Attachment 4 - JA Redacted.pdf

SOLE SOURCE JUSTIFICATION

For Certain Commercial Items for Procurements Exceeding the Simplified

Acquisition Threshold pursuant to FAR Subpart 13.5, Including Brand Name

Solicitation 70Z04022Q55800B00

In compliance with Federal Acquisition Regulation (FAR) 13.501(a)(ii), this justification uses the format at FAR 6.303-2 and is modified to state that the procedures in FAR subpart 13.5 are used.

1. Agency and Contracting Activity

The Department of Homeland Security, United States Coast Guard (USCG), Surface

Forces Logistics Center (SFLC), Small Boat Product Line (SBPL), and Contracting and

Procurement Division 3 (C&P3) located at 2401 Hawkins Point Road, Baltimore, MD

21226 prepared this justification for other than full and open competition.

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

(a) Nature of the action: USCG intends to procure on a brand name basis overhauled and new Twin Disc Marine Reduction Gears.

(b) Name and address of the contractor:

Original Equipment Manufacturer:

Twin Disc, Inc.

1328 Racine St

Racine, WI 53403

(c) Type of action: Firm Fixed-Price Requirements Type Contract

(d) Estimated total value (including options):

CLIN Description Base Year Option Year 1 Option Year 2 Option Year 3 Option Year 4

OPEN/INSPECT DP

TEST (MG5114SC)

$1,050.00 $1,081.50 $1,113.95 $1,147.36 $1,181.78

OPEN/INSPECT DP

TEST (MG507A1)

$900.00 $927.00 $954.81 $983.45 $1,012.96

OVERHAUL LABOR

(MG5114SC)

$2,362.50 $2,433.38 $2,506.38 $2,581.57 $2,659.01

OVERHAUL LABOR

(MG507A1)

$1,959.50 $2,018.29 $2,078.83 $2,141.20 $2,205.43

MANDATORY

REPLACEMENT

PARTS (MG5114SC)

$11,592.10 $11,939.86 $12,298.06 $12,667.00 $13,047.01

MANDATORY

REPLACEMENT

PARTS (MG507A1)

$3,438.45 $3,541.60 $3,647.85 $3,757.29 $3,870.01

PRESERVATION,

PACKING AND

MARKING

$287.50 $296.13 $305.01 $314.16 $323.58 https://www.acquisition.gov/far/13.501 https://www.acquisition.gov/far/part-6#FAR_6_303_2 https://www.acquisition.gov/far/part-13#FAR_13_500

0008 NEW CRATE $125.00 $128.75 $132.61 $136.59 $140.69

EXTENDED

WARRANTY

$187.50 $193.13 $198.92 $204.89 $211.03

TECHNICAL

REPRESENTATIVE

SERVICES

$150.00 $154.50 $159.14 $163.91 $168.83

NEW REDUCTION

GEAR (MG5114SC)

$18,088.00 $18,630.64 $19,189.56 $19,765.25 $20,358.20

Base Year $130,759.45

Option Year 1 $134,682.23

Option Year 2 $138,722.70

Option Year 3 $142,884.38

Option Year 4 $147,170.91

Total: $694,219.68

The Independent Government Estimate (IGE) is derived from current material pricing and previous acquisition history. Actual pricing data was extracted from NESSS using previous contracts. To adjust for inflation over the option years and account for market volatility due to

COVID-19, a 3% escalation factor was applied. This escalation factor is composed of Consumer

Price Index rate with added adjustment to account for economy and market volatility due to

COVID-19.

Note: Previous contract HSCG40-17-D-53004 expires 09/27/2022

(e) Type of funding: Operations and Support funds

(f) Year of funding: Intend to use current year funds when orders are issued.

(g) Solicitation number: 70Z04022Q55800B00

(h) Background information about the requirement: The USCG, SFLC, SBPL, has an ongoing requirement on a brand name basis for the overhaul and supply of

Original Equipment Manufacturer (OEM), Twin Disc Marine Reduction Gears, model numbers MG-5114SC and MG-507A1, which conform to the exact form, fit and function of the equipment attached to the main propulsion units installed on the United States Coast Guard vessels 45’ Response Boat – Medium (45’ RB-

M) and 49’ Buoy Utility Stern Loading (49’ BUSL), respectively.

3. Description of Supplies/Services.

This requirement is for the overhaul and supply of the Twin Disc reduction gear models

MG-5114SC and MG507A1 for the United States Coast Guard’s (USCG) SFLC-SBPL-

CEO Division. The reduction gears convert speed and torque transmission propulsion from the main diesel engine power. Each reduction gear scheduled for overhaul is to be disassembled, inspected, overhauled, tested, preserved, packaged, and marked to like-new condition using only authorized OEM repair facilities and only genuine OEM replacement parts. The projected goal of this requirement will be for SFLC SBPL to ship out “Not Ready for Issue” gears known as “F” Condition gears to a Twin Disc certified contractor where they will be overhauled using OEM certified parts and labor to return them back to a “Ready for Issue” status known as “A” condition. If a marine gear is found to be Beyond Economic Repair (BER), or if the need arises to bolster the SBPL’s stock without providing “F” Condition gears, a CLIN to purchase new gears may be utilized.

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

Competition.

The statutory authority of 41 U.S.C. 1901 permitting other than full and open competition as implemented by Federal Acquisition Regulation (FAR) Subpart 13.501, Simplified

Procedures for Certain Commercial Items.

5. Identification of Exception to the Buy American Act.

The Coast Guard has not identified an exception to the Buy American Act.

6. Demonstration that the Proposed Contractor’s Unique Qualifications or the Nature of the Acquisition Require Use of the Authority Cited.

This is a brand name requirement for the overhaul and supply of Twin Disc marine reduction gears, model numbers MG-5114SC and MG0-507A used on the United States

Coast Guard vessels 45’ RB-M and 49’ BUSL power train. The Coast Guard does not possess the necessary technical data to be able to solicit the requirement as full and open competition. The technical data required to overhaul these marine gears is proprietary to

Twin Disc and was not obtained when the vessels were acquired. Without adequate technical data, the Coast Guard is not capable of specifying manufacturing requirements for replacement parts or processes required for performing the services. The Coast Guard also lacks the technical data needed for evaluating the viability of non-OEM parts or alternate overhaul facilities and processes. OEM Authorized repair facilities are necessary due to OEM-specific tooling and technical information needed to overhaul the gears and ensure form, fit and function of the equipment is retained. The use of OEM parts is necessary for ensuring components and processes are sufficient to enable physical and functional interchangeability, as well as identifying source, size, configuration, and performance requirements.

Only contractors within the Twin Disc distribution network will be able to fulfill the service and supply needs for overhaul of the Twin Disc gears under this requirement in accordance with the OEM specifications. The Coast Guard’s inability to evaluate non-

OEM parts due to a lack of technical data could result in equipment failure including, but not limited to a failure of bearings, clutch assembly, seals, springs, or couplings, thus disabling the vessels of proper forward and reverse maneuverability.

Based on market research, the only companies that can satisfy this requirement are authorized distributors of Twin Disc, Inc.

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

Potential Sources as is Practicable.

https://www.govinfo.gov/app/details/USCODE-2011-title41/USCODE-2011-title41-subtitleI-divsnB-chap19-sec1901/summary https://www.acquisition.gov/far/13.501

In an effort to identify alternative sources, a Sources Sought Notice (SSN), 70Z04022S55900B00, was posted on SAM.gov on November 12, 2021, inviting industry to demonstrate capability in providing both overhauled and new marine reduction gears required for the Coast Guard’s 45’ RBM and 49’ BUSL small boat platforms. The notice provided possible sources 21 calendar days to respond and provide their capabilities to perform the requirements. According to an email received by the OEM on 11/23/2021, Twin Disc has three (3) authorized distributors in the United States that are capable of fulfilling the requirement: Great Lakes Power, Sewart Supply, and Palmer Johnson Power

Systems, the holder of the current overhaul contract, HSCG40-17-D-53004. A courtesy email was provided to the three identified authorized distributors, which notified them of the notice on SAM.gov. A Dynamic Small Business Search utilizing the NAICS 333613, and keyword “Twin Disc” yielded no results, however four (4) additional companies were identified using only the keyword “Twin Disc.” The SSN courtesy email was also forwarded to these companies in order to allow them to provide documentation proving their capabilities to meet the requirement. The SSN yielded two responses. Great Lakes

Power provided a response to the SSN on 11/23/2021 stating their intent to bid on a resulting solicitation. Stilten, Ltd. Co. provided a response to the SSN on 12/2/2021 stating their interest in the requirement. The KS replied to Stilten requesting documentation they are an authorized distributor of Twin Disc and could provide authentic OEM parts.

Additionally, the KS reply requested Stilten to provide a verifiable DUNS, as the DUNS provided in their SSN response only contained 8 digits. No response was received.

The KS emailed Sewart Supply on 12/9/2021 asking if the company had interest in the requirement, and if so, to provide an appropriate DUNS. Sewart replied, also on 12/9/2021, with their DUNS indicating they have interest in the requirement. Based on market research, the only companies that can successfully satisfy the requirement are the distributors identified by Twin Disc: Great Lakes Power Services Company, Palmer

Johnson Power Systems, and Sewart Supply.

8. Determination by the Contracting Officer that the Anticipated Cost to the

Government will be Fair and Reasonable.

The Contracting Officer (KO) will determine the anticipated prices will be fair and reasonable based on comparison with the Independent Government Estimate (IGE), previous contract HSCG40-17-D-53004, prior acquisition history of marine reduction gears and associated parts and market research results.

9. Description of Market Research.

Market research, as prescribed in FAR Part 10, was conducted by the Contracting Officer’s

Representative (COR), Contracting Specialist and Contracting Officer, from September

2019 through December 2021, in an effort to identify alternative sources that can provide both overhauled and new reduction gears. Specifically, an extensive Internet search was conducted in order to locate price and availability of parts, the Twin Disc distributor was contacted for estimates and availability of parts and several Government databases were reviewed for potential availability. The OEM was contacted via email on 11/23/2021 to request a list of their authorized distributors, and to inquire if the OEM intended to bid on a resulting solicitation for this requirement. In Twin Disc’s reply, also on 11/23/2021, they stated that Great Lakes Power Service Company, Palmer Johnson Power Systems and https://www.acquisition.gov/far/part-10

Sewart Supply are the only companies capable of fulfilling the requirement. Further, due to an agreement with their distributors, Twin Disc stated they will not be quoting on a resulting solicitation for this requirement.

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

None.

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

Acquisition.

Great Lakes Power Service, Co.

7455 Tyler Blvd

Mentor, OH 44060

Stilten Ltd. Co. (not an authorized distributor)

9800 Centre Parkway, Ste. 570

Houston, TX 77036

Palmer Johnson Power Systems

1835 Haynes Drive

Sun Prairie, WI 53590

Sewart Supply

1556 Destrehan AVE

Harvey, Louisiana 70058

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.

A request was emailed to the OEM on 11/24/2021 to inquire if the data rights to these reduction gears were available for sale and at what price. Also indicated was that no response would be perceived as a presumed negative response. A response was received from Twin Disc on 12/1/2021 declining the sale of data rights. Although the Coast Guard does not currently own the right to the total technical data package required to permit the manufacture of OEM compliant replacement parts, the duplication of overhaul services and to permit the Coast Guard to evaluate other than OEM parts, the Government will make all fiscally responsible attempts to try and procure data rights in an effort to increase competition.