Beebe_Signed_28_Jan_UTAS_JA_Redacted.pdf

DDEFENSE LOGISTICS AGENCY

HEADQUARTERS

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6221

JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

I. CONTRACTING ACTIVITY

This Class Justification and Approval (J&A) is submitted to request authority for Other Than Full and Open Competition to support requirements generated by the Department of Defense and Foreign Military Sales via a phased approach which includes standard DLA Direct Long Term Contract, Supplier Initiated Orders, and Performance Based Logistics (PBL). Acquisition of Depot Level Repairable (DLR) and consumable parts, or outcomes tied to these parts, will be supported through one of the three increments under this program.

The contracting authority for this requirement is DLA Aviation, Strategic Acquisition and Programs Directorate.

II. NATURE AND/OR DESCRIPTION OF THE ACTION BEING PROCESSED

Due to the circumstances described herein, this activity requests authority for the negotiation and award of a contract action on a sole-source basis, to UTC Aerospace Systems (UTAS) for sole source commercial and non-commercial parts. UTAS is a combination of individual business units who specialize in specific product lines; from engine control systems to landing systems and fire suppressants, UTAS products are on many commercial and military aircraft. UTAS CAGEs involved in this acquisition include, but are not limited to: 12511, 61423, K0131, 00462, 3HRL4, 99167, 73030, 59885, F1688, 17576, 13002, 99551, 45153, 31218, 71895, 73168, 89305, 02121, 31645, 60678, 26581, K0377, 97153, U1603, 51563, 55438, 0AJJ0, 05BU0, K0023, 17610, 3TAH8, 0YJV4, 63395, 58556, D8095, 26502, 3SDT5, 8F963, 05WL4, 8Y438, FA3T0. Sole source UTAS parts from any other associated facility will be candidates for possible inclusion in the contract.

The acquisition will be conducted using Other Than Full and Open Competition as prescribed by FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

This contract will be awarded as an Umbrella with each individual business unit having its own unique subsumable contract. The award of the Umbrella will only include terms and conditions and will not include pricing. Upon award of the Umbrella, DLA will solicit & negotiate pricing with each individual business unit and award subsumable contracts reflecting negotiated pricing and any unique requirements that were not agreed upon by UTAS, as a whole, in the Umbrella.

This action will result in a program with three (3) individual/staggered increments, each will consist of one (1) ten (10) year Long Term Contractual arrangement. Each increment will consist of a five (5) year ordering/base period and one five (5) year unilateral option period.

Market Research has been conducted for those NSNs which will become part of Phase 1 and has determined that there is no source, other than UTAS, which is able to support the desired outcome of the first phase of this project. In accordance with FAR Part 10, additional Market Research will be accomplished prior to the implementation of subsequent increments and all associated options. In no event will an increment’s total contract period exceed the ten-year period authorized by 10 U.S.C. 2304a(f), unless appropriate approval is obtained.

It is anticipated that the increments will be accomplished as follows:

- Increment 1: Standard Long Term Contract (LTC). Pricing to be negotiated with individual business units and incorporated through subsumable contracts. This increment is a follow-on contract to the current LTC with UTAS. The structure of the Umbrella and its relationship to its subsumable contracts will be the same under this increment of the COI project.

- Increment 2: Supplier Initiated Orders (SIO) for specific business units of UTAS.

This will not apply to all UTAS business units. SIO is a concept where the supplier, using specific demand data provided by the DLA, forecasts and builds parts to support the DLA’s future requirements. This gives the supplier strategic latitude to efficiently support DoD requirements. The greater visibility into the DLAs demands will allow the supplier to buy raw materials in efficient quantities and establish level-loaded production lines. The DLA will share in the savings obtained through this increment.

Prior to implementation of any SIO arrangement, a Business Case Analysis (BCA) will be conducted to ensure that it is in the best interest in the Government. As further explained in Section V of this document, appropriate levels of Market Research will also be performed to ensure parts involved in SIO are sole source to UTAS.

- Increment 3: PBL support. This will enable the DoD to buy a level of support from UTAS to support any one of its sole source end-items. A level of support is being used as a general term in this document because it can vary depending on the requirement.

Examples include, but are not limited to, C-130 Hub and Blade Virtual Prime Vendor concept, support for Constant Speed Drives, & Wheels and Brakes improvements.

Projects will be measured by establishing a price per landing or a price per flight hour and any other pertinent, measurable outcome. The type of outcomes to be supported through this effort will vary, but each will go through a BCA and appropriate Market Research to ensure the project is in the best interest of the DoD and that the NIINs involved are sole source to UTAS. Increment 3 of the COI will not be limited to PBLs for sole source UTAS product lines and higher assemblies. Performance-based sustainment and engineering efforts to support service-life extension programs and other modernization upgrades or safety modifications will fit into this phase of the overall program.

The graphic on the following page further illustrates the relation of the three increments to the overarching COI construct.

UTC Aerospace Systems Captains of Industry Effort

The contract will primarily be funded by the Defense Working Capital Fund. Provisions will be incorporated to include service provided funding to enable the Services to leverage this contract to increase savings for depot maintenance, platform and system modifications and service life extension programs. Again, it is anticipated that this program will be implemented in phases with individual contracts as requirements fully develop. Although all increments/contracts will operate via “D” type ordering arrangements, application of PBL sustainment (i.e. pricing arrangements, metrics, disincentives) may vary for each increment/contract.

III. DESCRIPTION OF THE SUPPLIES/SERVICES REQUIRED TO MEET THE

AGENCY’S NEEDS

This Class Justification and Approval covers the acquisition of supplies and services which are sole source to UTAS via the incremental strategy mentioned above. The initial population of 788 NIINs for Phase 1 is attached to this document. The total amount of NIINs for this project could grow up to 44,274. Phases two and three are more strategic in nature and will include a holistic support strategy to be identified in individual Acquisition Plans specific to each increment. That strategy may include supply chain management, logistics & engineering services and sole source repair services to include, but not limited to, repair of DLRs and unplanned depot maintenance activity repair services.

This initiative will involve identifying demand patterns and emergent needs for parts in various Federal Supply Classes which are only manufactured by UTAS, and to place those NSNs on contract through one of the three increments as demand warrants.

IV. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND

OPEN COMPETITION

Use of Other than Full and Open Competition is authorized by 10 U.S.C. 2304(c)(1) and FAR 6.302-1, as there is only one responsible source and no other supplies or services will satisfy agency requirements. The acquisition is restricted to UTAS who is the sole manufacturing source for all NSNs to be included in this project.

V. DEMONSTRATION THAT THE CONTRACTOR’S UNIQUE

QUALIFICATIONS OR NATURE OF THE ACQUISITION REQUIRES THE USE

OF THE AUTHORITY CITED ABOVE

The authority in paragraph IV above applies because UTAS is the Original Equipment Manufacturer (OEM) with design control, authorization, and documentation to overhaul and manufacture the NSNs tied to this acquisition.

The parts provided by UTAS include critical machining processes which are proprietary and owned by the OEM. In order for the parts to perform properly and stay within required parameters and tolerance limits, these critical processes must be followed. Since the data required to properly support this effort is owned by UTAS, interested vendors would have to be willing to invest the time, funding, and manpower required to reverse engineer these parts at their own expense.

As each weapon system plays a key role in the support of the Global War on Terrorism and the overall mission of the Department of Defense, asset availability is critical to uninterrupted logistical support.

The initial population of NSNs has been verified to be sole source to UTAS through a Material Master review, which consists of an analysis of the Acquisition Method Codes/Acquisition Method Suffix Codes (AMC/AMSC) maintained inside Government databases. The AMC/AMSC is fed into DLA databases by the Service with Engineering Authority for the respective NIIN. This review concluded that the initial population of NIINs are sole source to one of the UTAS business units specified in Section II of this document. In addition to the AMC/AMSC review, a subsequent NIIN-by-NIIN technical review was performed to validate that only UTAS CAGEs are associated with the attached NIIN population in DLA systems.

This has been done for the initial population of NIINs which will be part of Phase 1. Any future additions to Phase 1 will follow a similar process to verify that the Government does not own sufficient data to obtain competition, or develop a manufacturing source other than UTAS.

Prior to implementation of phases 2 and 3, DLA will verify that all applicable NSNs are indeed sole source to UTAS, or that the appropriate bundling and/or consolidation analysis has been performed and approved. The primary goal of this initiative is to improve logistics support to all worldwide customers by reducing total cost of product, DLA inventory, and Administrative Lead Time/Production Lead Time for parts identified as candidates for one of the three increments.

As the program matures, and projects relating to the SIO and PBL phases are more clearly identified, market research will be performed to ensure these subsequent phases are sole source to UTAS. Market research techniques will include, but are not limited to, industry feedback, synopses, Requests for Information, technical reviews, and information obtained from the applicable Services regarding drawings and technical data rights. Prior to issuing any solicitation for a strategic requirement under the SIO or PBL phases, coordination with the Small Business office and Competition Advocate will be accomplished to verify that UTAS is, indeed, the sole source with the capability and technical data to support the future requirement.

Accordingly, UTAS is the only firm capable of providing the services and supplies described in Section III above without the government experiencing delays in fulfilling its requirements.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS DEEMED

PRACTICABLE

This requirement will be synopsized on the Federal Business Opportunities (FedBizOpps) web page as required by FAR 5.201. It is anticipated that sources having an interest in subcontracting may be identified through synopsis. Although the Government does not own data to support acquisition of these items from any other source, any source who responds to the Government as a result of the synopsis will be identified to UTAS as a potential for subcontracting possibilities. Future interest from additional sources is not anticipated at this time, but future increments will nevertheless be advertised via FedBizOpps as well to ensure that potential alternate sources are aware of the requirement and can identify interest in support for the applicable items.

VII. DETERMINATION BY THE CONTRACTING OFFICER THAT THE

ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND

REASONABLE

The Contracting Officer has determined the anticipated cost to the Government of the supplies/services covered by this Class J&A will be fair and reasonable. UTAS will be required to provide appropriate cost or pricing data in accordance with FAR Parts 12 & 15.

For items deemed non-commercial: A review of the proposed prices will be conducted whereas the Government will review UTAS cost data including proposed labor hours, types and quantities of material, historical material prices and other direct costs. A Forward Pricing Rate Agreement (FPRA) or Forward Pricing Rate Recommendation (FPRR) for direct and indirect rates will be provided by Defense Contract Management Agency. For UTAS facilities that do not have a FPRA or FPRR, direct and indirect rates will be negotiated and established in a rate agreement. Profit will be negotiated using the Weighted Guidelines Method.

For items deemed commercial: UTAS will not be required to provide certified cost or pricing data IAW FAR 15 procedures. Price analysis will be used to determine price reasonableness for commercial items. Should data other than certified cost or pricing data be utilized, the Government’s negotiation objective will be developed using local technical analysis, negotiated direct and indirect rates (FPRA), and profit using the Weighted Guidelines Method.

Additionally, the Government will analyze sales data to non-governmental entities to ensure that the same or similar parts are sold in substantial quantities in the commercial market.

The ten-year term of each increment (5-year base plus one 5-year option), and tenets of each increment, will motivate UTAS business units to continually seek out opportunities for reliability improvements, obsolescence management, process improvements and more efficient operations over the contract period. This contract will be negotiated assuming decreased costs associated with efficiencies that will be gained through the potential ten-year performance period of each increment. On the basis of the foregoing, the Contracting Officer hereby determines that the anticipated cost to the Government will be fair and reasonable.

VIII. DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AND THE

RESULTS, OR STATEMENT OF THE REASONS MARKET RESEARCH WAS

NOT CONDUCTED

NSNs included in the initial population for Phase 1 are deemed to be sole source to UTAS based on Market Research, which included an analysis of the AMC/AMSC coding inside of Government systems to verify if the Government owns sufficient data to compete or find additional sources. The result of the query is that the Government does not own sufficient technical data to develop Source Qualification documentation to seek out, and find, additional sources. In addition to the AMC/AMSC analysis a Technical Review was performed on the NIIN list for Phase 1 to determine if additional sources are listed in Government databases;

that review yielded no additional CAGEs outside of the UTAS business units listed in Section II of this document. Additional Market Research in accordance with FAR Part 10 will be conducted prior to adding NSNs to the contract beyond the initial population.

These parts have been supported through a sole source contract with UTAS that was awarded in May of 2008. Vendor surveys were conducted with UTAS business units via email and teleconferences to determine a strategy to improve support and the Government’s buying power under the new program. Feedback from those meetings have been incorporated into the overall structure and strategy of this program.

A review of the class population confirmed that the initial items to be solicited are sole source to UTAS. Technical certifications will be required for every NSN involved in this program. A synopsis will be posted to FedBizOpps to advise industry of the procurement and solicit further inquiries from interested parties prior to issuance of the Request for Proposal. It is anticipated that no other source other than UTAS, the only known source capable of providing these parts, will be interested in this procurement.

Due to the sole source nature of parts associated with this project, a Sources Sought waiver was obtained from the Head of Contracting Activity in accordance with DFARS PGI 206.302-1.

Based on the market research conducted, there is a high level of confidence that there are no additional sources capable of satisfying the agency's need for these proprietary items nor are there any other commercial or nondevelopmental items which could be utilized or modified to meet the agency's need.

IX. ANY OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL

AND OPEN COMPETITION

As detailed above, UTAS is the OEM for all parts associated with this procurement. UTAS’ unique engineering expertise and world wide support infrastructure make it the only company capable of providing support of the magnitude and complexity needed to support all three increments of this acquisition. Additionally, the Government does not own sufficient data that could be made available to any other source to perform all of the requirements anticipated by this comprehensive level of support.

X. LIST OF SOURCES, IF ANY, THAT EXPRESSED INTEREST IN

THE ACQUISITION

As indicated in Section VI above, this requirement will be synopsized on the FedBizOpps website as required by FAR 5.201. If sources other than UTAS express interest, they will be directed to a copy of the solicitation.

XI. A STATEMENT OF THE ACTIONS, IF ANY, THE AGENCY MAY TAKE TO

REMOVE OR OVERCOME ANY BARRIERS TO COMPETITION BEFORE

MAKING SUBSEQUENT ACQUISITIONS FOR THE SUPPLIES

Due to the complex nature of this work, there is no opportunity at this time to remove barriers to competition at the prime contractor level. However, the Government intends to include FAR 52.219-16, Liquidated Damages- Small Business Subcontracting Plan and FAR 52.219-10, Incentive Subcontracting Program in the contract and work in close coordination with both the DLA Small Business Office and UTAS to select subcontractors on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract and sound business case analyses. DLAD Clause 52.217-9002, Condition for Evaluation/Acceptance of Part Numbered Items, will be included in the solicitation which provides guidance for potential suppliers. Additionally, UTAS may be required to obtain common consumables required for this effort from the Defense Logistics Agency and all applicable competitive processes will continue to be utilized for acquisition of common consumables.

This acquisition will include DLAD 52.216-9006, Addition/Deletion of Items, which allows additional sole source items to be added to the contract after the initial award. Prior to pricing and adding items to the contract, a complete technical review, sole source certification and synopsis will be completed. Any items found to have additional sources of supply will be excluded as candidates to be added. Conversely any item which becomes competitive after award will be deleted from the contract.

The Contracting Officer will continue to synopsize items that may be added to this contract in order to investigate the possibility of competition. The Competition Advocate will review the requirements to verify that all requirements are sole source. As stated above, UTAS is the only known source with the capability of furnishing the required logistics support.

Future increments and/or additions to the contract will nevertheless be advertised in the FedBizOpps website (www.fedbizopps.gov), prior to execution, in order to ensure that potential alternate sources are aware of the requirement and can identify interest in support for these items.

XII. CONTRACTING OFFICER’S CERTIFICATION

The contracting officer’s signature on the Coordination and Approval Document evidences that he has determined this document to be both accurate and complete to the best of his knowledge and belief.

Attachments:

UTAS NIIN List Signed Technical Certifications Waiver of Requirement to Post Sources-Sought Notice