CSASS - SDMR JA_3SEP19 FINAL (Redacted).pdf

Control No.: CAO-19-0712

JUSTIFICATION REVIEW DOCUMENT

FOR OTHER THAN

FULL AND OPEN COMPETITION

Program/Equipment: Compact Semi-Automatic Sniper Systems (CSASS) and Squad Designated Marksman Rifles (SDMR).

Authority: Title 10 United States Code (U.S.C.) Section 2304(c)(1) as implemented by Federal Acquisition Regulation (FAR) 6.302-1 -- Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

Amount: $33.5M

Prepared By:

Katherine N. Conklin DSN: 880-7674 Contracting Officer Date: 3 September 2019 Email: katherine.n.conklin.civ@mail.mil

Contracting Officer:

Katherine N. Conklin DSN: 880-7674 Contracting Officer Date Reviewed: 3 September 2019 Email: katherine.n.conklin.civ@mail.mil

Technical Representative:

Elliott R. Caggins, COL, IN DSN: 880-6560 Project Manager Soldier Weapons Date Reviewed: 3 September 2019

Requirements Representative:

Elliott R. Caggins, COL, IN DSN: 880-6560 Project Manager Soldier Weapons Date Reviewed: 3 September 2019

Reviews: I have reviewed this justification and find it adequate to support other than full and open competition.

Project Manager:

Elliott R. Caggins, COL, IN DSN: 880-6560

Signature: //Signed//____________ Date: 23 Aug 19

Branch Chief:

Anthony J. Delicati DSN: 880-3586

Signature: //Signed//_____________ Date: 9-SEP-2019

Division Chief:

Typed Name: John C. Rosamilia DSN: 880-2749

Signature: //Signed//_____________ Date: 9-SEP-2019

Legal Counsel:

Typed Name: Juan F. Garcia, Jr. DSN: 880-6583

Signature: //Signed//_____________ Date: 9/9/19_____

Associate Director:

Typed Name: Lori A. Deara DSN: 880-4048

Signature: //Signed//_____________ Date: 9 Sep 2019_

Advocate for Competition:

Typed Name: Beth-Ann Mendell DSN: 880-9028

Signature: //Signed//_____________ Date: 19 September 2019_

Senior Contracting Official:

Typed Name: Thomas A. Dougherty DSN: 880-7484

Signature: //Signed//______________ Date: 27 September 2019_

Justification and Approval for Other than Full and Open Competition

1. Contracting Activity: U.S. Army Contracting Command – New Jersey

2. Description of Action: Project Manager Soldier Weapons (PM SW) requests a modification to increase the ceiling amount of the Firm Fixed Price Indefinite Delivery Indefinite Quantity (IDIQ) contract W15QKN-16-D-0051. Army and Other DoD Services procurement funds will be used to issue delivery orders.

3. Description of Supplies/Services: This requirement is for the Compact Semi-Automatic Sniper System (CSASS), the Squad Designated Marksman Rifle (SDMR) spare parts and contractor logistics support (CLS). The CSASS, National Stock Number (NSN) 1005-01-665- 3603, and SDMR, NSN 1005-01-674-6686, are identical rifles except for the buttstock and scope. The CSASS and SDMR provide precision fire capability that is now an integral part of the infantry team. The CSASS provides the Department of Defense precision-fire capability to engage select personnel targets from zero to eight hundred meters, while the SDMR provides the Army and Air Force with precision-fire capability to engage select personnel targets from zero to six hundred meters. The current period of performance will remain from date of IDIQ Contract Award of 31 March 2016 through six one-year ordering periods (until 30 March 2022). The current Contract Ceiling is $44.5M.

Using the competitively established full rate production unit pricing for the rifles along with the demand for complementary spare parts and CLS results in an increase of $33.5M which raises the contract ceiling from $44.5M to a new total contract ceiling amount of $78M. This increase is required to accommodate fulfillment of the revised program objectives, as initiated by the Directed Requirement signed on 2 December 2016 by Army Chief of Staff, G-8. Army SDMR fielding needs include fully equipping a second unit in May 2020 and fielding thereafter continuing into Fiscal Year (FY) 2023 at a rate of two Brigade Combat Teams per month with each brigade requiring approximately 117 SDMR rifles. Until SDMR achieved Urgent Material Release (UMR) in the fourth quarter Fiscal Year 2018, it was possible the Directed Requirement mandate would be accomplished within the current ceiling of $44.5M. However, subsequent to UMR, the Air Force and United States Army Special Operations Command (USASOC) demand for SDMR emerged making the fulfillment of overarching program objectives unachievable within the existing ceiling constraint of $44.5M.

The table below depicts the estimated demands in excess of the demand able to be accommodated within the currently available remaining IDIQ contract ceiling amount of $3.48M. A total of 6,449 SDMR production units have been ordered as of 13 September 2019 and CSASS is currently in Production Qualification Testing.

For Official Use Only

Rifles including complementary support

Anticipated Order Placement – through 31 March

Anticipated Order Placement

– 1 April 2020 through 31 March 2021

Anticipated Order Placement – 1

April 2021 through 31 March

Totals

SDMR

Quantity/Price 615/$5.3505M 750/$6.5250M 950/$8.2650M 2315/$20.1405M Spare Parts $2.0700M $0.6700M $0.82450M $3.5645M

CLS $0.2000M $0.2000M $0.4000M

2315/$24.1050M

CSASS

Quantity/Price 1000/$8.7000M 1000/$8.7000M Spare Parts $0.2650M $0.0300M $0.2950M

CLS $0.2000M $0.2000M $0.4000M

1000/$9.3950M

3315/$33.5000M

*Note: CSASS is expected to be procured in production quantities on behalf of Other DoD Services, primarily the Air Force beginning first quarter Fiscal Year 2020. Future delivery orders for SDMR will satisfy both Army and Air Force requirements.

4. Authority Cited: Title 10 U.S.C. Section 2304(c)(1), as implemented by FAR 6.302- 1(a)(2)(ii)(B), Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

5. Reason for Authority Cited: As described at FAR 6.302-1(a)(2), when the supplies or services required by the agency are available from only one responsible source, or for DoD, NASA and the Coast Guard, from only one or a limited number of responsible sources, and no other types of supplies or services will satisfy agency requirements, full and open competition need not be provided for. The proposed contractor Heckler and Koch (H&K), the awardee of contract W15QKN-16-D-0051, is the Original Equipment Manufacturer, retains ownership of all relevant technical data, and is the sole developer and producer of the CSASS and SDMR rifles. Furthermore, H&K has the personnel, equipment and proven processes in place to timely satisfy the increased demands imposed by the Directed Requirement along with the unforeseen Air Force and USASOC SDMR requirements resultant to UMR, and an unplanned Air Force CSASS demand.

Subsequent to award of the contract in March 2016, a Directed Requirement was signed on 2 December 2016 by Army Chief of Staff, G-8. The Directed Requirement identifies an operational need to equip Infantry, Scout and Engineering squads with the capability to engage enemy personnel out to six hundred meters (Threshold) with accurate rifle fire. The Directed Requirement identifies the H&K G28E rifle as the SDMR materiel solution. Modification P00007 to contract W15QKN-16-D-0051 awarded on 26 September 2017 added the SDMR rifle as a within-scope change, which supports the Directed Requirement mandate.

The current competitively awarded IDIQ contract ceiling amount of $44.5M, of which $3.48M remains, is forecasted to be exhausted first quarter Fiscal Year 2020. The IDIQ solicitation and resultant contract award did not take into consideration the Army, including USASOC, and Air Force demand for SDMR, or the Air Force demand for CSASS, or the complementary spare parts and CLS requirements for these rifles.

As further described at FAR 6.302-1(a)(2)(ii)(B), supplies may be deemed to be available only from the original source in the case of a follow-on contract for the continued development or production of a major system or highly specialized equipment, including major components thereof, when it is likely that award to any other source would result in unacceptable delays in fulfilling the agency's requirements. The average Procurement Acquisition Lead Time of a competitive procurement with an estimated value of $33.5M is 190 calendar days or 6 months. In addition, it would take upwards of three months to prepare a new procurement package. Subsequent to award to a source other than H&K, it would take an estimated 12 months to proceed through Product Qualification Testing, followed by an estimated minimum 6 months of Operational Testing, and culminating with an estimated 12 months production cycle lead time to field the materiel solution. Cumulatively, the total estimated time to initial production delivery of the CSASS and SDMR rifles is in excess of three years, which will be sometime in FY2023. This delay is unacceptable in satisfying the Directed Requirement (fully equipping two brigade combat teams per month with each brigade requiring approximately 117 SDMR rifles) with an organic, precision-fire capability to engage select personnel targets (such as leaders, snipers, and marksmen) from 0 to 600 meters. Also, delaying fielding of the USASOC and Air Force SDMR capability, or the Air Force CSASS capability pending the execution of a competitively negotiated procurement strategy would be imprudent. The delay in fielding these rifles capabilities as exacerbated by the continued emerging threats could lead to mission failure or cause unnecessary loss of life and/or loss of critical assets to military forces.

6. Efforts to Obtain Competition:

a. Effective Competition: Since this is a sole source action, effective competition is not applicable. The notices required by FAR 5.201 shall be published and any bids or proposals received shall be considered.

b. Subcontracting Competition: Since H&K is a small business subcontracting arrangements are not feasible nor applicable to the instant acquisition.

7. Actions to Increase Competition: Full and Open competition has been considered; however at this point the Technical Data Package (TDP) is the property of H&K. Contract W15QKN-16-D-0051 includes provisions enabling Government procurement of Government Purpose Rights to a Level II TDP in the amount of $5.25M after having funded the purchase of a minimum of a combined forty thousand CSASS and SDMR rifles subject to payment of a royalty fee of 5% of the negotiated price of each rifle in excess of the stated quantity of forty thousand. However, even after the significant increase in demand explained herein, there is no known or anticipated demand large enough to justify the purchase of the TDP.

Also, the Directed Requirement specified the SDMR is an interim rifle solution. ACC-NJ competitively awarded Prototype Other Transaction Agreements to Sig Sauer Inc., General Dynamics-OTS, Inc., and AAI Corporation on 29 August 2019. Onward selection to a single Next Generation Squad Weapon (NGSW) provider is contemplated to be awarded 1QFY22 with forecasted fielding beginning in FY23. Accordingly, there are no ongoing activities to increase competition for the CSASS and SDMR rifles.

Progression of the NGSW activities will be closely monitored to ensure revisiting of the need for future CSASS and SDMR acquisition planning should it become necessary.

8. Market Research: In accordance with Defense Federal Acquisition Regulation Supplement (DFARS) 205.205-71, DFARS 206.302-1(d), and DFARS Procedures, Guidance and Information (PGI) 206.302-1(d), Sources Sought Notice W15QKN-19-X- 05ZN was posted to Federal Business Opportunities (FedBizOpps) on 8 April 2019 and the outcome is summarized below.

There were a total of 13 responses, 1 from a large business and 12 from small businesses. Although the large business and nine of the small businesses have been deemed either likely or highly likely to be able to satisfy the requirement from both capability and technical performance perspectives, none are able to comply with the stringent schedule constraint. Although H&K was not one of the respondents to the notice, it is motivated, capable and possesses the capacity to meet the revised Government program objectives.

Detailed below are the market survey’s respondent’s business size and market survey evaluation results for the 13 market survey responses. All respondents have been reviewed in accordance with the following key:

HIGH Capability – The Company provided information or website exhibited information that indicates a robust industrial infrastructure pertaining to the manufacture of small arms, small arms components and small arms maintenance, suggesting a high degree of capability to meet the requirement.

LIKELY Capability – The Company provided information or website exhibited information that indicates a robust industrial infrastructure pertaining to the manufacture of machined components, suggesting a promising capability to meet the requirement.

UNLIKELY Capability – The Company provided information or website exhibited little or no information regarding their industrial infrastructure, suggesting an inadequate capability to meet the requirement.

INCAPABLE – The Company provided information or products exhibited on the website do not appear to be compatible with the requirement, and/or the website does not contain information with regard to industrial infrastructure.

RESPONDENT NAME BUSINESS SIZE EVALUATION RESULTS

B5 Systems Small with Cage Code

58VQ8 and DUNS 828777867

Incapable. This company does not manufacture small arms, but is a component manufacturer. They have no intention of submitting a rifle system, but are willing to provide a buttstock for consideration on the SDMR.

CAPCO LLC Small with 315 employees.

CAGE code: 04099 DUNS Number: 056838428

Unlikely. While this company listed manufacturing experience in small arms, their proposal hinges on manufacturing the SDMR based on a government provided TDP. The government does not currently own the TDP for the SDMR and is unable to provide it for production.

Daniel Defense, Inc. Small with approximately 210 employees CAGE Code 3E3E2 / DUNS Number 130482040

Likely. The Company does indicate direct experience in the manufacture and servicing of small arms and small arms components.

Manufacturing history does indicate a strong capability in the machining weapons related components.

FN America, LLC Large, CAGE 3S679, DUNS 098401086

HIGH. The Company does indicate direct experience in the manufacture and servicing of small arms, small arms components and small arms maintenance.

Manufacturing history does indicate a strong capability in the machining weapons related components.

Knight’s Armament Company

Veteran Owned Small Business, 285 employees, CAGE Code 1S002, DUNS Number: 054038138

HIGH. The Company does indicate direct experience in the manufacture and servicing of small arms, small arms components and small arms maintenance.

Manufacturing history does indicate a strong capability in the machining weapons related components.

Austin Precision Products, Inc. Dba LaRue Tactical

Small Likely. The Company does indicate direct experience in the manufacture and servicing of small arms and small arms components.

Manufacturing history does indicate a strong capability in the machining weapons related components.

Lewis Machine & Tool Co. Small Business, CAGE Code

3W544, DUNS 054212261

Likely. The Company does indicate direct experience in the manufacture and servicing of small arms and small arms components.

Manufacturing history does indicate a strong capability in the machining weapons related components.

LWRC International, LLC LWRCI is a Small Business as outlined for NAICS Code 332994 businesses by the Small Business Administration. LWRCI has less than 300 employees.

DUNS: 809189405 CAGE:

52RX1. LWRCI’s facilities are in a Historically Underutilized Business Zone (HUBZ).

Likely. The Company does indicate direct experience in the manufacture and servicing of small arms and small arms components.

Manufacturing history does indicate a strong capability in the machining weapons related components.

Nemo Arms, Inc. Small Business, 8 Employees, DUNS 078357628, Cage 6NHR2

Likely. The Company does indicate direct experience in the manufacture and servicing of small arms and small arms components.

Manufacturing history does indicate a strong capability in the machining weapons related components.

Patriot Ordnance Factory, Inc. (POF)

Small Business, 25 full time employees. Cage Code:

4Y6X4

Likely. The Company does indicate direct experience in the manufacture and servicing of small arms and small arms components.

Manufacturing history does indicate a strong capability in the machining weapons related components.

Seekins Precision LLC Small business with 55 employees.

CAGE Code: 7LXJ0

DUNS#: 47382372

Likely. The Company does indicate direct experience in the manufacture and servicing of small arms and small arms components.

Manufacturing history does indicate a strong capability in the machining weapons related components.

SWORD International, Inc. Veteran Owned Small Business, 20 Employees Cage Code: 71FP2

DUNS: 060597719

Likely. The Company does indicate direct experience in the manufacture and servicing of small arms and small arms components.

Manufacturing history does indicate a strong capability in the machining weapons related components.

Trident, LLC Small Business – SDVOSB, 8 employees plus 84 at manufacturing facility

DUNS: 079400721 CAGE:

74JK9

Unlikely. While this company listed manufacturing experience in small arms, they failed to provide any relevant government experience in manufacturing small arms, small arm components, or small arms maintenance on a large scale.

PM SW representatives attended the 2019 Shot Show in Las Vegas, Nevada on 21 January 2019 during which they met with numerous manufacturers of commercially available relevant 7.62mm rifles manufacturers. The companies consulted included Daniel Defense, POF-USA, Knight's Armament, LMT Defense, FN, SIG, H&K, Troy, Stag, Remington, LWRC and LaRue. None of these companies, except H&K, are able to meet the stringent delivery schedule requirements for the reasons previously cited in this Justification and Approval.

9. Interested Sources: To date, no other sources have written to express an interest.

10. Other Facts:

a. Procurement History:

(1) Contract numbers and dates of the last several contracts for these same requirements. W15KQN-16-D-0051 awarded on 31 March 2016.

(2) The competitive status of these actions. Full and Open Competition.

(3) Authority previously cited if less than full and open competition was used. Not Applicable.

(4) If a justification was prepared to support the procurement made before this one, a summary of the contents of paragraph 7 of the justification for that procurement and an explanation of the results. Not Applicable.

(5) If any prior contract for this requirement was accomplished using full and open competition, include a detailed explanation of the changed circumstances causing this action to now limit the sources. Contract No. W15QKN-16-D-0051 was awarded utilizing Full and Open Competition. As initiated by a Directed Requirement signed on 2 December 2016 by Army Chief of Staff, G-8 and the unanticipated high demand for the SMDRs from both the Army, including USASOC, and Air Force, and an unforeseen Air Force CSASS demand, a ceiling increase to the existing contract is required to fulfill requirements.

(6) An explanation of any unusual patterns that may be revealed by the history, e.g., several consecutive, urgent buys. Not Applicable.

(7) If a justification was prepared to support the procurement made before this one, briefly describe the circumstances justifying the procurement and whether there have been any significant changes. Not Applicable.

b. Other facts. Not Applicable.

11. Technical Certification: I certify that the supporting data under my cognizance, which are included in the justification are accurate and complete to the best of my knowledge and belief.

Typed Name: Elliott R. Caggins, COL, IN Date: 23 AUG 19_______

Title: Project Manager Soldier Weapons Signature: //Signed//____

12. Requirements Certification: I certify that the supporting data under my cognizance, which are included in the justification are accurate and complete to the best of my knowledge and belief.

Typed Name: Elliott R. Caggins, COL, IN Date: 23 AUG 19_______

Title: Project Manager Soldier Weapons Signature: //Signed//_____

13. Fair and Reasonable Cost Determination:

I hereby determine that the anticipated price to the Government for this contract action will be fair and reasonable. This determination will be based on comparison to competitively established pricing under Contract No. W1SQKN-16-D -0051, the Independent Government Estimate, price analysis, and cost analysis, and technical evaluation. In accordance with FAR 15.403-4(a)(1) certified cost and pricing data will be required.

Typed Name: Katherine N. Conklin Date: 9 Sep 2019________

Title: Contracting Officer Signature: //Signed//______

14. Contracting Officer Certification: I certify that this justification is accurate and complete to the best of my knowledge and belief.

Typed Name: Katherine N. Conklin Date: 9 Sep 2019________

Title: Contracting Officer Signature: //Signed//______

Approval

Based on the foregoing justification, I hereby approve the modification to increase the ceiling on Contract No. W15QKN-16-D-0051 by $33.5M from $44.5M to $78M for the procurement of Compact Semi-Automatic Sniper System (CSASS), Squad Designated Marksman Rifle (SDMR), spare parts, and contractor logistics support (CLS) on an other than full and open competition basis pursuant to the authority of Title 10 United States Code (U.S.C.) Section 2304(c)(1), as implemented by Federal Acquisition Regulation (FAR) 6.302-1 -- Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements. The total estimated value of this modification is $33.5M. Approval is subject to availability of funds, and provided that the services and property herein described have otherwise been authorized for acquisition.

10/17/19__ //Signed//________________

DATE:

BRYAN R. SAMSON

Senior Contracting Official