J A_Final_-_Redacted_Version_Redacted.pdf

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JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

I. CONTRACTING ACTIVITY

This Justification and Approval (J&A) to request authority for Other Than Full and Open Competition supports requirements generated for AFLCMC/WLNCA. The contracting authority for this requirement is AFLCMC/WLNC. The purchase request number supporting this contracting action is FD2060-15-93501.

II. DESCRIPTION OF THE ACTION BEING PROCESSED

This is a continuation of the Performance Based Logistics (PBL) Contract implemented in 2006 with Lockheed Martin Aeronautics (LMA). The follow-on effort will utilize a combination of Cost Plus Incentive Fee (CPIF), and Firm Fixed Price (FFP) task orders to reduce Government risk and increase Contractor performance.

Background: The C-130J Hercules program began as a streamlined commercial development acquisition and is a continuation of the United States Air Force (USAF) combat aerial delivery force modernization plan which began in 1992 with the acquisition of the upgraded C-130H(3) aircraft. The C-130J is the first major combat weapons system platform commercially procured by the Department of Defense. Lockheed Martin Aeronautics (LMA) funded at private expense the entire development effort without support from the United States Government (USG), thus all design and engineering data for C-130J peculiar systems, parts and components is proprietary to LMA or its suppliers. A subsequent request to acquire this data to enable organic and sustainment competition activities of C-130J peculiar LRUs by AFLCMC/WLNC was declined by Lockheed Martin on 24 February 2014. USAF has contracted with LMA for product support and other support of the C-130J since initial acquisition of the aircraft.

The C-130J is supported through an evolving sustainment strategy, initially developed under the C-130J Long Term Sustainment (LTS) Business Case Analysis (BCA) (June 2004) and revalidated by the Sustainment of the C-130J Propulsion System Economic Analysis (March 2007) and the C-130J Product Support (PS) (Peculiar Non-Propulsion) Economic Analysis (January 2008). Originally the program utilized Five Year Option Contracts (FYOCs) as the method to procure both aircraft and Interim Contractor Support (ICS). Under this contract, C- 130J unique items were managed by LMA. The FYOC ICS expired on the 31st of January 2006, and a new product support strategy was developed to allow for continued coverage. Under the new strategy, two multiple (LMA 10 years, Rolls-Royce 9 years) contract vehicles were established. LMA was awarded PS under the LTS contract and Rolls-Royce was awarded PS under the MissionCare contract.

LMA provides worldwide sustainment activities for C-130J peculiar (non-propulsion) items, support equipment and consumables. This includes material management, program management, sustaining engineering, obsolescence abatement, and technical order updates.

LMA processes repair of repairables, replacement and replenishment of consumable materials, This document may contain competitive, sensitive, or other non-public information not intended for disclosure outside official government channels

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This document may contain competitive, sensitive, or other non-public information not intended for disclosure outside official government channels and engineering support. The current LMA LTS contract has been negotiated through 31 January 2016.

The C-130J is still in production at LMA. The unique characteristics of sustainment environment during production can be vastly different from a post-production one (e.g. Original Equipment Manufacturer (OEM) spares & repair support, diminishing vendors, etc.). This J&A will cover a period of five years. This will be a one (1) year base period with four (4) one (1) year options which will allow off ramps to organic support. This contract will provide support for the USAF, other USG Agency operators of the C-130J and international operators of the C-130J that have Foreign Military Sales (FMS) cases established with AFLCMC/WLN.

This J&A authorizes the use of other than full and open competition procedures for the acquisition of various supplies and services in the form of support and sustainment activities for the C-130J peculiar systems, subsystems, and components that are sole source to LMA. This J&A also authorizes the use of other than full and open competition procedures for the acquisition of C-130J common airframe sustainment engineering services and related supplies that are sole source to LMA. These supplies and services will be procured under a Cost Plus Incentive Fee and Firm Fixed Price contract.

Contractor support capabilities are required for aspects of the C-130J for which the USG and international customers do not own adequate data rights. Services include but are not limited to:

Sustainment Program Management, Material Management, Sustainment Engineering Services and technical support arenas, Sustaining Logistics, Depot Maintenance Activation Activities, Foreign Military Sales Support, Repair of Repairables, Depot level repair and aircraft heavy maintenance, Sustainment Modifications, and Technical Data activities. Supplies include but are not limited to initial and replenishment spares purchases.

This J&A contemplates one contract with multiple options and delivery orders for support and sustainment requirements over the five-year period. The contract period will be 1 Feb 2016 thru 31 Jan 2021, this is a one year basic contract with four option years. No task order Period of Performance will be more than 12 months . Orders placed by the last day of any option period can have a Period of Performance of up to 12 months. Our approach will be to establish a LTS contract that is performance based. Placing sole source requirements on one contract to the corporate entity with up to five year durations will provide the USG maximum support capability by minimizing the acquisition lead time and the risk of interruptions in support caused by a break in contractual coverage.

The acquisition strategy will use a FAR Part 15 contract with LMA. The requirements of this contract will be performance based and comply with AFI 63-101/20-101 (Integrated Life Cycle Management). Performance measurements will be tracked and WR-AFLCMC/WLN selected metrics will be utilized. The goal is to use fixed price task orders to the maximum extent practicable. Where applicable, the task orders will include incentives to improve performance, streamline management, and reduce total ownership cost. The following values were determined as a result of an integrated product team activity comprised of the WR-AFLCMC/WLN C-130J Hercules Division Chief, C-130 Product Support Manager and WR-AFLCMC/WLNK. The

This document may contain competitive, sensitive, or other non-public information not intended for disclosure outside official government channels

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This document may contain competitive, sensitive, or other non-public information not intended for disclosure outside official government channels values represent estimates only and are not meant to establish fiscal year ceilings.

Additionally, Public Private Partnerships with Direct Sales back to the Organic Facility are being considered by AFLCMC, with LMA for C-130J peculiar avionic/electro-mechanical items.

Depot activation efforts are managed by the Product Support Manager and Depot Activation Working Group. Activation will proceed in accordance with the DMAWG developed schedule and is accomplished as funding becomes available. Currently, there are no known Corporate Contracts that support C-130J peculiar items.

($ inTY Millions)

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Lockheed Martin Corporation 86 South Cobb Dr Marietta, GA 30063-0001

DUNS: 003268869

CAGE Code: 98897 Large Business

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

AGENCY’S NEEDS

Sustainment support for the C-130J consists of sustainment of peculiar systems and avionic/electro-mechanical Line Replaceable Units (managed by LMA). Items that are common to other C-130 platforms are stock listed and managed through the organic Air Force materiel management systems. Sustainment activities include: sustainment program management, material management, sustainment engineering services, sustaining logistics, depot maintenance activation activities, foreign military sales support, replenishment spares purchases, technical support arenas, depot level repair and aircraft heavy maintenance, avionics repair, software maintenance, modifications, C-130J peculiar spares, technical data activities and C-130J critical common spares support. C-130J critical common spares support will be for the C-130J fleet only when funded and contracted. Air Force Special Operations Command (AFSOC) has initiated actions to re-designate the Mission Design Series (MDS) from EC-130J to EC-130X. This MDS change provides AFSOC the ability to effectively manage this variant of the C-130J. It does not change any of the peculiar equipment installed on the EC-130J supported by this J&A.

Subject Matter Experts (SME) and technical services support to organic sustaining engineering activities will be provided for all versions of the C-130J to include AC-130J, C-130J, C-130J (short), EC-130J and X , HC-130J, MC-130J, WC-130J and any other “J” peculiar variant that is developed and fielded. In the event an existing C-130J variant is converted to another Mission Design Series (MDS) (e.g. EC-130J to MC-130X), the new MDS will be supported since the basic aircraft platform will remain the same as the rest of the C-130J fleet except for missionized equipment. This support will be limited to those activities that involve vendor proprietary data and/or require expertise that is so specialized as to make it unavailable from another source.

Some examples of SME activities are C-130 structural integrity program support, aerodynamic loads and fatigue analysis interpretation, and component design criteria. SME activities have been procured annually throughout the life cycle of the C-130 as part of the AFLCMC/WLN, C- 130 Hercules Division sustaining engineering support activities. This contract will not be utilized to replace or displace any sustaining activities that we are able to compete such as Civil SATCOM. If AMC decides to modify the remaining C-130J fleet, we will be able to compete and support organic sustainment of this modification due to having a complete TDP. Sole source determinations will be made for each C-130J sustaining engineering effort before being placed on contract. Technical services support activities will include, but are not limited to, sustaining engineering, diminishing manufacturing sources, resource analyses, material shortages resolution, parts obsolescence, engineering analyses, prototyping, engineering data, technical orders, and Reliability and Maintainability (R&M) improvements.

This document may contain competitive, sensitive, or other non-public information not intended for disclosure outside official government channels

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Only those supplies/services that are peculiar to the C-130J and sole source to LMA will be ordered under these resulting task orders. Each action will classify the supply/service in one of the following categories: Supplies, Repair Services, Engineering Services, Logistics Sustainment Modifications/Services, or Data. Any item or service that is determined to be of a competitive nature and can be competed shall not be covered under this J&A.

IV. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION

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

THE AUTHORITY CITED ABOVE (APPLICABILITY OF AUTHORITY)

The items covered under this J&A are highly specialized in that the C-130J is both a military and Federal Aviation Administration commercially certified aircraft. These certifications for the line replaceable units (LRU) are at the platform level restricting modifications or the substitutions of these components. The C-130J was designed and developed solely by LMA and its vendors exclusively at private expense. The USG originally purchased the aircraft as a Commercial Acquisition under FAR 12 and procured limited data rights. The OEMs refusal to sell the USG the rights to 241 peculiar spares, 622 peculiar consumables and 33 peculiar support equipment items to enable organic and sustainment competition activities required to compete this effort hampers full and open competition. The rationale and basis for going other than full and open competition are listed below:

a. Only One Responsible Source (FAR 6.302-1) – LMA is the only responsible source with the necessary design and manufacturing data capable of providing items and services that meet the necessary minimum requirements. Only this company (the OEM) can provide this corporate knowledge for their respective system. To award to any other source would cause substantial duplication of cost which could not be recovered through competition and result in unacceptable delays in fulfilling the war-fighter’s requirements.

The proprietary data necessary for this effort was developed at private expense by the prime contractor, LMA, and its major OEMs prior to the commercial purchase of the C-130J aircraft. LMA has continually declined to release or sell their data rights to the USG for the purpose of competitive procurement. A subsequent request to acquire this data by AFLCMC/WLNC was declined by Lockheed Martin on 24 February 2014.

LMA and its major OEMs are the only known sources that currently possess the necessary technical knowledge, manufacturing processes and tooling to support the C- 130J peculiar aircraft systems. The level of capability between LMA and their vendors

This document may contain competitive, sensitive, or other non-public information not intended for disclosure outside official government channels

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This document may contain competitive, sensitive, or other non-public information not intended for disclosure outside official government channels prevent unacceptable delays in fulfilling the war fighter’s requirements and getting assets repaired and back into the supply chain. Due to this lack of engineering data, without a follow-on contract, the C-130J will not be supportable after January 2016 when the current contract expires. Additionally, LMA maintains control of the model specification and provides updates of software and technical data necessary for aircraft support, maintenance, and upgrades.

Reverse Engineering – The C-130J is an advanced integrated avionics platform consisting of multiple complex components working independently and in conjunction with each other connected by source code programming; monitoring system status and faults, engine performance, and flight envelope parameters ensuring safe flight.

This added complexity of interdependency of system components would require that the entire avionics suite would need to be reverse engineered in conjunction with new software development effectively eliminating the Programs Office’s (PO) ability to disperse reverse engineering costs over subsequent years to reduce budgetary impact.

1 Systems Engineering Plan For the C-130J Hercules, 14 Nov 2006, 657 AESS EN 06-0005A 2 C-130J Command Aircraft Systems Training, 01 March 2007, Program 5433 Avionics Systems

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According to market research performed throughout the history of the C- 130J program, it would take a prospective competitor at least seven years and well over $1 billion to produce a weapon system similar to the C- 130J.3

The PO engineering supervisor forecasts it would take six years and $129 million dollars to accomplish reverse engineering activities. This estimate is based on legacy C-130 reverse engineering efforts and is contingent upon uninterrupted funding. If funding is interrupted then the schedule would be impacted accordingly resulting in unacceptable costs and delays to the sustainment program.

If reverse engineering was successful the USG could then compete the purchase and repair of the reverse engineered assets. Since these complex assets still require a base cost to build and repair, the projected savings from competition would be a percentage of the total cost. This percentage, estimated to be between 12 and 17 percent, would then require an additional 10 years for a return on investment. Thus, reverse engineering requires extensive, unavailable, investment costs while increasing risk to program schedule and performance.

LMA and its major OEMs are the only firms capable of providing the supplies and services described in Section III above without the US Air Force experiencing substaintial duplication of costs that could not be expected to be recovered through comptetition and unacceptable delays in fulfilling its mission requirements.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE

This requirement was synopsized on the Federal Business Opportunities web page as required by FAR 5.201 citing conditions which preclude Full and Open Competition. Sources having an interest in subcontracting may be identified through synopsis.

VII. DETERMINATION BY THE CONTRACTING OFFICER THAT THE

ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND REASONABLE

The CO will ensure that each item or service contemplated for acquisition is purchased at a fair and reasonable price to the USG. The negotiation process will include AFLCMC/WLNC requirements and technical personnel, Defense Contract Audit Agency (DCAA), Defense Contract Management Agency (DCMA), C-130 price analysts and contracting officer.

A thorough cost analysis will be performed for each negotiation requiring submission of cost or pricing data. The contractor will be required to furnish certified cost or pricing data.

AFLCMC/WLNC, DCAA and DCMA will conduct technical evaluations, price analysis and

3 C-130J Life Cycle Management Plan (LCMP), 2010

This document may contain competitive, sensitive, or other non-public information not intended for disclosure outside official government channels

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This document may contain competitive, sensitive, or other non-public information not intended for disclosure outside official government channels accomplish audits for actions that meet the requirement. DCAA and DCMA analysis will be combined with the AFLCMC/WLN personnel evaluations of the contractor’s cost or pricing data.

VIII. DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AND THE

RESULTS

Comprehensive market research was conducted in March of 2014, utilizing internet searches and vendor surveys, and concluded only the OEM could accomplish the requirements of this effort.

Avionic/Electro-Mechanical Peculiar AFLCMC/WLNCA conducted its market research using the following techniques:

• Sources Sought Synopsis

• Internet searches

• Researched current analysis activities being conducted in AFLCMC

• Evaluation of previous C-130J market research documents

A Sources Sought Synopsis (SSS) was conducted for 30 days by AFLCMC/WLNN, posted 5 May 2014, to FedBiz Ops and sought to identify any viable market segment sources for any current available alternate air vehicles and associated logistics support. The C-130J Program Branch did not receive any responses to the SSS posting.

A web search was conducted in May 2015 to determine the capabilities of companies currently operating in the commercial market place and the following three vendors were identified and analyzed to determine their ability to provide the current level of support for the C-130J Fleet.

After a thorough review it is apparent that LMA is the only contractor currently capable of supplying the required level of services. Neither The Boeing Company nor Northrop Grumman Corporation have access to the required data or sub vendors to effectively sustain the C-130J.

Only LMA has access to the required data and sub vendors and is capable of performing C-130J sustainment activities.

A. Lockheed Martin Aeronautics Company http://www.lockheedmartin.com http://defenseindustrydaily.com

1. Location address: Ft Worth, TX

2. Cage Code: 98897

3. Type of Business: Large

4. NAICS code: 541330

5. The C-130J Long Term Sustainment Program was recognized as a leading, visionary effort for its strategic Performance Based Logistics. Lockheed Martin is a major supplier of logistics systems and services to military and civil government customers. The corporation provides solutions for platform maintenance, modifications and repair, material readiness and distribution, and global supply chain command and control.

B. The Boeing Company

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This document may contain competitive, sensitive, or other non-public information not intended for disclosure outside official government channels http://www.boeing.com http://www.defenseindustrydaily.com

1. Location address: Chicago, IL

2. Cage Code: 81205

3. Type of Business: Large

4. NAICS code: 541712

5. Boeing does not have the capabilities to perform PBL Sustainment efforts for the C- 130J because it does not have, nor can it acquire, access to the proprietary data required to accomplish this effort.

C. Northrop Grumman Corporation http://www.northropgrumman.com http://www.zacks.com

1. Location address: Falls Church, VA

2. Cage Code: 97942

3. Type of Business: Large

4. NAICS code: 54171

5. Northrop Grumman does not have the capabilities to perform PBL Sustainment efforts for the C-130J because it does not have, nor can it acquire, access to the proprietary data required to accomplish this effort.

Market research revealed several companies were currently performing similar services for AFLCMC. They were as follows:

• Lockheed Martin Aeronautics (C-130J Airframe)

• Rolls-Royce (RR) Corp. (C-130J Propulsion)

• The Boeing Co. (C-17)

• Northrop Grumman System Corp. (Global Hawk)

Evaluation of the two previous C-130J Market Research documents (dated 1 Jun 2004 and 10 Jan 2008) provided additional insight to commercial trends, lack of substitute availability within the market place, and barriers to competition. Results from the previous Market Research efforts determined that the breadth of services required for total system sustainment support of the C- 130J is only available from Lockheed Martin Corporation.

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

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See Section VI.

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 Government is making diligent efforts to compete these areas as practicable. Additional breakout attempts are being pursued by the Government to divide out workload/services away from a sole source provider, where possible. Portions of Aircraft Structural Integrity Program (ASIP) and Corrosion Prevention and Control Program (CPCP) related tasks have already been contracted out to Research Centers and other Contractors which offer a broad range of analytical capabilities.

The AFLCMC/WLNEA ASIP Manager, with the concurrence of the WLSE EN, decided in Fiscal Year (FY) ‘08 to initiate an effort to evaluate the C-130 ASIP program and to recreate some of this proprietary data in order to lessen the Government's dependence on LM Aero, thus setting up a second source for support. One ongoing strategy is to contract out the second source requirement focusing on the less critical proprietary components and working towards the more critical ones. This strategy is seen as a long term effort due to sustaining engineering (EEIC 583) funding limitations. Sufficient FY10 engineering funding to begin the effort was obtained and a study was awarded to Mercer Engineering Research Center (MERC) on 10 August 2010 with a three-year Period of Performance (PoP). The PoP for this effort was extended to 9 August 2014 and the C-130J ASIP Assessment Report was delivered 14 February 2014. A new contract was initiated with MERC in April 2014 to continue this ongoing effort.

The contract was for one year with three year options which would extend the PoP through March 2018. The assessment report included recommendations to improve ASIP effectiveness, flexibility and responsiveness. The C-130J ASIP Manager and engineering leadership determined that the technical risk in the wholesale second sourcing of ASIP outside the OEM is very high. Any second source will be required to generate non-proprietary data which will be Government owned. Non-proprietary data will allow the Government to compete the specialized engineering services among various qualified sources.

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Programmed depot-level maintenance, time-phased maintenance tasks, surveillance testing, structural integrity testing, and repair of reparable LRU/Shop Replaceable Units (LRU/SRU) will be performed according to requirements established by the Source of Repair Assignment Process (SORAP) process.

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)(12)).

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)).