ADV_01._15-00028finalJA_Redacted.pdf

JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

I. CONTRACTING ACTIVITY

This Justification and Approval to request authority for Other Than Full and Open Competition supports requirements generated for the Air Force Sustainment Center (AFSC), 638th Supply Chain Management Group (SCMG), 409th Supply Chain Management Squadron (SCMS) / GUME. The contracting Activity for this requirement is AFLCMC/EBK, Armament Contracting. The purchase request number supporting this contracting action is FD2060‐15‐00028.

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

Due to the circumstances described herein, the activity requests authority to acquire the spares listed in this document using Other Than Full and Open Competition as prescribed by 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 Firm‐Fixed‐Price contract with a basic year plus four out‐year option periods in which additional quantities may be ordered. This sole source requirement will be purchased from the following company:

HIREL Connectors Inc 760 West Wharton Dr Claremont, CA 91711

CAGE: 34222

Small Business

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

This requirement is for a new spares buy of the Buffer Connector, NSN: 5935‐01‐336‐9017AL, P/N: 654478‐3, used with the AIM‐120 missile on the LAU‐12X launcher. This acquisition is in support of USAF, USN, USA, and FMS requirements and will be using 3010 appropriations. The Buffer Connector provides electrical connectivity between the launcher and the missile:

QTY Unit Cost Total Basic Year 1471 $ $ First Option Year 1‐1000 $ Second Option Year 1‐1000 $ $ Third Option Year 1‐1000 $ $ Fourth Option Year 1‐1000 $

Total estimated cost of this acquisition is $ . The base year unit price was taken from the Forecast Unit Price computed from the September 2013 requirements computation and inflated accordingly at a rate of 5% per year. The quantities represented are also from the September 2013 computation.

This item has an Acquisition Method Code (AMC/AMSC) of 3B meaning this part must be acquired from a manufacturing source specified on the source controlled drawing. Suitable technical data, Government data rights, or manufacturing knowledge are not available to permit acquisition from other sources, nor qualification testing of another part, nor use of a second source part in the intended application.

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 agency's minimum needs can only be satisfied by the unique supplies or services available from only the cited source, which possesses the unique capabilities demonstrated as follows:

The AIM‐120 missile buffer connector provides electrical and communication connectivity between the LAU‐12X launcher and the missile. These items go on an end item which is loaded on the F‐15A/B/C/D & E, F‐16A/B/C & D and F‐18C/D, E/F and G aircraft as well as HUMRAAM and SLAMRAAM ground launchers. This is a critical component of the AIM‐120 missile. Without the connector the warfighter is unable to utilize the capability of the AIM‐120, seriously impacting operational capability and jeopardizing the availability of fully mission capable aircraft.

The design requirements for NSN 5935‐01‐336‐9017AL are defined by a top level Technical Data Package (TDP) comprised of a Source Control Drawing 654478 (Rev H 2003) and associated Development Specification DS32050‐

456. The Contractor is responsible to manufacture an approved design developed in accordance with both 654478 and DS32050‐456. Raytheon owns the Copyright for both documents, and both drawings have Distribution Statement E (“Distribution authorized to DoD Components only”).

Raytheon is sole‐sourced for the AIM‐120 missile and they are sole‐sourcing the buffer connector to HiRel. The current Item Design Activity is Raytheon Company and the buffer connector is identified as a Source control drawing (654478). HiRel is the only vendor identified as an approved source of supply. A substitute item shall not be used without prior approval by Raytheon. Any addition or changes must be approved by Raytheon as the design activity. Any other design, including a reverse‐engineered one, would result in no warranty for the entire missile system, according to Raytheon.

Raytheon, as the design agent of the buffer and the missile, uses HiRel as the only qualified vendor to make the items for use with the missile. In late 2008 and early 2009 Raytheon was contacted and asked if another supplier could be added. Raytheon responded that they would not consider any source other than HiRel. Another request to qualify a supplier other than HiRel was made in July 2014 by email to Raytheon. While a definitive response from Raytheon is still pending, the latest communication received from Raytheon on July 24, 2014 states the efforts to perform a redesign (minus any infringement rights) for non‐recurring engineering and qualification testing for all interface configurations would be very costly and prohibitive in establishing a break‐even point (many years, if not decades away).

Raytheon is the design agent and manages configuration of the system under Total System Performance Responsibility agreements. Any new vendor of the current design (654478‐3) would have to go through the full qualification process by Raytheon Missile Systems as the Design Agent and also be approved by the Operational Safety, Suitability & Effectiveness (OSS&E) activity, AFLCMC/EBHA. The cost to qualify another design is approximately dollars. This cost includes first article testing, reliability testing, flight testing (Seek Eagle), AIM‐120 testing to cover all missile variants, and engineering man‐hours.

Accordingly, HiRel is the only firm capable of providing the requirements described in Section III above without the U.S. Air Force experiencing unacceptable delays in fulfilling its requirements. Based on the last redesign effort by Raytheon in 2008 that was ultimately deemed unacceptable (this effort is discussed in section IX) it would take approximately one (1) year to engineer the design and produce a prototype ready for the required testing needed to qualify the new design. Add to that another two (2) to three (3) years to get it on contract and start receiving production quantities, it would be a total delay of three (3) to four (4) years which will not meet the requirement of the warfighter. The buffer connector supplies all capability to the AIM 120 missile, the premiere missile of the U.S. Air Force. A break in the supply of these items (that is failure to deliver due to timeliness and/or non‐ conformance) seriously impacts the operational capability and jeopardizes the avilablity of fully mission‐capable aircraft.

This item has strictly a military application used solely with the AIM‐120 missile on a LAU‐12X launcher.

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. It is anticipated that sources having an interest in subcontracting may be identified through synopsis.

Any source who responds to the Government as a result of this synopsis will be identified to the prime contractor as a potential for subcontracting possibilities.

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 determined fair and reasonable to the Government. In accordance with FAR 15.403‐4, the contractor will be required to provide certified cost and pricing data to be used in supporting the Government’s evaluation of the proposed cost. The proposed skill mix of labor, labor hours, types and quantities of material, other direct costs, and direct and indirect rates will be negotiated by the Government based on recommendations from the Defense Contract Audit Agency (DCAA) and expert technical personnel supporting the program. The contract price will be negotiated in accordance with the procedures in FAR Part 15 ensuring the ultimate cost to the Government is fair and reasonable.

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

REASONS MARKET RESEARCH WAS NOT CONDUCTED

The Market Research techniques utilized included an internet search of the SBA Dynamic Small Business search tool. NAICS code 334417 (Electronic Connector Manufacturing) was used with “Connector” as part of the keyword search. This produced 173 suppliers. HiRel is the only source who has ever built this item; HiRel is listed as the only qualified source.

HiRel Connectors Inc, 760 West Wharton Dr., Claremont Ca. 91711, small business, qualified source, POC Scott

Snedigar phone 909‐626‐1820. Cage code 34222

As a delivery of this item was made as recently as April 2014, a first article would not be required. HiRel maintains capability to make this item as needed and is interested in continued manufacture of this item.

The following sources, all of which are small businesses, are identified as having experience in Connector manufacturing; however, due to a source controlled drawing, they are not qualified to do the required work:

Outman Industries, Inc., 1830 Wayne Trace, Fort Wayne, IN 46803, POC: Thomas Outman, Phone: (260)467‐

1576. Cage code 1DFJ9. POTENTIALLY CAPABLE OF MEETING REQUIREMENTS SUBJECT TO QUALIFICATION BY

RAYTHEON AND AFLCMC/EBHA APPROVAL

Realm Communications Group, Inc., 840 Yosemite Way, Milpitas, CA 95035, POC: John Russell, Phone: (408)945‐

6626. Cage code 3FAW4. POTENTIALLY CAPABLE OF MEETING REQUIREMENTS SUBJECT TO QUALIFICATION BY

RAYTHEON AND AFLCMC/EBHA APPROVAL

First Source, Inc., 780 N Cecil Rd 101, Post Falls, ID 83854, POC: Kimberly Rohde, Phone: (800)225‐7434. Cage code 0JHX2. POTENTIALLY CAPABLE OF MEETING REQUIREMENTS SUBJECT TO QUALIFICATION BY RAYTHEON

AND AFLCMC/EBHA APPROVAL

This is a source‐controlled, non‐competitive item and as such, no one is qualified or will be qualified to produce this item, except HiRel. Any new vendor for the current design (PN 654478‐3) would have to go through a full qualification process with Raytheon as the Design Agent, and also be approved by the OSS&E activity, AFLCMC/EBHA. In late 2008/early 2009, Raytheon said that any other source would have to be fully qualified by Raytheon before any item is considered for use and they would not consider any other source except HiRel.

Another request for a quote for the cost to qualify a supplier other than HiRel was made in November of 2013 without a response. A follow up request was made in July 2014 with a response still pending. As a result of the Market Research, the recommendation is that the acquisition strategy should be to pursue a sole source contract to HiRel Connectors Inc.

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

The identified source is the only source approved by Raytheon to produce this item. It is a source‐controlled drawing (654478) and there are no other potential sources. The Government’s need cannot be met by any other source. Since approval of the prior J&A in November 2007, there have been issues with the ratcheting mechanism on this connector leading to Raytheon Missile Systems, in August 2008, redesigning the buffer connector to eliminate the ratcheting mechanism. This item was developed by Raytheon and underwent full qualification and engineering review. It was designated as a 654478‐4 part number and was envisioned as being competitively sourced. Unfortunately, it was delivered by Raytheon to the USAF and was subsequently deemed unacceptable for fielding. The effort ended, with no further redesign effort currently planned because of the time and money involved in qualifying a new source. Any new vendor of the current design (PN 654478‐3) would have to go through the full qualification process by Raytheon as the Design Agent and also be approved by the OSS&E activity, AFLCMC/EBHA. Return on Investment (ROI) analysis was conducted as part of this effort. The ROI analysis compares the cost avoidance due to competition for the remaining life of the system in present value dollars and proposed investment in a reverse engineering effort. A reverse engineering project is estimated to only reduce the purchase price by 15%. Assuming an annual price inflation of 5%, with an annual estimated need of 1000 buffer connectors per year, and an estimated FY15 unit cost of $473.56, it would take a minimum of 84.5 years (FY2099) to recover the reverse engineering investment cost. Unfortunately, the platform with the longest service life retires in FY2040 and the investment cost is not recovered. The missile that this item mates to is source‐controlled to Raytheon, as is this item to HiRel. Fabrication of this buffer by any other supplier would void the warranty for the entire missile.

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

Raytheon stated in 2009 that qualification of another source would not be considered. In July 2014, Raytheon indicated that the investment required would be very costly and would need to be approved by Raytheon, as the Design Agent, and the OSS&E activity, AFLCMC/EBHA. Due to the time it takes and the money involved in qualifying a new source, it would be very prohibitive to recover a ROI. The expected life of this program will extend through the year 2040. It is anticipated that there will be follow‐on purchases; however, the timeframe and quantities are unknown at this time. Per Section IX above, past efforts to produce a competitive item have proven unsuccessful. Continued requests to Raytheon to qualify another source will be pursued, with elevation to management level if responses are not forthcoming.

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)).