JUSTAPPR_Redacted.pdf

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

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.

Choose the funding level for this J&A Document:

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

Contracting Activity: AFSC/PZABB

Purchase Request / Local ID Number: FD2060-16-00644

Program / Project (and PE, if applicable): AN/ALR-56C Exotics

Program Type (PEO or Other Contracting): Other Contracting

Authority (include full title): 10 U.S.C. 2304(c)(1) Only one Responsible Source and No other Suppliers or Services Will Satisfy Agency Requirements

Estimated Contract Cost (including options): J&A Type: Class Individual

COORDINATION (AFFARS 5306.304(a) )

Date

12 Jul 2017

Project Lead / Program Mgr / Requiring Activity James Gordon

408 SCMS/GULB DSN 472-4553

Signature

Date

12 Jul 2017

Contracting Officer John Middlebrooks

AFSC/PZABB DSN 468-7161

Signature

Date

12 Jul 2017

Local Legal Reviewer Bradley Adams

78 ABW/JA DSN 427-0569

Signature

APPROVAL (AFFARS 5306.304(a) )

Date

13 Jul 2017

Competition Advocate Betsy F. Kennedy

AFSC/PZC DSN 472-1102

Signature

I. Contracting Activity.

This Justification and Approval (J&A) requests authority for Other Than Full and Open Competition (OTF&OC) to support requirements generated for the Air Force Sustainment Center (AFSC), 638 Supply Chain Management Group (SCMG), 408 Supply Chain Management Squadron (SCMS)/GULB. The contracting office for this requirement is AFSC/PZABB. The purchase request number supporting this contracting action is FD2060-16-00644.

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

Due to the circumstances described herein, the activity requests authority to establish a new repair contract for AN/ALR-56C Radar Warning Receiver (RWR) Exotics 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 follow-on Requirements Indefinite Delivery Contract (IDC), which will include a 12-month basic and four

(4) 12-month options (FY18-FY22). This will be a firm fixed price (FFP) contract.

The sole source requirement will be obtained from the following source:

Pacific Electronic Enterprises, Inc.

DBA: Pacific Electronics (PE) 7471 Talbert Ave Huntington Beach, CA 92648-1209 Cage Code: 32324 Small Business

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

There are 63 National Stock Numbers (NSNs) associated with the AN/ALR-56C RWR. However, only 22 NSNs are Master NSNs with sub-master NSNs within the same family. The total estimated cost of this repair requirement is This estimate is based on Best Estimated Quantity (BEQ) for the basic and option years using D200A January 2017 computation. The unit repair cost for the four (4) out-year options was increased by 3% to account for inflation. To avoid a lapse in repair coverage, this requirement is projected for award on 01 Feb 2018. Based on this award date, the period of performance (PoP) will be 30 Jan 2018 through 29 Jan 2023.

This contract will be used to support the AN/ALR-56C RWR, applicable to the Tactical Electronic Warfare System (TEWS) used on the F-15 C/D/E aircrafts. The AN/ALR-56C is a completely self-contained system that automatically provides the functions of the threat signal detection, identification, and direction finding.

The system displays the threats, which are enhanced by audio signals.

This requirement is for repair services of NSNs listed in J&A Attachment 1. The estimated cost and BEQs for each NSN is listed on Attachment 1. Quantities are only provided for Master NSNs. However, the Government may require repair for a substituted NSN which fulfills Master NSN requirements.

TOTAL ESTIMATED DOLLAR VALUE $6,001,764.53

This acquisition will be funded with Consolidated Sustainment Activity Group-Supply Division (CSAG- SD) Defense Working Capital Fund (DWCF) 97X4930 appropriations.

These NSNs have been screened and findings documented on individual Contract Repair Screening Analysis Worksheets (CRSAWs), AFMC Form 762. All NSNs have been assigned Repair Method Code (RMC) “R5.” This code means to acquire directly from a sole source contractor which is not the actual manufacturer. The Repair Method Suffix Code (RMSC) was “R.” This code means the Government does not own the data or the rights to the data needed to repair or purchase this part from additional sources. It has been determined to be uneconomical to buy the data or rights to the data. It is uneconomical to reverse engineer the part. This code is used when the Government did not initially purchase the data and/or rights.

The RMC/RMCS were previously assigned R1/G. This assignment meant the acquisition is suitable for competitive acquisition and the Government has rights to the technical data, the data package is complete, and there are no technical data, engineering, tooling or manufacturing restrictions. However, based on recent re-evaluation of these NSNs it was determined the R1/G assignment was not accurate. As indicated above, the correct RMC/RMSC assignment is “R5/R.”

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).

The original equipment manufacturer (OEM), BAE Systems, did not develop repair processes or the data required for repairs for these items. Pacific Electronic (PE) used their own facilities, equipment, and funds to reverse engineer these NSNs for repairs for all AN/ALR-56C 63 components to qualify as a repair source. PE has repaired these components for 20 years. The Government emailed PE and asked them to consider selling the repair data. PE replied on 07 Feb 2017 and stated the information requested is not for sale.

These items have been determined of such complexity and criticality that first article testing measures and specialized test equipment/tooling are required for all unproven sources, however the Government does not possess the technical data so an interested source would be required to reverse engineer the parts.

Qualification of a new repair source would require the repair-candidate to develop and provide two first articles that pass qualification testing. Qualification is estimated to take a minimum of five (5) years to complete. This estimate is based on a previously failed attempt to reverse engineer repair by another source. An interested source attempted to accomplish a reverse engineering effort under contract FA8522-15-D-0005, however on 21 Apr 2017 requested contract termination. Additionally, the Government has determined that a break in item supply will cause unacceptable delays and would seriously impair the mission capability or cause serious damage or harm, as follows: Failure to repair these assets will lead to increased Mission Incapable Awaiting Parts (MICAP) and Surge requirements that will ground aircraft and ultimately result in mission failure or loss of life.

These items cannot be customized, modified, or tailored to meet the requirement. When these items are open for repair (the majority are hermetically sealed), the parts inside vary due to the different designs used by the sub-vendors to accomplish item peculiar functions. Each component is unique and must have specialized test equipment/tooling and processes.

The ALR-56C system is no longer in procurement and will not be installed on any additional platforms.

The estimated retirement date of the F-15 is 2045. However the AN/ALR-56C will be replaced by an upgraded system, AN/ALR 56C Digital Upgrade. The fielding of the upgraded system is scheduled to begin in FY20. As the new system is fielded, the repair requirement for the original AN/ALR 56C will diminish until the legacy system is completely phased out. As legacy systems are removed, the items will go back into stock increasing our spares levels. This will result in less items going into repair as we will have a surplus of serviceable items coming back into stock. Repairs will be reduced as new systems are fielded. However, this effort may not reflect a reduction in repairs in the out-years. This was done to ensure the Government will have contract capacity to fill repairs in the event that the fielding schedule falls behind. This would reduce the possibility of material shortage in out-years.

With the limited life cycle of the current configuration of the AN/ALR-56C, it would not be feasible for the Government to reverse engineer the repair data to allow for future competition. The Government estimates a reverse engineering effort for all 63 NSNs would cost in excess of $6 million and require a minimum of 5 years to complete. This estimate is based on a previous attempt to reverse engineer these items. The phase out of these items would more than likely occur prior to the completion of the reverse engineering effort. If reverse engineering were to occur earlier than expected, there would not be ample life cycle on the legacy system for the Government to recuperate the cost incurred in a reverse engineering effort.

Accordingly, PE is the only firm capable of providing the services described in Section III above without the U.S. Air Force experiencing substantial duplication of cost that could not be expected to be recovered through competition and unacceptable delays in fulfilling its requirements.

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

A Request for Information (RFI) was released via the Federal Business Opportunities (FedBizOpps) website on 23 Jan 2017. The solicitation number was ExoticsRepairALR-56C (FD20601600644) and interested parties were afforded 30 calendar days until 23 Feb 2017 to provide documentation supporting their company's capability to meet the requirements for qualification and production of the AN/ALR-56C requirement.

This requirement will be synopsized on FedBizOpps website as required by FAR 5.201. It is anticipated that sources having an interest in subcontracting may be identified through this synopsis. Any source who responds to the Government as a result of the 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 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 Management Agency (DCMA) 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.

Market research was conducted and completed on 06 June 2017 as outlined by FAR 10.001 and 10.002 using the following methods: sources sought synopsis; reviewing industry reports, trends and product developments; discussions with industry representatives; internet searches; and industry knowledge possessed by the AN/ALR-56C Engineering staff.

A Request for Information (RFI)was released FedBizOpps on 23 Jan 2017 under solicitation number ExoticsRepairALR-56C (FD20601600644). An interested source, other than the incumbent responded but the vendor failed to provide sufficient capability information to support their ability to fulfill this requirement therefore the Government determined them not capable.

Engineering reviewed industry reports, trends and product developments, and talked with field personnel, and maintaining an active dialog with the AN/ALR-56C system designer/manufacturer (BAE) and the qualified repair source (PE). The team conducted several industry-wide searches on the internet, using the following search engines. The key terms used in the searches were “ALR-56C RF component repair,” “RF component repair,” and/or NAICS 811219. The internet sites used are as follows:

• http://www.aerospace-technology.com/contractors/index.html,

• http://www.globalspec.com/ProductFinder,

• http://www.eem.com/,

• http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm,

• https://www.sam.gov/,

• Review of Govt-proprietary component product database (Haystack)

In addition, potential vendors were examined for their service capabilities and for services they are currently providing or have provided in the past. Internet searches and vendor surveys did not result in the discovery of any new sources that possess the detailed knowledge required for the repair of these assets.

Market research revealed that there is no commercial application that can fulfill the AN/ALR-56C components requirement. The uses of the AN/ALR-56C exotics are limited to military aviation. These components were specifically designed for the AN/ALR-56C RWR for electronic warfare applications.

Thus, market research revealed that PE is the only qualified source with the data, skills, and equipment necessary to support this effort within the allotted time and to meet 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.

The previous J&A (approved 06 Feb 2014) and subsequent award was written under the terms of Insurance Buy/Delivery Protection Program (DPP) procedures. The mission essential quantity was awarded to PE with dual award to US Technologies with intention of qualifying them as a new source of repair. However, US Technologies was unable to get the required test plans approved and has requested termination of the contract.

The Government emailed PE and asked them to consider selling the repair data. PE replied on 07 Feb 2017 and stated the information requested is not for sale.

AN/ALR-56Cs will begin phasing out in FY20 with the volume of repairs decreasing by FY22. The Government estimates a reverse engineering effort for all 62 NSNs would cost in excess of $6 million and require a minimum of 5 years to complete. It would not be economical or cost beneficial for the Government to pursue qualification of a new repair source due to the planned phase out of AN/ALR-56C.

In order to break barriers to competition, the Government will conduct market research prior to exercise of each option to determine if the market has changed and new source(s) of supply for the AN/ALR-56C are identified. If potential source(s) sources are identified, they will be evaluated and determination made of their supply capability. If they are determined capable, the option(s) will not be exercised and follow-on support will be competed.

XII. Certification by the Contracting Officer.

As evidenced by my signature above, 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.