Redacted_J A_Redacted.pdf

FOR OFFICIAL USE ONLY

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JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION FOR NORTHROP ENTERPRISE-WIDE

STRATEGIC CORPORATE CONTRACT

OTHER CONTRACTING

I. CONTRACTING ACTIVITY

This Justification for Other Than Full and Open Competition supports requirements generated for the Air Force Sustainment Center (AFSC) and all subordinate units. The contracting authority for this requirement is the AFSC/PZABB, Robins AFB, GA 31098. The planning purchase request number supporting this contracting action is FD2060-13-00747.

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

This follow on contract action establishes an “Enterprise Wide” strategic corporate contract with Northrop Grumman Corporation (NGC) to support AFSC requirements. This follow-on is a consolidated effort that will continue support previously provided by five separate contracts. The NGC requirements previously provided by the contract vehicles F0960398C0403, FA850409C0004, F0960394C1266, FA825108C0019, and F0960303D0002 are covered by this contract action. Long term strategic corporate contracts foster comprehensive supplier relationships, provide certainty to the supply chain and enable efficiencies in the delivery of materials, products and services that support the warfighter. Estimated award of this effort is November 2014 with a contract ordering period from November 2014 through 31 October 2019.

This J&A provides authority to acquire repairs, spares/buys, engineering services listed in this document using Other Than Full and Open Competition as prescribed by Federal Acquisition Regulation (FAR) 6.302-1, Only One Responsible Source and No Other Supplies or Services will Satisfy Agency Requirements. This sole source action will result in the award of a new Indefinite Delivery type contract with five one-year ordering periods. This contract contemplates the inclusion of various contract types to include Firm-Fixed Price (FFP), Cost Reimbursement (CR), and Time and Materials (T&M). All sole source requirements will be purchased from the following company:

Northrop Grumman Technical Services, Inc.

101 Industrial Park Blvd Warner Robins, Georgia 31088-7409

CAGE: 1LTU5

DODAAC: EZ7109

DUNS: 106680846

Type business: Large Business

The primary corporate contract source address/CAGE code is identified above. CAGE codes associated with work to be completed under this contract are identified in Attachment A.

This contract will be used to acquire repair, spares/buys and engineering services where the supplier is the only responsible source to support sustainment for various weapon systems, FD2060‐13‐00747 Page | 2 platforms, Shop Replacement Units (SRUs), Line Replacement Units (LRUs) and Test Replacement Units (TRUs). These items/services will be utilized on, but not limited to, U.S. Air Force air and ground platforms and Foreign Military Sales (FMS) supported by the USAF through Primary Inventory Control Agency (PICA) or Secondary Inventory Control Agency (SICA) relationships and Non-consumable Item Materiel Support Codes (NIMSC).

To allow the maximum flexibility and efficiencies, this contract will utilize decentralized ordering with the overall administration and contract management remaining under the Supply Chain Management Division. An Indefinite Delivery contract provides for filling all actual purchase requirements of designated Government activities for supplies or services during a specified contract period, with deliveries or performance to be scheduled by placing orders with the contractor for the sole source requirements listed in the scope and documentation for this effort. In addition to the specific items identified in this J&A, additional ceiling has been included in the J&A to allow for the addition of repairs, spares and engineering services where market research has shown the supplier to be the only responsible source and where no other supplier or services will satisfy agency requirements. This additional ceiling, referred to in this J&A as potential adds, allows the contract to remain flexible to new developing systems or changes to existing support structures not fully definite at this time. Any add ons for repairs, spares/buys and engineering services will be incorporated as an amendment to the J&A. Any J&A amendment will be processed through the Procuring Contracting Officer (PCO), coordinated by the local Small Business Office (SBO) and approved by the local AFSC Competition Advocate (CA). The CA will validate that the effort meets the sole source requirements established in this J&A prior to inclusion in the contract. Attachments E, F, or G shall be utilized for these amendments and for documenting the process for approval by the local Competition Advocate.

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

AGENCY’S NEEDS

A. This requirement is to provide repairs, spares/buys, and engineering services where the supplier is the only responsible source, related to the Electronic Systems Test Set (ESTS), AN/AY/1 & 2, ALR 20, ALQ 155, ALQ 131, ALQ 161, ALQ 135, AN/APN 241, T-38 and B-1 systems and component SRUs, LRUs and TRUs that are sole-source to NGC on various weapon systems and platforms. Sustainment of repairs, spares/buys and associated engineering services are currently supported via 9 separate NGC contracts. Award of a new contract will consolidate these 9 separate contracting efforts and will continue the provision of supplies and services under this enterprise effort. Other agencies may also use this corporate contract under the decentralized ordering guidelines as set forth in the NGC Corporate Contract User’s Guide. The Contractor shall provide all labor, services, facilities and replacement parts necessary to return unserviceable Government SRU, LRU and TRU assets to “ready for issue” condition. The total estimated cost for all items will be expressed in terms of Best Estimated Quantities (BEQs) for all ordering periods. All computations were calculated using requirements data (D200/Automated Budget Compilation System (ABCS)) for all part number variants for each specified National Stock Number (NSN).

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The principle scope and level for this corporate contract is for the manufacture of spares/buys and repair services associated with NSNs listed in Attachments B and C. However, an engineering service Contract Line Item (CLIN) will be included to provide a vehicle for acquiring technical support.

Any Engineering Service efforts considered under this contract will pertain to an NSN already on the contract. Engineering services estimates are based on historical information and estimated future workload requirements that directly support the NSNs identified herein.

Engineering services described in this J&A document will be processed through individual task orders.

The scope of the engineering services will be limited to sustainment work where the supplier is the only responsible source that can support the sole source NSNs that are on the basic contract. Each individual engineering services task order that is issued against the basic contract as sole source must be self-supported by its own sole source documentation and documented at the task order level. Each individual task/delivery order issued against the basic contract will identify the estimated delivery dates and period of performance. Market research must be conducted to support each engineering services task order included within the scope of this J&A. An amended “Justification for Sole Source Engineering Services” (Attachment G) must be processed and approved by the Competition Advocate for each engineering services task order. These task orders will be accomplished within the ceiling of this J&A.

B. The following chart represents the total estimated requirement to be supported by NGC.

Individual work to be completed under this section is identified in Attachments B, C and D.

Dollars in Millions

FY15

Ordering Period 1

FY16

Ordering Period 2

FY17

Ordering Period 3

FY18

Ordering Period 4

FY19

Ordering Period 5 Totals

Repairs

Spares/Buys Engineering Services

Potential Adds

Totals $87.99 $79.48 $77.13 $77.51 $79.79 $401.87

ESTIMATED CONTRACT VALUE: $401,866,223.25

The above data is based on D200A/C, ABCS projections, backorders, user modifications and acquisition schedules, total future flying hours projected and historical spares and repair data.

Predominately Consolidated Sustainment Activity Group (CSAG) fund appropriations will be used for these efforts. Other funding types will be used as appropriate. FMS countries will identify their unique funding sources that will be set forth on this contractual vehicle.

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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

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 the above cited source. The above cited source possesses unique capabilities demonstrated by the following paragraphs.

A. The Government does not have adequate technical data/drawings to procure spares and repairs of items for the systems listed in Section III. The items are components of ten (10) different systems that were developed during the 1970s and 1980s. At the time of system development and production, the Government did not procure data on some items; on others, the data procured was mostly Level I drawings and Illustrated Parts Breakdowns which do not provide enough detail for competition. Since the technical data is insufficient to allow for competition, the screener and/or engineer coded each Screening Analysis Worksheet (SAW) based on the data available in the Government’s repositories. NGC was determined to be the only source available to procure spares or repair the items covered by this J&A.

The items referenced in this J&A are categorized as follows: a) highly technical requirements where available limited data is inadequate for other companies to procure spares and perform the repairs, b) no data available for other companies to procure spares and perform repairs, c) technically complex requirements that would require NGC to validate performance/integration and for which other companies would require NGC support to develop comprehensive reverse engineering technical data to procure and/or repair an item, or d) low usage items for which reverse engineering an item would not be a cost effective means to obtain competition. All items included in this corporate contract J&A are required to support warfighter demand and to keep Air Force aircraft operational. NGC Technical Services was contacted in March 2013 regarding the Government’s interest in obtaining procurement and/or repair technical data packages for the items listed in Attachments B, C, and D. NGC responded in March that their intent is to provide their Air Force customers’ spares and repair support on all the items requested; likewise, they are at this time unwilling to sell the data required to procure and/or repair any item. NGC also stated that if, during the course of contract execution, NGC no longer wants to support specific NSNs they will, at that time, work with the Government on a case-by-case basis to develop organic support capability for that requirement or provide a suitable data package for competition.

B. NGC is the only source that has the expertise, facilities, equipment, and proprietary data to repair, build spares, and provide engineering resolutions for obsolescence issues in support of the NSNs covered via this contract. This expertise includes years of engineering design, repair, test, and evaluation of multiple end items and upgrades of the items and configuration

FD2060‐13‐00747 Page | 5 control management. Many of the aforementioned processes involve the use of highly specialized test equipment as well as facilities to house this equipment.

C. The Government has attempted to purchase the necessary data from NGC; however, this data is proprietary and the contractor refuses to release the rights or sell the data. Suitable technical data, government data rights, or manufacturing knowledge is not available to permit acquisition/repair or engineering services from other sources, nor allow for qualification testing of another part or the use of a second source part in the intended end item.

D. NGC is the Original Equipment Manufacturer (OEM) for these NSNs and is the only source capable of providing the supplies and services identified in Section III for the specific NSNs identified in Attachments B and C.

E. All NSNs included or to be included in this effort have an AFMC Form 761 SAW and/or

AFMC Form 762 Contract Repair SAW (CRSAW) sheet which states an Acquisition Method Code (AMC) and Acquisition Method Suffix Code (AMSC) or Repair Method Code (RMC) and Repair Method Suffix Code (RMSC) that indicate a sole source requirement to NGC exists. For further information regarding this process, please see Attachment H, “Screening/Breakout Program Bullet Background Paper.” AFMC Form 761s/762s were accomplished for each NSN by the cognizant engineer, and 100% of the NSNs were determined to be sole source to Northrop Grumman. The reasons for these sole source determinations vary. However, from a general standpoint, the overwhelming reason for sole source determination was based on NGC owning the proprietary repair and/or production data necessary to repair and/or build new spares. Of the AFMC Form 761s, 100% show a sole source determination due to proprietary/restricted production data. When evaluating the AFMC Form 762s, 86% of the NSNs were determined to be sole source due to proprietary/restricted repair data; 11% of the NSN sole source determinations cited technical expertise/repair knowledge and special test/inspection facilities; and the remaining 3% cited limitations for competition due to the cost exceeding the projected savings. NGC is the only company with the proprietary production and/or repair data, technical expertise, facilities, and equipment to satisfy the Government’s requirements.

F. Unacceptable Delay. Even if the Government had a data package suitable for competition, award to any other source would result in unacceptable delays of six (6) to seven (7) years in fulfilling the Government’s sustainment requirements for aircraft platforms or test stations supporting operational missions. AFSC lead engineers, using their expertise, experience and requirements established in Air Force Materiel Command Instruction (AFMCI) 21-101, sections 1.2.3 and 10 USC 2464, estimate the time needed to establish initial repair capability is approximately four (4) to five (5) years. The estimated timeline is based upon one (1) year for securing and verifying repair data and three (3) to four (4) years to secure the proper test equipment, develop test program sets (TPS), and prepare for a competitive repair contract.

Furthermore, the timeline is based on operating instructions, regulatory requirements and required expertise necessary to establish an organic capability. Although contract sources do not have to adhere to the same operating instructions or regulatory requirements, past experience has proven these timelines applicable to the process. The Common Electronics Commodity Council (CECC) integrated master schedule template for large dollar contracting

FD2060‐13‐00747 Page | 6 activities prescribes a minimum of two (2) years for a contract solicitation from inception to award. Therefore, non-execution of a repair requirement with the qualified repair source (NGC) would result in unacceptable delays, totaling six (6) to seven (7) years that could prevent the U.S. Government and FMS users from meeting their sustainment requirements.

Aircraft and aircrews as well as the ground forces they support would be placed at significantly higher risk from hostile threats if there is a delay in repairing the systems covered in this effort.

G. Substantial Cost Duplication. One example to highlight the complexity of this acquisition is the ALQ-155 System. The ALQ-155 Program Office reverse engineering estimate for the ALQ-155 NSNs is approximately per item. Based on NGC’s response to the Government’s request to procure technical data, competition is not possible at this time. The process of standing up another contractor would involve duplicating costs incurred by the Government, would require significant funding and time to develop technical data/drawings and would establish approved procurement and repair sell-off procedures. Since many of the ALQ-155 items covered by this J&A have low demand/usage, the Return on Investment (ROI) to obtain the reverse engineering data required to procure and/or repair each item would be cost prohibitive based on the program office’s reverse engineering cost estimate.

The other nine systems covered by this J&A would incur similar reverse engineering risks/costs. Even if the technical data/drawings were available, the time required to qualify a new company would result in unacceptable delays in supporting Air Force warfighter requirements to keep aircraft operational. While competition is generally expected to reduce cost, there must be sufficient future activity (e.g. spares or repairs) to obtain a positive Government ROI. The AFMC Forms 761s/762s screening documentation shows the lack of Government owned technical data/drawings. NGC is the only qualified source that has the procurement, repair and engineering services capabilities necessary to satisfy the Government requirements.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE

The Government does not have the technical data required for repair and/or production of spares/repairs. Such data would enable other companies to fulfill the Government’s requirements by duplicating NGC processes, thereby fostering competition. NGC was asked to provide a price for data; however, they responded that the data was not for sale.

The Government made an independent determination concerning whether or not other companies would be able to compete. Given that NGC is the only source through which the U.S.

Government has obtained services for the identified items, the non-availability and/or the proprietary nature of technical data restricts competition. NGC's approved procedures are used for all SRU, LRU and TRU repairs. There are no Government approved depot-level Technical Orders releasable to Department of Defense (DoD) contractors. Furthermore, NGC owns Special Test Equipment that is essential for the troubleshooting and testing of applicable assets which has not been procured by the Government. The drawing package for test station/equipment is owned by NGC. The Government currently does not own a data package suitable for publication and therefore cannot provide a data package to any potential suppliers.

Since NGC is unwilling to sell the required data necessary to perform the required services, it is

FD2060‐13‐00747 Page | 7 not practicable that other companies could adequately provide a proposal or fulfill the workload requirements.

The AFMC screening process was used extensively to determine the competitive environment for each NSN covered by the scope of this contract. Screening results are documented on AFMC 761 Forms (Screening Analysis Worksheets (SAWs)) and AFMC 762 Forms (Contract Repair Screening Analysis Worksheets (CRSAWs)). These screening results were used to determine the capability of supporting the repair and/or manufacture of the relevant parts, and these screening results were relied on significantly. Market research was also accomplished (reference Section VIII below).

This requirement will be synopsized on the Federal Business Opportunities (FedBizOps) web page citing conditions which preclude Full & Open Competition. Sources expressing an interest as a result of the synopsis will be investigated for their capabilities to perform on this and/or future requirements. This is a pre-award synopsis of proposed contract action, as required by FAR 5.201(b) in advance of issuance of the solicitation.

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 to be fair and reasonable to the Government. In accordance with FAR 15.403-4, the contractor will be required to provide certified cost or 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), the Defense Contract Management Agency (DCMA) and other available expert technical personnel supporting the program. The contract price will be negotiated and documented 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

Market research was conducted in accordance with FAR Part 10 and was completed in March 2013. The multi-functional team was involved in conducting and documenting the market research effort. In-depth guidance was provided by the Robins Acquisition Center of Excellence (ACE) subject matter expert (SME), as well as the Robins Small Business Office SME. The following market research techniques were used:

A. Current: The Government engineering team conducted research through the completion/review of current AFMC Form 761, SAW and AFMC Form 762, CRSAW documents completed in accordance with AFMCI 23-113.

B. Current: The Government conducted a vendor survey; results are detailed in Attachment I hereto. The subject NSNs procurement histories were reviewed, to identify if the Government had previously contracted for these requirements from a company other than

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NGC. The results of the survey yielded that either the vendor was a subcontractor to the OEM, manufactured a component or sold the product line to NGC.

C. Current: Additional information was compiled concerning SORA for NSNs associated with systems included in this contract. This information describes the lack of proprietary technical data available, lack of depot repair, as well as the decisions that contributed towards the decision to assign the source of repair to the Contractor (Northrop Grumman).

D. Historical: Market research for the previous contracts involved interrogation of DoD data systems performed at the time a firm requirement for purchase or repair was identified. For this follow-on contract the same reviews have been accomplished.

E. Forward-Looking: Internet searches were conducted on the U.S. Dept. of Commerce, United States Census Bureau website using NAICS Codes to research companies that might possess spare/repair and engineering capability for the subject NSNs. The Business Identification Number Cross-Reference System (BINCS) Search (http://www.logisticsinformationservice.dla.mil/BINCS/default.aspx) was used to look up CAGE code/business contact information. Webster’s Online Business Directory (www.webstersonline.com) was also used to gather contact information for businesses.

F. Forward-Looking: Ongoing market surveillance continues through the monitoring of technical literature, discussion with other engineers, and attendance at expos for potential repair sources/suppliers of the subject NSNs.

G. Forward-Looking: System program managers will use a Business Case Analysis to determine if procuring repair data maximizes the lifecycle sustainment related support. All life cycle sustainment decisions must conform to the most recent Depot Source of Repair (DSOR) determination.

The Air Force accomplishes continuous market surveillance and periodic reviews of the adequacy of its technical data for competition. The technical data for every item to be acquired or repaired is reviewed under a formal acquisition engineering process (known as the AFMC 761/762 screening process) that determines the appropriate acquisition approach in view of the specific item-unique, detailed data the Air Forces possesses and its adequacy for competition.

Wherever possible, items related to these systems are already coded for competitive acquisition;

the items to be acquired under this contract are those for which the screening processes determined that technical data is inadequate for competition. NGC is the only known source that can provide the items and/or services described herein. Additional Market Research, in accordance with FAR Part 10, will be conducted for each individual engineering task or new NSN to be associated with this effort.

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

OPEN COMPETITION

There are no other qualified companies currently available to provide the necessary supplies and services for the NSNs listed in Attachments B, C and D. For each NSN, NGC is the only company that has the knowledge, data, test equipment, facilities, and trained technicians to procure and/or repair each item. NGC has informed the Government that they are unwilling to sell the data necessary for competition. Additionally, reverse engineering is a high risk/cost option and is not feasible at this time due to the complexity of each system covered by this J&A.

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

ACQUISITION

The attached Vendor Survey shows the list of companies that initially expressed interest in this requirement. However, when contacted by the Air Force with specific questions regarding their capabilities and their ability to meet the requirement, all vendors provided responses explaining why they were no longer interested in pursuing this contract nor capable of performing it.

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 systems/sub-systems for the subject NSNs are stable and mature in the sustainment life cycle. While the current Market Research indicates a sole source environment for these NSNs, the following are steps the Government will take to overcome barriers to competition for future acquisitions:

1. Review the items on contract to identify opportunities where procurement of technical data/drawings would return a positive ROI and justify competition or performance by Government personnel,

2. Solicit for technical data/drawings or pursue third party engineering services where feasible, for a proposal to enhance the data as necessary to render it suitable for competition or performance by Government personnel,

3. Request funding to acquire technical data/drawings for competition in the appropriate fiscal cycle to yield the purchase of sufficient data packages where procurement of technical data/drawings would return a positive ROI or other benefit and justify competition or performance by Government personnel, and

4. Execute funded projects to obtain technical data/drawings.

Once the data/drawings are available, the Government will be postured to compete future requirements.

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(b)).

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List of attachments Atch A: NGC CAGE Codes /Addresses (as of 1 Jul 13) Atch B: Repair NSN Requirements (as of 1 Jul 13) Atch C: Spares NSN Requirements (as of 1 Jul 13) Atch D: Engineering Services Requirements (as of 1 Jul 13) Atch E: Amendment to J&A for Sole Source Repair(as of 1 Jul 13) Atch F: Amendment to J&A for Sole Source Spares/buys (as of 1 Jul 13) Atch G: Amendment to J&A for Sole Source Engineering Services (as of 1 Jul 13) Atch H: Screening/Breakout Program Bullet Background Paper(as of 15 Mar 13) Atch I: Vendor Survey (as of 1 Jul 13) Atch J: Glossary (as of 1 Jul 13)