Sanitized_J A.pdf

DEPARTMENT OF THE AIR FORCE

JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

AFLCMC/WNZCB

INDIVIDUAL

PR Number: FD2060-14-00319

I. CONTRACTING ACTIVITY

This Justification and Approval to request authority for Other Than Full and Open Competition supports requirements generated for the Air Force Life Cycle Management Center (AFLCMC), 638 Supply Chain Management Group (SCMG). The contracting authority for this requirement is AFLCMC/WNZKBBA. The purchase request number supporting this contracting action is FD2060-14-00319.

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

Due to the circumstances described herein, the activity requests authority to acquire the repair listed in this document using Other Than Full and Open Competition as prescribed by FAR 6.302-1, Limited Sources and No Other Supplies or Services Will Satisfy Agency Requirements. This action will result in the award of a new contract, which will be a firm-fixed price requirements contract with a one basic year plus 4 one year options. This sole source requirement will be purchased from the following company:

Olympus NDT Inc.

48 Woerd Ave Ste 105 Waltham MA 02453-3824

CAGE: 1KY21

Large Business

III. DESCRIPTION OF THE SUPPLIES/SERVICES REQUIRED TO MEET THE AGENCY’S NEEDS

Under the contemplated repair contract, Olympus NDT Inc. will provide the following services which are required to support the repair of Borescopes and Fiberscopes for multiple aircraft in support of the Air Force requirements for optical/visual inspection of engines. These scopes allow visual access to engine areas that are difficult or impossible to examine from the exterior. The scopes are used to detect subtle irregularities in castings, ensure the structural integrity of the aircraft engine, and to diagnose the cause of an indeterminable noise or other engine malfunction that can compromise the safety of the aircraft during operation. The estimated unit repair costs used are based on ROM from Olympus NDT Inc. The estimated price for the basic $1,087,828.00 and all 4 options are $5,778,820.00. Escalation factors were discussed with IPT during planning PR meeting and a 3% escalation for each option year is appropriate.

The estimated value of this procurement, including all quantities and options is $6,866,648.00.

Requirements listed in this document will be funded by the Centralized Assets Management (CAM) office appropriation. This contract requires delivery to begin in 30 days ARO at quantities indicated for Basic and Option Periods.

BASIC

NSN BEQ Est. Unit Price Total

6650‐01‐547‐2218 9 $14,177.00 $127,593.00

6650‐01‐547‐3104 18 $10,926.00 $196,668.00

6650‐01‐547‐2213 8 $12,970.00 $103,760.00

6650‐01‐547‐4342 8 10,624.00 $84,992.00

6650‐01‐461‐0976 5 $7,176.00 $35,880.00

6650‐01‐248‐9081 9 $7,396.00 $66,564.00

6650‐01‐502‐8623 6 $13,976.00 $83,856.00

6650‐01‐455‐4327 5 $7,176.00 $35,880.00

6650‐01‐461‐1559 5 $8,219.00 $41,095.00

6650‐01‐406‐3086 5 $8,669.00 $43,345.00

6650‐01‐324‐3329 13 $7,408.00 $96,304.00

6650‐01‐522‐2391 8 $14,322.00 $114,576.00

6650‐01‐502‐4583 5 $11,463.00 $57,315.00

Est Total: $1,087,828.00

OPTION 1

NSN BEQ Est. Unit Price Total

6650‐01‐547‐2218 9 $14,602.00 $131,418.00

6650‐01‐547‐3104 18 $11,253.00 $202,554.00

6650‐01‐547‐2213 8 $13,359.00 $106,872.00

6650‐01‐547‐4342 8 $10,942.00 $87,536.00

6650‐01‐461‐0976 5 $7,391.00 $36,955.00

6650‐01‐248‐9081 9 $7,617.00 $68,553.00

6650‐01‐502‐8623 6 $14,395.00 $86,370.00

6650‐01‐455‐4327 5 $7,391.00 $36,955.00

6650‐01‐461‐1559 5 $8,465.00 $42,325.00

6650‐01‐406‐3086 5 $8,929.00 $44,645.00

6650‐01‐324‐3329 13 $7,630.00 $99,190.00

6650‐01‐522‐2391 10 $14,751.00 $147,510.00

6650‐01‐502‐4583 5 $11,806.00 $59,030.00

6650‐01‐599‐7717 5 $13,905.00 $69,525.00

6650‐01‐599‐7714 5 $3,038.00 $15,190.00

Est Total: $1,234,628.00

OPTION 2

NSN BEQ Est. Unit Price Total

6650‐01‐547‐2218 9 $15,040.00 $135,360.00

6650‐01‐547‐3104 18 $11,590.00 $208,620.00

6650‐01‐547‐2213 8 $13,759.00 $110,072.00

6650‐01‐547‐4342 8 $11,270.00 $90,160.00

6650‐01‐461‐0976 5 $7,612.00 $38,060.00

6650‐01‐248‐9081 9 $7,845.00 $70,605.00

6650‐01‐502‐8623 9 $14,826.00 $133,434.00

6650‐01‐455‐4327 5 $7,612.00 $38,060.00

6650‐01‐461‐1559 5 $8,718.00 $43,590.00

6650‐01‐406‐3086 5 $9,196.00 $45,980.00

6650‐01‐324‐3329 13 $7,858.00 $102,154.00

6650‐01‐522‐2391 10 $15,193.00 $151,930.00

6650‐01‐502‐4583 5 $12,160.00 $60,800.00

6650‐01‐599‐7717 5 $14,322.00 $71,610.00

6650‐01‐599‐7714 5 $3,129.00 $15,645.00

Est Total: $1,316,080.00

OPTION 3

NSN BEQ Est. Unit Price Total

6650‐01‐547‐2218 9 $15,491.00 $139,419.00

6650‐01‐547‐3104 18 $11,937.00 $214,866.00

6650‐01‐547‐2213 8 $14,171.00 $113,368.00

6650‐01‐547‐4342 11 $11,608.00 $127,688.00

6650‐01‐461‐0976 5 $7,840.00 $39,200.00

6650‐01‐248‐9081 14 $8,080.00 $113,120.00

6650‐01‐502‐8623 9 $15,270.00 $137,430.00

6650‐01‐455‐4327 5 $7,840.00 $39,200.00

6650‐01‐461‐1559 5 $8,979.00 $44,895.00

6650‐01‐406‐3086 5 $9,471.00 $47,355.00

6650‐01‐324‐3329 13 $8,093.00 $105,209.00

6650‐01‐522‐2391 10 $15,648.00 $156,480.00

6650‐01‐502‐4583 5 $12,524.00 $62,620.00

6650‐01‐599‐7717 8 $14,751.00 $118,008.00

6650‐01‐599‐7714 8 $3,222.00 $25,776.00

Est Total: $1,484,634.00

OPTION 4

NSN BEQ Est. Unit Price Total

6650‐01‐547‐2218 12 $15,491.00 $185,892.00

6650‐01‐547‐3104 23 $12,295.00 $282,785.00

6650‐01‐547‐2213 11 $14,596.00 $160,556.00

6650‐01‐547‐4342 12 $11,956.00 $143,472.00

6650‐01‐461‐0976 5 $8,075.00 $40,375.00

6650‐01‐248‐9081 14 $8,322.00 $116,508.00

6650‐01‐502‐8623 9 $15,728.00 $141,552.00

6650‐01‐455‐4327 5 $8,075.00 $40,375.00

6650‐01‐461‐1559 5 $9,548.00 $47,740.00

6650‐01‐406‐3086 5 $9,755.00 $48,775.00

6650‐01‐324‐3329 17 $8,335.00 $141,695.00

6650‐01‐522‐2391 10 $16,117.00 $161,170.00

6650‐01‐502‐4583 5 $12,899.00 $64,495.00

6650‐01‐599‐7717 8 $15,193.00 $121,544.00

6650‐01‐599‐7714 8 $3,318.00 $26,544.00

Est Total: $1,723,478.00

TOTAL POTENTIAL CONTRACT VALUE $6,846,648.00

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

This agency’s needs can only be satisfied by the unique supplies or services available from only Olympus NDT Inc., which possess unique capabilities demonstrated as follows. The Borescopes and Fiberscopes requiring repair are commercial items that Olympus NDT Inc. designed and built as the original equipment manufacturer (OEM). Olympus NDT Inc. are the only known approved repair sources at this time for these Borescopes and Fiberscopes. Furthermore, Olympus NDT Inc. possesses the test equipment and data to test and repair these components. Sufficient justification does not exist to obtain funding for reverse engineering, which is necessary for qualifying additional sources. Because the Government does not own data rights which impedes competition from other sources and therefore directs the solicitation be issued to the approved source only for repair for these items. Accordingly, Olympus NDT, Inc. 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 due to reverse engineering efforts that could not be expected to the be recovered through competition and unacceptable delays in fulfilling this requirements. An analysis of the prohibitive costs associated with reverse engineering is presented in Section IX.

The RMC/RMSC code for the listed items is R3Z, which means repair, for the second or subsequent time, directly from the actual manufacturer. This repair is a commercial/non-developmental/off-the-shelf item unique to Olympus NDT Inc. owners of data packages required for support, therefore only source available for repair. Commercial item descriptions, commercial vendor catalog or price lists or commercial manuals assigned a technical manual number apply. Approved source(s) retain repair knowledge, or technical data that are not economically available to the Government. Under the contemplated repair contract, Olympus NDT Inc. will provide repair services in support of multiple aircraft engines.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE SOLICITED FROM AS

MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE

This requirement will be synopsized on the Federal Business Opportunities (FedBizOpps) web page as required by FAR 5.201. citing conditions which preclude full and open competition. It is anticipated that 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 overall cost of this acquisition will be considered fair and reasonable based upon FAR 12 negotiation procedures using price and cost analysis. Methodologies to assure this will be commercial pricing techniques utilizing publicly offered catalogs, comparison to historical contractor sales and/or analysis of limited cost and pricing information which could be made available by the contractor. In the event that limited cost and pricing information is made available, the Government’s negotiation objective will be developed using local technical analysis applied to direct rate factors recommended by the DCAA and/or

DCMA.

VIII. DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AND THE RESULTS, OR A

STATEMENT OF THE REASONS MARKET RESEARCH WAS NOT CONDUCTED

A detailed market research was conducted by the System Engineer in accordance with FAR 10.001 and

10.002. The engineer conducted research using background information from Government databases (D200, SMART PIDS, PRPS), and vendor information from Central Contractor Registration (CCR) database. Out of six vendors identified, Olympus NDT Inc. is currently the only approved source that can satisfy this requirement. Without data, it is not possible for the Government to develop repair specifications for a competitive solicitation. Therefore, these items can only be repaired by Olympus NDT Inc. as the original manufacturer owns proprietary rights to the manufacturing and repair data packages.

No other contractual vehicles are in place to repair these items and it is not economically feasible to reverse engineer or qualify another source at this time.

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

COMPETITION

Olympus NDT Inc.was approached by the Government program office personnel during the Market Research process regarding the sale of borescopes data rights. The contractor refused to sell the rights at any price. This means that the technical data package, specification, and engineering description suitable for Full and Open Competition cannot be developed without reverse engineering which is estimated to take approximately eighteen to twenty-four months. The Government has determined that reverse engineering is cost prohibitive approximately $22.4M. Modern borescopes used by the US Air Force are complex pieces of inspection equipment combining the latest technologies in optics, robotics, software and materials. Reverse engineering these COTS items is prohibitively expensive and time consuming as shown in the following analysis. The borescope is described by several major subsystems:

optical tips, fiber-optics, mechanical actuation and controller design, cable design, housing and display design, power systems, packaging, and software/image processing. The following tables show the estimated number of man hours and cost associated with reverse engineering each of the aforementioned subsystems. Estimates are based on engineering experience and average labor rates from the Bureau of Labor Statistics.

System Engineering Rate

Man Hours

Total

Optical Tips $38.74 1920 $74,380.80

Fiber‐Optics $38.74 960 $37,190.40

Actuation and Controller $38.74 960 $37,190.40

Cables $38.74 160 $6,198.40

Housing and Display $38.74 480 $18,595.20

Power System $44.14 320 $14,124.80

Packaging $38.74 160 $6,198.40

Software/Image Processing

$49.99 1920 $95,980.80

Totals $289,859.20

The 15 different types of borescopes require additional reverse engineering, and therefore the total cost of developing the technical specifications needed to conduct a repair for the various types of borescopes is approximately $4.4 million. However in order to repair the borescopes, special tooling, processes, facilities, machining capabilities, high precision optical work, circuitry work, software fixes/debugging, etc.

would also need to be developed, likely at least doubling the cost to $8.8 million. Furthermore, the Air Force needs to fund the training of personnel and develop the testing procedures and equipment for ensuring the borescopes are repaired successfully in addition to funding the actual repairs.

Assuming the Air Force can repair the scopes at twice the cost (due to lack of experience) of the OEM, the estimated repair cost is $13.6 million. Add this to the cost of developing capability and the total becomes $22.4 million.

In light of the costs associated with reverse engineering, the OEM is the only entity with adequate repair capability. Olympus is the only company with rights to the data, the special facilities, equipment, tooling, trained personnel, and experience to conduct a borescope repair that meets Air Force requirements

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

Although the Government does not own data to support acquisition of these Borescopes and Fiberscopes sources will be evaluated to provide an assessment of their capabilities in meeting requirement.

The program office will continue to manage these borescopes indefinitely as there is no plan to replace these items for other inspection tools However, these borescopes will continue to be updated with technological changes as most commercial items in the market place, but their application will remain the same, the inspection military aircraft engines. The current plan is contact Olympus management within a period of six months, to find out if the contractor is receptive to the possibility of the Government using or buying procurement quality data so that a competitive package can be developed. Engineering’s goal is to continue research on the reverse engineering process and identify viable options for the development of a competitive data package

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 as prescribed by 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)).