F03_JA_Tuknik_140D0421C0002_redacted_1.pdf

United States Department of the Interior

INTERIOR BUSINESS CENTER

Washington, DC 20240

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

SOLE SOURCE 8(a) CONTRACT EXCEEDING $100 MILLION AUTHORITY: DFARS 206.303-1, FAR 6.302-5 and 15 USC 637

Contract #140D0421C0002

1. Identification of the agency and the contracting activity, and specific identification of the document as a “Justification for Other than Full and Open Competition”.

This document is a justification for other than full and open competition for the Department of the Interior, Interior Business Center, Acquisition Services Directorate, Division I, Branch III on behalf of the Department of Defense Chief Information Officer (DoD CIO) Joint Artificial Intelligence Center (JAIC).

2. A description of the needs of the agency concerned for the matters covered by the contract.

Defense Federal Acquisition Regulation Supplement (DFARS) 219.808-1(a) requires a completed justification in accordance with FAR 6.303 and DFARS 206.303 3-1(b) for a DoD sole-source 8(a) contract exceeding $100 million, in lieu of the threshold at FAR 19.808-1(a).

This justification provides the rationale for the exception.

This justification is for a sole-source modification to Tuknik Government Services, LLC (TGS), an 8(a) Alaska Native Corporation, to increase the contract ceiling value above the $100 million DoD threshold from due to the following actions:

a. Increase the ceiling of the current Period of Performance (Option Period 3) by $10 million, from $ , to $

b. Add FAR Clause 52.217-8 “Option to Extend Services” to the contract for a potential Six-month Extension Period of Performance of December 23, 2024, through June 22, 2025, for a potential total value of $

In 2020, the JAIC rolled out its new organizational construct, or JAIC 2.0. This unique structure consists of 5 Directorates: Chief of Staff, Program Plans & Analysis, Strategy & Policy, Products, and Missions. The reorganization is designed to replicate similar organizational structures in the US Private Sector and Venture Capital ecosystem. TGS’s continued support is required for JAIC 2.0, as it oversees and develops scalable artificial intelligence (AI) / machine learning (ML) rapid prototyping solutions for DoD. The contractor currently provides a range of support services to enable JAIC to accelerate the delivery of AI enabled capabilities, scale the Department-wide impact of AI, and synchronize DoD AI activities to expand Joint Force advantages.

The ceiling increase is due to the need to (1) increase the amount of support provided under this contract within Option Period 3 in the amount of $10 million, and (2) add FAR Clause

Awarding a contract for this requirement to a new vendor now while the follow-on is in progress will significantly impact performance as a substantial amount of time would be required in order for the new vendor to get up to speed on the current status of the various programs being supported under this contract as well as the time needed for the new vendor’s staff to acquire the necessary clearances and read-ins to provide the support currently being provided under this contract. These impacts are likely to be felt across DoD as JAIC / CDAO acts as a clearing house for all things Artificial Intelligence for DoD and projects and programs that have Artificial Intelligence components will not be able to depend on the current level of support from JAIC / CDAO while a new vendor gets up to speed.

Increase to Option Period 3: The Office of the Chief Digital and Artificial Intelligence Officer (OCDAO) is the successor organization to the JAIC, as referenced in the December 8, 2021, Deputy Secretary of Defense (DSD) Memorandum, Establishment of the Chief Digital and Artificial Intelligence Officer (8 DEC 2021). Pursuant to the same memorandum, CDAO also incorporates the former Defense Digital Service and the Office of the DoD Chief Data Officer.

CDAO was established to strengthen the integration of data, digital, and AI/ML solutions across the Defense enterprise. In addition to JAIC, the following offices, functions, and associated resources were placed under the CDAO: Defense Digital Services (DDS), Chief Data Officer (CDO), the Office of Advancing Analytics (ADVANA), and components of Project Maven. CDAO will also lead the conduct of the AI and Data Accelerator (ADA) initiative, execution of the Global Information Dominance Experiment (GIDE) and development of the data integration layer as part of the Joint All Domain Command and Control (JADC2) concept.

This significantly increased mission and support required in standing up the office with a range of Headquarter support functions. While the changes occurred within the organization in December 2021, it wasn’t immediately clear what resources and level of support would be needed for CDAO to adapt to those changes until recently. CDAO has only recently grasped the totality of the impact to supporting contracts as a result of the above-mentioned changes to the organization and has been actively planning how these changes would impact current and future contract needs. In terms of the impact of these changes on the current CDAO support contract, these changes have resulted in a need for increased contract support, which was not originally anticipated, hence the need for the ceiling increase to Option Period 3 in the amount of $10M in order to maintain the level of support currently being provided under the contract until the period of performance end date in December of 2024. If no increase is allowed for, all work will likely need to stop in September of 2024 as the current ceiling is estimated to run out around this time. If the increase in ceiling is not completed and work is stopped in September, the Government would suffer significant programmatic and financial loss as the level of support in the field of Artificial Intelligence that DoD programs and projects receive from CDAO will be degraded if support under this contract was to be suspended.

Adding FAR 52.217-8: CDAO and its supporting offices are responsible for ensuring the DoD becomes a digital and AI-enabled enterprise capable of operating at the speed and scale necessary to preserve military advantage. The six-month extension period maybe required while the follow-on contract is being completed, in order to avoid gaps in service for this critical mission. It must be noted that the Government may end up not needing the extension at 52.217-8. However, as a risk mitigation strategy, it is being included to ensure there is no gap in service between the current contract and the new contract and mitigate risk of protests, and other unforeseen procurement delays.

Due to the above-mentioned items and the immediate need of continued support in which delays are unacceptable, it is in CDAO’s best interest to issue this sole source modification to TGS, rather than recompeting at this time.

5. A determination that the anticipated cost of the contract will be fair and reasonable.

The CO determined that the $10 million increase in Option Period 3 fair and reasonable as demonstrated with the following. The increase is only for ceiling and the terms and conditions established at award, including the labor rates already found fair and reasonable, will still be in place to ensure expenses under this contract will remain fair and reasonable. The COR will continue to monitor the performance of this contract along with the CO, ensuring there is adequate government surveillance. The COR nominated has demonstrated past capabilities to administering T&M contracts and was instrumental in identifying current burn projects and determining the need for this increase in ceiling for Option Period 3 based on the current burn rate. As this is a Performance Based Acquisition, the Quality Assurance Surveillance Plan (QASP) will address cost control. The modification will reaffirm the NTE $10 million increase in Option Period 3 may be incrementally funded that corresponds to the level of effort that DoD CDAO predicts will be necessary at the time, and the contractor will not be allowed to exceed the funding on the contract without working at their own risk. The CO and COR will be monitoring burn rates through validating and approving invoices. All deliverables will be assessed by the Government and performance by the contractor will be recorded in the Contractor Performance Assessment Reporting System (CPARS) at the end of the period of performance.

Price analysis conducted at award included a comparison of TGS’ rates with the Independent Government Cost Estimate (IGCE) and similar contracts. TGS’ rates for Option Period 3 were found to be .40% lower than the IGCE, and in line with comparable contracts, with an 8%-9% discount off of their GSA price. TGS’ proposed labor mix and level of effort were also reviewed by the client Program Office and CO, and found to be fair and reasonable. Review of actual labor mix and level of effort will continue throughout the performance of Option Period 3 by the CO and COR to ensure the labor mix and level of effort being utilized is appropriate for the nature of the work being performed.

With regard to the evaluation of pricing for the FAR 52.217-8 option, the government is evaluating price by adding six months to Option Period 3 (the last and current option period) to TGS’s total price. Should this option be exercised, the rates would remain the same as currently proposed in the preceding option period. The option would allow the government to unilaterally extend the contract up to six months. The price for the six-month extension period was calculated by halving the value of Option Period 3. Factoring in the value of the six-month extension, TGS’s total price would be $121,958,034.94. This extended period is considered fair and reasonable based on the evaluation of rates described above and TGS’s price evaluation at award. Review of actual labor mix and level of effort will take place throughout the performance of an extension under FAR 52.217-8 (if exercised) by the CO and COR to ensure the labor mix and level of effort being utilized is appropriate for the nature of the work being performed.

6. Such other matters as the head of the agency concerned shall specify for purposes of this section.

DoD CIO is the Principal Staff Assistant (PSA) and advisor to the Secretary and Deputy Secretary of Defense for IT, including national security systems (NSS) and information resources management (IRM) matters. The DoD CIO is responsible for all matters relating to the DoD information environment including Cyber, Cloud, Command/Control/Communication (C3), and AI. In 2018, the Deputy Secretary of Defense authorized the DoD CIO to establish the JAIC to accelerate the delivery of AI-capabilities, scaling the Department-wide impact of AI, and synchronizing DoD AI activities to expand Joint Force advantages. JAIC swiftly introduces new capabilities and effectively experiments with new operational concepts in support of DoD’s warfighting missions and business functions.

This requirement is a follow-on to 8(a) Contract 140D0419C0047 (awarded to TGS). AQD offered and SBA Accepted Tuknik for the award of 140D0421C0002 in the amount of $99,936,189.49 on December 21, 2020. No justification and approval were previously prepared/required in accordance with DFARS 206.303-1(a). Market research conducted at the time of award included reviewing the historical contract and the SBA Small Business Database.

Alaska Native Corporation (ANC) participants can be awarded sole-source contracts, up to a ceiling of $100 million, without executing a justification per DoD Class Deviation – Justification and Approval Threshold for 8(a) Contracts. AQD policy Alert POL-2020-013 - DoD FAR Class Deviation for DoD 8(a) Sole Source Contracts confirmed that this deviation applied to contracts awarded by AQD on behalf of DoD. The services needed under this requirement are commercial services that were already being completed in a satisfactory manner by TGS. TGS was determined to have the capabilities to carry out the work under this requirement. Therefore, other sources were not used during the market research process for the award.

Tuknik was originally selected for the 140D0419C0047 award because of previous experience supporting DoD CIO, the parent organization of JAIC. Tuknik was selected for the current order because of the good work completed under 140D0419C0047. Due to the significant change in scale from 140D0419C0047 ($22 million) to 140D0421C0002 ($99 Million), these contracts are considered different in scope and award to Tuknik for both is considered appropriate. The CO confirmed through a search on the Small Business Administration’s (SBA) Dynamic Small Business Search that the contractor remains a certified 8(a) company that is also registered as an ANC. The 8(a) Program is an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society.

This award supports DoD Small Business goals and is also made to an ANC, which supports Indian Economic development.

Upon execution of this action, the modification and this justification will be provided to the SBA for their records.

This requirement includes highly specialized and critical services that if disrupted would potentially harm the government by causing delays and setbacks in meeting the needs of DoD’s warfighting missions and business functions. A transition at this time is not in the best interest of the government as it would put the requirement and the DoD CIO program at risk with unacceptable delays.

See PDF Signature Sheet.