JA-CAD_15-00586_2016_01_20(s)_Redacted.pdf

J&A (FD2060-15-00586) Dated 20 Jan 16 Page 1

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), 411th Supply Chain Management Squadron (SCMS)/GULA. The contracting activity for this requirement is AFSC/PZAAA. The purchase request number supporting this contracting action is FD2060-15-00586.

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

Due to the circumstances described herein, the activity requests authority to acquire the services listed in this document using Other Than Full and Open Competition as prescribed by FAR 6.302-l, “Only one or a limited number of responsible sources and no other type of supplies or services will satisfy agency requirements.” This action will result in the award of a new firm-fixed price requirements type contract (with a period of performance spanning FY16 – FY21) to the following company:

Executive Instruments Inc.

4141 Lindberg Dr.

Addison, TX. 75001-4361

CAGE: 24363

Small Business

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

AGENCY’S NEEDS

Under the contemplated contract, Executive Instruments Inc. (CAGE: 24363) will provide repairs for the following parts in support of sustainment for the TH-1H program:

Noun NSN Part Number Directional Controller 5825-01-566-7710HL 205-USH-VOR-37 Transponder Controller 5895-01-566-6242HL 205-USH-XPN-36 Receiver Controller 5895-01-566-7709HL 205-USH-UHF-35

The DF Controller (NSN 5825-01-566-7710HL) is used to control the KNR-634A VHF Omnirange (VOR) Navigation Radio Receiver on the TH-1H aircraft. The DF Controller is made by Honeywell as part number 071-01283-0012. Once the NVIS kit is installed, the part number is 205-USH-VOR-37.

The KFS-578A Transponder Control Unit (NSN 5895-01-566-6242HL) is used to identify a TH- 1H aircraft. The Transponder Control Unit is made by Honeywell as part number 071-01507- 4902. Once the NVIS kit is installed, the part number is 205-USH-XPN-36.

J&A (FD2060-15-00586) Dated 20 Jan 16 Page 2

The R/T Controller (NSN 5895-01-566-7709HL) is a KTR-909B UHF Communication Two- Way Radio designed for international governmental, military and paramilitary use. The R/T Controller is made by Honeywell as part number 071-01576-0101. Once the NVIS kit is installed, the part number is 205-USH-UHF-35.

The following table illustrates the planned period of performance, unit costs and estimated quantities per ordering period, and the summation of estimated costs associated with this requirement:

BASIC Est. Unit Repair Cost BEQ Est. TOTAL Directional Control

TT&E $

REPAIR

Transponder Control

TT&E

REPAIR

Receiver Transmitter

TT&E

REPAIR

Sub-Total $

Ordering Period 1 Est. Unit Repair Cost BEQ Est. TOTAL Directional Control

TT&E

REPAIR

Transponder Control

TT&E

REPAIR

Receiver Transmitter

TT&E

REPAIR

Sub-Total

Ordering Period 2 Est. Unit Repair Cost BEQ Est. TOTAL Directional Control

TT&E

REPAIR

Transponder Control

TT&E

REPAIR

Receiver Transmitter

TT&E

REPAIR

Sub-Total

1284132439C Sticky Note Cancelled set by 1284132439C

J&A (FD2060-15-00586) Dated 20 Jan 16 Page 3

Ordering Period 3 Est. Unit Repair Cost BEQ Est. TOTAL Directional Control

TT&E

REPAIR

Transponder Control

TT&E

REPAIR

Receiver Transmitter

TT&E

REPAIR

Sub-Total

Ordering Period 4 Est. Unit Repair Cost BEQ Est. TOTAL Directional Control

TT&E

REPAIR

Transponder Control

TT&E

REPAIR

Receiver Transmitter

TT&E

REPAIR

Sub-Total

Grand Total

The total estimated cost of this acquisition is , which includes a basic period and four (4) annual ordering periods. The estimated costs for this repair are based on actuals from contract FA8552-12-D-0003 with a 4% escalation factor added to each Ordering Period. This effort will be funded using 4930 Working Capital Funds.

NSNs: 5895-01-566-7709HL (Receiver Control) and 5825-01-566-7710HL (Directional Control) have been assigned RMC/RMSC R3/R. The RMC of “R3” indicates the following:

Repair, for the second or subsequent time, directly from the actual manufacturer. The RMSC of “R” indicates the following: The Government does not own the data or the rights thereof, which are needed to contract the repair of this part from additional sources. This code also states that it has been determined to be (1) uneconomical to buy the data or rights to the data and (2) uneconomical to reverse-engineer the part. NSN 5898-01-566-6242HL (Transponder Control) has been assigned RMC/RMSC R5/R. The RMC of “R5” indicates the following: Repair directly from a sole source contractor which is not the actual manufacturer. The RMSC of “R” has been described above.

J&A (FD2060-15-00586) Dated 20 Jan 16 Page 4

IV. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION

10 USC 2304(c)(1), as implemented by FAR 6.302-l, Only one or a limited number of responsible sources and no other type of 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

The agency’s minimum needs can only be satisfied by the unique supplies or services available from the above cited source, which possesses unique capabilities needed to satisfy this agency need.

The TH-1H is a refurbished Bell UH-1H helicopter with an installed Huey II kit, which encompasses a more powerful engine, new dynamic components, a new nose and tail boom. The cockpit and mission equipment upgrades include a change from analog to digital cockpit, the addition of crashworthy seats, and total re-wiring. The upgraded avionics components are almost exclusively commercial off-the-shelf (COTS) items. These modifications transform a legacy aircraft into a state-of-the-art training platform compatible with future operational aircraft.

This helicopter is used as an undergraduate training platform that develops multiple pilot skills and transitions those skills faster across multiple aircraft. The TH-1H's advanced electronics provide expanded training opportunities and improved operational capabilities by upgrading the engine, transmission, and rotor system. It has multi-function displays allowing for future upgrades and provides new aircrews with a seamless transition from the TH-1H to follow-on rotary wing aircraft such as the CV-22 and the Combat Search and Rescue-X helicopters.

During development of the TH-1H aircraft, these three items were purchased from Honeywell/Bendix (Cage 22373), the original equipment manufacturer (OEM), by the Prime Contractor, Lockheed-Martin. They were then sent to Executive Technical Services (ETS) (Cage 24363) to have Night Vision Lighting (NVIS) Kits installed. The only repair source found was Executive Instruments Inc. Executive Instruments Inc. removes the NVIS Kit, repairs the underlying controller (either themselves or via specialized sub-vendors), and then re-installs the NVIS Kit.

The drawings, maintenance manuals and acceptance test procedures for the instrument and the NVIS kit are proprietary for these parts. Design/repair technical data or the rights to use this data are not owned by the Government and are currently not available for purchase.

On 6 July 2015, ETS responded to a request for data from the Program Manager, 411 SCMS/GULB . Executive Instruments Inc. declined to sell data to the Government.

At this time, any attempts by the Government to reverse-engineer these parts would result in a significant duplication of costs that would not be recouped by the AF within the timeframe that this part is anticipated to be utilized on the TH-1H aircraft. To make this determination, the team

J&A (FD2060-15-00586) Dated 20 Jan 16 Page 5 assessed an example project that reverse-engineered the Fuel Quantity Indicator (FQI) for the HH-60G aircraft. This effort required 5 years and o complete. Discussions with Engineering revealed that the technical complexity of these three parts is thought to be similar to that of the FQI; however, it will be three separate reverse-engineering efforts, which could significantly extend the duration of such a project. Instead of 5 years, 8 years will be used as the estimated duration of such an endeavor. Given these technical assumptions, the initial cost savings resulting from competition would likely not be observable until approximately 2024 (i.e.

2016 + 8 years).

Based on an assessment of historical performance as well as forecasted demand for these repairs, future quantities are not anticipated to provide a magnitude of work scope that will produce the cost-savings needed to recoup the initial investment ) within the estimated service life of the aircraft (i.e. through 2040). If this 5-year requirement totals approximately , then competition could feasibly result in a 20% savings (approximately

) beginning in 2024 (see above paragraph). At that rate of savings, it would take approximately 300 years to break-even with a investment, which is an unrealistic timeframe for implementing any cost-savings initiatives. According to this fundamental rationale, choosing to reverse-engineer these three parts would not produce any cost benefit to the AF within the anticipated duration (i.e. operational years) of service life for the TH-1H helicopter.

At this time, the capabilities to fill this particular requirement are currently only available from Executive Instruments Inc. primarily because no one else has the data to properly build these items currently installed in the TH-1H. They have sole proprietary rights to the technical design and repair data for these units and have declined to sell them to the Government. In accordance with the market research conducted in support of this requirement, the only identified repair source by which Operations, Safety, Suitability and Effectiveness (OSS&E) and Configuration Control can be successfully maintained is via Executive Instruments Inc.

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. Although the Government does not own data to support acquisition of these controllers from any other source, 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.

A Source Sought Synopsis (SSS) was posted on the Federal Business Opportunities (FedBizOpps) webpage on 27 July 2015 as required per FAR5.201 in order to identify potential sources that possess the expertise, capabilities, technical data resources, and experience to repair these three items utilized by the TH-1H Helicopter. The SSS was posted for ten working daysand as of 7 August 2015, AFMC/PZAAA at Warner Robins FA8524 had received no responses.

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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 15.404, it is anticipated that negotiations will be conducted using information other than cost or pricing data from the contractor. Price analysis will be conducted using available information and approved pricing techniques that will support the contracting officer in making a determination that the price paid to the contractor is fair and reasonable to the Government.

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 May 28, 2015 pursuant to FAR 10.001 and

10.002. Market research was conducted using search engines such as the System for Award Management (SAM), the Small Business Advocate (SBA) Website and Google.

https://www.sam.gov/portal/SAM/#1 www.smallbusinessadvocate.com https://www.google.com/?gws_rd=ssl

Internet search using Google on “205-USH-XPN-36”, “205-USH-UHF-35” and “205-USH- VOR-37” found sources of aftermarket parts, but no repair sources. They would not have access to the proprietary Honeywell or ETS data and so would not be able to successfully repair these items.

An internet search of ILSmart on the NSNs of these three items found sources of surplus parts, but no alternate sources of repair.

The SBA Dynamic Search Engine includes the ETS Cage Code, 24363.

The Federal Acquisition Regulation (FAR) Report from SAM shows ETS is a small company for its one North American Industry Classification System (NAICS) Code.

A vendor survey was conducted via market research, which identified Executive Instruments Inc.

and Honeywell International Inc. as the only repair sources for these parts. The details regarding these entities, their relationship in performing the repair tasks, and technical substantiation of their capabilities can be found in the Market Research Report (MRR) that corresponds to this J&A.

Market research has clearly concluded the only company capable of repairing the specified 3 NSNs is Executive Instruments (Cage Code 24363).

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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

The Government Logistics Manager and Engineer contacted Executive Instruments Inc. in June 2015 to request purchase of all internal data and repair data related to this repair. On July 6, 2015, they stated via e-mail that will not sell this data as they consider their data proprietary.

The other option is to reverse-engineer these parts with the objective of establishing a full technical data package that would enable the Government to (1) qualify additional sources to compete for this requirement and/or (2) stand-up an organic repair capability; however, as explained in Section V of this J&A, it would take an unacceptable number of years (far more than the life of the weapon system) to recoup the estimated investment needed to complete a reverse-engineering project. Therefore, it would be unfeasible and unbeneficial to pursue such an endeavor.

The service life of the TH-1H is expected to be active through 2040; therefore, follow-on repair requirements are anticipated. The Government will continue to request the OEM’s willingness to sell the data rights for this part with the goal of qualifying additional industry sources to compete for this work scope. The 411 SCMS will also continue surveilling the market to determine (1) the feasibility/possibility of alternate strategies and (2) the probability of them producing realistic cost-savings to the AF during the useful life of these parts on the TH-1H helicopter. The team will also reassess barriers periodically to determine if changing circumstances support a shift toward a different approach.

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).