JA14-027_DMDC_Mid_Range_Support_Services_2018-0004.doc

JUSTIFICATION & APPROVAL FOR

FEDERAL ACQUISITION REGULATION (FAR) SUBPART 16.5 ACQUISITIONS

EXCEPTION TO FAIR OPPORTUNITY

Multiple Award Schedule/ Multiple Award Contract (MAC) Orders under MAC/ Fair Opportunity – FAR 16.505, Defense Federal Acquisition Regulation Supplement 216.505-70; Procedures, Guidance, and Information 216.505-70

Purchase Request Number: E200011 Contract Number: HC1028-08-D-2018 Task/Delivery Order Number: 0004 Procurement Title: Defense Manpower Data Center (DMDC) Mid-Range Support and Services Contracting Office: Defense Information Systems Agency (DISA)/ Defense Information Technology Contracting Organization (DITCO) Scott Air Force Base (AFB) PL83 Estimated Contract Value: $1,310,107.00 Authority: FAR 16.505(b)(2)(i)(C)

JUSTIFICATION FOR AN EXCEPTION TO FAIR OPPORTUNITY

Number: JA14-027

Upon the basis of the following justification, I, as the Procuring Activity Competition Advocate, hereby approve this exception to fair opportunity pursuant to the authority of FAR 16.505(b)(2)(i)(C).

REQUIRING AGENCY AND CONTRACTING OFFICE:

Requiring Agency:

Defense Manpower Data Center (DMDC) DMDC West, DoD Center 400 Gigling Rd Seaside, CA 93955

Contracting Office:

Defense Information Systems Agency (DISA), DITCO/PL8313 2300 East Drive Scott AFB, IL 62225-5406

NATURE/DESCRIPTION OF ACTION(S): DMDC requests a nine month firm-fixed-price extension to the existing contract HC1028-08-D-2018, task order 0004. The period of performance will include a 4-month base period, one 3-month option and one 2-month option period. Fiscal year 2014 operations & maintenance funds are available for the base period and the 3-month option if exercised, FY15 O&M funds will be used if the final 2-month option is exercised.

HC1028-08-D-2018, Task Order 0004, DMDC Mid-Range Support and Services-JA14-027

Page 2 of 9 Pages

DESCRIPTION OF SUPPLIES/SERVICES: The services performed under this task order and required for this extension provide hosting and administration of Government owned mid- range computing platforms, including virtual servers, used by DMDC. The Government will provide the mid-range computing platforms and virtual servers on which the contractor shall operate. The contractor shall provide system administration services for the Government owned mid-range platforms. Services include system performance management, monitoring and reporting; storage disk utilization management; system back-up and recovery operations; and troubleshooting and resolution for hardware and other system failures. The contractor is responsible for the implementation and maintenance of the security settings and profiles established by the Government. The contractor shall make no modifications to the Government furnished equipment (GFE) without prior approval from the Government. The Government will provide all workload management functions except system level functions such as reboot and other system specific tasks that require scheduling and workload management. The contractor’s change management process must be in accordance and integrated with DMDC’s change management process and must be approved by the Government.

The proposed performance period is a 4-month base period (March 17, 2014 – July 16, 2014), with a 3-month (July 17, 2014 – October 16, 2014) and subsequent 2-month (October 17, 2014 – December 16, 2014) option periods.

The total estimated cost of the procurement for the period of performance is $1,310,107.00

SUPPORTING RATIONALE, INCLUDING A DEMONSTRATION THAT THE PROPOSED CONTRACTOR’S UNIQUE QUALIFICATIONS OR THE NATURE OF THE ACQUISITION REQUIRES USE OF AN EXCEPTION TO FAIR OPPORTUNITY:

Exception to Fair Opportunity. The following exception applies to fair opportunity accomplished in accordance with (IAW) 16.505(b)(2)(i)(C).

The order must be issued on a sole-source basis in the interest of economy and efficiency because it is a logical follow-on to an order already issued under the contract, provided that all awardees were given a fair opportunity to be considered for the original order.

Description of the Justification. The period of performance on the current contract ends March 16, 2014. Hewlett Packard Enterprise Services (HPES), LLC is the current contractor. Part of the support and services provided by HPES includes providing the facility used to host the mid-range services in Auburn Hills, Michigan. The requirement as outlined in paragraph 3, and as currently performed by HPES, will be required beyond March 16, 2014.

DMDC has been looking for alternative locations since July 2013 but due to very strict requirements a number of initial leads were not viable so the search for an acceptable facility has taken longer than originally anticipated. Additionally, in July 2013, the DoD CIO put out two mandates regarding Component Data Center Consolidation and Core Data Centers that resulted in the need for DMDC to revisit its plan for selecting a new data center. These mandates require components to migrate all applications and systems supporting users to Core Data Centers by the end of FY18, and also direct that applications and systems scheduled for Initial Operating Capability (IOC) in 2QFY14 and beyond be hosted in a data center at IOC. In order to meet these mandates and accomplish the move of the data center, DMDC had to re-evaluate the strategy and determined that it is in the best interest of the Government and most cost effective to move into a DoD location at this time versus moving a second time by the end of FY18. As of December 2013 DMDC has now been able to identify three potential locations but has not yet finalized the follow-on strategy.

In addition to the above planning, DMDC is also in the process of establishing a disaster recover/failover capability between Auburn Hills, Michigan and Seaside, California. This process is to ensure uninterrupted service during the data center move.

Since a strategy has not yet been approved, a follow on effort is not likely to be awarded in advance of March 16, 2014, with sufficient lead time to de-install, prepare for shipping and actually ship the existing GFE to a new location. Additionally, HPES notified DMDC in February 2013, that they will be closing the facility in late 2014. At that time, the Government began pursing competitive alterative locations for the hardware, software and all other platforms that are currently hosted by HPES.

Moving and re-establishing data lines, etc. can take six to nine months of planning and installation. The Government has been in the process of researching potential DoD data center locations since July 2013. As discussed above, two DoD CIO mandates were published in July 2014, which requires the Government to move to a DoD data center. The Government plans on making a final decision early in 2014. Due to the logistics involved in locating, ordering and moving the entire mid-range platform it is infeasible to consider a temporary relocation until the long-term location is established.

Awarding a contract to a new contractor until the Government has established a final location would cause an undue financial burden to the government because the GFE and entire infrastructure would have to be relocated twice, to the new contractor and then again to the final DoD location. This would also create multiple disruptions in benefits and entitlements to our service members and their family members.

A number of factors have played into the need for an exception to full and open competition. The reduction in DMDC’s budget due to sequestration has played a significant part in this requirement. Initially, DMDC was analyzing the cost effectiveness of whether the mid-range support services and facility should continue to be provided by a contractor or whether it is more cost effective to locate to a Government owned facility and the support services be provided by civilian employees or a combination of the two. DMDC considered the future needs to virtualize using cloud technology and looked at industry best practices in order to accommodate those requirements. As previously indicated, it would not be cost effective to relocate to two locations: to a new contractor location and then to a final DoD location. Also, the relocation and potential down time services will have a major impact to DMDC’s mission and the benefits and entitlements to military service members and their families.

In compliance with the DoD Data Center Consolidation Initiative goals, DMDC is actively seeking a qualified DoD data center co-location provider that has sufficient available capacity for the DMDC Auburn Hills mid-range relocation. In July 2013, DMDC began acquisition strategy discussions with the contracting office. At that time DMDC was not aware of the DoD CIO mandates. The initial strategy was to solicit information from industry using a Request For Information to identify industry best practices. In September 2013, the direction changed and DMDC began preparing a Statement of Objective (SOO) which at that time included not just moving the data center and providing support activities but also to identify a commercial data center. DMDC drafted a SOO and submitted to the contracting office in October 2013. Sequestration and Furlough at the beginning of FY14 impacted their review timeline. Since DMDC became aware of the two DoD CIO mandates, DMDC had to take another look at the overall strategy and identified that the requirements originally identified in the SOO were no longer accurate. As part of the research efforts DMDC is visiting three DoD data centers in early January 2014 and intends to have a final decision in early February 2014. Once the location is identified, DMDC will then begin the process of establishing long-term memorandum of understanding (MOU). DMDC will then have to begin the acquisition process for those services not covered in the MOU.

Incorporated in the period of performance will be a transition period. This time would allow for an orderly fail over to our Seaside, California location, shut-down of the presence in the current Auburn Hills, Michigan facility and start up in the new location. DMDC anticipates a constant level of effort during the transition period with the work load shifting from operations to de-installation and related close-out activities over a period of 30 to 90 days.

HPES, LLC, the current contractor, provides the support services and the facility for the GFE provided. If the contract were awarded to another contractor, the Government would incur relocation costs for moving the GFE twice (to the new contractor location and then again to the final location). The estimated cost is approximately $1,000,000 and was based on the current inventory list, packing and shipping in accordance with manufacturer specifications in order to maintain warrantees and estimates provided by a contractor. This additional cost is a direct result of the overlap between the two locations. This also increases the possibility of multiple disruptions in benefits and entitlements to our service members and their family members as these moves take place.

Due to the logistics of moving and the length of time required to acquire and establish data lines to the new location, it is not feasible to accomplish these tasks within the amount of time remaining on the current contract.

By extending this period of performance the government avoids the additional costs and operational risk associated with relocation to an intermediate provider prior to the completion of the competitive selection process for determining the long-term provider and location. At this time it is not feasible to complete the competitive selection process and establish the required MOU or contract, including startup and initiation task by December 16, 2013, to allow the required 30-90 transition period to perform the GFE migration prior to the current contract end date.

Proposed sole source contractor. This requirement was initially competed in 2008 among all 26 ENCORE II contractors, in which only one proposal was received from Electronic Data Systems Corporation (EDS). EDS changed their name in 2010 to HPES, LLC. HPES has provided the facilities and support services for the DMDC’s mid-range requirements for over five years. They have the historical knowledge and experience of working the urgent congressional mandates. This is the first time an exception to fair opportunity has been used for this requirement.

Significant GFE is currently located and operated from within the HPES facilities by HPES personnel under their current contract. HPES performance under their current contract has met or exceeded minimum government expectations over the past five years.

Multiple Award Contract (MAC) holders were considered during our research; however, it is not in the best interest of the Government to award these services to a new contractor. Awarding to a new contractor would not be cost effective due to DMDC having to move the data center twice. A lapse in service is also not an acceptable alternative because subsequent loss of this information technology (IT) capability creates an unacceptable risk to the government. Planning is underway to establish a permanent alternate location and provider to relocate the IT capabilities currently located at HPES facility.

Based on preliminary research with potential government locations and the length of time it may take to relocate and establish the GFE, lines, etc., an estimate of the cost to the government that would be duplicative is approximately $140,000 for each month it takes to complete the transition from the current HPES facility to the new location. This cost is in addition to estimated moving costs from one location to another.

Discussion regarding cause of the sole source situation. The current contract period of performance ends in March 2014. HPES will be closing the facility in late 2014. The DoD Chief Information Office mandate dated July 11, 2013, requires DoD agencies to consolidate their data centers to a Central Core data center by the end of FY18. To meet this requirement, DMDC must move their current data center to a

DoD facility, which requires extensive research to locate a data center that meets all requirements and timelines. Qualified existing DoD providers are under consideration for the permanent location to provide the IT capabilities currently located at the HPES facility. Due to the logistics involved in locating, ordering and moving the entire mid-range platform it is not feasible to establish the MOU or contract by March 2014.

Once the location is determined and agreements made with that facility, DMDC will be able to begin the solicitation process.

Demonstration of unique source. Significant GFE is currently located and operated from within the HPES facilities by HPES personnel under their current contract. It is not possible to have a different contractor in the HPES owned facility currently housing the GFE. HPES performance under their current contracts has met or exceeded minimum Government expectations over the past five years. Relocation of GFE at this location and subsequent loss of this IT capability prior to the availability of a permanent alternate location and provider creates an unacceptable risk to the Government. Planning is underway to establish a permanent alternate location and provider to relocate the IT capabilities located at HPES facility.

Procurement discussion. Qualified existing DoD providers are under consideration for the permanent alternate location to provide the IT capabilities currently located at HPES facility. This extension provides additional time to complete the review, establish agreements with the DoD provider, and transition to the permanent location. DMDC is looking at three DoD facilities and will be visiting them in early January 2014. A final decision on the location will be made in February 2014. Once the decision is made and agreement terms finalized between DMDC and the DoD facility provider, we will be able to finalize the requirements and a solicitation will be created to include those services that the DoD facility provider is unable to provide.

There is significant effort in planning and executing a relocation which makes it infeasible to consider a temporary relocation until the long-term location is established. For example, network connectivity requires DoD Information Assurance Certification and Accreditation Process certification and scheduling, ordering and installation of circuits; a process that may take more than six months on its own. The existing operational authorities would transparently extend under a contract with HPES as the existing provider.

Impact: Relocation of GFE at this location and subsequent loss of this IT capability due to a lapse in the contract prior to the availability of a permanent alternate location and provider creates an unacceptable risk to the Government and DMDCs mission. DMDC is the only central access point for information and assistance on DoD entitlements, benefits, and medical readiness for uniformed services' members, veterans and their families. The capability that supports these production applications for the DoD resides under the current HPES contract. Multiple service interruptions to these applications are not acceptable to DMDC or the DoD.

DMDC cannot go without hosting and IT administrative support on the databases located here; specifically, the Defense Enrollment Eligibility Reporting System and Real-Time Automated Personnel Identification System, which support services members and their family members’ worldwide. There currently is not an option to relocate this requirement to another facility to perform the tasks.

COST/PRICE FAIR AND REASONABLE DETERMINATION: The cost/price fair and reasonable determination that will be used will be based on the applicable ENCORE II price schedule and compared with the prices for services currently provided under the task order, which were awarded on a competitive basis. Additionally, the contracting officer will obtain certified cost or pricing data, and upon completion of negotiations, will obtain a certificate of current cost or pricing data. The contracting officer will make a determination that the anticipated cost/prices are fair and reasonable.

MARKET RESEARCH: Market research was conducted in June 2013. The market research was conducted by review of the following market places: The General Purpose Commercial IT Equipment, Software, and Services (IT 70), Professional Engineering Services, General Services Administration (GSA) Alliant Government Wide Acquisition Contract, and the /DITCO ENCORE II IT Solutions. A number of potential sources can be found on GSA Schedule 70, 871, & Alliant, and on DISA DITCO’s ENCORE II contract vehicles.

The DMDC’s first priority when conducting the market research was to find a location to relocate the IT infrastructure that is in accordance with the Federal Data Consolidation Center Initiative (FDCCI). In this effort DMDC has investigated potential DoD data center providers, as well as qualified commercial data center providers. The DoD Chief Information Officer direction is to consolidate and relocate DoD IT workload to an existing DoD data center. In a wide search to identify qualified co-location providers, with available capacity, in the timeframe of this acquisition, we were not able to find providers who were able to meet the six to twelve month timeframe required. The search included DoD, federal or commercial providers with co- location services required by DMDC. The costs associated with moving the IT infrastructure to a new location includes not only the estimated cost of $1,000,000 to relocate the hardware/software, but also includes potential costs associated with supporting two data center locations for a period of 90 days. Two moves double this estimate to 180 days to ensure no downtime during the transition, with an estimated cost of approximately $857,611. This cost was based on the ENCORE II average labor rates.

After market research, it was concluded that it is not cost effective to relocate IT infrastructure in a six to twelve month timeframe. The DMDC strategy is to relocate once to a DoD operated data center.

Concurrent with planning to relocate to a DoD operated data center; a SOO was submitted in October 2013 to our contracting office to determine if a commercial provider may offer the equivalent co-location and associated services at a lower cost (which is one of the exceptions listed in the FDCCI). The requirements originally identified in the SOO have changed based on the direction received in the two DoD CIO mandates and will need to be reviewed once the appropriate agreements have been made with the DoD data center.

ANY OTHER SUPPORTING FACTS: DMDC currently has a rudimentary disaster recovery capability for the application currently being run at the HPES facility; however, extended reliance on DMDC’s disaster recovery capability for these high visibility programs at a single site with no failover capability presents an unacceptable risk to Service members, retirees, and their family members throughout the world.

ACTIONS THE AGENCY MAY TAKE TO REMOVE OR OVERCOME BARRIERS THAT LED TO THE EXCEPTION TO FAIR OPPORTUNITY:

17 Sep 2008 – 16 Sep 2013. Fair opportunity competition under ENCORE II.

HC1028-08-D-2018, Task Order 0004, 6-month extension awarded 10 Sep 2013, period of performance 17 Sep 2013 – 16 Mar 2014 IAW FAR 52.217-8, Extension of Services.

DMDC will need to review the requirements identified in the original SOO submitted to our contracting office once a final decision has been made on the DoD data center location. Once the agreements are finalized, DMDC will 1) modify the SOO to include the support and services not provided by the selected DoD data center; 2) request the contractor provide best practices for DMDCs processes and virtualization efforts.

REFERENCE TO THE APPROVED ACQUISITION PLAN (AP): Not applicable.