Attachment 2_JA_Redacted.pdf

Solicitation Number: 70Z085-20-Q-P4507300

SOLE SOURCE JUSTIFICATION

For Certain Commercial Items for Procurements Exceeding the Simplified Acquisition Threshold pursuant to FAR Subpart 13.5, Including Brand Name

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 of Homeland Security (DHS), U.S. Coast Guard (USCG) Surface Forces Logistics

Center (SFLC) Icebreaker, Buoy and Construction Tender Product Line (IBCTPL) located at 300

Main Street, Norfolk, VA 23510.

2. Nature and/or Description of the Action being approved.

a) Nature of the action: The SFLC anticipates awarding a MATOC IDIQ-type contract with Firm

Fixed Price (FFP) task orders to Caterpillar (CAT) Inc. dealers, on a limited source (services) basis for the procurement of Original Equipment Manufacturer (OEM) authorized technical representative for services and parts for the CAT Model 3508 main diesel engine (MDE) using the procedures set forth in FAR Part 12 “Acquisition of Commercial Items” and FAR Part 15

“Contracting by Negotiation.” Four-(4) awards is anticipated; however, the Government reserves the right to award a single award.

OEM authorized technical service representatives and parts are necessary to groom, assess, maintain, repair, and if necessary overhaul the CAT main propulsion diesel engines onboard the Coast Guard “Keeper” cutter class vessels (175 WLM) in preparation for recapitalization of the Machinery Plant Control and Monitoring System (MPCMS) components. Services constitute the major portion of this requirement, while incidental parts may be procured in conjunction with grooms, assessments, repairs, and overhauls.

There exists multiple sources for the procurement; however, it has been USCG mission to ensure the reliability of the vital main diesel engine and that engine services are performed only by authorized dealer of the OEM to ensure the most recent OEM procedures, parts, and inspections are performed. Names and address of OEM contractor is provided below.

b) Name and address of the contractor:

Gregory Poole Equipment Company Hawthorne Power Systems

1500 Sensation Weigh 16945 Camino San Bernardo

Beaufort, NC 28516 San Diego, CA. 92127

NC Power Equipment Blanchard CAT

17900 West Valley Highway 153 Farmington Rd, Tukwila, WA. 98188 Summerville, S.C. 29483

c) Type of action: Firm Fixed Price Multiple Award Contract

d) The Independent Government Estimate (IGE) for services and parts is to include one (1) 12-month base period, with four (4) 12-month option periods. All task orders will require O&M funding for that current year.

Performance Period Estimate

Base Year: 12 Months from the Effective Date of Award

Option Year 1: 12 Months from the end of Base Year

Option Year 2: 12 Months from the end of Option Year 1

Option Year 3: 12 Months from the end of Option Year 2

Option Year 4: 12 Months from the end of Option Year 3

5 Year Performance Estimate:

e) Type of Funding: The type of funding shall be Operations and Maintenance

(O&M) for that current year.

f) Year of Funding: Fiscal Year 2020

g) Solicitation Number: 70Z085-20-Q-P4507300

h) This justification for other than full and open competition seeks approval to award a firm fixed price multiple award contracts with CAT authorized Dealers for the repair of the CAT Model

3508 MDE on CG Keeper Cutter Class vessels (175 WLM).

3. Description of Supplies/Services.

This acquisition is for technical services and parts in support of conducting grooms, assessments, repairs, testing, and/or overhauls of the engine propulsion system and associated components onboard the 175 WLM class vessels. Services will include the following tasks:

• Validate the system is operating within the manufacturer’s specifications.

• Ensure the proper communication and interoperability of the system components.

• Perform planned maintenance tasks for system components. Planned maintenance tasks are those recommended by the system component manufacturers and approved by the Coast

Guard.

• Participate in dockside performance test, evaluation, and validation.

• Participate in underway performance test, evaluation, and validation.

• Repair, renew, adjust, calibrate, and test of improperly functioning system components as required.

• Provide genuine-OEM approved parts as required

The Contractor shall provide all personnel, labor, materials, parts, tools, test equipment, test fittings, supplies, consumables, and equipment. At a minimum, the Government will require fourteen (14) grooms’ onboard cutters. Coast Guard personnel will operate the engine during the proposed testing.

4. Identification of Statutory Authority Permitting Other Than Full and Open

Competition. The statutory authority permitting sole source justification is 41 U.S.C. 1901 as implemented by FAR, Subpart 13.5 entitled “Simplified Procedures for Certain

Commercial Items.”

5. Identification of Exception to the Buy American Statute. Not Applicable

6. Demonstration that the Proposed Contractor’s Unique Qualifications or the Nature of the

Acquisition Require Use of the Authority Cited.

As previously described the acquisition uses OEM authorized technical services to ensure system capabilities and equipment reliability is not adversely impacted by “aftermarket” support and parts.

Therefore the requirements are to be performed by a CAT authorized technical representative who is certified by CAT to work on their CAT Model 3508 main diesel engine components and provide genuine OEM parts as necessary.

a) Rationale for using the authority cited in section 4 of the J&A: The CAT main diesel engines were installed on all 175 WLM Coast Guard cutters from 1995 through 2000 during vessel construction. The proper operation of the CAT Model 3508 MDE and associated systems is critical to the safety and operation of the 175 WLM class cutter. Additionally, proper operation is vital to ensure MPCMS recapitalization efforts are not negatively impacted by propulsion system performance. The Government would not be able to conduct Coast Guard missions without a working and properly maintained MDE.

b) Details covering what events lead to the situation requiring use of other than full and open competition procedures including whether any portion of the work can be segregated to allow for competition: The Government does not possess, or have access to, the technical data needed to support a competitive acquisition of the required services and supplies. Technical data to support the grooms, assessments, evaluations, and parts required were not obtained during installation

(only basic operating and maintenance information) and are considered proprietary to the OEM.

CAT Inc., with headquarters located in Peoria, IL, is the OEM of the CAT Model 3508 main diesel engine. CAT Inc. alone possesses the data and proprietary rights to produce the required technical data and engine parts. CAT utilizes a vast network of authorized dealers to provide technical support and to provide genuine-OEM parts.

c) Summarize alternatives considered and why they will not work:

1. CAT Inc. authorizes work completed by independent, authorized dealers and their certified

Tech Reps only; other diesel engine vendors may not have knowledge of CAT-specific procedures, parts, and technical data. Any vendor submitting proposals for this requirement will be required to include proof of their authorization from CAT Inc. to service the CAT

Model 3508 diesel engines.

2. CAT Inc. provides only their authorized dealers with updated procedures, specifications, and inspection / failure criteria as changes are made to improve engine performance and component reliability. As CAT Inc. makes material, design, or manufacturing process changes to individual parts, the installation procedures and specifications may change. This information is distributed to Caterpillar’s service provider network only. Access to the OEM’s proprietary information, software, and tools necessary to accomplish the requirements of this procurement is not available to non-Caterpillar authorized entities.

3. Technical representatives trained by CAT do not retain their certifications when they leave the CAT-authorized dealer or work under a non-authorized service provider. Service and parts provided by a non-authorized entity are non-warrantable by CAT and are limited to the warranty provided by the provider. Additionally, the expertise of the OEM and their vast network of authorized dealers is not available for service or parts provided by a non-authorized entity.

4. CAT Inc. is the sole-source provider of genuine new and remanufactured OEM parts for

CAT diesel engines. Use of aftermarket parts are non-warrantable by CAT and could potentially lead to premature engine wear or engine failure.

5. While a third party vendor may be able to provide the services of this requirement, the

Government would incur increased risk by accepting service from an entity who does not possess certified Tech Reps. These Tech Reps would not have access to updated procedures, specifications, and inspection criteria required to accomplish services. If services and/or parts are provided by an entity who is not familiar or does not have up-to-date training, the risk to the

Government of engine failure increases. From time to time, the OEM will update components to mitigate failure and improve performance of their engines which is why up-to-date training is required. If an engine failure does occur due to workmanship and/or use of aftermarket parts, the Government and non-authorized entity would be responsible for shouldering the cost and risk of repairs.

6. Impact to the mission that would result if the J&A is not approved and, consequently, the product or service not provided:

• If the justification for other than full and open competition is not approved, the USCG would be forced to accept service from non-authorized service providers and non-OEM parts. Without access to updated procedures, specifications, inspection, and failure criteria, the USCG would accept the risk that the old information is still relevant and acceptable.

Not following the manufacturer’s assembly procedures can potentially increase the likelihood of an engine failure. Numerous inspection points are built into the manufacturing process to assure a quality and reliable product which can withstand the extreme operating environment of a large diesel engine. USCG does not possess the equipment or expertise to perform quality inspections on engine parts. Therefore, USCG has relied on the parts manufacturer to perform those inspections and to develop a part which meets the design criteria to perform as required. Only the OEM of a particular part possesses the information necessary to correctly manufacture the part. If USCG utilizes non-OEM parts, we accept the risk of inadequate parts being used which increases the likelihood of an engine failure. Additionally, the OEM supports a “remanufactured

(REMAN) parts turn-in program”, intended to provide cost reduction to its customers through return of in-service parts as “core deposits”. Only the OEM possesses the proprietary information to rebuild and recertify REMAN parts to OEM standards. By using non-OEM parts, this program would be unavailable to the USCG and would result in additional costs incurred.

• If the service is not provided, the USCG would have no technically-acceptable options to groom, assess, maintain, repair, and/ or overhaul the MDEs onboard the 175 WLM cutter.

Without this service, the USCG would risk failure of the engines and hinder efforts in support of MPCMS recapitalization efforts. Service provided by non-authorized entities and/or use of “aftermarket”/non-OEM parts would further increase the likelihood of engine failures. The failure of a MDE would prevent these USCG cutters from safely operating and prohibit their ability to conduct associated missions. These missions include maintaining aids to navigation and properly positioning navigational aids for safe transit by marine traffic. This would be a disadvantage to the Government and overall USCG mission.

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

Sources as is Practicable.

An Acquisition Planning Forecast (APFS) record F2018042585 was posted to the APFS website on

June 22, 2020 and reposted on April 3, 2020 with no inquiries made in response to the announcement. In an effort to promote full and open competition and to solicit as many potential vendors as possible, a Sources Sought notice was posted on 29 July 2019 through 12 August 2019 in the Federal Business Opportunities (FedBizOpps) website (www.fbo.gov). This notification informed the industry of the USCG’s intent to purchase services and parts for the CAT Model 3508 engine from vendors with the expertise and required capabilities to provide. Interested vendors were invited to submit information discussing such capabilities within fourteen (14) calendar days of the posting date. One (1) response was received during this period. See paragraph 10 for details.

8. Determination by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable.

The Contracting Officer anticipates that the cost to the USCG will be fair and reasonable based on historical prices paid and comparisons to the Independent Government Estimate. Price analysis will be performed to ensure fair and reasonable prices are obtained. Additionally in accordance with the FAR and 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.

In accordance with FAR 10.001 (a)(2), market research was conducted from Mar 25, 2018 through

August 12, 2019 to identify companies capable of conducting propulsion system grooms and validations on 175 WLM class vessel. Attempts were made by searching the internet for suppliers that may possess the necessary technical data, drawings, manufacturing data, specifications and repair tolerances, and that could provide OEM equivalent services. Several independent, authorized

CAT-dealers were identified that were capable of meeting the requirements. Information available on: https://www.cat.com/en_US/support/dealer-locator.html

10. Any Other Facts Supporting the Use of Other Than Full and Open Competition.

CAT Inc. possesses the most up to date critical technical data for the Caterpillar Model 3508 Main

Diesel Engine onboard the 175 WLM class cutter. Authorized independent CAT dealers are the only entities authorized by CAT Inc. to perform services and to provide genuine OEM new and remanufactured parts.

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

Acquisition.

Four (4) authorized CAT dealers (listed below) expressed interest in the acquisition; however, the

USCG anticipates additional authorized CAT dealers will express interest. We do not anticipate that there are additional CAT-authorized service providers outside of the CAT dealer network that will provide an offer in response to the solicitation. Only authorized CAT dealers can effectively service these engines, provide parts, and meet all the requirements of the specification. The approved J&A will be posted to Beta Sam at the https://beta.sam.gov website in accordance with

FAR Subpart 5.102. If proposals are received from qualified sources, they will be considered.

Prospective vendors are expected to demonstrate experience, authorization as a CAT-authorized entity, and certified to accomplish work on the CAT Model 3508 diesel engine.

Gregory Poole Equipment Company

1500 Sensation Weigh

Beaufort, NC 28516

252-504-5111

POC: Timothy Heaney (timothy.heaney@gregpoole.com) mailto:timothy.heaney@gregpoole.com

Hawthorne Power Systems

16945 Camino San Bernardo

San Diego, CA. 92127

858-688-7034

POC: Mike Stumpo (MStumpo@HawthorneCAT.com)

NC Power Equipment

17900 West Valley Highway

Tukwila, WA. 98188

425-251-5877

POC: Art Kercher (akercher@ncmachinery.com)

Blanchard CAT

153 Farmington Rd, Summerville, S.C. 29483

843-480-3597

POC: Harry Whittaker (hwhittaker@blanchardmachinery.com)

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.

CAT Inc. owns all data rights for the diesel engines and will not release the information to customers. It is not anticipated that any future requirements can be competed on a full and open competition basis. However, the Coast Guard will continue its attempts to obtain proprietary data rights. This will include continuing to conduct market research in accordance with FAR Part 10, with a focus on locating vendors capable of meeting the requirement before subsequent acquisitions occur.

mailto:MStumpo@HawthorneCAT.com mailto:akercher@ncmachinery.com mailto:hwhittaker@blanchardmachinery.com