that provides a high degree of production flexibility and

August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 6 of 8August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 6 of 8 process control. Machines integrated into an FMS possess a removable machine work pallets that can be transported out of the machine to an off- machine storage or work loading station. This capability permits the segregation of work set-up from machine operation; thus, machines are solely dedicated to performing its intended operation. Incorporating standardized machines into an FMS will optimize machine operational runtime from the current 212 hours to approximately 1250 hours per machine.

V. Description of efforts made to ensure that offers are solicited from as many potential sources as practicable, including whether a notice was or will be publicized as required by subpart 5.2 and, if not, which exception under

FAR 5.202 applies.

In accordance with DFARS PGI 206.302-1, Sources Sought Synopsis (SSS)/Request for Information (RFI) was posted to government point of entry (SAM.gov) on 8 December 2023 and left open for 30 days. Six sources responded, The SSS/RFI provided a series of questions, a description of the requirement, and a draft statement of work. Vendors were instructed to provide their company information and capabilities relative to the requirements. Moreover, as part of the market research, several industry leaders in machine tool building, aerospace manufacturing, depot maintenance, and turbine engine Maintenance, Repair, and Overhaul (MRO) were surveyed including

. Each vendor/organization provided an overview of respective products, capabilities, as well as outside perspectives on the needs of the AF regarding milling, lathe, grinding, and flexible manufacturing systems/equipment. Industry leaders were identified using ProcurementIQ, IBISWorld, critical technology assessment reports from the Bureau of Industry and Security Office of Technology Evaluation, and publicly available trade data platforms. Additionally, text publications and trade associations were contacted, and their respective materials reviewed.

The current state of costly machine variability and excessive Total Cost of Ownership (TCO) has degraded mission capability.

Although OC-ALC owns and operates large infrastructure systems, installing disparate brand machines has decreased operations and maintenance proficiency. The market research and the subject matter expert analysis documents that complexity across multiple machine tool manufacturer types leads to gaps in repair capability, limited machine up-time, ineffective operator/maintainer training, and inefficient operating costs and processes.

In accordance with FAR 5.201, all requirements utilizing this Class J&A must be synopsized and the solicitations for each individual acquisition utilizing this Class J&A must be posted to SAM.gov, the Government Point of Entry. Based on the market research of each instant acquisition, the majority of individual requirements will be competed with capable and responsible OEM dealers to procure the required brand; Starrag or executed directly to the OEM for limited items listed above.

VI. Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The contracting activity (AFSC/PZIM Tinker) or designated contracting officer will be required to make an individual determination of price fair and reasonableness in accordance with FAR 12.209 (commercial acquisitions), FAR 13.106-3(a) (simplified acquisitions) or FAR 15.4 (negotiated acquisitions) prior to award.

VII. Description of the market research conducted and the results, or a statement of the reasons market research was not conducted.

Extensive market analysis was accomplished by subject matter experts to gather practical knowledge and experience in current market and industry trends as well as to understand vendor capabilities relative to the requirements. The analysis was conducted using a series of questionnaires, in-person/telephone interviews, on-site visits, and vendor web-site queries.

Input was gathered from subject matter experts, market analysis, and gap analysis. The underlying analysis of the need for standardization accounted for as many different manufacturer's brands as would be practical to achieve the maximum amount of savings and efficiencies. Additionally, market analysis provided by Air Force Installation Contracting Center

August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 7 of 8August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 7 of 8

(AFICC) was reviewed, which supports limiting the number of milling machine manufacturers.

Additionally, an SSS/RFI was posted to SAM.gov on 8 December 2023 and left open for 30 days.

Six sources responded:

VIII. Any other facts supporting the use of Other Than Full and Open Competition.

At this time, OC-ALC needs immediate J&A authority to limit competition to assigned brand name manufacturer; Starrag. The ALC currently owns at least 178 multi-axis milling, lathe, and grinding machines with approximately 70% of these machines exceeding its designated useful life by a significant margin. In addition, this machine inventory is comprised of 13 different manufacturers, featuring 4 distinct controller types, with each controller type averaging 9 distinctly different models. As outlined in the Category Management, Category 5.1 Intelligence Brief complexity across multiple machine tool manufacturer types leads to gaps in repair capability, limits machine up-time, promotes ineffective training, and inefficient operating cost and process. Standardization is integral to the ALC generating significant estimated cost saving in acquisition, operations, maintenance, turnover, and scrap.

In order to implement this acquisition strategy, the AF must pre-plan the brand name CNC machines per cell supported. An analysis of current standardization efforts was conducted in total using historical information and data accrued from machines presently in operation within a production squadron. This analysis took into account; price, quality, sustainability, performance, capacity, and similarity of offered components across multiple capabilities. Considering the ALC's current standardization policy, Starrag offers the optimal combination of factors to drive mission capability up while decreasing TCO.

There are available manufacturers that offer higher priced machines with increased accuracy and specialized capabilities, but that lack interoperability. There are other manufacturers that can offer reduced per machine unit pricing, but lack accuracy, supportability, and reliability-- all of which increase the TCO and degrade mission capability.

Procuring under this Class J&A will replace the anticipated repeated requests for brand name J&A's necessary to ensure equipment interoperability. This Class J&A eliminates the need for separate Individual J&A's, creating more agile acquisition cycles and maximizing savings to the AF.

Approval of this Class J&A will reduce the TCO to the Air Force (AF) by more than over the 13-year life cycle of the CNC machines ( ). TCO savings cited above are garnered through reducing non-value-added costs in the following specific areas: acquisition cost reductions ( ); operations cost reductions ( );

maintenance cost reductions ( ); and turnover/rework cost reductions ( ). Mission capability will improve in the following specific areas: machine up-time, joint-use capability between machines across the ALC; organic repair capability on “standard” equipment.

TCO Savings (Total):

Acquisition Cost Savings:

Operations Cost Savings:

Maintenance Cost Saving:

Turnover/Scrap Cost Savings:

*End of Life Adjustment:

*End of life scrap/resale value decreases slightly due to reduced acquisition costs

August 2023 CONTROLLED UNCLASSIFIED INFORMATION Page 8 of 8

IX. List of any sources that expressed, in writing, an interest in the acquisition.

X. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisitions for the supplies or services required.

As a result of having additional sources for the majority of our items per Sections II and V , there are no known additional actions which can be taken to remove barriers to competition and therefore, specific actions and milestones cannot be established.

XI. Certification by the Contracting Officer.

As evidenced by my signature above, I certify that this justification is accurate and complete to the best of my knowledge and belief.

XII. Certification by the technical/requirements personnel.

As evidenced by my (our) signature(s) above, I (we) certify that any supporting data contained herein, which is my (our) responsibility, is both accurate and complete.