FBOJA_C-130J.pdf

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

I. CONTRACTING ACTIVITY

Department of the Air Force, Air Force Materiel Command (AFMC), Aeronautical Systems Center (ASC), 516th Aeronautical Systems Wing (516 AESW), 866th Aeronautical Systems Group (866 AESG), 657th Aeronautical Systems Squadron (657 AESS), Wright-Patterson Air Force Base, Ohio (WP AFB).

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

This Justification and Approval (J&A) is being submitted to reflect an increase in potential C-130J and derivative aircraft sales over and above previous J&A limits. These sales will result in the creation ofnew Contract Line Item Numbers (CLlNs) on the C-130J aircraft acquisition Contract (F A8625-06-C-6456) with Lockheed Martin Corporation, Lockheed Martin Aeronautics Company - Marietta (LM). These CLlN s will primarily be firm-fixed-price (FFP) in nature with separate time-and-materials (T&M) and cost-reimbursement (CR) CLlNs for aircraft spares and support. A number ofthese CLlNs are being funded by fiscal appropriations included within the Supplemental Appropriations Act of2008, Public Law 110-252 (the "FY08 War Supplemental").

The original J&A for the Five-Year Option Contract (FYOC III) FA8625-06-C-6456 contained provisions for the acquisition ofup to forty-eight (48) C-130J and derivative aircraft. An amendment to the original J&A increased the number of anticipated aircraft to be acquired from forty-eight (48) to seventy-two (72). The 866 AESG now envisions a need to further increase the anticipated number of aircraft to be . under FYOC III to an estimated one-hundred

161 aircraft This Federal Acquisition Regulation (FAR) Part 15 acquisition will support mission requirements for the United States Air Force (USAF), other United States Government and' and FMS case customers.

The C-130J program is currently in the final year of the C-130J Multi-Year Contract (MYC I) F33657-03-C-2014. Aircraft deliveries under MYC I will end in November 2009. A follow-on MYC II is currently being considered, but will likely not materialize until sometime in FYI2. To bridge the gap between the end of the current MYC I and the establishment of a follow-on aircraft production contract (MYC II and/or FYOC IV), the FYOC III contract vehicle must be used. Ofthe forty-eight (48) C-130J and derivative aircraft authorized by the original FYOC III SAMP, and the additional twenty-four (24) aircraft authorized by the SAMP amendment, firm orders have been for aircraft with an . for six additional aircraft.

Additionally, in support ofpotential new FMS cases, it is contemplated that the 866 AESG may need to task LM to accomplish certain studies and analyses, site surveys, and technical studies prior to weapon-system Letters ofOffer and Acceptance (LOAs). These efforts would be funded through separate country-specific site survey LOAs and only on an as-needed basis.

Based upon the potential for increased domestic and international C-130J and derivative aircraft sales, a new J&A is requested for a total of 161 C-130J and derivative aircraft to be acquired under the FYOC III contract vehicle. This J&A request also includes related aircraft spares and support activities, as well as pre-LOA technical studies, analyses, and site surveys.

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

AGENCY'S NEEDS

Aircraft Production

LM was awarded a Multi-Year Procurement (MYP) Contract F33657-03-C-2014, focusing on the acquisition of new C-130J and KC-13OJ configured aircraft. A total of sixty-two

(62) aircraft have been acquired through the MYP with deliveries taking place through FY09.

The MYP approach allowed for production line stability and certain economies-of-scale to be realized over a longer, more predictable aircraft production run unachievable under the options based FYOC approach.

Development ofNew Capabilities

To facilitate developmental updates to the C-130J fleet, LM was awarded a Block Upgrade Improvement Contract (BUIC) FA8625-04-R-6452. The BUIC is an Indefinite Delivery/Indefinite Quantity (IDIQ) contract, with individual technical efforts accomplished via task orders. Each task order will be an individual development contract, with its basis in the BUIC, and its specific guidance being provided by the task order and its associated Statement of Objectives (SOO). The individual task orders executed under the BUIC are for the development and testing of specified changes, accompanied by associated technical publications and drawings commensurate with a developmental program.

Training

To ensure C-130J operational units are properly trained, the 677th Aeronautical Systems Group (677 AESGITS) at WPAFB awarded a C-130J Maintenance and Aircrew Training Systems (MATS) contract, F A8621-06-C-6300 to Lockheed Martin Corporation, Lockheed Martin Simulation, Training and Support (LM STS). The C-130J MATS is an integrated training system, consisting ofMaintenance Training Devices (MTDs), an Aircrew Training System (ATS) and associated courseware, and a Training System Support Center (TSSC). The MTDs support the training and certification ofC-130J maintenance personnel, while the ATS provides initial, continuation, and upgrade training for C-130J aircrews. The ATS consists of a system of academic material, aircrew training devices, trainer instruction, and in-flight instruction conducted by USAF personnel.

Common Parts with Legacy Fleet

Support for C-130 common items is currently provided by organic USAF, Defense Logistics Agency (DLA), and Department ofDefense (DoD) depot infrastructure. Specifically, C-130J sustainment requirements will be met under the Mid-Term SustainmentfLong-Term Sustainment (MTS/LTS) contract. This contract was awarded by the 330th Tactical Sustainment Group (330 ACSG) at Robins AFB, Georgia simultaneously with the FYOC III Contract. The 866 AESG will remain responsible for engineering and logistics support. The FYOC III contract reflects the migration of sustainment activities from Interim Contract Support (lCS) provided by the 866 AESG to LTS provided by the 330 ACSG.

Planned Acquisition

The basic contract and priced options will be used to support and acquire:

• C-130J and derivative aircraft and associated aircraft data;

• Initial spares, mission spares, repair parts and support equipment;

• Incorporation of Engineering Change Proposals (ECPs);

• Modification kits;

• Training;

• Interim Contractor Support (ICS) personnel deployments and ICS data; and

• Test support and technical studies.

The Contractor will be responsible for managing the C-130J configuration baseline with the Government approving all Class I changes to the military baseline.

C-J30J Aircraft

The FY OC III contract aircraft options will be used to acquire any C-130J aircraft configuration including "Short" and "Stretch" C-130J, EC-130J, KC-130J, HC-130J MC-130J and internationallFMS aircraft and and

Data

Data deliverables will be procured to support the C-130J aircraft and related systems. These data deliverables will ensure the USG maintains clear visibility into program schedule, technical and logistical performance, configuration management initiatives, programmatic risks, financial information, and aircraft certifications. Types of data to be delivered include: Program Management, Technical and Engineering, Engineering Drawings, Financial Management, Logistics Support, Technical Manual Contract Requirements (TM 86-01), Training, Courseware Update, and Configuration Status Accounting. Data deliverable options will be priced and evaluated each option year.

Initial Spares and Support Equipment (SE)

LM will be responsible to procure initial peculiar and mission-specific spares and SE for each C-130J aircraft, training devices, and major (Class A) ECPs. This involves the acquisition of initial peculiar and mission specific spares and SE, cataloging, and assisting the USG in the provisioning process for eventual long-term sustainment of these items by USG organic resources. As part of this ongoing effort for the C-130J program, LM will provide Interim Supply Support (ISS). ISS tasks, including assistance in the overall management ofnew parts and/or support equipment for C-130J peculiar and mission-specific items, will be provided by LM until USG assumption of these tasks takes place at Warner-Robins Air Logistics Center

(WR-ALC).

Reliability and Maintainability (R&M) Program:

This effort requires LM to perform specific engineering analyses on the C-130J aircraft unique systems for evaluating system performance. LM will be responsible for the maintenance of the combined C-130J Logistic Support AnalysislIntegrated Logistic Support (LSAJILS) database that serves as the central file for inputs, storage, analysis, and retrieval ofLSA and LSA-related information. In addition, this engineering program will provide for the development ofa diagnostic management system necessary to bring ground and on-aircraft applications to the user for C-130J Maintenance Management Systems.

Training

As an integral part of the support system to the pilots and maintainers, various training programs and devices need to keep pace with improvements to the C-13OJ weapon system. These include, but are not limited to: initial cadre training (Type 1) for maintenance and aircrew personnel, maintenance training for aircraft systems and subsystems, aircrew teachback, Ground Maintenance Systems (GMS) operator training, and aircrew deficiencies training.

Engineering, Logistics, and Defensive Systems Support Services

The scope of the FYOC III contract vehicle includes unique support services that are requested by the USG and are typically for short-term, bounded analyses not covered elsewhere in the contract. These tasks will be contracted on a T &M basis. As the designer, developer and manufacturer of the supplies and services to be supported, LM is uniquely qualified to provide the USG with such supplies and services.

Interim Contractor Support (lCS) On-Site Representatives

These LM personnel will provide subject matter expertise involving, but not limited to:

technical and instructional assistance to maintenance and operations personnel, maintenance of various data systems for data collection, analysis, basic aircraft systems familiarization, and assistance with supply chain management.

Technical Manual Page Development/Flight Manual Replacement Pages

LM will be responsible for the delivery of technical manuals with the delivery of each aircraft procured. If the technical data required changes, the USG will have the capability through FFP and T&M (price/page) efforts to implement customer-directed changes into the C-130J Technical Manuals.

Travel

The USG will reimburse LM for travel and per diem costs on the basis of the DoD Civilian Personnel Joint Travel Regulations (JTR). Travel and per diem costs incurred in Contractor directed replacement ofpersonnel, or outside the scope of the JTR, will not be reimbursed.

Travel requirements must be approved by the Contracting Officer in advance and must be performed in conjunction with specific program requirements.

Pre-LOA FMS Studies/SUrveys

As referenced in paragraph II DOlten'[Ial new FMS cases.

FMS cases are pending and deemed likely to be approved over the next several years. The 866 AESG requests the ability, prior to weapon-system LOA, to authorize LM to accomplish certain studies and analyses, site surveys, and technical studies.

These efforts would be funded through separate country-specific site-survey LOAs and will be accomplished only on an as-needed basis.

IV. AUTHORITY

10 U.S.C. 2304(c)(I), as implemented by FAR 6.301-1 (a)(2)(ii), Only One Responsible Source.

V. APPLICABILITY OF AUTHORITY

Based upon the requirements set forth in the Operational Requirements Document (ORD) from Air Mobility Command, LM is the only source capable of providing C-130J and derivative aircraft, support equipment, and logistics support.

During the production history of the C-13OJ aircraft, LM has acquired extensive knowledge of the product and has expended considerable corporate funds to design and develop improvements to the product. The C-130J weapon system is based on the C-130 airframe which has been in

Dr(]IOuc:::t·lon since the 1950s.

Although some aircraft design enhancements are anticipated through the current Block Upgrade contract, the design of the C-130J remains relatively stable.

As the C-130J weapon system was developed solely at private expense, LM owns all technical data rights. Peculiar spares, support equipment, ICS, training, technical studies, and aircraft data are available only from LM. In addition, LM maintains the C-130J System Performance

Specification (SPS) and has integration and design authority for all peculiar and mission-specific spares purchased and installed to support the aircraft. LM also provides updates of software and technical data necessary for aircraft support, maintenance, and upgrades. The C-130J contains proprietary systems, subsystems, and components. With LM owning all technical data rights, the USG does not possess adequate data to support these systems.

Aircraft

For the USG to estimate the cost ofhaving a competitor produce a weapon system equivalent to the C-130J, certain assumptions must be made. First, the cost ofdeveloping a new weapon system meeting the current system performance specification of the C-130J will likely be significantly greater than the _ cost LM incurred for development of the C-130J weapon system. This cost figure is conservative and only includes development activities specific to the C-130J program, which is an outgrowth of the overall C-130 program that has been in existence for more than half a century.

Second, in order for a competitor to manufacture the weapon system, a new production line would have to be built, or an existing production line would have to be reconfigured. The C-130J is manufactured in a production facility in Marietta, Georgia that has been producing various models of the C-130 aircraft since the early 1950s. It is estimated that it would take a minimum of for a to build/retrofit a and oro{luc;e and

This estimate is considered to be very aggressive in nature. LM has extensive knowledge ofoperational requirements, a vast body of engineering and manufacturing expertise, a history ofperforming state-of-the-art advancements to enhance logistics, and a highly-skilled workforce to manufacture, test, and continuously develop the C-13OJ weapon system.

Based on the above analysis, the estimated cost for a competitor to develop and manufacture a weapon system comparable to the C-130J would be extremely prohibitive. Since LM already has vast experience in developing and manufacturing various models ofC-130 aircraft, a competitor would likely be required to spend a much longer period of time developing a similar aircraft that would meet the current C-130J SPS for initial production. Additionally, the cost to ~ build/modify a viable production facility would be prohibitive - certainly above the __development cost of the C-130Jweapon system. As a result, there would be substantial duplicated costs and unacceptable delays in fulfilling USG requirements which could not be recovered through competition.

Logistics

From the initiation of the C-130J program, LM was responsible for acquisition logistics activities throughout the C-130J lifecycle. Such activities were procured from LM by the 866 AESG and its with LM ICS and SUD100rt

The C-130J weapon system is currently in production at LM. Since the sustainment environment during a production environment can be vastly different from a post-production sustainment environment (original equipment manufacturer (OEM) spares support, repair support, diminishing vendors, etc.), a robust logistics program within the FYOC III contract vehicle will reflect the' . of sustainment . from the 866 AESG to the 330 ACSG.

At this time, there are two contracts with private business entities that support C-130J logistics activities. In the future, these corporate contracts will continue to be utilized by the USG to the fullest extent practicable. As logistics items are screened by the USG for vendor breakout, the appropriate Commodity Council will be engaged to determine the most cost-effective support methodology.

Considering the complex nature of C-130J logistics requirements, it is not possible to specify all the standards of qualification of alternate sources for the thousands of components used in the systems and subsystems of the C-130J weapon system. The data n~cessary to perform qualification efforts was developed at private expense by LM, in concert with its major subcontractors and OEMs, prior to the initial manufacture and delivery ofC-130J aircraft. LM and its major OEMs are the only known entities that currently possess the necessary technical knowledge, manufacturing processes, and tooling to support C-130J weapon system logistics activities. Also, LM maintains sole control of the C-130J SPS. Furthermore, LM has declined to release or sell its proprietary data rights to the USG to facilitate competitive procurement of C 130J logistics activities. As a result, a substantial duplication of effort would be involved in developing and qualifying alternate sources of supply for C-130J logistics activities. If such activities are undertaken in the future, the USG would pursue obtaining appropriate data rights from OEMs, whenever it is feasible and affordable to do so, to facilitate a competitive procurement environment.

VI. EFFORTS TO OBTAIN COMPETITION

C-13OJ acquisition requirements in relation to the basic FY OC III contract were synopsized in the Federal Business Opportunities (FedBizOpps) on 28 February 2005. Companies responding to the synopsis were small businesses interested in subcontracting opportunities with LM.

The development and production of the C-130J weapon system has been - and will continue to be a complex endeavor for LM to undertake. Any business entity wishing to build and sell a weapon system similar to the C-130J would have to invest substantial amounts of time and money to develop the aircraft and its various systems and subsystems, establish relationships with OEMs and subcontractors, and assemble the production facilities necessary to manufacture the aircraft. As for logistical support, it is impossible to specify all the standards for qualification of alternate sources of supply for the hundreds of components used within the C-130J aircraft.

The USG cannot economically acquire this knowledge, nor can it be readily duplicated.

LM has expended more than _ in private funds for the development of the C-130J and its proprietary data rights. This cost figure does not include development efforts unde~ its vendors, nor the cost to acquire proprietary data rights from them. The amount of_ may be considered the minimum cost for the USG to procure those rights and initially establish a competitive environment. In addition to the monetary cost, it is estimated that the initial establishment of this competitive environment would take at least to complete and would involve significant reverse engineering and other substantive efforts to establish the aircraft production, logistics, program management, financial management, and contracting infrastructure equal to what LM has established.

VII. FAIR AND REASONABLE COSTS

The Procurement Contracting Officer (PCO) will determine that the proposed costs ofLM efforts are fair and reasonable based on a detailed analysis of the contractor proposal. Cost analysis will be perfonned by the PCO for all actions, and LM will be required to furnish certified cost or pricing data. The 866 AESG, the Defense Contract Audit Agency (DCAA), and the Defense Contract Management Agency (DCMA) will conduct detailed technical evaluations, price analyses, and accomplish necessary audits for contracting actions that meet or exceed established price thresholds.

VIII. MARKET RESEARCH

Market research techniques used include a review of the procurement histories of cost and perfonnance for military cargo aircraft, a Notice ofContract Action (NOCA), and fonnallinfonnal contacts with industry. The NOCA sought to identify any viable market segment sources for any current available alternate air vehicles and associated logistic support.

Aircraft

Smaller aircraft, such as the CASA C-29S and the L3COMIAIenia Aeronautics C-27J, are priced significantly lower than the C-130J, but have significantly less capability in terms of payload capacity, range, and cruising speed. Conversely, larger military transport aircraft included in the survey, such as the Boeing C-17 Globemaster III and the Lockheed Martin C-SB Galaxy, have larger payload capacities and higher than the C-13OJ. However these increased capacities and speeds dictate higher

The cost of the Airbus A400M is but it is not available for delivery until

Another area of research considered the price per Unit ofTransport Power (UTP), an aggregate price measure quantifying the acquisition price of an aircraft against three important factors:

maximum payload capacity, range and speed. The product of the aircraft's maximum capacity (pounds), the aircraft's range and the aircraft's results in a measure ofTransport Power The C 130J has a of and less than the median value for the military transport aircraft surveyed.

The C-130J is cost efficient in terms oftransport power when compared, in aggregate, to other military transport aircraft. The two largest aircraft in the have the lowest price per unit of transport power; the C-17 has a price ofabout while the C-SB has a price of about prices per unit; both the C-295 and the C-27J have per-unit prices in excess The C-130J has a lower price per unit of transport power than the A400M indicating that the C 130J is more cost efficient at moving its payloads over its range at its maximum speed than the A400M. The C-130J loses some ofthat advantage when aircraft volume is taken into consideration. When aircraft volume is placed into the equation, the C-130J has a pnce 0 which is higher than the figure for the A400M and the median value 0 However, the C-130J's unit price in this category is still far lower than the average value of This value is skewed in favor of larger aircraft, which have significantly more payload volume than the C-130J.

Logistics Support

A lack ofresponse from industry supports the WR-ALC "C-130J Long-Term Sustainment Business Case Analysis" that analyzed several support options ranging from total ,,,,,n.,,,, to total . responsibility. The case analysis, reviewed the engineering data for C-130J peculiar items and determined they did not support competitive repair or competitive reprocurement. Since the 866 AESG is a participant in the Contractor Supported W and LM has been established as an Control Point, reviews ofprocurement history, and reviews ""T<~T""""'" would reflect the contractor's data.

IX. OTHER FACTS

Acquisition Data Availability

The proprietary nature of the C-130J and derivative aircraft specifications, as well as those of the many privately developed subsystems within the C-130J weapon system, preclude full and open competition. Unlimited data rights are not available on these privately developed commercial systems and subsystems.

Follow-On Acquisition

As stated above, it is estimated that if an award was made to another source, there would be a substantial duplication of cost to the USG. An analysis ofthe necessary startup, tooling, facilities, testing, and other nonrecurring costs that would be expected by a new source for a C-130J equivalent aircraft indicates that the duplication of cost would be in excess of.

_. Due to its private development ofthe C-130J aircraft, LM owns significant amounts of proprietary data. The cost to obtain this proprietary data would increase the overall duplication cost considerably if a contract award were made to a source other than LM. The C-130J aircraft specifications contain privately developed subsystems and spares from OEMs and other vendors that preclude full and open competition. Unlimited rights are not available on these privately developed subsystems and spares. The USG has limited rights in accordance with DFARS 252.227-7015; these rights limit the usage of LM proprietary data by the USG to internal USG use only.

X. INTERESTED SOURCES

LM is the only interested source on the small business concerns:

As stated earlier, these respondents are interested in subcontracting opportunities with LM and have been notified to contact LM for more information on subcontracting opportunities.

XI. STEPS TO FOSTER COMPETITION

Because of the retention of proprietary data rights by LM and its major vendors, the cultivation of new suppliers would not be cost effective. All design and engineering data for C-130J peculiar systems, parts and components are proprietary to LM and/or its suppliers, as LM and its suppliers privately funded the development of the C-130J weapon system. The USG currently does not possess adequate data to support these systems through competitive means. LM has declined to release the data rights to the USG for the purpose of competitive procurement and the cost of acquiring these rights would be prohibitive to the USG if LM decides to release its proprietary rights.

XII. CONTRACTING OFFICER'S CERTIFICATION

The signature ofthe PCO on the J&A signature page evidences that he has determined this document to be both accurate and complete to the best of his knowledge and belief.

XIII. TECHNICALIREQUIREMENTS PERSONNEL CERTIFICATION

As evidenced by their signatures on the J&A signature page, personnel have certified that any supporting data contained herein, which is their responsibility, is both accurate and complete.