ESS J A Amendment 1 - SAF AQ Approved 16 Dec 2011 Redacted 27 Aug 12.pdf

COORDINATION AND APPROVAL DOCUMENT

AMENDMENT 1

to the

JUSTIFICATION AND APPROVAL

for

UMBRELLA ENGINEERING SERVICES SUPPORT

Contractor Logistics Support (CLS) Sustainment

Division

Aerospace Sustainment Directorate

Oklahoma City Air Logistics Center

PREPARED BY:

OC-ALC/GKSVA

JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

Contracting Activity: OC-ALC/GK Purchase Request/Local Identification Number: GFD20300600175 Program Name: Umbrella Engineering Services Support Program Estimated Contract Cost (including options): $973,000,000 Type Program: AFPEO/CM Program Authority: 10 USC 2304(c)(1), as implemented by FAR 6.302-1

AFMC Director of Contracting

Air Force Program Executive Office/ Combat and Mission Support

Deputy Assistant Secretary (Contracting)

APPROVAL

Air Force Service Acquisition Executive

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

I. CONTRACTING ACTIVITY Purchase Request: GFD20300600175

LORETTA A. WILLIAMS, OC-ALC/GKSKA

Contractor Logistics Support (CLS) Sustainment Division Aerospace Sustainment Directorate 3001 Staff Drive Tinker AFB OK 73145-5609

DSN 339-4342

II. NATURE AND/OR DESCRIPTION OF THE ACTION BEING PROCESSED

The purpose of this amendment is to modify the existing contract to add additional contract types raise the ceiling authority, document changes in covered aircraft, and identify how modification programs will be covered under this plan. This change increases the ceiling authority from $305,000,000 to $973,000,000

Due to the circumstances described herein, this Justification and Approval (J&A) authorizes use of other than full and open competition procedures to obtain engineering services support from Boeing Aerospace Operations, Inc., Midwest City OK.

In support of the AF initiative to reduce T&M type contracts and to provide more flexibility, the authorized contract types will include Firm Fixed Price (FFP), FFP Level of Effort (FFPLOE), Cost Plus Fixed Fee (CPFF), Cost Plus Incentive Fee (CPIF), Cost Reimbursable (CR), Time and material (T&M) and Fixed Price Incentive Firm Target (FPIF).

Selection of contract type will be based upon the effort and risk. It is planned that FFP/FFPLOE will be used for certain studies and projects that are well defined or have normalized historical cost data. CPFF and/or CPIF will be utilized for those tasks estimated at less than 300 hours for such actions as engineering/logistics studies, Rough Order of Magnitude (ROM) estimates and those actions that are non-complex. T&M and Cost Plus contract types will be used for non-recurring engineering and modification prototype design and support. CR will be used for travel and contractor personnel relocations. FPIF will be used where costs are well defined, but incentives to cost, schedule or technical performance may be appropriate. Where appropriate, tasks will be phased so the government can move from T&M to Cost Plus or Fixed Price awards as the task is better defined and the risk is manageable. Due to the nature of the non-recurring effort to be performed under this contract, a time and material type contract must be utilized because the extent and duration of the work required to be performed is basically unknown, cost cannot be anticipated with any reasonable degree of confidence and no other contract type is suitable to be used to award the unanticipated, non-repetitive type of engineering support required for this effort.

The estimated value of the action is raised from $305,000,000 to $973,000,000. This includes $2,800,000 in programmatic changes through FY11 and $173,200,000 to add into the award. These are all Boeing Commercial Derivative Aircraft (CDA) models managed by the CLS Sustainment Division. While the new aircraft are different government mission design series, they are all called out in the original J&A and acquisition plan in their Boeing commercial model designation.

As was anticipated during the original Acquisition Plan for the current contract, modifications are included in the scope. Originally, ceiling authority was not considered for modifications, but is now being addressed in this action due to the magnitude of modification required.

is added for ceiling purposes only for planned modifications, as they are part of the Designated Acquisition Official (DAO) (OC-ALC/GK) Portfolio as ACAT III programs.

However, as they are executed by this contract under AFPEO/CM’s portfolio, ceiling authority must be granted under this authorization.

This joint service program provides engineering services support for Boeing commercial derivative airframes managed and/or supported by the CLS Sustainment Division:

The current contract was awarded with a basic period of performance of 1 Apr - 30 Sep 2007 plus nine (9) one year Options. If all options are exercised, this contract will expire on 30 Sep

2016. The contract was moved to a calendar year effort effective 1 Jan 2011 with Option Year IV award. It is anticipated that this amendment will be effective at the Option Year V award on 1 Jan 2012.

A "C" type contract will continue to be used to execute this requirement due to the flexibility in realignment of funds, the ability to exercise options subject to funds availability and the successful, historical use of this contract type for multiple service, multiple platform type requirements.

This J&A only covers necessary ceiling authority and class J&A approach for programmed modification efforts. No modification will be included in this contract unless it is determined sole source based on the authority cited in this J&A. The contract type(s) and phases for all modifications will be determined at the individual modification acquisition strategy briefing or acquisition strategy panel and be approved by the DAO on a case-by-case basis, if sufficient ceiling authority is available or obtained. Cost and pricing information will be obtained from the contractor and utilized in negotiating prices and fixed hourly rates for the follow-on contract and for each modification awarded.

The overall risk to this performance-based acquisition is assessed as low. Boeing's expertise and experience with these airframes has been established for over twenty-five years and they have shown sufficient capacity to provide the required engineering support in an acceptable fashion.

III. DESCRIPTION OF THE SUPPLIES/SERVICES REQUIRED TO MEET THE

AGENCY’S NEEDS

The total estimated value is increased to $973,000,000.00 for this performance based contract.

Budget estimates were derived from the FY07 through FY16 Sustaining Engineering Requirement Plan (SERP) and the Budget Estimate Submission (BES) for each weapon system.

Services will be funded by each individual platform on an as-needed basis for emerging requirements. This requirement will utilize Foreign Military Sales (FMS), 3010 (modifications), 3400 (Operations and Maintenance), and 3600 (Research and Development) Appropriations.

Due to the Federal Aviation Administration (FAA), the international community and the Government mandating various navigational / systems be installed and/or upgraded, it would benefit the Government to continue this engineering services support effort with another follow-on contract. In an effort to continue saving time and money, a ten-year period of performance will also be utilized for this instant, proposed acquisition. Approval for more than one fiscal year is required to ensure that there is no interruption in this critical engineering services support and because there are no feasible actions which could be implemented to develop future competition.

This contract continues the current successful method of providing critical multiple platform engineering support for multiple service organizations. This contract provides engineering services support in the form of recurring and nonrecurring efforts. Recurring efforts are identified as, but are not limited to: tasks which consist of Boeing's evaluation of commercial service literature in the form of service reports, letters and bulletins and airworthiness directives;

liaison engineering for minor repairs and aircraft system research; 24 hour in-flight emergency technical assistance; access to proprietary engineering data and drawings; hardness maintenance and surveillance activities; management of maintenance program requirements; and configuration management and interface control. Boeing maintains the integrated commercial aircraft and mission systems drawings and technical data for use by the Air Force or approved Air Force contractors.

Non-recurring tasks consist of, but are not limited to: hardware evaluations, detailed engineering analysis, on-site accident and incident investigations, engineering feasibility studies and tests and design and prototype modifications. Specifically included are providing repair procedures for components unique to each aircraft, engineering feasibility studies for the installation and testing of Air Force stock listed components, conducting special studies using structural analysis and aerodynamic analysis, resulting in technical order changes, submitting of engineering change proposals and conducting prototype hardware fabrication. Specialized engineering efforts consist of providing familiarization of Air Force personnel and contractor personnel with new and improved operational and maintenance techniques, providing guidance and assistance with requirements associated with logistics support, maintenance, modernization and operational effectiveness of any of the ESS aircraft platforms and completing special studies, tests and inspections.

IV. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION

10 USC 2304(c) (l), as implemented by FAR 6.302-l (a) (2), with an application pursuant to FAR 6.302-1(b) (2), Only One Responsible Source.

V. DEMONSTRATION THAT THE CONTRACTOR’S UNIQUE QUALIFICATIONS

OR NATURE OF THE ACQUISITION REQUIRES THE USE OF THE AUTHORITY

CITED ABOVE (APPLICABILITY OF AUTHORITY)

Acquisition of the required engineering services without providing for full and open competition is necessary. Only the original design contractor is capable of providing the required services to the Air Force due to a lack of availability of detailed design and engineering data in the competitive market. Boeing designed and developed the airframes for the commercial aircraft these weapon systems were derived. All programs since entry into the Air Force service have been supported as CLS aircraft with Original Equipment Manufacturer (OEM) engineering services support contracts. Without this continued service, requirements such as basic structural repairs and modifications would become insurmountable tasks. Each of these aircraft has been modified to support a specific mission. They are FAA certified and must be managed IAW AFPD 62-6 and AFI 62-601, USAF Airworthiness. These policies direct that modifications to commercial derivative aircraft meet FAA airworthiness standards by receiving a Supplemental Type Certificate (STC). To achieve this certification standard, impacts of the modification on the original airworthiness of the aircraft must be determined. This requires that either the OEM develop/review modifications, or that extensive reverse engineering of the basic aircraft be undertaken. Boeing has maintained the baseline for these aircraft and as a result is the only source for historical, developmental, design, qualification and test data required to perform sustaining engineering services and for engineering skills required to make use of this data. Proprietary Boeing intellectual property includes the original drawings and specifications, structural strength and durability analysis, electrical loads analysis, and aerodynamic performance data.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE

Only the original design contractor, Boeing, possesses the unique skills, expertise and experience with the commercial derivative aircraft to perform the required engineering services. Rights to all the detailed design data are proprietary to the Boeing Company who refuses to sell the data as re-verified in May 2011. North Atlantic Treaty Organization (NATO) sources were not considered. Data is not available to establish a competitive bid package. As is customary in acquisition of commercial derivative aircraft, only "commercial rights" to basic aircraft data were procured with the fleets. These commercial rights allow use of data for maintenance and operations, but not for modifications or engineering analysis. The aircraft were procured as used aircraft, further limiting the government's ability to obtain source data. The fact that the government does not own the aircraft proprietary data base and the unique management requirements associated with support of this program make it improbable that full and open competition of this contract will be feasible and in the best interest of the government. A synopsis will be issued in the Federal Business Opportunities (FedBizOpps) publication and anyone requesting a copy of the solicitation will receive one.

VII. DETERMINATION BY THE CONTRACTING OFFICER THAT THE

ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND REASONABLE

The Contracting Officer shall determine the cost of tasks/modifications efforts executed under this contract to be fair and reasonable. The cost assessment will include an evaluation of cost, schedule and technical risks associated with the effort as well as the planned contract types.

Traditional pricing will be utilized for this acquisition. As part of the cost analysis, the contractor will provide certified cost and pricing data. The Government objective will be developed based on this data, technical analysis from the SPO and Defense Contract Management Agency and field audits from Defense Contract Audit Agency. Detailed documentation and justification of price reasonableness will be disclosed in the official Price Negotiation Memorandum (PNM), which will be completed upon conclusion of negotiations.

VIII. DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AND THE

RESULTS, OR A STATEMENT OF THE REASONS MARKET RESEARCH WAS NOT

CONDUCTED

Sustaining engineering services are considered commercial services, but since the detailed design data necessary to perform these services is proprietary to The Boeing Company, these services must be obtained directly from Boeing. (The USAF approach is consistent with that of commercial airlines, which require ongoing relationships with the OEM for technical and engineering support.) An examination of the acquisition history of these services and experience with the marketplace under previous acquisitions for these services indicate that no other source other than Boeing possesses the necessary skills and expertise to perform the required services.

Boeing owns the detailed design data and remains the only source capable of providing the required sustaining engineering services support for Boeing commercial aircraft owned in the commercial market and for government owned Boeing commercial derivative aircraft fleets under the ESS contract.

Market research was revalidated in May 2011 whereby Boeing was contacted and subsequently confirmed that their proprietary data/data rights would continue to be unavailable for sale to the Air Force.

IX. ANY OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL AND

OPEN COMPETITION

Acquisition Data Availability - Each aircraft is a derivative of a Boeing commercial aircraft. The Air Force only has title to the Air Force unique data on each aircraft. Boeing retains rights to all the commercial data. Boeing owns the detailed design data and remains the only source capable of providing the required sustaining engineering services support for Boeing commercial aircraft owned in the commercial market and for government owned Boeing commercial derivative aircraft fleets under the ESS contract. It is necessary to have OEM assessment of impacts to basic aircraft airworthiness to meet AFPD 62-6 and AFI 62-601 airworthiness certification standards, even if a third party were to design a modification. Procurement of OEM engineering data for basic airframe is not feasible because the data is not for sale. Since detailed design data is not available to establish a competitive bid package, this engineering services support requirement cannot be competed.

Follow-on Contracts -

The separation of the engineering effort from the CLS contracts allowed other contractors to compete for the CLS portion of the workload. In order to support the CLS contractors, it is imperative that the Air Force has the engineering services support expertise and data that the Boeing Company can provide.

Contract Type – This J&A amendment is adding additional contract types to not only offer more flexibility in contracting, but to facilitate planned actions to reduce the amount contracted under a T&M award. The ESS team will continue to identify and implement actions to further reduce T&M awards, where feasible. While incorporated modifications contract type strategy will be determined through the DAO process, the ESS team will emphasize the need to reduce/limit T&M awards. Where T&M awards are necessary/justified, the modification programs will be further encouraged to phase actions to support transitioning to FP/CP awards as soon as practical.

X. LIST OF SOURCES, IF ANY, THAT EXPRESSED INTEREST IN THE

ACQUISITION

Boeing Aerospace Operations Midwest City, OK

XI. A STATEMENT OF THE ACTIONS, IF ANY, THE AGENCY MAY TAKE TO

REMOVE OR OVERCOME ANY BARRIERS TO COMPETITION BEFORE MAKING

SUBSEQUENT ACQUISITIONS FOR THE SUPPLIES OR SERVICES REQUIRED

The Air Force, in purchasing commercial aircraft could not purchase the design data necessary to solicit competitive proposals for sustaining engineering services for these Boeing commercial derivatives. Due to the lack of design data, this sustaining engineering support cannot be acquired competitively because much of the support required involves conceptual problems requiring design solutions. The original equipment designer / manufacturer owns the proprietary design data, has the unique knowledge and currently maintains the necessary skills to perform the sustaining engineering for this requirement. While competition does not exist for the sustaining engineering services support due to the non-availability of acquisition data, this acquisition will be synopsized for subcontracting opportunities.

To facilitate competition, all modification efforts will be scrutinized through market research to indicate if sufficient data is available to perform the effort without the need of Boeing’s proprietary data. If so, the modification will not be awarded under this plan, but broken out as a new separate award/plan. This determination will be made by the DAO as part of the acquisition strategy determination for that modification. Modifications, where competition is feasible, will not be performed on this contract. Market Research was revalidated in May 2011 with Boeing, who continues to refuse to sell their proprietary data. In addition, as modifications are developed the Government will purchase data to ensure competition for Group A and Group B kits as well as installation to the maximum extent possible. This will facilitate future competition for production and installation efforts.

XII. CONTRACTING OFFICER'S CERTIFICATION

The Contracting Officer's signature on the Justification and Approval Coordination and Approval Cover Page evidences that she has determined this document to be both accurate and complete to the best of her knowledge and belief.

XIII. TECHNICAL REQUIREMENTS/PERSONNEL'S CERTIFICATION

As evidenced by their signatures on the Justification and Approval Coordination and Approval Cover Page, the technical and/or requirements personnel have certified that any supporting data contained herein, which is their responsibility, is both accurate and complete.