J&A_Redacted_.pdf

PR Number: FD2060-15-00596 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), 638 Supply Chain Management Group (SCMG), 407 Supply Chain Management Squadron (SCMS)/GULB.

The contracting authority for this requirement is AFSC/PZABA Robins AFB, GA. The purchase request number supporting this contract action is FD2060-15-00596.

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

Due to the circumstances described herein, the activity requests authority to acquire the repair 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 requirement is for the final procurement of repair services for the Common Large Area Display System (CLADS) monitors which are subcomponents required to support the E-3 Airborne Warning and Control System (AWACS), Mission Computing System (MCS). This action will result in the award of a new contract, which will be a firm-fixed price, requirements-type contract with a basic year plus two (2) ordering periods/option years in which additional quantities may be repaired. This requirement will be purchased from the following company:

Raytheon Company, Division EO Innovations (Formally known as ELCAN Optical Technologies) 1601 N. Plano Road Richardson, TX 75081

CAGE 1SDY4

Large Business

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

AGENCY’S NEEDS

This requirement is for the final procurement of repair services for the Common Large Area Display System (CLADS) monitors which are subcomponents required to support the E-3 Airborne Warning and Control System (AWACS), Mission Computing System (MCS). Work performed under this effort includes all actions necessary to return NSN 5980-01-419-2208CX to a serviceable condition. Consolidated Sustainment Activity Group (CSAG), Material Support Division (MSD) funding will be used to fund these repairs.

The estimated repair costs are based upon pricing on the previous contract, (FA8539-14-D-0006) pricing with a three percent inflation rate applied to each out year. The Best Estimated Quantities (BEQ) is based on actual demand as well as projections computed by the Sep 2014 D200A computation cycle.

PR Number: FD2060-15-00596 Page 2

(1) The requirements covered by this J&A are as follows:

Period BEQ QTY EST Repair Cost Eval Cost EST Total Cost Basic FY17 86ea Option 1 FY18 72ea Option 2 FY19 67ea

Total =

The total estimated value of the contract including maximum quantities for all option years is

Deliveries shall begin 90 days after receipt of a funded task order or receipt of reparable assets whichever is later at a minimum rate of eight (8) repairs per month.

This acquisition is being conducted is accordance with FAR 13.5- Test Program for Commercial Items.

NSN RMC Expiration Approved Source 5980-01-419-2208 R3/R 05 Mar 2020 Northrop Grumman

The AFMC Form 762, Contract Repair Screening Analysis Worksheet (CRSAW), states that the RMC/RMSC for this item is R3/R: R3 indicates “Repair, for the second or subsequent time, directly from the actual manufacturer” and R indicates, “The Government does not own the data or the rights to the data needed to contract repair of 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.

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)

CLADS, NSN 5980-01-419-2208CX, Part Number (P/N) 3310031100-30 is a lightweight, high-resolution video monitor designed to provide the clarity and resolution required to support intensive display requirements. The CLADS is an E-3 AWACS aircraft peculiar item that uses Digital Light Processing (DLP) electronics to support vivid colors and wide viewing angles for displaying maps, images, sensor station data and command and control information. CLADS is a critical component in the E-3 MCS and as such, can critically affect or cause mission failure.

PR Number: FD2060-15-00596 Page 3

In 2014, contract, FA8539-14-D-0006, was awarded to Raytheon Company, EO Innovations Division as a sole source to repair for CLADS. Raytheon is the Original Equipment Manufacturer (OEM). The previous Requirements Approval Document (RAD) was approved for

. However, during final contract negotiations, the contractor refused to commit to a multi-year (basic+4 option years) contract citing diminishing sources of repair and materials as their primary reason. Consequently, PR FD2060-13-00842 was awarded for only one (1) year (FA8539-14-D-0006) for to complete evaluation and repair of 72 CLADS units.

This contract was awarded on 19 Sept 2014 and expired on 19 Sept 2015. Another Task Order was issued for 36 additional repairs, 50% of the original, to sustain repairs until a follow on contract is awarded. Repairs on the final Task Order are anticipated to be delivered through Dec 2016. Raytheon EO Innovations retains all of the data and drawings needed to repair CLADS.

The E-3 AWACS M19-E-3-Block 40/45 modification is Special Program Office (SPO) funded project initiated to replace the entire E-3 MCS which includes CLADS as a subcomponent.

CLADS is not a standalone system and is not compatible with the new MCS and as such will no longer be used on the E-3 once modifications are completed in FY20. The new MCS and all its subcomponents will be sustained by the E-3 SPO. The AFMC Form 762 CRSAW actions resulted in the assignment of the RMC/RMSC of R/3R for NSN 5980-01-419-2208CX (CLADS) where special tools/test equipment and special facilities are required for repairs, all of which the OEM currently possesses. Only repairs completed by the OEM would be accomplished in accordance with testing documents tailored around CLADS performance specifications with variations to accommodate the specific design of the internal assemblies from past production orders. The 407 SCMS Program Manager contacted the OEM and requested a price quote for CLADS Technical Data Package (TDP) needed for repairs however, Raytheon declined to sell;

10 Nov 2015 is the date of Raytheon’s most recent reply.

Award to any source other than Raytheon would result in substantial duplication of costs to the Government to develop Line Replaceable Units (LRU) Test Set Procedures (TSP) and Shop Reparable Units (SRU) TSP. Costs for these expenditures are not expected to be recovered through competition including organic repair and will create unacceptable delays in fulfilling Air Forces requirements. In 2008, Source of Repair Approval Package (SORAP) #01-138 was signed by the 309 MXW, Source of Repair Team indicating that the maintenance wing agreed that future repairs should be accomplished via contractor rather than standing up organic repair.

Because Raytheon is unwilling to sell CLADS technical data to the Government, award to any other source would require a redesign and/or reverse engineering effort to develop internal TDP for the depot or a commercial vendor. Based on similar projects, a redesign and/or reverse engineering effort would expose the Air Force to unnecessary cost risk, schedule risk, and technical risks with no guarantee of success. In addition, it would take approximately five years for the government or a commercial vendor to obtain the necessary tools/equipment and facilities, complete a redesign and/or reverse engineering effort, identify and rectify obsolescence issues, deliver qualification reports, provide First Article assets for the Government’s review, deliver a TDP, and begin delivery of CLADS. The estimated cost for such an effort, not including the cost of production assets, is estimated at over based on 524 EMXS/MDPBE historical averages for multi-weapon system like items. The MCS which includes CLADS is scheduled to be removed from all active E-3 aircraft by FY20 under the M- 19-E-3 Block 40/45 Modification with the final aircraft entering Programmed Depot Maintenance (PDM) in October 2020. Twenty-four (24) E-3 aircraft are scheduled for

PR Number: FD2060-15-00596 Page 4 modification and the remaining seven (7) will be decommissioned. The most recent schedule was updated 29 Oct 2015 and posted in the Spares Recoverability Review Board (SRRB) template.

There are a total of 31 aircraft in the E-3 fleet. Nine (9), aircraft have already been modified with the following scheduled modifications through to FY20: Three (3) aircraft are scheduled for modification in CY16, three (3) aircraft in CY17, three (3) aircraft in CY18, three (3) aircraft in CY19, three (3) aircraft in CY20 for a total of 24 modifications. The remaining seven (7);

aircraft are scheduled for decommissioning. The Block 40/45 Modification schedule has changed since the beginning of this contract effort; however, best estimated repair quantities remain consistent due to an increase in flying hours, a decrease in Meantime Between Demand (MTBD), an increase in condemnation rates and an increase in Monthly Demand Rates (MDR).

Based on anticipated reduction in requirements and reclamation of serviceable CLADS units from modified aircraft, this repair effort is expected to sustain repairs through FY20. These items are also highly specialized and require peculiar test equipment that is only available at the contractor’s facility. These items require a specific test capability to test fault analysis screens and to run computing data for the E-3 aircraft. The contractor has the required equipment to download and troubleshoot call outs for failures and to ensure that the computing system is downloading the data properly.

Repairs under the current contract and stock of serviceable assets are expected to meet recurring monthly demands through Dec 2016. The delays associated with award to another vendor or standing up organic repair are unacceptable with backorders currently at 85 with a monthly demand rate (MDR) of 7.3. Backorders will accrue at a rate of 7.3 per month during the new vendor’s redesign and/or reverse engineering, build, test, qualification, manufacturing start-up, and delivery phases which will lead to increased Mission Incapable (MICAP) and SURGE requirements. Over the lifespan of CLADS, the OEM compiled a list of historical data identifying at risk parts. This list can be used to identify and qualify replacement parts when their current supply is depleted on an as needed basis. This listing is proprietary historical data owned and used solely by the OEM and cannot be duplicated by the Government or another contractor.

The overall mission capable rate of the AWACS fleet will be adversely impacted, as would E-3 Air Crew training and worldwide missions supported by AWACS. Raytheon is the only firm capable of providing the services described in Section III without the Government experiencing unacceptable delays in repair and substantial duplication of costs which cannot be recovered through competition and will hinder fulfillment of AWACS mission requirements.

CLADS performance specifications were developed with an open architecture approach, which would allow future manufacturers to produce new CLADS assets by utilizing current technology that may be totally different from what existed when the system was originally designed. Only the outputs of internal assemblies are controlled by the original specification but the configuration of CLADS has changed with each new production order, rendering any existing test data developed for previous production orders, invalid. Battelle Memorial Institute was identified in the Market Research as co-developer of CLADS but the company was eliminated as a Source of Repair (SOR) because they have never possessed the tech data or test equipment needed to make repairs. Battelle acted only as a developer but never made repairs. Raytheon maintains configuration control and owns all engineering data that pertains to past and current configurations of the 620 plus CLADS units which have been manufactured. There are multiple configurations of CLADS fielded and only EO Innovations possesses the necessary data to repair any configuration.

PR Number: FD2060-15-00596 Page 5

For the reasons outlined above, stand up of an organic or contract repair line through redesign/reverse engineering is not considered to be a viable or economically sound alternative.

Raytheon EO Innovations is currently the only known SOR capable of providing repairs as described in Section III without the Air Force experiencing substantial duplication of cost which is not expected to be recovered through competition or without creating unacceptable delays in fulfilling mission requirements.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE

This requirement was synopsized on the Federal Business Opportunities (FedBizOpps) web page as required by FAR 5.201. Although the Government does not own data to support acquisition of this repair effort, any source who responds to the Government as a result of this synopsis will be identified to the prime contractor as a potential subcontractor.

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 considered fair and reasonable based upon FAR 12 negotiation procedures using price and cost analysis. Methodologies to assure this will be commercial pricing techniques utilizing publicly offered catalogs, comparison to historical contractor sales and/or analysis of limited cost and pricing information which could be made available by the contractor. In the event that limited cost and pricing information is made available, the Government’s negotiation objective will be developed using local technical analysis applied to direct and indirect rate factors recommended by the Defense Contract Audit Agency (DCAA) and/or Defense Contract Management Agency (DCMA).

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 17 July 2015 pursuant to FAR Part 10. Thorough documentation searches were conducted within Government databases combined with various internet searches Thomas Registry (www.thomasnet.com), IHS Haystack (www.ihs.com/products/haystack-gold.html), JEDMICS (https://jedmics.af.mil/webjedmics/index.jsp) and PDM Gateway (https://tosune5.robins.af.mil/pdm_gateway/) were searched using P/Ns. It was determined that no technical data is available. WebFLIS (http://www.dlis.dla.mil/webflis/pub/pub_search.aspx), BINCS (https://www.dlis.dla.mil/bincs/begin_search.aspx), PRPS, SAM (https://www.sam.gov/index.html/#1) the internet, via Google.com were searched using keywords, manufacturers, nomenclature, NSNs and P/Ns for background information and to determine current and past sources.

A search for HUB zone and service disabled veteran owned businesses was conducted using the Dynamic Small Business Search Engine (http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm), A vendor survey was conducted to identify contractors with the capability to meet the

PR Number: FD2060-15-00596 Page 6 government’s requirements. Multiple vendors listed in the search results were researched in further detail. An analysis was also performed to identify the cost, schedule, and technical risks associated with potential vendors.

RFI-15-00596 was advertised on FedBizOpps from 31 July to 10 August 2015 stating: “This effort is to obtain contractor services for repair of the Common Large Area Display Set (CLADS) (NSN 5980-01-419-2208, P/N 3310031100-30) used on the E-3 aircraft” the advertisement included a Sources Sought Synopsis and Request for Information (RFI) document.

The RFI closed without any inquiries or responses.

In addition, a search for HUB zone and ownership/self-certs (minority, veteran, women etc.) was conducted using Dynamic Small Business Search (DSBS), http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm, using criteria consisting of keywords, manufacturers, National Stock Number, and Part Numbers pertaining to item name and description. A vendor survey was completed by contacting Raytheon EO Innovations and Battelle. Battelle Memorial Institute, (CAGE 1SDY4, NAICS code 333314) provides research and development (R&D), analysis and management services for industry and government offices. Battelle co-developed the specifications and requirements for CLADS but is not a valid source of repair as EO Innovations is the actual manufacturer. There were no other small business opportunities available to support this effort. RFI-15-00596 was advertised on FedBizOpps from 31 July to 10 August 2015 and closed without any inquiries or responses.

Market research identified Raytheon as the only qualified SOR with experience repairing airborne DLP monitors for military application and the technical data for the current USAF approved configuration baseline. They are the only vendors who have repaired this item.

Raytheon possesses the proprietary technical data required to repair this item and has stated that they will not sell the data and/or the rights to the data. A redesign and/or reverse engineering project for this item is not feasible due to cost, schedule, and technical risk. The OEM is the sole owner of the TDP and intellectual property for this item. Raytheon has the greatest likelihood of success from a cost, schedule, and technical risk perspective. Recommend sole source repair through the source identified, Raytheon, EO Innovations.

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

OPEN COMPETITION

This is a follow on effort to maintain a SOR for CLADS until they are removed from the aircraft. The current contract was originally written to cover multiple years (basic plus 4 options) and was approved through the Warner Robins Competition Advocate office for . During final negotiations, the contractor refused to commit to a multi-year agreement citing diminishing sources of repair/materials and obsolescence as primary factors in their decision. The Contractor also identified the following issues affecting their repair processes: a loss of subject matter experts, failing test equipment and a need to update test data. In addition, they also identified several at risk parts which includes: the high intensity lamp and its associated ballast, the color wheel motor, and the super extended graphics array (SXGA) board and its electronic components. Raytheon purchased many of these parts in an end-of-life acquisition and they will

PR Number: FD2060-15-00596 Page 7 no longer be procurable once Raytheon’s stock is depleted. Consequently, PR FD2060-13- 00842 was only awarded for one (1) year (FA8539-15-D-0006) for to test and repair of 72 units.

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

According to the E-3 SPO, there will not be a need for CLADS repairs beyond FY20 after the Block 40/45 Modification project is complete.

CLADS is not a standalone item but is a subcomponent of the Central Computer (CC-2E), MCS and is considered a commercial item with a unique military use only on the E-3 AWACS aircraft. Modifications were made to CC-2E, CLADS monitors to accommodate USAF form, fit, function, and interface (F3I) requirements. Currently there are no commercial or non-commercial items which can replace CLADS for use within the MCS design. Once block 40/45 modifications are completed the entire MCS, which includes CLADS, will no longer be used.

Block 40/45 will replace the aging CC-2E computing system, which is based on an International Business Machines (IBM) 360 mainframe and its operator’s terminals with a network of UNIX-based commercial off the shelf (COTS) workstations for the operators linked to several UNIX-based COTS computers, which will perform functions currently resident in the CC-2E. The new systems are COTS and will be sustained by the E-3 Special Program Office (SPO).

The Government pursued several avenues to overcome barriers to competition by contacting vendors identified during market research and seeking organic and/or contract repair using reverse engineering. However, attempts were unfruitful primarily because the Government does not own and cannot purchase system technical data needed to establish alternative repair sources.

In addition, of the E-3 Block 40/45 Modification program is scheduled to be completed in FY2020 which does not allow adequate time for the Government or a separate vendor to recoup expenditures associated with a reverse engineering effort and standing up a commercial or organic repair facility without inflicting severe damage to customer support by creating excessive backorders, SURGE and MICAP conditions.

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)).

PR Number: FD2060-15-00596 Page 8

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)).