Attachment 4 JandA FME PARTS CPACA Approved Redacted.pdf

70Z085-21-Q-42114B00

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

Under 10 U.S.C. § 2304

Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements

(Brand Name Justification) RFP Number: 70Z085-21-Q-42114B00

Pursuant to the requirements of the Competition in Contracting Act (CICA) as implemented by the Federal Acquisition Regulation (FAR) Subpart 6.3 and in accordance with the requirements of FAR 6.303-1, the justification for the use of the statutory authority under FAR Subpart 6.3 is justified by the following facts and rationale required under FAR 6.303-2 as follows:

1. Agency and Contracting Activity:

Department of Homeland Security, United States Coast Guard (USCG), Surface Forces Logistics Center (SFLC) Contracting and Procurement Division (CPD), Icebreaker, Buoy and Construction Tender Product Line (IBCTPL), 2401 Hawkins Point Road, Baltimore, Maryland 21226.

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

(a) The USCG has a requirement to procure Fairbanks Morse Diesel Engine parts, used onboard the 378’ Coast Guard High Endurance Cutters (WHECs) and 140’ Coast Guard Icebreaking Tugs (WTGBs) on a brand name basis. The period of performance will be five (5) years with four (4) 12 month option years. The Independent Government Estimate (IGE) for this acquisition is . A breakdown of the estimated total value is provided below. The USCG intends to award a requirements type contract with firm, fixed-priced delivery orders. Delivery orders issued against the contract intend to use annual Operational and Maintenance Funds for the particular fiscal year of the order. The proposed contract is expected to be awarded to either the Original Equipment Manufacturer (OEM), Fairbanks Morse Engine (FME), or FME’s ONLY Authorized Distributor, Incredible Supply & Logistics.

(b) Name and address of the OEM:

Fairbanks Morse Engine (FME) 701 White Avenue

Beloit, WI 53511

Name and address of the authorized distributor is:

Incredible Supply & Logistics 1439 Great Neck Road Virginia Beach, VA 23454

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

Attachment 4

(d) Estimated total value (including options): , broken down as follows:

Independent Government Estimate:

Period Months Estimated Cost

Base Year

(12 months)

Option Year 1 (12 months) Option Year 2 (12 months) Option Year 3 (12 months) Option Year 4 (12 months)

Total

The period of performance will be five (5) years with four (4) 12 month option years. This IGE was developed using information from several sources. Price information for FME parts were based on a historical simplified and formal acquisition purchases, historical simplified and formal acquisition purchases, Market Research, and using Consumer Price Index for inflation and more recent purchases. A inflation factor was added due to market influences of product demand, unforeseen market factors and part availability to determine fair and reasonable pricing. The estimated pricing was determined after a review of the historical data in Naval and Electronic Supply Support System (NESSS). Estimated price information for parts was based on previous purchases, ROM pricing from commercial sources and information obtained from Web-Flis. The quantities were estimated based on historical date retrieved from NESSS, Fleet Logistics System (FLS) and driven by the Cutter Maintenance Plan (CMP).

Note: There was a previous contract HSCG40-15-D-30002 that also required a justification due to the proprietary products or services, the period of performance end date for that contract was 05/14/2020.

(e) Type of funding: Operations and Maintenance funds

(f) Year of funding: Fiscal Year 2021; annual appropriations for option years.

(g) Solicitation Number: 70Z085-21-Q-42114B00

(h) This justification for other than full and open competition seeks approval to award a firm fixed price requirements contract with the OEM, FME or the authorized distributor, Incredible Supply & Logistics.

3. Description of Supplies/Services.

The USCG anticipates awarding a requirements contract with firm, fixed-price delivery orders to purchase of numerous diesel engine parts used on the FME Model 38 8-1/8 opposed piston (OP) engines. The parts must be FME. Using FME parts will ensure the parts are manufactured in accordance with FME specifications and standards, conform to original form, fit, and function, and are compatible and interchangeable with existing FME parts.

Additionally, FME parts will ensure proper operating and calibration parameters are met.

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

The statutory authority permitting other than full and open competition is 10 USC 2304(c)(1) implemented by Federal Acquisition Regulation (FAR) Subpart 6.302-1 “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements”.

5. Identification of Exception to the Buy American Statute.

N/A. No Exception Applies.

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

This acquisition will be made using FME parts and assemblies. The statutory authority is 41 U.S.C. 1901 is applicable because FME is the only source that possesses required drawings, specifications, and proprietary data and methods to ensure the latest design configuration, manufacturing and quality control required to produce FME parts to the latest engineering specifications and requirements for the OEM parts.

The requirement to use only OEM brand parts shall be enforced or the mission of the 378’ (WHEC) and 140’ (WTGB) fleet could be jeopardized by causing a catastrophic engine failure due to unknown quality or compatibility. FME is the only known source that possesses the required capabilities, drawings, specifications, engineering control procedures and proprietary methods to ensure the latest design configuration, manufacturing, and quality control required to produce parts to the latest engineering specifications and requirements.

Since the drawings, manufacturing processes, and other technical data is proprietary information to the OEM, it is impossible for the Coast Guard to evaluate aftermarket parts and components and determine if they are equal to OEM parts.

Procuring an engineering agency to perform these reengineering evaluations would be cost prohibitive due to the sheer number and complexity of the FME parts and components which would have to be re-engineered, tested, and approved to ensure proper functional and reliability. Allowing non-OEM vendors to qualify their own parts would still require verification.

In accordance with Commandant Instruction M4130.6B, Coast Guard Configuration

Management Manual, it is very important to maintain cutter configuration. Use of other than OEM brand products would entail development of a new engineering change, as required by CGTO PG-85-00-900-G, Joint Surface Forces Engineering Change Process Guide. This is a lengthy process requiring months of reviews, approvals, and prototyping, and would result in differences between vessels in the cutter class.

The 378’ WHEC operations include search and rescue, counter drug operations, counter migrant operations, fisheries enforcement and homeland security. The 140’ WTGB operations include ice breaking on rivers, lakes, and northeast coastal waters, port safety operations, and support to aids to navigation. Failure to provide OEM parts could cause engine failure, rendering the vessels unable to complete mission requirements, and possibly place the crews in a hazardous environment causing serious injury to the crew, cause schedule impacts and the reduced ability to support US interests around the world.

The standard warranty on all parts is one year for all equipment sold. The use of non-OEM parts will nullify any warranty on OEM parts already installed, due to the symbiotic relationship of all parts that make up the engines. Additionally, because non-OEM parts manufacturers do not have access to drawing tolerances and material composition for the various parts that comprise the engine, reduced reliability and decreased lifespan of the engine may be experienced.

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

Potential Sources as is Practicable.

The APFS F2019048058 was published on 20 April 2020. However, no responses were received from the APFS posting. The USCG sent an email to FME requesting to purchase data rights, drawings, manufacturing data, and specification. On 11/19/2020 FME responded stating “Fairbanks Morse Engine does not disclose nor sell any of our intellectual property nor share any drawings pertaining our engine line of equipment. Such information and material is proprietary of Fairbanks Morse Engine who is the sole source of such information. The only authorized distributor or agent who represents FME for the USCG within the US is: Incredible Supply & Logistics”.

Another request for data rights was sent on 06/12/2020. FME responded on 06/23/2020 with the same response and stated above. On June 23 2020, FME emailed stating they do not disclose nor sell any data their intellectual property nor share any drawings pertaining to their engine line of equipment. Such information and material is proprietary of FME who is the sole source of such information.

In accordance with FAR Subpart 5.203, in an effort to solicit as many potential sources as practicable, Sources Sought Notices were posted on the beta.sam.gov on 12/12/19 and updated on 12/13/19 with a response date of 01/06/20. Only Incredible Supply & Logistics, LLC (ISL) responded to it. Due to later changes (additions and removals) in the Schedule of Supplies, which indicates the CLINs (parts) list for the requirement, a second sources sought/request for information notice was published on 02/27/20. This second notice was again responded to by ISL. An email was also received from FME indicating its interest to participate “be it directly (direct source) or indirectly…through our US authorized agent Incredible Supply & Logistics”.

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

The Contracting Officer will determine that the anticipated prices are fair and reasonable in accordance with using FAR 15.404(a)(2) based on comparisons with the IGE, market research, previous acquisition history, and if required by the Contracting Officer, the offeror may need to submit other than certified pricing data. If deemed necessary by the Contracting Officer, other than cost and pricing data may be requested per FAR 15.403-03(c).

9. Description of Market Research.

The Contracting Officer’s Representative (COR), , conducted market research November 2019 through June 2020. Internet searches, direct contact with industry, as well as reviews of previous government contracts were researched to look for companies that are capable of providing these parts.

Internet Contact – In a letter e-mailed on November 25, 2019, FME asserted, in part, the following: FME is the sole OEM for OP engine replacement parts, sole design control entity for the OP engine, and the only entity with OP data such as Design Data Base, Acceptance/Rejection Criteria, Destructive Test Results for High Shock Qualification, and Material and Chemical Property Specifications (for hardness, case depth, and chemical material properties, etc.). FME and Incredible Supply & Logistics (ISL) have an Alliance Relationship to serve the USCG.

Acquisition History – A query of NESSS resulted in numerous records of simplified acquisitions made with FME and ISL over the last 5 years for items for the same engines, which were never added to the requirements contract.

FedLog – FedLog research verified that the majority of parts required by this contract have active National Stock Numbers (NSNs) associated with the OEM part numbers.

Sources Sought- A sources sought/request for information notice was published on the Federal Business Opportunities website at beta.sam.gov on 12/12/19 and updated on 12/13/19 with a response date of 01/06/20. Only Incredible Supply & Logistics, LLC responded to it.

Due to later changes (additions and removals) in the Schedule of Supplies, which indicates the CLINs (parts) for the requirement, a second sources sought/request for information notice was published on 02/27/20. This second notice was again responded to by ISL. An email was also received from FME indicating its interest to participate “be it directly (direct source) or indirectly…through our US authorized agent Incredible Supply & Logistics”.

Request for Data Rights- On 11/19/2020 FME responded to the request to purchase data rights, drawings, manufacturing data, and specification stating “Fairbanks Morse Engine does not disclose nor sell any of our intellectual property nor share any drawings pertaining our engine line of equipment. Such information and material is proprietary of Fairbanks Morse Engine who is the sole source of such information. The only authorized distributor or agent who represents FME for the USCG within the US is: Incredible Supply & Logistics”. Another request for data rights was sent on 06/12/2020. FME responded on 06/23/2020 with the same response and stated above.

OP OEM Statement Letter- As stated in a letter dated 11/25/2019, FME provides supplies and services to the USCG through its small-business alliance partner, Incredible Supply & Logistics, LLC.

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

The requirement cannot be modified to allow full and open competition. The parts required in this acquisition were designed exclusively to fit FME OP Engines. Therefore the only way to modify the requirement to allow full and open competition would be to remove entirely the FME OP Engines from the WHEC-378 and WTGB-140 class cutters and replace them with engines from a different manufacturer that makes spare parts available on the open market.

Given that these engines are large and powerful enough to propel a ship through the water, the anticipated acquisition cost for the WTGB-140 fleet alone would be in excess of (at least per engine, times two engines per hull, times eight hulls). This figure does not include the same acquisition for the WHEC-378 class, nor does it account for the monetary and time expense of developing, prototyping, and deploying such an engineering change.

Reverse engineering was considered and dismissed for lack of cost-effectiveness and time-effectiveness. Reverse engineering would entail material composition analysis of all engine parts in this requirement, determination of dimensions and tolerances, and development of OEM-equivalent manufacturing procedures. The Coast Guard does not possess the OEM tolerances, testing, and quality control procedures for use in comparing the reverse engineered data. The reverse engineering timeline is estimated at approximately 10 months. Production and quality assurance of the reverse engineered items would have to be managed and approved by a technical expert that is well versed in main propulsion machinery and considered a subject matter expert (SME). The entire process, including parts testing and the efforts of other fields such as contracting and project management is estimated to at least 1.5 to 2 years during which time the OP main propulsion diesel engines currently in service would not be supported.

Detailed reverse engineering cost estimates are provided below as averages for one CLIN on the Schedule of Supplies (Attachment 1):

Task Person- Hours

Mean Hourly

Wage (BLS)

Total Cost

Unpack Material (53-7064 Packers and Packagers, Hand)

Disassemble Assemblies (51-2031 Engine and Other Machine Assemblers)

Measure dimensions (49-9071 Maintenance and Repair Workers, General)

Analyze materials and develop Bill Of Materials (17-2131 Materials Engineers) http://www.bls.gov/oes/current/oes537064.htm http://www.bls.gov/oes/current/oes537064.htm https://www.bls.gov/oes/2018/may/oes512031.htm https://www.bls.gov/oes/2018/may/oes512031.htm http://www.bls.gov/oes/current/oes499071.htm http://www.bls.gov/oes/current/oes499071.htm http://www.bls.gov/oes/current/oes172131.htm

Create drawing (17-3019 Drafters, All Other) 40 Reassemble Assemblies (51-2099 (51-2031 Engine and Other Machine Assemblers)

Repack Material (53-7064 Packers and Packagers, Hand)

Subtotal 110 Overhead and G&A Profit Margin Total labor cost for one item Freight 60 items Total cost for all 60 items

Note: The above table is for the estimated reengineering costs for one CLIN. Not all CLINs are assembled parts and thus would not require disassembly. On the other hand, some CLINs are much more complex (e.g. vertical drive assembly) and would require many more labor hours to disassemble, analyze, develop assembly bill of materials and create drawings. These variations in scope of work were considered when estimating average labor hours. Total estimated lead time to reverse engineer and create manufacturing drawings is approximately 180 person-days. This does not include the manufacturing time specified in the delivery schedule, which must occur prior to testing each part on an installed engine. Prototyping of the reverse engineered parts must occur in conjunction with a planned cutter availability involving a main diesel engine overhaul. The cost to reengineer all of the CLINs for this contract would be significantly higher and labor intensive. Total time from commencement of reverse engineering to awarding a contract to purchase all the parts is expected to be at least 2- 3 years.

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

The following companies responded to the sources sought notices posted for this acquisition and are expected to be able to meet this requirement:

• Fairbanks Morse Engine (FME) (OEM)

701 White Avenue Beloit, WI 53511

• Incredible Supply & Logistics (Authorized Distributor)

1439 Great Neck Road Virginia Beach, VA 23454

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.

FME owns all data rights for the FME diesel engine parts 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 http://www.bls.gov/oes/current/oes173019.htm https://www.bls.gov/oes/2018/may/oes512031.htm https://www.bls.gov/oes/2018/may/oes512031.htm http://www.bls.gov/oes/current/oes537064.htm http://www.bls.gov/oes/current/oes537064.htm 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.