JA_APPROVED.pdf_-__redacted.pdf

FD2060-13-01822

13 May 2014, v15

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), 638 Supply Chain Management Group (SCMG), 411 Supply Chain

Management Squadron (SCMS) / GULD. The contracting authority for this requirement is AFMC AFSC/PZAAB. The purchase request number supporting this contracting action is FD2060-13-01822 & FD2060-14-00447.

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

Due to the circumstances described herein, the activity requests authority to acquire the repair services listed in this document (AN/AAQ-38/38A Infrared Detection System

(IDS) 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 sole source requirement will be repaired from the following company:

Canadian Commercial Corporation

50 O’Connor St, Suite 1100

Ottawa, ON K1A0S5

Canada

CAGE: 98247

WESCAM (L-3 COM)

649 North Service Rd. West

Burlington, Ontario Canada L7P 5B9

CAGE: 3AC24

Large Business

Award is made to Canadian Commercial Corporation, who then subcontracts to

WESCAM

III. DESCRIPTION OF THE SUPPLIES/SERVICES REQUIRED TO MEET

THE AGENCY’S NEEDS

Air Force Special Operations Command (AFSOC) aircraft have a requirement for depot level repair of Line Replacement Units (LRUs) of the AN/AAQ-38/38A Infrared

Detection Set (IDS). The LRUs consist of peculiar Commercial Off-the-Shelf (COTS)

WESCAM Infrared Receiver (LRU-1) and Control Converter (LRU-2) that are Mission

Design Series (MDS) specific. The AN/AAQ-38 IDS assets are comprised of National

Stock Numbers (NSNs) 5855-20-005-0514SO (LRU-1) and 5895-20-004-0810SO (LRU-

2), applicable to the MC-130P Combat Shadow. The AN/AAQ-38A IDS assets are comprised of NSNs 5855-20-005-0515SO (LRU-1) and 5895-20-004-4164SO (LRU-2), applicable to the MC-130H Combat Talon II.

13 May 2014, v15

Requirements:

CLIN NSN URC BEQ TOTAL

OPTION

TOTAL

0001 5855-20-005-0514SO $ 12

0002 5895-20-004-0810SO $ 7 $

0003 5855-20-005-0515SO $ 35 $

0004 5895-20-004-4164SO 30 $

0005 NFF

0006 BER

0007 Over & Above 1

To Be

Negotiated

1001 5855-20-005-0514SO 10 $

1002 5895-20-004-0810SO $ 7 $

1003 5855-20-005-0515SO $ 35

1004 5895-20-004-4164SO 30

1005 NFF

1006 BER

1007 Over & Above 1

Negotiated

2001 5855-20-005-0514SO $ 8 $

2002 5895-20-004-0810SO $ 7 $

2003 5855-20-005-0515SO $ 35 $

2004 5895-20-004-4164SO $ 30 $

2005 NFF

2006 BER

2007 Over & Above 1

Negotiated

3001 5855-20-005-0514SO 8

3002 5895-20-004-0810SO $ 7 $

3003 5855-20-005-0515SO $ 35 $

3004 5895-20-004-4164SO $ 30 $

3005 NFF

3006 BER

3007 Over & Above 1

Negotiated

4001 5855-20-005-0514SO $ 8

4002 5895-20-004-0810SO $ 7 $

4003 5855-20-005-0515SO $ 35

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4004 5895-20-004-4164SO $ 30 $

4005 NFF

4006 BER

4007 Over & Above 1

Negotiated

Grand Total

TOTAL ESTIMATED CONTRACT COST: $

Basis for the estimated cost for this repair is from current contract (FA8524-10-D-0006) with a 4% inflation rate per year.

RMC/RMSC code R3R. RMC R3: Repair, for the second or subsequent time, directly from the actual manufacturer. RMSC R: The data needed to acquire these parts competitively is not physically available, cannot be obtained economically, nor is it possible to draft adequate specifications or any other adequate, economical description of the material for a competitive solicitation.

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

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

a. The AN/AAQ-38/38A are digital, third generation medium wavelength infrared

(MWIR) IDS that replaced the analog, first generation long wavelength infrared

(LWIR) legacy AN/AAQ-17/17A IDS. The AN/AAQ-38/38A LRU-1 is peculiar to the Air Force and the OEM, L-3 Communications WESCAM Inc., Burlington, Canada. The Q-38/38A is a Commercial Off-The-Shelf (COTS) non-developmental system based on the MX-15 series of WESCAM marketed products. WESCAM provided a small amount of development to their MX-15 in order to meet the Air Force’s form, fit, and function requirement without losing any of the MX-15 basic functionality.

http://www4.law.cornell.edu/uscode/html/uscode10/usc_sec_10_00002304----000-.html http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/Far/06.htm#P77_9982

13 May 2014, v15

The Government does not own the rights to the software and hardware data required to manufacture this assembly. No sources other than the Original

Equipment Manufacturer (OEM) are qualified to make these items. On 7 Aug

2013, the OEM stated that they are unwilling to sell the rights to this data to the government.

b. L-3 WESCAM owns the complete technical data package. Multiple sources exist that can modify or reverse engineer a new or existing asset that could be used to meet the government’s requirements, but this effort would require significant time and resources to re-accomplish and re-qualify an OSS&E detailed production support knowledge base. In addition, there are no new technologies that provide affordable best value alternatives to the current design.

c. The 411 SCMS believes that award to any other source would result in unacceptable delays in fulfilling the Air Force’s requirements. Contracting to a new source would incur delays in test data development; first article testing, training and qualifying personnel to operate the equipment, as well as, added delay in achieving the required capabilities. A competitive solution for AAQ-

38/38A IDS repair will require capitalization for multi-spectral infra-red tests and repair capability. These are comparable with known vendor sources of similar design, production, and repair capabilities. Known vendors are: Boeing, Lockheed, Raytheon, BAE, and FLIR Inc. NRE required to establish system

LRU tests and repair would require 18-36 months to establish with a nominal 24 month production capability (this includes data sourcing). A new vendor start-up process could be achieved for $9.74M at less than 5 years.

d. To compete this repair, approximately $25M would be required to fund reverse engineering of the units to provide the required technical drawings, maintenance, and test procedures required to repair the items to a level to maintain the required mean time between failures. The cost is directly proportional to the Level Of

Effort (LOE) required to establish the above. A reasonable public IPT labor estimate basis would be 6 PE’s of 4 (2078 hr./PE) man years at $105/hr. (last comparable 2013 pricing) or $5.2M ($5,236,560) labor plus $12.2M EO/IR DSP test/repair capabilities with infrastructure. Test includes auto-collimation, black body source/measurements, precession electromechanical capabilities, and Very

High Speed Integrated Circuit (VHSIC) Digital Signal Processing (DSP) Field

Programmable Gated Array (FPGA) capabilities with large Digital Word

Generator (DWG) data pin depth exercising developed stochastic embedded software algorithms. This is a high risk concept at best.

VI. EFFORTS TO ADD ADDITIONAL SOURCES/SOLICIT FROM AS MANY

SOURCES AS POSSIBLE

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

13 May 2014, v15 own data to support acquisition of this LCU 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.

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.

This is a foreign acquisition. Contract will be awarded to the Canadian Commercial

Corporation (CCC). CCC will subcontract to WESCAM. Negotiations will be conducted based on FAR Part 25, Foreign Acquisitions. The Canadian Commercial

Corporation (CCC), and its subcontractors are exempt from submission of certified cost or pricing data; however, not from the requirement to submit data other than certified cost or pricing data.

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 Aug 2013 pursuant to FAR 10.001 and 10.002. Market research tools (the internet, trade journals and the Haystack Database) which details the history of design for the item were utilized by the Government program management/engineering team. Also, an examination of the available technical data was conducted. A Federal Logistic Information search was performed to determine if the item could be repaired by a different vendor. An internet search was also conducted, but revealed no other potential sources. Based on available information and engineering knowledge of the item and the aerospace industry, the only viable source for the repair of this part is L-3 WESCAM (Prime: Canadian Commercial Corporation). No small business and no small disadvantage business opportunities can be met concerning this acquisition.

The market research techniques used, IAW FAR 10.002(b) (2), were:

(i) Contacting knowledgeable individuals in Government and industry regarding market capabilities to meet requirements,

(ii) Reviewing the results of recent market research undertaken to meet similar or identical requirements.

(iv) Querying Government data bases that provide information relevant to agency acquisitions.

(v) Participating in interactive, on-line communication among industry, acquisition personnel, and customers.

(vi) Obtaining source lists of similar items from other contracting activities or agencies, trade associations or other sources.

(vii) Reviewing catalogs and other generally available product literature published by manufacturers, distributors, and dealers or available on-line.

13 May 2014, v15

These techniques included but were not limited to internet searches and discussions with other government technical employees that are/were directly or indirectly involved with

Infrared Detection Set(s) resources and applications. Trade journals and catalogs were reviewed and compared with queried Internet resources. Consultation with other government entities with similar requirements were accomplished for a full Market

Research review due diligence.

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 Government has attempted to acquire rights in technical data and computer software sufficient to compete follow-on acquisitions. On 7 Aug 2013, the OEM stated that they are unwilling to sell the rights to this data to the government. The government will continue to pursue the purchase of the technical data by elevating the request within the company. We anticipate follow-on repair efforts in the future and will pursue technical data and elevate request up the chain of command in the company prior to negotiation of a new follow-on effort.

The system engineer has concluded that a “normalized” return on investment (ROI) for reverse engineering concept cannot be realized:

Legacy repairs average $50 K/LRU with Mean Time Between Demand (MTBD) of 1800 hrs. /LRU. There are two LRU configurations with 20 MC-130H Mission Design Series aircraft at 350 fleet flight hours using 700 hours/month. This is a systemic Elapsed Time

Indicator (ETI) Life of Program (LOP) Fy2025 projection. 750 hours/month for 12 months and 12 years projected = 108,000 operational hours expectation E(x). MTBD implies 60 repair actions for the LOP. At $50K/LRU repair action = $3M LOP (without inflationary extrapolation). Yet there are two configurations, therefore a worst case economic E(x) = $6M LOP. Assuming extrapolated legacy repairs, competitive reverse engineered repairs are 50% less or $25K/LRU with the two configurations or $3M for

LOP. Reverse engineering would require a $25M capitalization (reference PR FAD2060-

09-25193 Paragraph V). Assuming three years to implement and qualify a reverse engineer plan, leaves 9 years LOP serviceability returning $3M/year savings, or $27M returned for the $25M invested or LOP Return on Investment (ROI) of 1.08.

13 May 2014, v15

With the timeline to qualify a new source being in excess of three years, it is unlikely that the government will receive any return on dollars invested toward a reverse engineering effort for this part. By the time the new sources are qualified in approximately 2016, the

MC-130H will have begun retiring. The new airframe MC-130J began delivering in

October 2011 and will not require the current configuration of AN/AAQ-38/38A Infrared

Detection System. Additionally, the follow-on repair coverage is needed in 2015, which is why qualifying a new source is not economical and cannot meet our schedule on face value.

The Government’s latest attempt to purchase data was Aug 2013. After contract award, the Government plans to submit a yearly request to the contractor to purchase data.

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)).

http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/Far/06.htm#P204_28777 http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/Far/06.htm#P204_28777