CFCI_67_Redacted__J&A_FA8504-17-R-0011.pdf

Justification and Approval (J&A) for Other Than Full and Open Competition

Updated: 15 Mar 16 Page 1 of 10

Choose the funding level for this J&A Document:

< $700K > $700K and < $13.5M > $13.5M and < $93M > $93M

Contracting Activity: AFLCMC/WLNKA

Purchase Request / Local ID Number: FD2060-17-93501

Program / Project (and PE, if applicable): C-130J R391 Propeller (Products-Initial Spares & Services-Depot Activation)

Program Type (PEO or Other Contracting): PEO

Authority (include full title): 10 U.S.C. 2304(c)(1), as implemented by FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements

Estimated Contract Cost (including options): $63,600,000.00 J&A Type: Class Individual

COORDINATION (AFFARS 5306.304(a) ) ** The text in the signature blocks below is editable, including the title.

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APPROVAL (A F F A R S 5 3 0 6 . 3 0 4 ( a) ) ** The text in the signature blocks below is editable, including the title.

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NOTE: If a Justification and Approval was approved for the preceding acquisition, a copy of the approved J&A for the predecessor action must be included in the staff package for approval of the instant J&A. This applies to J&A staff packages that are submitted for review and approval at a level above the contracting officer. The predecessor J&A will be used as a reference document by the approving official.

Date Project Lead / Program Mgr Charles (Chuck) Chalk

AFLCMC/WLNCA, DSN 472-8241

Signature CHALK.CHARLES.F.10636 Digitally signed by CHALK.CHARLES.F.1063698462

DN: c=US, o=U.S. Government, ou=DoD, ou=PKI, 98462 ou=USAF, cn=CHALK.CHARLES.F.1063698462 Date: 2016.12.13 10:31:55 -05'00'

Date Contracting Officer Brandi Moody

AFLCMC/WLNKA, DSN 497-4287

Signature MOODY.BRANDI.W.1369 Digitally signed by MOODY.BRANDI.W.1369786802

DN: c=US, o=U.S. Government, ou=DoD, ou=PKI, 786802 ou=USAF, cn=MOODY.BRANDI.W.1369786802 Date: 2016.12.13 10:46:44 -05'00'

Date Local Legal Reviewer Jennifer Leavengood

78 ABW/JA, DSN 472-0570

Signature Digitally signed by LEAVENGOOD.JENNIFER.B.1277380451

LEAVENGOOD.JENNIFER.B.1277380451 DN: c=US, o=U.S. Government, ou=DoD, ou=PKI, ou=USAF, cn=LEAVENGOOD.JENNIFER.B.1277380451 Date: 2016.12.13 11:55:26 -05'00'

Date

13 Dec 2016

Competition Advocate Kimberly McDonald

AFSC/PZC, DSN 472-0188

Signature MCDONALD.KIMBERLY.1 DN: c=US, o=U.S. Government, ou=DoD, ou=PKI, Digitally signed by MCDONALD.KIMBERLY.1229900508

229900508 ou=USAF, cn=MCDONALD.KIMBERLY.1229900508 Date: 2016.12.13 12:48:06 -05'00'

Date Program Executive Officer (PEO) Kevin W. Buckley, SES USAF

AFLCMC/WL, 312-785-9300

Signature

BUCKLEY.KEVIN.W.

1033262708

Digitally signed by BUCKLEY.KEVIN.W.1033262708 DN: c=US, o=U.S. Government, ou=DoD, ou=PKI, ou=USAF, cn=BUCKLEY.KEVIN.W.1033262708 Date: 2016.12.22 09:19:48 -05'00'

Updated: 15 Mar 16 Page 2 of 10

Note 1: See guidance at the end of this document for completing the following sections.

Note 2: Each field will expand automatically if additional space is needed.

I. Contracting Activity.

This Class Justification and Approval (J&A) for Other Than Full and Open Competition supports requirements generated by Air Force Life Cycle Management Center (AFLCMC) C-130 Hercules Division (WLN), Propulsion Branch for Products-Spares (WLNCB) and Depot Activation Team for Services-Depot Activation (WLNC). The Contracting activity is AFLCMC/WLNKA. The Purchase Request number for this contracting action is FD2060-17-93501.

II. Nature and/or description of the action being processed.

This Class J&A requests the authority to use Other Than Full and Open Competition (OTF&OC) procedures, prescribed by Federal Acquisition Regulation (FAR) 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements. This action will result in the award of a new contract(s) for various support and sustainment activities for the United States Air Force (USAF) to support the R391 Propeller, subsystems, and components. The contract(s) will contain Firm Fixed Price (FFP) Contract Line Item Numbers (CLINs). This sole source requirement will be purchased from the following company:

GE Aviation Systems LLC DBA: Dowty Propellers 114 Powers Court Sterling, Virginia 20166-9321 Large Business Cage Code: 93366

III. Description of supplies/services required to meet agency needs.

This Class J&A contemplates two contracts for support and sustainment requirements for the C130J R391 Propeller. The contracts are for Product/Spare and Services for Depot Activation. The scope of these contracts is described below:

A. PRODUCT DESCRIPTION (R391 PROPELLER SPARES AND PROPELLER

SPARE PARTS)

The contract will provide initial R391 propeller spares in support of C-130J aircraft buys. Previously, initial spare propellers were purchased Firm Fixed Price (FFP) on a delivery order under Defense Logistics Agency (DLA) Basic Ordering Agreement (BOA), SPE4A1-14-G009.

This product/spares contract contemplates a FAR Part 12, Indefinite Delivery/Indefinite Quantity (ID/ IQ), FFP, 5 year contract with a one-year basic and four one-year ordering periods.

The total estimate for purchasing initial propeller spares is $44.8M. Of this amount $41.8M will support peacetime operating spares (POS) and $3.0M supporting Readiness Spares Packages (RSP).

This contract will provide support to the C-130J aircraft across eight Major Commands (MAJCOMs) operating around the world. See J&A Figure 1 (FY16 NSNs) and Figure 2 (FY17 NSNs).

AFLCMC/WLNKA made a commerciality determination on 13 June 2016. All items that support

Updated: 15 Mar 16 Page 3 of 10

R391 Propellers, subsystems, and components were determined commercial, therefore acquisitions will follow procedures of FAR 12.

B. SERVICE DESCRIPTION (DEPOT REPAIR/OVERHAUL CAPABILITY)

The C-130J aircraft, originally developed as a commercial venture by LMA-M utilizes GE Dowty's commercial R391 Propeller as part of its propulsion system. The R391 Propeller is manufactured and currently maintained by GE Dowty.

This service contract will provide the support to establish a Public Private Partnership (PPP) with GE Dowty. The proposed PPP will support AFLCMC/WLN in executing a high quality, cost effective, and timely organic R391 Propeller repair/overhaul facility at WR-ALC.

Previously, R391 Propeller repair requirements were performed by GE Dowty as a sub-contractor to Rolls-Royce under contract number FA8504-07-D-0001. GE Dowty performed all depot level maintenance while Air Force mechanics performed all O-level maintenance. In addition, GE Dowty completed 100% of all maintenance on the associated propeller control units, like; pitch control unit;

over speed governor; and auxiliary pumps. Propeller maintenance, both scheduled and unscheduled, was completed at the GE Dowty facility in Sterling, VA.

GE Dowty assessed the establishment of an organic R391 Propeller depot repair/overhaul facility using a PPP under contract FA8504-13-M-0003 and delivered the Depot Partnering Propeller Repair Assessment Report (DPPRAR) to the USAF. The DPPRAR provided a detailed gap analysis of necessary plans, alternative facility plans and layouts, test equipment and tool lists, depot initial provisioning spares, consumable parts and materials, chemicals and hazardous materials, repair and overhaul tasks and processes, USAF and GE Dowty personnel requirements, and training requirements.

R391 Propeller organic depot repair/overhaul capability is outlined in the Source of Repair Assignment

(SORA) 03-02C4 (WR-ALC).

Depot activation efforts will utilize United States Government (USG) and Contractor personnel in USG-owned facilities, performing the work on USG owned R391 propeller equipment, and establish a key CORE repair capability for the USG. Within the PPP, GE Dowty, will act as the Product Support Integrator (PSI) for R391 components, parts, support equipment and test equipment. The PPP will create a long-term business arrangement integrating GE Dowty and USG personnel to provide repair/ overhaul capability for R391 Propellers.

This PPP service contract is estimated at $18.8M. This service requirement will utilize FAR 12 procedures and result in a definitive “C” FFP type contract with Period of Performance (PoP) of 36 months.

A screening analysis has been performed on each National Stock Number (NSN). The screening assigned Acquisition Method Code (AMC)/Acquisition Method Suffix Code (AMSC) of 3/Z to each NSN. An assignment of AMC “3” means acquire for second or subsequent time directly from the actual manufacturer. AMSC “Z” means the part(s) was determined to be commercial/ nondevelopmental/off-the-shelf item. The item has a commercial item description, commercial vendor catalog or price list or commercial manual assigned and technical manual number(s) apply.

The dollar values used within this document were developed by an integrated product team (IPT)

Updated: 15 Mar 16 Page 4 of 10 comprised of the C-130J System Program Managers (PMs) and Financial Managers (FMs). The proposed acquisitions are in Then Year (TY) dollars based on information obtained from historical contract data, individual estimates, Program Objective Memorandum (POM), and 2016 Program Office Estimate (POE).

The Products/Spares Contract and Services/PPP Depot Activation contract total an estimated $63.6M.

Both requirements will be funded with Central Procurement (CP) 3010 appropriations. The estimated values for the basic and four ordering periods is as follows:

Dowty Propellers FY16/FY17 FY18 FY19 FY20 FY21 FY16-FY21

TOTAL

3010-POS 29.4 3.4 2.3 2.6 4.2 41.8

3010-RSP 0.9 0.5 0.5 0.5 0.5 3.0

Products - Initial Spares 30.3 3.9 2.8 3.1 4.7 44.8

Services-DepotActivation 18.8 0.0 0.0 0.0 0.0 18.8

Total 49.1 3.9 2.8 3.1 4.7 63.6

IV. Statutory authority permitting Other than Full and Open Competition.

10 U.S.C. 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).

A. BACKGROUND

At the request of Headquarters (HQ), Air Mobility Command (AMC)/A4, AFLCMC/WLN conducted a Business Case Analysis (BCA) in support of a Long Term Sustainment (LTS) decision for the C-130J weapon system in 2004. The BCA analyzed various options available for sustainment of the C-130J to determine which option would provide the “best value” for the Air Force. The analysis considered five potential options for comparison. Of the five options considered in the BCA, the recommendation was to establish propulsion partnerships which would leverage the expertise of both Lockheed Martin Aeronautics Corporation - Marietta (LMA- M) and Rolls-Royce in their respective areas, providing enhanced USG support. HQ AMC/CV approved this recommendation on 19 Jul 2004. These partnerships would also leverage the current AFLCMC/WLN infrastructure in the areas of supply chain management, program management, and engineering. This option would provide the user with a similar support structure as the C-130E and C-130H fleets, while complying with Core and 50/50 Public Law mandates. A Public-Private Partnership (PPP) with WR-ALC and GE Dowty is in work and in the final stages to establish depot repair and overhaul capability of the R391 Propeller at WR-ALC.

Contractor support capabilities are required for aspects of the C-130J's sustainment for which the USG and international customers do not own adequate data rights. The PPPs executed via the planned product and services contracts are intended to create a long-term stable relationship with

Updated: 15 Mar 16 Page 5 of 10

GE Dowty to promote private investment, requirements (business, fiscal, and operations) stability, and collaboration on the weapon system support. The recently approved 2016 BCA supports this decision. The 2011 SORA revalidation and current SORA supports this decision.

GE Dowty developed and owns all R391 Propeller technical data and is the only responsible source for the acquisition and repair of the R391 Propeller, Line Replaceable Units (LRUs), and spare parts.

B. PERFORMANCE REQUIREMENTS:

The R391 turboprop provides the ability to land and take-off at steep angles from rough fields in short distances. This propeller is a proven design with over 19,000 composite blades in-service, over 30 years composite blade experience, 270 million flying hours, 100% safety record, no blade detachments, lightweight composite design, low maintenance cost and has an advanced electronic control system.

This propeller is highly specialized for the characteristics and performance requirements listed below:

The 6 bladed R-391 propeller for the Lockheed Martin Hercules C-130J aircraft incorporates advanced technologies developed by Dowty Propellers over the past 60 years.

The R-391 propeller consists of high integrity all-composite blades with unique benefits such as low system weight, service proven rugged construction, and erosion protection system.

The R-391 propeller employs a fail-safe fully integrated electronic control system with unique benefits such as precise speed selection and synchrophasing accuracy, counter weighted blades to assure safe coarse-seeking operation and has a single lever cockpit control.

C. DATA RIGHTS

All design and engineering data for the R391 Propeller systems, parts, and components were exclusively developed at private expense and not developed under a USG contract and are proprietary to GE Dowty. The USG does not possess adequate data to support the R391 Propeller through competitive means and GE Dowty has declined to release the data rights to the USG for the purpose of competitive procurement.

The R391 propeller was Federal Aviation Administration (FAA) certified upon initial acquisition.

In accordance with FAA Order 8110.54a and FAA Policy Statement PS-AIR-21.50.01, the contractor is required to deliver Instructions for Continued Airworthiness (ICA) data to the USG.

The ICA data was never delivered to the USG. Research found that the C-130J design was based on the LMA-M 382J which has an FAA type certificate but not an FAA airworthiness certificate.

Since the FAA did not issue an airworthiness certificate for the C-130J, the Original Equipment Manufacturer (OEM) is not required to provide the USG copies of the ICA data. The FAA supported this position in a 5 Nov 2014 letter to the Naval Air Systems Command by stating that 14 C.F.R. § 21.50(b) does not apply at all to the C-130J aircraft, because it is not an aircraft that has an FAA-issued type certificate. Secondly, under FAA regulations, a product owner may distribute

Updated: 15 Mar 16 Page 6 of 10 whatever ICA the owner possesses to third party maintenance providers.

GE Dowty was contacted with requests to sell or release the technical and maintenance data on 4 Apr 14, and Oct 15. Each time they have responded stating that they strongly objected to the release of repair data. The USAF has no authorization to distribute any data related to the R391 propeller they may have in their possession without written authorization from GE Dowty. More recently, AFLCMC/WLN sent another request for release of data rights and received a negative response on 24 Oct 16. USG has access (license) to data for use only on designated USAF contracts in conjunction with the PPP and Depot Activation Implementation Agreement (IA), however USG cannot release this data to third parties. GE Dowty maintains protected right to buy back/destroy USG license upon expiration of the IA. The lack of data or releaseablity of the data prevents competitive acquisition.

D. REVERSE ENGINEERING

The expertise required to complete a redesign effort is beyond the capability of any known source.

A reverse engineering effort would require first article testing and qualification.

Research was also conducted to determine the feasibility of qualifying a new source for some or all of the NSNs. The design complexity of the components, lack of engineering data, and expertise required to complete the qualification process limits the feasibility of a reverse engineering effort.

The OEM's refusal to sell data and the inability within the Department of Defense (DoD) and commercial market place to redesign these items preclude our ability to qualify a new source(s).

Per previous C-130J Propulsion J&A, FD2060-15-93502 dated 30 Jul 2015, the Program Office's Propulsion Engineer forecasts it would take five years and $150 million dollars to accomplish reverse engineering activities. This estimate is based on legacy C-130 reverse engineering efforts and is contingent upon uninterrupted funding and the delivery of critical operational assets needed for development. If funding is interrupted, the schedule would be impacted accordingly, resulting in unacceptable costs and delays to the sustainment program.

Additionally, the Propulsion Engineer estimated five years to engineer the correct interfaces to ensure aircraft and propulsion system interoperability. In order for this to be successful, the USG will require Lockheed-Martin, the aircraft OEM's, cooperation with the Interface Control Drawings to test (to include flight testing) and integrate the newly designed propulsion system with the avionics platform consisting of multiple complex components that work 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. Source qualifications would also need to be accomplished in order to complete the effort.

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 12 percent saved through competition and pass-through cost avoidance, would then require an additional 13 years for a return on investment. Thus, reverse engineering requires extensive and currently unavailable investment costs, while increasing risk to program schedule and performance.

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Accordingly, GE Dowty is the only firm capable of providing the supplies and services described in Section III above without the U.S. Air Force experiencing substantial duplication of cost and/or unacceptable delays that would not be expected to be recovered through competition.

VI. Description of efforts made to ensure that offers are solicited from as many potential sources as practicable.

This requirement was synopsized as a Request for Information (RFI) on the Federal Business Opportunities (FedBizOpps at www.FBO.gov) web page citing conditions which preclude Full and Open competition on 12 May 2016, solicitation number: FA8504R391PROPELLERS with a response date of 13 June 2016.

Only one vendor, First Aviation, indicated an interest in the requirement by checking the interested vendor list on the FBO notification. However, a response package was not submitted for evaluation by this interested vendor.

This requirement will be synopsized on FedBizOpps as required by FAR 5.201. Sources expressing an interest in subcontracting opportunities will be identified to the prime contractor.

VII. Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

This “Class” J&A contemplates two contracts supporting the C-130J R391 propeller. The first proposed activity is Products - Initial Spares, the procurement of initial spare propellers associated with new aircraft buys through FY21. Follow-on contracts will support new aircraft buys after FY22. The second proposed contract is for the Service - Depot Activation, stand up of a repair and overhaul capability at WR-ALC.

The Service - Depot Activation repair and overhaul capability is a one-time requirement. Follow-on contracts will be initiated to support sustainment repairs.

The overall cost of each item or service contemplated for acquisition will be fair and reasonable to the Government. Price analysis will be accomplished by evaluation of pricing data using FAR Part 12 commercial pricing procedures. Contract price reasonableness will be determined using contractor pricing data. A Defense Contract Management Agency (DCMA) Integrated Cost Analysis Team (ICAT) may be used for one or more of the acquisitions. The negotiation process may include AFLCMC/WLNC requirements and technical personnel, DCMA, price analysts and the Contracting Officer.

VIII. Description of the market research conducted and the results, or a statement of the reasons market research was not conducted.

Market Research was conducted and completed on 13 June 2016 in accordance with FAR Part 10.001 and

10.002 utilizing the following searches for logistics capability, technical and engineering experiences as well as skills.

- Internet searches: used Bing and Google with keywords, “R391 Propeller Repair.” Known vendors who support similar products were also searched. Research revealed several companies were currently performing similar services for AFLCMC, however these companies were deemed not capable due to their inability to access C-130J required data.

- Evaluated previous C-130J market research documents: evaluated progress and changes in methodology.

- Inter-agency networking with Navy and United States Cost Guard C-130J users accomplishing similar follow-on contracts.

Updated: 15 Mar 16 Page 8 of 10

In addition to above, reviewed previous web surveys to search for alternate propeller providers in Jan 2014 and in Oct 2014. Eight vendors were identified and assessed. None were found to have suitable alternative propellers to replace the R391 Propeller or have access to the required data to effectively sustain the C-130J.

As stated above, a RFI was synopsized on FedBizOpps on 12 May 2016, Solicitation number:

FA8504R391PROPELLERS. Responses to the RFI were due on 13 June 2016. The Government received one response from an interested vendor, First Aviation, however a package was not submitted for evaluation by this interested vendor.

Acquisition and services to procure and sustain the R391 propulsion system have been determined commercially available from GE Dowty. Therefore, both acquisitions will be conducted under FAR Part 12 procedures.

The market research concluded the C-130J R391 Propeller is currently being maintained by GE Dowty.

There is no other source with access to the required technical data to fulfill this requirement.

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.

As stated in VII above, this “Class” J&A contemplates two contracts supporting the C-130J R391 propeller.

The first proposed activity is Products - Initial Spares, the procurement of initial spare propellers associated with new aircraft buys through FY21. Follow-on contracts will support new aircraft buys after FY22. The second proposed contract is for the Service - Depot Activation, stand up of a repair and overhaul capability at WR-ALC. The Service - Depot Activation repair and overhaul capability is a one-time requirement. Follow-on contracts will be initiated to support sustainment repairs.

Research determined there are two major barriers for open competition of this effort. The first is a lack of procurement and depot maintenance/repair data. The second are the terms and conditions under the production acquisition strategy that allowed the vendor to retain strict control over data rights

Procurement data and depot maintenance/repair data was not procured with aircraft acquisition. All design and engineering data for the C-130J R391 Propeller, parts, and components are proprietary to GE Dowty.

The USG does not possess adequate data to support the R391 Propeller through competitive means and GE Dowty has declined to release the data rights to the USG for the purpose of competitive procurement. The end strength of the C-130J will be 263 aircraft by FY24.

Updated: 15 Mar 16 Page 9 of 10

As mentioned in paragraph V.C. above GE Dowty was contacted with requests for sell or release the technical and maintenance data on 4 Apr 14, and Oct 15. Each time they have responded stating that they strongly objected to the release of repair data. The USAF has no authorization to distribute any data related to the R391 propeller they may have in their possession without written authorization from GE Dowty.

More recently, AFLCMC/WLN sent another request for release of data rights and received a negative response on 24 Oct 16. In accordance with the GE Dowty DPPRAP, 14 Oct 14, page 46-47 the USG has access (license) to data for use only on designated USAF contracts in conjunction with the PPP and Depot Activation Implementation Agreement (IA), however USG cannot release this data to third parties. GE Dowty maintains protected right to buy back/destroy USG license upon expiration of the IA. The lack of data or releaseablity of the data prevents competitive acquisition.

Engineering has been tasked to begin data request after repairs are actually being performed at Robins.

Once repairs have begun the engineers will know exactly what data is required and will be able to submit a defined data request to GE Dowty with hopes that GE Dowty will release data repair rights. Repairs are set to begin at Robins in 2020.

The life of the C-130J program is expected to operate out to year 2045. The following are steps the USG will take to overcome barriers to competition for future acquisitions:

A. The Government will request prior to each ordering period the sell or release of technical data/ drawing rights from GE Dowty. In the event GE Dowty agrees to the sale of the technical data/ drawings, and the Government determines the procurement of such data will result in a positive Return On Investment (ROI), funding will be requested to procure the data. The multi-functional team will initiate a break-even analysis to determine if procuring repair data maximizes the lifecycle sustainment and/or supports a reverse engineering initiatives.

B. Once the depot is repairing the propellers, the USG will evaluate the feasibility of pursuing third party engineering services for enhancement to data currently owned by them to render it suitable for a competitive repair effort, or organic repairs.

C. AFLCMC/WLNC under this “Class” J&A and in conjunction with a PPP will work with the OEM to stand-up a R391 Propeller repair/overhaul capability by FY22. This may provide opportunities to explore reverse engineering strategies.

XII. Certification by the Contracting Officer.

As evidenced by I have determined this document to be both accurate and complete to the best of my knowledge and belief.

XIII. Certification by the technical/requirements personnel.

As evidenced by my (our) signature(s) above, I (we) certify that any supporting data contained herein, which is my (our) responsibility, is both accurate and complete.

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