DF Ukraine WC864 Ball Powder SEC 1244 FY23 NDA Approved_Redacted.pdf

DETERMINATION AND FINDINGS

Title: Public Interest Determination Under Section 3204(a)(7) of Title 10, United States Code

Authority:

- Section 3204(a)(7) of Title 10, United States Code (10 U.S.C. 3204(a)(7))

- Subsection 1244(a)(2), of the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, as amended by Section 1242 of the NDAA for FY2024

- Defense Pricing and Contracting CLASS DEVIATION 2024-O0005

- Army FAR Supplement 5106.302-7 and Appendix GG

Requesting Activity/Program Office: The Office of Project Manager for Combat Ammunition Systems (PM CAS), under Joint Program Executive Officer Armaments & Ammunition (JPEO A&A)

Contracting Activity: U.S. Army Contracting Command – New Jersey (ACC-NJ), Contract Information: W15QKN-19-D-0074, Indefinite Delivery Indefinite Quantity (IDIQ) with Firm Fixed Price (FFP) Delivery Orders, Current total ceiling value , Total obligated dollars to date , Current Period of Performance (PoP) is from 09 July 2019 to 08 July 2024.

Anticipated Award Date: W15QKN-19-D-0074 was awarded on 09 July 2019. The Government anticipates the modification to increase the ceiling and to extend the PoP will be executed in 4th Quarter of Fiscal Year 2024 (4QFY24) (accounting for 7-day notice of use of procedures to the congressional defense committees).

Requirement Description: ACC-NJ, on behalf of JPEO A&A/PM CAS, is planning to award a contract modification to Contract W15QKN-19-D-0074 with .

for the production of WC864 Ball Powder. The contemplated modification will increase the total contract ceiling by from to and extend the PoP of the contract from 9 Jul 2024 to 8 Jul 2026 by adding two, one-year negotiated ordering periods (Ordering Periods 6 & 7). This modification is required to allow for continuous production of WC864 Ball Powder to replenish the U.S.

Army stockpile and provide continued support for Presidential Drawdowns (PDs)/Tranches to support Ukrainian war efforts. As a “covered contract”, the planned award is presumed to be in the public interest. Application of that presumption to this procurement expedites contract award and thereby advances important Department of Defense (DoD) and national objectives related to Ukraine/Israel support.

In response to the wars in Ukraine and Israel, and to support customer requirements in the event of a national emergency, JPEO A&A, PM CAS, and ACC-NJ have identified that this contract ceiling increase and PoP extension are needed to support a significant increase in demand for WC864 Ball Powder. A Justification and Approval (J&A) was previously approved in November 2022 to address an unforeseen spike in requirements for WC864 Ball Powder due to current events in Ukraine and the significant increase in deployment of the Modular Artillery Charge System (MACS), which is used in 155mm ammunition. The Senior Procurement Executive approved a class J&A under the authority of Title 10 United States Code (U.S.C.) Section 3204(a)(1) as implemented by Federal Acquisition Regulation (FAR) Part 6.302–1 - Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements to increase the contract ceiling by from to .

However, during the course of negotiations for the ceiling increase, only agreed to increase the ceiling by , for a total adjusted ceiling of .

negotiated a ceiling increase less than the total amount approved by the J&A due to nitrocellulose sourcing concerns and ammunition mill capacities. These same concerns have informally been addressed with the contractor to help mitigate risk of the contractor not meeting these requirements by collaborating on delivery schedule parameters and storage resolution.

The existing WC864 Ball Powder inventory cannot sustain future MACS support without replenishment of ball powder being acquired in support of Ukraine/Israel. Without the incorporation of this additional contract ceiling increase and PoP extension, no contract vehicle will exist to meet the expected US Army fielding and readiness requirements for MACS, replenish MACS stockpiles depleted due to Presidential Drawdown (PD) Initiatives or fulfill additional PD initiatives in support of Ukraine/Israel. A follow-on contract award is currently forecasted for 4QFY26.

The estimated requirements for quantity and dollars to support this D&F are displayed in the table below. The estimates take into consideration budgeted requirements for FY24- 26, and surge requirements for USMC, PD Initiatives, and Ukraine/Israel Replenishment Tranche Funding. Congress recently approved a supplemental for a quantity of 2.0M MACS. The 2.0M MACS necessitates the purchase of a requisite amount of 128,800 lbs.

of WC864 Ball Powder. This one requirement is illustrative of the logarithmic increase that has occurred and is projected to increase throughout the requested PoP extension, and growth from the initial requirement at the time of base contract award. These vast increases are in specific, direct response to the Ukraine/Israel Replenishments, PD Initiatives and the US Army’s 100k Shot Per Month (SPM) profile (which requires 25,800 lbs. of WC864 Ball Powder on a monthly basis). Additionally, further Ukraine Replenishment quantities are currently being finalized for further WC864 Ball Powder for this FY. Throughout the ordering period, PM CAS may order any quantity of WC864 Ball Powder in any year if the total amount does not exceed the maximum ordering limitation or the new contract maximum value.

FINDINGS

1. Pursuant to 10 U.S.C. Section 3204(a)(7), as implemented in Federal Acquisition Regulation 6.302-7, full and open competition need not be provided for when the head of the agency determines that it is not in the public interest in the particular procurement concerned. Subsection 1244(a)(2) of the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (NDAA 2023) as amended by Section 1242 of the NDAA for FY2024, implemented in DPC Class Deviation 2024-O0005, provides that a “covered contract” may be presumed to be in the public interest. A “covered contract” is any contract, subcontract, or modification of a contract, or subcontract awarded by the Department of Defense (DoD) to:

to build the stocks of critical munitions and other defense articles of the DoD to provide materiel and related services to foreign allies and partners that have provided support to the Government of Ukraine, Taiwan, or Israel; or to provide materiel and related services to the Government of Ukraine, Taiwan, or

Israel

2. Pursuant to AFARS 5106.302-7 and Appendix GG, the head of agency authority has been delegated to the Senior Contracting Official, Army Contracting Command.

3. ACC-NJ, on behalf of JPEO A&A/PM CAS, plans to award a contract modification to Contract W15QKN-19-D-0074 with for production of WC864 Ball Powder, to increase the contract ceiling from to and extend the PoP by adding two, one-year ordering periods. The US Government awarded a total of 214,300 lbs of WC864 Ball Powder in FY23-FY24 totaling in support of PD requirements.

These awards, along with prior awards, obligated of the contract ceiling with headspace remaining. The PD requirements thus far have accounted for a increase in requirements above the initially awarded total contract value of

. The planned contract is a “covered contract” for the following reasons:

a. To build the stocks of critical munitions of the DoD. In response to the war in Ukraine/Israel, DoD Components have been tasked with the rapid replacement of defense articles from the stocks of the DoD for the reimbursement of various defense ammunition items provided to the Government of Ukraine or to foreign countries that have provided support to Ukraine at the request of the United States pursuant to the “Continuing Appropriations and Ukraine Supplemental Appropriations Act, 2023”. The Army is in the process of replenishing the nation’s ammunition stockpile, to include Artillery Projectiles and Mortars. MACS has been identified in multiple PDs and WC864 Ball Powder is a key component of the MACS.

Therefore, the contract ceiling and period of performance for the current WC864 Ball Powder contract must be increased to fulfill existing PDs and increased demand for MACS, which is used in 155mm ammunition for Ukraine / Israel, US Army, NATO partners and other FMS requirements.

A market survey was issued in November 2023 where was the only source to respond, and additional market research activities have been ongoing. PM CAS continuously assesses the market and determined that, remains the only capable, low-risk source of meeting the US Government requirements and schedule, and that use of the existing contract, W15QKN-19-D-0074, is necessary to maintain sustainability of the WC864 Ball Powder. As the current and unique producer of WC864 Ball Powder, has specialized knowledge, necessary personnel, experience, assets, skills and technologies that are required to support WC864 Ball Powder production and are not available by any other source. is the only source capable of successfully producing the WC864 Ball Powder that requires specialized knowledge of the propellant. In addition to successful production, ’s production has been successfully qualified through a series of essential programmatic events including, but not limited to, a Critical Design Review, Development Test and Evaluation, Initial Operational Test & Evaluation, First Article Test and successful Lot Acceptance Tests. Additionally, utilizes a proprietary process it developed to meet the performance requirement in the US Government’s technical data package to manufacture the different blends and sizes of ball powder. This proprietary process is the only application that has been qualified by the US Government to meet stringent performance requirements.

The WC864 Ball Powder is a key component of the MACS, which is currently funded in the Army budget. Even though is the current sole producer of the WC864 Ball Powder, the US Government will continue to canvas the market to evaluate other potential suppliers and subcontracting opportunities.

4. As a “covered contract” the planned award may be presumed to be in the public interest.

Application of that presumption to this procurement expedites contract award and thereby advances important DoD and national objectives related to Ukraine / Israel support.

5. Pursuant to FAR Part 5.202(a)(10), this contract action is being made under the conditions described in 6.302-7, Public Interest, and advance notice is not appropriate or reasonable. Therefore, this action is an exception from the requirement to synopsize proposed contract actions.

6. In accordance with NDAA FY2023, Subsection 1244(a)(2)(B)(iii), as amended by Section 1242 of the FY2024 NDAA and Class Deviation 2024-O0005, Section H(1), a written notification will be submitted to the congressional defense committees and DPC not later than seven days before awarding a covered contract. Furthermore, congressional notification will also be submitted to DASA(P) within one day after award in order to meet the 7-day post-award notification requirement.