C130 Bundling Analysis MFR Redacted.pdf

SOURCE SELECTION INFORMATION – SEE FAR 2.101 AND 3.104

DEFENSE LOGISTICS AGENCY

(DLA)

HEADQUARTERS

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060

MEMORANDUM FOR RECORD

Subject: Bundling Analysis Determination for C-130 Holistic Strategic Support

This Memorandum has been prepared pursuant to 15 U.S.C. § 644(e)(2) and the Federal Acquisition Regulation (FAR) 7.107 to identify benefits of a proposed C-130 holistic strategic support acquisition, to be established under a new Aviation Consumables Performance Based Logistics (ACPBL) contract with Lockheed Martin, and to document that those benefits are measurably substantial and support the proposed bundle as necessary and justified.

Section I: Background

Defense Logistics Agency (DLA) Aviation is working to develop and implement a performance-based acquisition support strategy for consumable items supporting the C-130 aircraft for both depot and worldwide operational customers, while leveraging Lockheed’s engineering, planning and supply chain experience. This strategy will leverage Lockheed’s existing C-130 supply chain and integration experience and link profitability to performance while reducing DLA inventory investment. DLA Aviation intends to award a ten-year fixed-price, holistic support, performance-based contract with a five-year base period and a five-year option period using FAR Part 15 procedures. This ACPBL contract seeks to deliver multiple benefits to DLA and the customer by incentivizing Lockheed Martin to improve several performance metrics of C-130 consumable parts supporting repair to both the depot and users worldwide; improve industrial base utilization to reduce diminishing manufacturing source and obsolescence by leveraging Original Equipment Manufacturer (OEM) engineering expertise to identify and/or develop sources for these types of parts; and improve small business participation through offering expanded opportunities for small business to develop a working relationship with the OEM while maintaining the same level of current DLA spend with small business. Conversely, Lockheed Martin will be disincentivized if performance does not meet agreed to performance targets.

This Requirements-Type contract includes a fixed-price base period and a fixed price with price redetermination option period. The original Lockheed Martin sourced population for this acquisition was 8,916 National Stock Numbers (NSNs) which had a five-year base period estimated value of and the full 10-year contract has an estimated value of . After discussions with the Small Business Administration (SBA)1, DLA agreed to remove 192 NSNs from the Lockheed Martin sourced population accounts for approximately $6.5M Annual Demand Value (ADV) or $65M over the 10-year contract life. This population is supported by 49 Small Business (SB) suppliers of which, seven are Small Disadvantaged Business (SDB) suppliers and five are Women Owned Small Business (WOSB) suppliers. To further align with and support the Administration and Departmental priorities towards equity in procurements, DLA Aviation reviewed and identified 172 additional NSNs valued at approximately $4.4M in ADV or $44M over the 10-year contract life. These 172 NSNs are supported by 105 SBs of which, 31 are SDB suppliers and 27 are WOSB suppliers. DLA Aviation agreed to remove these 172 NSNs from the Lockheed Martin sourced population to the DLA sourced population. This action maintains and potentially advances equity in procurement for these socio-economic concerns at the prime contract level. After these updates, DLA is bundling $28.4M SB ADV, DLA is retaining $230.9M ADV prime contracting opportunities for small businesses, and DLA is maintaining a 57% small business participation metric even though these removals reduce the historical small business spend from 55% of the population to 48%. Further explanation of the small business participation metric is in Section IV below.

During the discussions with SBA other NSNs were removed from the Lockheed Martin sourced population for various reasons such as: NSNs becoming terminal, NSNs being covered under other DLA Aviation long-term contracts, and NSNs managed by other Major Subordinate Commands (MSCs). The final Lockheed Martin sourced population after discussions with SBA totals 7,884 NSNs. This final Lockheed Martin sourced population has a five-year base period estimated value of and the full 10-year contract has an estimated value of .

The item population includes Lockheed Martin Sole Source, C-130 weapon system unique, customer unique consumable items having greater than 75% of overall market share/demand from Warner Robins Air Logistics Complex (ALC) customers, and items with First Article Test (FAT). The final analysis resulted in 7,884 NSNs in the Lockheed Martin sourced population.

Initial award will require Lockheed Martin to discretely price approximately 4,000 NSNs of the 7,884 NSNs. See Table 1 for breakdown.

This shall be a sole source award to Lockheed Martin. Lockheed Martin is the OEM for the C- 130 aircraft. Through market research as discussed throughout this document, DLA Aviation has determined that Lockheed Martin is the only source that can bring real-time access to the engineering expertise, technical data, and understanding of the manufacturing processes essential to successful support the C-130. As part of this holistic effort, Lockheed Martin will be incentivized to meet and improve the current performance on the following performance metrics:

MA, Order Response Time (ORT), reducing aged backorders greater than 180 days, Inventory Turns, and small business participation. Conversely, Lockheed Martin will be disincentivized if performance on these metrics decline. Additionally, this holistic effort is expected to decrease Production Lead Time (PLT) and Administrative Lead Time (ALT), which will result in improved mission capability and reduced costs to the USAF, USMC, and USN customers. PLT and ALT will not be incentivized or disincentivized.

DLA initially identified 44,218 additional NSNs tied to the C-130 weapon system. Both the 7,884 NSNs in the Lockheed Martin sourced population as well as the 44,218 NSNs in the DLA sourced population constitute a holistic Weapon System (WS) solution for support of the entire customer Bill of Materials (BOM). As discussed above, the NSNs DLA agreed to remove from the Lockheed Martin sourced population during discussions with SBA will be covered in the DLA sourced population. The final DLA sourced population totals 44,582 NSNs. By covering the entire BOM for the customer, DLA intends to drive a comprehensive WS support solution through this acquisition. Over the course of the acquisition, DLA will track all these items for impact on the WS and attainment of metrics. Items in the DLA sourced population will be eligible to be added to the Lockheed sourced population if performance declines on the performance metrics stated above. The contractor will be required to monitor DLA’s supply chain for all parts and when a gap in the DLA sourced population is recognized, the contractor will be expected to “fill the gap” with material to ensure the customer requisition is filled. These additional 44,582 NSNs will continue to be supported through Business-As-Usual (BAU) and not part of this bundled acquisition. These NSNs account for approximately $220M in Small Business ADV with 95% MA for the small business subset of the population. If NSNs move from the DLA sourced population to the Lockheed Martin sourced population a 2579 will be submitted for coordination and review.

DLA’s current support of consumables has led to a low aggregate Material Availability2 (MA) across all buckets of these items, resulting in increased costs and degraded performance for the services’3 fleet. Analysis performed on the 7,884 Lockheed Martin sourced population NSNs population of C-130 components revealed that the population is managed across several DLA major subordinate commands (MSCs): Aviation, Troop Support, and Land and Maritime. DLA currently supports these items through sole source and competitive acquisition methods via multiple long-term contracts (LTCs) and thousands of individual transactional procurements to support worldwide military customers. These methods of variable BAU DLA support have yielded a weighted MA of 83% across the Lockheed Martin sourced NSNs population, as noted above. This population’s 83% MA performance is below DLA’s 90% MA goal and provides unsatisfactory support to the worldwide customers. As such, MA is an element where significant improvements are expected to be realized and sustained through the planned performance-based holistic support to improve readiness.

The logistics solution being acquired is a more comprehensive and complete supply chain management program than the current tactical procurement strategy being employed to support these items. The C-130 is an aging aircraft, and as such, the population of items poses significant engineering, technical, diminishing manufacturing sources, and raw material acquisition challenges. Real-time access to the engineering expertise, technical data, and understanding of the manufacturing processes is essential to successful supply support of the C-130.

This performance based, supply chain management effort will utilize ACPBL functionality with lot payments, under which Lockheed Martin will manage the supply chain vice being just a parts provider. Lockheed Martin will also manage the customer requirements via Stock Transfer Orders (STOs) and Material Release Orders (MROs). Outcome and performance-based contracting will be used in lieu of traditional transactional contracting.

Lockheed Martin will enhance DLA supply chain management activities for DLA managed consumables for the Lockheed Martin sourced population (7,884 NSNs out of the 52,466 NSNs in the BOM) through demand forecasting, monitoring the DLA supply chain, providing recommendations and emergency supply support to ensure availability of parts. These 7,884 NSNs were selected for sourcing by the OEM based on either being:

1) sole source to the OEM;

2) unique to the C-130 – unique parts to the aircraft that pose distinct challenges and are typically more complex than common parts;

research demonstrated there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality, and delivery. Multiple market research efforts revealed several barriers impeding the participation of small businesses in this effort.

The main factors preventing small business participation in this bundled requirement are:

1. Manufacturing, Technical and Engineering Expertise, and access to Technical Data:

Lockheed Martin is the OEM of the C-130 and currently supports an active production line for the C-130J aircraft and provides component and depot support to USAF for earlier models of the C-130 aircraft. Only Lockheed Martin has access to all drawing required to fulfill orders for the population of 7,884 parts. Of the original 7,884 parts in the Lockheed sourced population, 5,382 parts are not AMSC “G” parts. Therefore, the Government does not have a full technical data package.

Lockheed Martin is uniquely qualified as the OEM to identify and troubleshoot diminishing manufacturing, obsolescence, and other manufacturing challenges for this population to improve MA support and reduce backorders.

2. Upfront Costs and Warehouse Capacity to Build Core Population: Through sources sought responses and discussions with businesses, suppliers advised they do not have the financial capacity or ample warehouse square footage to ramp-up, store, and manage the Lockheed Martin sourced NSNs population.

3. Administrative Staffing and Information Technology (IT): A sophisticated IT system is required to support not only the volume of orders, but the way in which orders are generated. This effort will utilize ACPBL functionality, which is different than traditional transactional ordering from DLA and push delivery order issuance from

DLA.

4. Discrete Pricing Capability: This acquisition will require discrete pricing capability within a reasonable timeframe to meet contract milestones both for the initial award of approximately 4,000 NSNs and moving forward with phased add actions of the remaining Lockheed Martin sourced NSNs population. The contractor will be required to have a robust and proactive sourcing team, an appropriate quality system, and an approved supplier base to leverage throughout contract performance to meet proposal timeframes and associated cost and price regulatory requirements.

E. Identification of Alternative Contracting Approaches

DLA Aviation considered the following alternative contracting approaches that may reduce the scope of bundling.

1. Continue Business as Usual (BAU): DLA currently supports the Lockheed Martin sourced NSNs population of the C-130 population through a combination of strategic and tactical efforts. Strategic support is provided through LTCs between DLA and single vendors. There are 299 different LTCs within the three-year procurement history. These LTC numbers represent either single or multiple item contracts with multiple year terms.

While these strategic LTCs have presumably short acquisition lead times and may have yielded volume discounts based on estimated annual demands at the time of award, this method of procurement across several different contractors represents a workload burden with potential for systemic inefficiencies across DLA since it requires management of thousands of individual contract arrangements with over 1,100 different contractors. In addition, these thousands of LTCs do not include performance-based metrics and are focused solely on delivering a single part, which does not improve availability of the system. There were 1,997 LTC delivery orders issued within the past three years across 893 NSNs of the Lockheed Martin sourced NSNs population.

Tactical support is currently provided through individual transactional buys between DLA and single vendors. There were 9,870 transactional buys issued within the past three years across 3,762 NSNs of the Lockheed Martin sourced NSNs population. There are a considerably higher number of transactional buys when compared to LTC delivery orders, and these buys are spread across over 1,100 different contractors. Managing over 10,700 different contracts across over 1,100 different contractors is administratively burdensome, does not include performance-based metrics, and focuses on delivering one part at a time, which does not focus on improving system availability. Furthermore, transactional buys are subject to longer administrative lead times and may not yield volume discount advantages, making tactical support a burdensome approach to continued support. Most importantly, as-is acquisition methods provide the DLA customer with an aggregate 83.2% material availability, which is well below the goal of 90%.

This BAU strategy would eliminate the opportunity for reduction in administrative work and material cost savings gained by consolidating C-130 consumable spend.

Furthermore, this BAU approach does not allow DLA to improve its business processes, systems, or policies or to better align its resources to support its military customers in more cost efficient and effective ways. Finally, it would not provide a single point of responsibility for performance or provide flexibility in paying for performance, to include incentivizing and disincentivizing performance. In summary, pursuing a BAU approach is a highly ineffective strategy and would achieve none of the benefits of the proposed bundled approach.

2. Population Split: Another alternative strategy would be to split the population of items into two groups, the sole source population in one group and the competitive items in another group. This was not considered an effective approach as it does not align with leveraging OEM technical and logistics expertise to reduce obsolescence and strengthen the supply base. It does not allow DLA to realize as substantial a reduction in administrative work because it requires two supply chain integrators, one not the OEM, thus sub-optimizing the ability to fully leverage the OEM’s capabilities. Furthermore, it does not achieve the material cost savings to be gained by fully consolidating spend and does not align a single point of responsibility for performance. It is unlikely to achieve the improved MA for the entire population that is expected to result from the proposed bundled approach as any integrator other than Lockheed Martin does not possess the engineering, production, and repair experience of the OEM to improve the manufacturing processes for these items. The MA for competitive source controlled and competitive fully and open NSNs in the Lockheed Martin Sourced population is 81.4% and 84.5%, respectively.

3. Small Business (SB) NSNs: Based on the SB supplier actions mentioned below and in Section IV below, the Contracting Officer believes ample risk mitigations measures have been conducted and will be in place to ensure DLA’s SB suppliers have every advantage in providing C-130 material to Lockheed Martin under the proposed acquisition. In addition, DLA will include a small business participation metric to ensure that small business spend across this population do not decrease, and DLA will include a small business participation incentive to grow small business spend across this population.

a. BAU Savings: During its alternative strategies analysis, the Contracting Officer considered the removal of all SB NSNs from the population. This course of action would minimize or eliminate any Bundling issues and would also remove the Small Business Administration’s (SBA) and Small Business Office’s (SBO) concerns that the proposed strategy would adversely impact DLA’s current SB suppliers supporting the ACPBL population. DLA Aviation decided to not remove the SB NSNs for several reasons, the first of which is the impact to the holistic nature of the ACPBL procurement. Historic DLA support to the C-130 has relied heavily on the use of transactional procurement of both C-130 Common & Unique NIINs. This transactional support strategy does not take advantage of the inherent savings opportunities gained from long term contract support. In devising its Holistic support strategy, DLA wanted to consolidate its C-130 Support requirement (both Large & Small Businesses) under a single contract structure to harvest the substantial savings identified in the BAU Analysis, most notably cost reductions associated with inventory holding and transactional workload. Removal of the 3,300+ SB NSNs would significantly minimize the Government’s projected holistic savings as the overall SB sales base of the population accounts for approximately 45% of annual sales.

b. On-Time Delivery (OTD) and Material Availability (MA) Performance:

Another goal of pursuing a holistic support strategy is to improve timely supplier delivery, which enables DLA to provide strong MA to the warfighter.

Timeliness of delivery to DLA is measured by using OTD performance data.

Across the entire 7,884 Lockheed Martin sourced NSNs population, overall OTD support is averaging 68.0%. When Lockheed Martin OTD performance is isolated within the population, Lockheed Martin is performing at a rate of 78.9%. When SB OTD performance is isolated within the agreed to 7,884 population, SB suppliers are performing at a rate of 70.3%. This low overall and SB OTD performance contributed to DLA’s decision to retain these NSNs typically supported by SB suppliers in the Lockheed Martin sourced population.

Furthermore, based on data provided by Lockheed Martin, they maintain a strong C-130 material integration support to its existing foreign/allied partners of over 96%. Therefore, DLA anticipates that Lockheed will improve upon the current performance of this population of items. In addition, SB MA for the Lockheed Martin Source population is 79% across 3,236 NSNs. This effort will incentivize performance above 90% MA and disincentivize performance below

90% MA to ensure attainment of higher MA in support of DLAs customers.

F. Industry Feedback On Notice of Intent to Bundle

The original Notice of Intent to Bundle was posted www.beta.sam.gov on 13 November 2020. A signed Notice of Intent to Bundle letter was also sent to all Small Businesses that received an award in the prior three years from date of the posting. The notices included information that a Small Business Industry Day will take place and each vendor would be invited.

Majority of the vendors, including vendors in the top 15 impacted listed above, expressed interest in supporting the goal of this holistic effort. Many vendors replied and requested to be notified of the Small Business Industry Day. Furthermore, vendors were looking forward to networking with Lockheed Martin in order to build a business relationship with a large OEM.

While majority of feedback from industry was positive, several vendors did express concern.

were vendors who expressed their concerns of the magnitude of this holistic effort to the DLA Aviation Acquisition Team, DLA Aviation Small Business Office, DLA Aviation Legal Counsel, and DLA Headquarters. In coordination with DLA Legal Counsel, the DLA Aviation Acquisition Team addressed these vendors’ early concerns. Part of the response also included a reminder they will be invited to the Small Business Industry Day.

Due to the lengthy time between when the original notices were posted and time this memorandum was written, the Contracting Officer posted a second notice on www.beta.sam.gov, gathered new procurement history from February 2019 through 31 January 2022, and sent the signed Notice of Intent to Bundle letter again to Small Businesses that received an award in the prior three years. The vendors mentioned above that have expressed concerned still were part of the procurement history and were notified again. The new procurement history also showed 55 new Small Businesses that were not in the prior procurement history data pull. The Contracting Officer also sent the Notice of Intent to Bundle letter to these new Small Businesses. There was no new feedback received from the February 2022 posting on www.beta.sam.gov.

Section III: Benefits Analysis

The consolidation and bundling of Lockheed Martin sourced NSNs population of the C- 130 population is expected to result in measurably substantial benefits, including a savings of up to % or $ over the five-year base period and the five-year option period Business As Usual (BAU) value. The projected savings and calculations are detailed herein.

Additionally, by leveraging the C-130 OEM’s experience and expertise, DLA will be successful not only in achieving the DoD's expected material cost savings to reinvest in customer support, but also in realizing a reduction in DLA administrative costs and workload avoidance through a single awardee.

Bundling this effort and establishing the OEM as the point of responsibility for managing the supply chain, allows the OEM to apply its unique technical, engineering and supply chain intelligence and expertise across this focused C-130 population to improve performance. As noted previously, the Lockheed Martin sourced NSNs population of items has an MA of 83.2%. Given that DLA’s MA goal for USAF managed items is 90%, there is significant room for improvement through this performance-based effort. As a result of the bundling, it is anticipated this goal will be met, but if performance falls below the contract goals, disincentives will be in place to ensure DLA and the customer are not paying for performance they are not receiving. The use of performance incentives tied to MA, ORT, Small Business Participation, and backorders greater than 180 days will drive performance over the potential ten-year life of the contract. The less-bundled alternatives do not provide the opportunity for these significant performance improvements.

DLA Aviation executed a Rough Order of Magnitude (ROM) Business Case Analysis (BCA) Simulation in order to calculate DLA’s baseline cost, or BAU. The BCA analyst calculated a BAU baseline incorporating historical pricing and demands as the baseline for the DLA parts on this effort for worldwide customers, Hill Air Force Base (FB2029), and Warner Robins (FB2065). To determine DLA’s BAU costs, Monte Carlo simulations of 8,819 out of 8,916 Lockheed Martin sourced NSNs population were conducted. The BAU did not simulate 97 NSNs that included items that are now considered non-procurable and higher level Kit NSNs that DLA builds itself. The Monte Carlo model utilizes 1,000 sampled-with-replacement item demand profiles and Enterprise Business Systems (EBS) planning and procurement logic to simulate DLA Aviation’s BAU acquisition costs as shown at the table below. The ROM BCA is incorporated at Attachment 3.

The cost elements, timeframes and associated calculations for each BAU element are detailed in Attachment 3 and summarized for understanding below:

• Manual Purchase Request (PR) Count: Number of manual PRs projected over the simulated horizon (5 years)

• Inventory Holding Cost (IHC): Calculated as 10% of the average annual inventory value (3% Invested Funds + 6% Obsolescence and Losses + 1% Storage Cost)

• Manual Workload Costs: $876.37 for manual PRs with a total value less than $250K or $6,341.46 for manual PRs with a total value greater than or equal to $250K.

• Get Well @ 90% MA: Cost it will take to achieve 90% MA via transactional buys.

Under the proposed ACPBL acquisition strategy where Lockheed will plan and push material into DLA’s system with associated performance driven metrics, the BCA analyst again utilized organic capabilities to calculate the potential costs of the strategic solution. Again, the Monte Carlo model utilized 1,000 sampled-with-replacement item demand profiles and ACPBL LTC logic to simulate the projected strategic solution acquisition costs. Get Well figures and incentives and disincentives will be established and negotiated individually for worldwide customers, Hill AFB (FB2029), and Warner Robins (FB2065). Under the ACPBL LTC logic, the model assumes a 30-day coverage duration with a 7-day administrative lead time (ALT) and 30-day production lead time (PLT); this assumption applies to all scenarios, which means DLA would stock material to support 90-days of requirements. The purpose of the ACPBL scenario is to identify maximum potential savings of the ACPBL acquisition strategy.

DLA will conduct a full BCA after negotiations have concluded. This will allow the most accurate assessment of savings by comparing today’s cost to actual negotiated prices.

Furthermore, this will allow any negotiated changes to be incorporated into the BCA.

Per FAR 7.107-3(d)(2), benefits are measurably substantial if individually, in combination, or in the aggregate the anticipated financial benefits are equivalent to five percent of the estimated contract or order value (including options) or $9.4 million, whichever is greater, if the value exceeds $94 million. The estimated cost savings for the Lockheed Martin sourced NSNs population based on the ROM BCA is % ($ ) for the five-year base period and the five-year option period. Thus, the anticipated financial benefits will be equal to or greater than five percent of the estimated contract value.

Section IV: Small Business Action Plan & Mitigation Strategy

As required by FAR 7.107-5 and DLAD 7.107-5(a)(1), the 965 small businesses mentioned in Section II (A) have been individually notified of DLA’s plan to bundle this acquisition.

Furthermore, the notice required by the Defense Federal Acquisition Regulation Supplement (DFARS) 205.205-70 was also published on the SAM.gov website. This public notice included a list of the Lockheed Martin sourced NSNs and DLA sourced NSNs populations and a brief description of the measurably substantial benefits derived from the bundled requirement.

The contract will include the following FAR clauses: 52.219-8, Utilization of Small Business Concerns, FAR 52.219-9, Small Business Subcontracting Plan.

Lockheed Martin’s Comprehensive Subcontracting Plan will be utilized as part of this effort;

however, a clause specific to the C-130 requirement will also establish a small business participation metric and both incentivize and disincentivize Lockheed Martin for its small business subcontracting under the effort. DLA will seek a metric of approximately 57% to align with historical DLA small business award dollars for this population of items. A contract incentive will award the contractor if it exceeds the metric at negotiated incremental levels, while conversely, a disincentive will penalize the contractor if it fails to meet small business subcontracting metric. As part of this 57% metric, DLA will also incentivize that at least 2% specifically be Small Disadvantaged Businesses (SDB). No disincentive will apply for this SDB specific metric.

Finally, the Government’s strategy of incorporating two separate item populations for Lockheed Martin sourced NSNs and DLA sourced NSNs population into this single holistic strategy helps to ensure a smooth transition of items from traditional DLA sourcing to Lockheed sourcing, while providing small businesses the opportunity to maintain sourcing relationships with both entities in support of the C-130 platform. Lockheed Martin will source and supply the approximate 7,884 NSNs, after removal of NSNs described above, in the Lockheed Martin sourced population within its supply chain, and DLA will continue to source and supply the balance of 44,582 NSNs in the DLA sourced NSNs population. Lockheed Martin’s responsibility for supplying the 44,582 DLA sourced NSNs is on an exception basis, occurring only when there is a gap in the DLA supply chain.

To offset any potential reduction to DLA’s SB suppliers, the Contracting Officer is taking several measures to ensure the population’s SB community is not significantly impacted by the sustainment shift to Lockheed Martin. To start, the Contracting Officer is including an aggressive SB Participation Metric in the contract to ensure Lockheed Martin meets or exceeds DLA’s current SB participation rate of approximately 55%. The SB Participation Metric will incentivize Lockheed Martin to achieve above 57% SB participation and disincentivize if Lockheed Martin is below 57% SB participation. This aggressive SB Participation Metric will be based on the total contract value.

A SB Industry Day will be conducted prior to issuance of the Request For Proposal (RFP) to help DLA’s Small Businesses better understand the acquisition strategy and how a SB supplier can become a qualified sources of supply to Lockheed Martin. As part of the Industry Day, Lockheed Martin will provide a detailed brief on its streamlined supplier qualification process. The Contracting Officer also provided a list of all Small Businesses who received an award within the last three years to Lockheed Martin in February 2022 to assist Lockheed Martin jump starting its SB supplier engagement efforts for utilizing as many DLA SB suppliers as possible. While the report was provided to assist Lockheed Martin’s engagement with SB suppliers, the Contracting Officer did not formally ask or request Lockheed Martin to begin any engagement. Any engagement performed once the list was received is/was strictly at Lockheed Martin’s own discretion.

The Contracting Officer is including language in the RFP that states Lockheed Martin will recognize DLA’s quality requirements that will result in Lockheed Martin pre-approving all of DLA’s SB suppliers as qualified sources of supply for Lockheed Martin. This recognition of DLA’s quality systems for its SB suppliers will significantly minimize the lengthy Lockheed Martin qualification process for new suppliers. Additional language in the RFP states Lockheed Martin must solicit DLA’s last three SB suppliers on all identified SB NSNs and report annually, at the NSN level, its progress in utilizing DLA’s SB suppliers. This language encourages Lockheed Martin’s use of DLA’s SB suppliers and should ensure Lockheed Martin meets or exceeds the SB Participation Metric mentioned above.

Small Business Mentor-Protégé Requirement: In an effort to develop and increase Small Business supplier sources in support of the C-130 ACPBL contract, Lockheed Martin shall enter into one

(1) or more Mentor-Protégé relationships with Small Business suppliers by contract award. After identifying one (1) or more Mentor-Protégé partners, Lockheed Martin shall explain how it intends to develop the Small Business supplier(s) over the five-year base period of performance and shall provide a copy of the Mentor-Protégé agreement in its proposal. Should the contract’s Option period be exercised, Lockheed Martin shall also be required to enter into a similar Mentor- Protégé relationship with one (1) or more different Small Business suppliers at the start of the Option period of performance.

Made in America (MiA) Executive Order: The President of the United States signed Executive Order 14005, Ensuring the Future is Made in All of America’s Workers, in January 2021 which significantly underlines buying from US sources of supply, closes loopholes by raising the domestic content threshold, strengthens domestic supply chains for critical goods, and Increases transparency and accountability in Buy America Act rules. While follow-on executive order guidance and clarifications are forthcoming, the Government requests Lockheed explore what actions it can take to increase the sourcing of C-130 ACPBL items using US Large & Small Business suppliers and to include its findings in its proposal submission.

Per DLAD 7.107-4, the DLA Aviation Acquisition team has completed the Contract Consolidation and Bundling Training.

Section V: Use of Mandatory Government Sources

AbilityOne Partnering: The AbilityOne Program, enabled by the Javits-Wagner-O'Day Act, 41 U.S.C. 46-48c, as amended by the FAR and DoD Directive 5000.57 and administered by the Committee for Purchase From People Who Are Blind or Severely Disabled, was created to provide employment opportunities for these individuals through the manufacturing of products and provision of services in support of the Government, while capitalizing on the talents of this historically under-utilized workforce. To increase the use of this under-utilized workforce, Lockheed Martin is strongly encouraged to explore how it can leverage one (1) or more AbilityOne companies in support of the C-130 ACPBL contract. The goal of a prospective Lockheed Martin-AbilityOne agreement is the continued support of the DoD while increasing opportunities for AbilityOne authorized nonprofit organizations to support their workforce of people who are blind or have other significant disabilities. Together with Lockheed Martin, these opportunities would be realized in employment, education, training, and knowledge transfer resulting from subcontracts and other purchases. Lockheed Martin shall explain in its proposal its efforts to develop and enter into agreements with AbilityOne companies and, if successful, how the AbilityOne partner(s) would be utilized and the anticipated annual purchases of products or services from the AbilityOne partner(s). AbilityOne partner support would be discussed & reported during annual Program Management Reviews (PMRs).

Section VI: Determination

Upon the basis of the findings and in accordance with FAR 7.107-3(a) and 7.107-4(b)(5), I hereby determine that the anticipated benefits of the proposed bundled contract substantially exceed the benefits of the possible alternative contracting approaches. Consequently, I have determined that bundling is necessary and justified.