FA825115R00222Redacted.pdf

JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

I. CONTRACTING ACTIVITY:

United States Air Force

OL:H/PZABB

6050 Gum Lane, Bldg 1215 Hill AFB UT 84056-5825 Contracting Officer: Randall J. Egbert Phone Number: 775-6455 PR Number: FD2020-15-00222

FD2020- l 5-00222 7 January 2015

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

A. Upon approval to use other than full and open competition procedures, the Air Force will issue a new requirements supply contract to buy the Combiner Assembly NSN 1270-99- I 79-7577WF, used on Block 40 F-16 Aircraft, to:

QIOPTIQ LTD, Optics with Intelligence Glascoed Road, St Asaph, Denbighshire CLWYD, LL 17 0000, United Kingdom CAGE Code: K6I I I (formally Thales Optics Ltd. (Pilkington PE Ltd)).

B. Contract Type & Structure: A new five year requirements supply contract will be issued to buy an estimated 300 units with a Firm Fixed Price (FFP) arrangement. The estimated value is $23,647,860.00 for the buy. The e'stimated award date is 1 Oct 20I5 with an ordering period through 3 0 Sep 2020 and delivery period through I Jan 2021.

C. Type J&A: Individual

III. DESCRIPTION OF THE SUPPLIES/SERVICES REQUIRED MEETING THE

AGENCY'S NEEDS:

A. Total estimated cost of supplies is: $23,647 ,860.00. This estimate is based on the ROM dated 8 August 2013 ($48,100.00 per Combiner), updated 18 July 20I4 ($64,487.00 for FYI6 and $90,200.00 for FYI 7, I8, 19, and 20), and updated 23 July 20I4 by e-mail ($64,487.00 for FY16 and FYI 7 then $84,757.00 for FYI 8) and D200 requirements forecast. This action will use 4930 CSAG-S working capital funds. This contract will have a 5-year basic ordering period and the government estimates 60 units for each year, exact delivery schedule and details will be detailed at the delivery order level. The decision to buy this item versus repairing resulted from an analysis of the above RO Ms.

Buying the items results in an estimated $5,922,480.00 savings over the five year period.

(Five year repair cost of $29,570,340.00 minus five year buy cost of $23,647,860.00)

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FD2020- I 5-00222

7 January 2015

B.

QTY

$VAL

FY16

$3,869,220

FY17

$3,869,220

FY18

$5,085,420

FY19

$5,412,000

FY20

$5,412,000

C. Approval request is for more than one ( 1) fiscal year. There are no feasible actions that could be developed to promote future competition during the performance period of the acquisition, as described in Section V below.

IV. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION:

The authority used is 10 USC 2304 (c) (1) as implemented by FAR 6.302-1 -- Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

V. DEMONSTRATION THAT THE CONTRACTOR'S UNIQUE QUALIFICATIONS

OR NATURE OF THE ACQUISITION REQUIRES THE USE OF AUTHORITY CITED

ABOVE (APPLICABILITY OF AUTHORITY):

A. The component, a Combiner Assembly, NSN 1270-99-l 79-7577WF, is an intricate highly specialized sub-assembly of the F-16 Block 40/42 HUD Pilot Display Unit Optical Module.

It consists primarily of three holographic elements, two of which are flat reflectors and the third is a collimator. Each element is comprised of two glass plates cemented together with highly specialized holographic reflective coating applied to each surface. The three elements are known as the rear, forward, and upper holograms. These glass elements are mounted into a cast metal housing, using a potting process. The Combiner Assembly collimates an image, combines it with a forward view from the aircraft, and transmits the combined picture to the pilot' s eyes. Principles of diffractive optics are used to create the virtual HUD and incorporate next generation techniques not found on other HUD systems. The Combiner Assembly is in front of the pilot and may be exposed to wind blast during canopy loss and ejection. Maintaining the structural integrity of the combiner is a safety of flight issue to prevent the possible loss of the aircraft or life in case of a bird strike/ejection. The Combiner Assembly cannot be repaired during repair of the Optical Module but must be replaced.

Therefore, this acquisition will be for a new requirements supply contract for the production of highly specialized equipment, the Combiner Assembly.

B. The government possesses no data rights and has only level one drawings of the Combiner Assembly that are part of the level two drawings of the next higher assembly which are insufficient to produce, or repair the equipment from another source. An attempt to obtain the necessary data rights for competition ofrepair was initiated 9 April 2012 by F-16 HUD Program Manager Jackie D. Jones. The vendor responded on 17 April 2012, "In response to your email dated 9th April requesting that Qioptiq re-consider its decision to not sell or release the proprietary information it holds in connection with the repair or manufacture of the Combiner Assembly or any of the Lens Assemblies in the Diffractive Optical Module or the Wide Area Conventional Optic Module. Qioptiq has reviewed the situation and re-affirms its decision that it would not consider selling this information to any parties." The Program Manager tried again on 16 September 2013 and Qioptiq responded 24 September 2013, "Qioptiq is not prepared to sell the IP used in connection with NSN 1270-99-179-7 577 at the

FD2020- l 5-00222 present time.". The program manager requested on 28 April 2014, government purpose rights for all glass and components used in the F-16 Optics Module. Qioptiqs replied on 1 May 2014, that the data rights requested are not for sale and are seen as Qioptiq Intellectual Rights.

C. The 4 l 61 h SCMS estimates cost to reverse engineer this asset would be in excess $5M (ref cost BOE). The estimate is based on the combined knowledge of the sustainment Engineer, Equipment Specialist, and Program Manager. Reverse engineering would require producing glass and metal for the housing that passes all government bird strike requirements and full flight testing. The bird strike tests and flight testing would require approximately 2 years and the reverse engineering for the coatings, application process, and compatability with the rest of the optics module would require approximately 18 months to 2 years. It would also require a specialized climatically controlled facility being built to house the processes used in the repair or manufacture of this item because of the holographies of the diffractive optic design. It is anticipated that it would take approximately an additional year for the U.S.A.F.

to get Technical Requirements Board, The Airworthiness Board, and the Joint Multinational Configuration Control Board approvals to use a Combiner Assembly produced by a different manufacture. This would be a total of approximately 5 years before a Purchase Request could be executed resulting in unacceptable delays in fulfilling this requirement. (ref unacceptable delay BOE)

D. Qioptiq is the only known source with the highly specialized facilities and equipment required to apply the coatings for the holographic images to be displayed on the Combiner Assembly. Qioptiq is also the only known supplier of the bird strike approved glass necessary for production of these assemblies. This acquisition is for performance of a highly specialized manufacture of the bird strike approved glass, applying specialized coatings between and on the outer surgaces of the glass, and casting the special metal used in the frame. Accordingly, Qioptiq Ltd. is the only firm willing and capable of providing the supplies and services described in Section III above without the U.S. Air Force experiencing substantial duplication of cost that could not be expected to be recovered through competition and/or unacceptable delays in fullfilling its requirements.

VI. DESCRIPTION OR EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE:

A. Sources Sought Synopsis: A sources sought synopsis was issued 30 Jan 2014, # FA8251-14- R-Combiner and closed 3 March 2014. The Sources Sought was conducted in order to assist the Government in discovering potential sources for the production of the Combiner Assembly for the F-16 HUD. The Sources Sought provided a description of the anticipated effort. It explained the part to be manufactured as 1270-99-179-7577WF - there were no responses.

B. This requirement will be synopsized in FedBizOpps, as a notice of contract action IA W FAR

5.201 . If other sources express interest as a result of this synopsis or other action, they will be listed in the official contract file.

C. Other actions: None.

D. Qualifying Country Sources: None.

VII. DETERMINATION BY THE CONTRACTING OFFICER THAT THE

ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND REASONABLE:

The following steps will be taken to ensure that the anticipated cost of this acquisition will be fair and reasonable. The Contracting Officer will comply with the procedures and criteria contained in Federal Acquisition Regulation (FAR) under Part 30 - Cost Accounting Standards, Part 31 - Contract Cost Principles and Procedures, Subparts 15.4 - Contract Pricing; to include technical evaluations and audits, as appropriate. Additional steps to ensure price reasonableness will be under the guidance of the Contract Pricing Reference Guides, jointly developed by the Federal Acquisition Institute and the Air Force Institute of Technology. The Contracting Office will obtain certified cost and pricing data IAW FAR Subpart 15.403, when required. The Final Step is to include the Price Negotiation Memorandum (PNM). This detailed documentation and justification of price reasonableness will be disclosed in the official PNM, to be prepared upon completion of negotiations.

VIII. DESCRIPTION OF MARKET RESEARCH CONDUCTED AND THE RESULTS

OR A STATEMENT OF THE REASONS MARKET RESEARCH WAS NOT

CONDUCTED:

A. As described in Section VI above, market research, in accordance with FAR Part 10, was conducted by synopsis of the proposed acquisition, advising industry of the pending acquisition and soliciting inquiries from interested parties.

B. Other market research consisted ofreviewing electronic databases and manufacturers' websites; reviewing QIOPTIQ' s limited data rights for this item; and reviewing the procurement history of the F-16 Head Up Display, by the Intergrated Product Team (IPT).

C. The Engineer conducted searches ofThomasNet, and internet database· out of the Thomas Registry (http://www.thomasnet.com/) on 20 February 2011. The below searches were repeated on 2 October 2013 and 9 June 2014 with similar results. No new possible sources for this combiner were identified.

a. Searches ofThomasNet were conducted for NSN 1270-99-179-7577, Part number 4569-1000-00, and nomenclature "F-16 HUD Combiner Assembly". The Engineer reviewed the ThomasNet database and companies' websites to evaluate if alternative sources exist for this item. A search conducted on ThomasNet using the phrase "F-16 HUD Combiner Assembly" returned 53 results in the "Combiner Assembly" category. None of these results included links to official company websites. A review of the companies' identified no new sources or commercially available alternative parts.

f 02020-15-00222

b. A search conducted on ThomasNet using the item' s NSN returned no results in the product/service, company name, CAD drawings and industrial web directories.

c. A search was conducted on ThomasNet using the item' s part number. This search returned no product/service directory results in the "Combiner Assembly" category. A random sampling of these results (fulfillment services (assembly) (153 companies), fixtures aircraft assembly (22 companies) and display fixtures (37 companies) identified firms involved in manufacture and distribution of cabinets, automotive assembly, filters, aircraft wire harnesses, etc. Company name results consisted of 24 miscellaneous firms that are not related to F-16 HUD Combiner Assembly, including abrasives, labels, batteries, battery holders, fans, RFI shielding, & masking products, custom manufacturer of wire forms & assemblies, spring & spring assemblies, welded assemblies, electrical assemblies, tools & dies, & tube & tubing assemblies & metal & non-metallic stamping, manufacture of electronic components, circuits, printed & flexible, surface mount assembly services: flex & lead free; rigid PCB. Also wire & cable harnesses and custom metal fabrications, oil field equipment.

D. The IPT reviewed past procurements for this item. There are no buy contracts for this stock number.

E. No commercial items or services or non-developmental items (NDI) [see FAR Part 2] are available. The requirement(s) cannot be modified to permit the use of existing commercial items and/or services or ND Is.

F. No organic capability exists for this item. Additionally, when compared to the cost of repairing the spares, the F-16 Logistics Sustainment divisions found it is more economical to buy these assemblies than develop and/or purchase data and material to repair.

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

OPEN COMPETITION:

None

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

ACQUISITION:

See Section VI above.

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:

Requests for a ROM regarding the purchase of data necessary for manufacture and repair of the Combiner Assembly have repeatedly been denied. In addition, reverse engineering costs and estimated timelines are prohibitive. The U.S. Air Force will continue to do market research and seek necessary data/data rights, during the course of this contract, to foster competition in the future.

XII. CONTRACTING OFFICER'S CERTIFICATION:

The Contracting Officer's signature on the Coordination and Approval Document evidences that he/she has determined this document to be both accurate and complete to the best of his/her knowledge and belief (FAR 6.303-2(b)(l2)) .

XIII. TECHNICAL/REQUIREMENTS PERSONNEL'S CERTIFICATION:

As evidenced by their signatures on the Coordination and Approval Document, the technical and/or requirements personnel have certified that any supporting data contained herein, which is their responsibility, is both accurate and complete (FAR 6.303-2(c)).