AFSAT_Spares_JA___Redacted.pdf

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

FOR OFFICIAL USE ONLY

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The BQM-167A and the requisite AFSAT Peculiar Items are required to provide adequate threat representative targets to meet current and projected HQ AF/TE-sponsored kill authorizations as outlined in AFI 99-108, as well as to satisfy Title 10 lethality testing/threat realism testing as required for all major aircraft and missile systems. The USAF missions require ever evolving weapon systems that not only require more precision, but lethality as well. In order for the warfighter to deploy these weapons, all USAF and DoD weapon systems must undergo survivability and lethality testing before entering full rate production. Based on market research, no other targets exist that have the full set of capabilities required to fulfill the agency's needs. This follow-on acquisition of BQM-167A AFSAT Peculiar Spares is required to maintain an adequate number of serviceable targets, which enables evaluation of fielded, as well as developmental, air-to-air weapon system programs to determine weapon performance and assess mission success.

The entire AFSAT System Peculiar Spares are contracted to sub vendors and manufactured to the KUAS design specifications as proprietary parts. This menu of active components includes approximately items with a variance of an approximately 20% increase in additional parts.

The specific number of items and quantities in any given Delivery Order will be based on operational consumption and budget considerations. Of the items, are "buy parts" and are KUAS "make parts". Air Force Budget Appropriation Aircraft Procurement (3010) and AF Operations and Maintenance (O&M) (3400) funds will be used to procure AFSAT- peculiar initial and replenishment spares for use in the AFSAT during operations at Tyndall AFB , FL and UTTR. Initial spares will include those components, assemblies, and subassemblies required as initial "stockage" at all levels including the pipeline to permit fielding of new end items. Two examples of new end items applicable to this effort include the modified common fuselage and Shrink Vector Doppler Scoring (SVDOPS- A). The contract FA8678-19-D-0001 award is anticipated to be in 4th Qtr FY19, the IDIQ ordering period of performance will be three (3) years, and the minimum and maximum order values will be

, respectively. The specific delivery order periods of performance will be specified in each delivery order.

Examples of some AFSAT peculiar spares including but not limited to: the engine, composite airframe components, command and control and avionics equipment, nose cones, and rocket assisted take-off (RATO) attachment kits. These items must be compatible with the existing AFSAT design.

Initial deliveries are required as early as six (6) months after contract FA8678-19-D-0001 award to prevent disruption to the planned live-fire (USC Title 10) requirements for F-22 and F-35 weapon system developments, AMRAAM and AIM-9X development, high priority special weapons/weapon system testing, front-line fighter operational flight program (OFP) development, and missile inventory WSEPs. AFSAT was originally awarded as a non-development item through full and open competition. Since the target design has evolved and the target is reusable, multiple initial and replenishment spares procurements have been completed under the existing contract with KUAS (formerly CEi). However, due to an increase in mission ops, as well as forecasted consumption and condemnation of on-hand spares, the need for additional quantities of peculiar spares is required to support operations and maintenance. Including all active and an approximately 20% increase in AFSAT- unique parts ensures there is a continuous ability to order requisite spares, reducing the number of urgent Mission Impaired Capability Awaiting Parts (MICAP) backorders while increasing the overall availability of AFSAT. The estimated award dates and periods of performance for the FA8678-19-D-0001 IDIQ spares contract/delivery orders are shown in the table below:

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Action Estimated Award Estimated Period of Performance Estimated Quantity Estimated Cost

Basic IDIQ Contract 4th Qtr 2019 Menu Items (Various Qtys/PN)

Modifications to add new spares TBD after approval of ECPs Up to 20% increase

Del Order(s) CY19 Various Qtys/PN

Del Order(s) CY20 Various Qtys/PN

Del Order(s) CY21 Various Qtys/PN

IV. Statutory authority permitting other than full and open competition.

The statutory authority for this acquisition is 10 U.S.C. 2304(c)(l), as implemented by FAR 6.302- l(a) (2)(ii), Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements, required by FAR 6.303-2(b)(4).

V. Demonstration that the contractor's unique qualifications or nature of the acquisition requires the use of the authority cited above (applicability of authority).

AFSAT is an Acquisition Category (ACAT) III program assigned to the Air Force Program Executive Officer for Weapons (AFPEO/WP). The AFSAT is a reusable, cost effective alternative to full-scale targets providing the Air Force the Title 10 required capability to evaluate fielded, as well as developmental, air-to-air weapon system programs to determine weapon performance and assess mission success. This follow-on acquisition of AFSAT System Peculiar Spares is required to provide the ability to launch, recover, refurbish, and relaunch existing targets before they are retired from service. This provides cost effective and timely support to meet current kill authorizations stated in the HQ USAF/TEP "Tactical Air Missile Program (TAMP)," and to provide spares to satisfy projected AFSAT requirements through the CY22 timeframe. When repairs are determined to be cost effective, both common parts (Defense Logistic s Agency (DLA) competitively sourced) and AFSAT System Peculiar Spares are required to return the AFSAT to an operationally usable status. By the nature of operations, parts required to refurbish each individual target to an operationally usable status vary depending on the damage/breakage sustained during the land or water recovery in the previous use.

The re-use of the AFSAT is an essential tenet of ACC's concept of operations and is an asset multiplier as the targets are flown an average of missions before being declared not economically repairable due to damage by a missile strike and/or impact with the ground/water. For example, in FYl6, launches took place and only AFSATs were expended due to the ability to repair and reuse the target. Without access to these highly specialized AFSAT System Peculiar Spares, the production and acquisition of new targets could not keep pace with the user's requirements and continued operations would cease when current limited inventories were expended.

The subject IDIQ ceiling for ordering AFSAT Peculiar Spares is . This amount is based on actual spares usage from AFSAT operations, projected to cover all three calendar years for ordering AFSAT Peculiar Items under this IDIQ. The AFSAT program has experienced a steady increase in operating tempo as the following launch history indicates:

March 2018 FOR OFFICIAL USE ONLY Page 7 of 13 procurements have been completed under the existing contract with CEi. The last delivery that can be placed under the existing contract was 31 December 2018. There is a Production/CLS contract, for 2019-2021, sole source award to KUAS under contract FA8678-18- C-0002. This Peculiar Spares Item effort addressed in this document will support the program from CY2019-2022 to ensure no gaps in support to the user. Without replenishment spares being added to the pipeline in a constant, forecasted timeframe, the number of times an AFSAT can be relaunched would decrease, driving an increase to the expenditure rate of the AFSAT. Expending AFSATs at an increased rate would cause ACC to burn through the targets faster than anticipated, generating either the need for ACC to increase the AFSAT target requirement or identify funding to field a follow-on subscale target sooner than anticipated.

The spares to be procured are designed uniquely to be compatible with the existing AFSAT design and are required as early as six (6) months after contract award of FA8678-19-D-0001 to avoid impacts to continued Title 10 testing requirements to support continued WSEP and operational training using the AFSAT. The Government does not own the AFSAT design TDP or specifications.

Without reverse engineering each of the items, along with the additional anticipated items identified in this procurement action, the Government cannot provide industry as a whole with the information or performance specifications required to produce spares that will properly interface and operate with the AFSAT target. KUAS is the only known source to possess the technical expertise, technical data documentation and detailed knowledge of the AFSAT (BQM-167A) (target unique avionics, unique software, facilities, tooling, manufacturing processes and maintenance support procedures) required to successfully perform the requirements of this pending acquisition of manufacturing and/or providing the spares for the AFSAT. Additionally, Department of Defense (DoD) test support and aerial target inventory requirements demand continuous operations and do not permit a break due to high weapons testing operations tempo. The government has determined that the only way to minimize adverse impact to critical mission activities requiring continuous availability of AFSAT and associated peculiar spares is to award new IDIQ efforts to the incumbent contractor for the CY19-22 requirements. As such, KUAS is the only responsible source of these highly specialized AFSAT Peculiar Spares that has the capability to meet all program requirements.

These items are considered highly specialized equipment/components due to their unique nature and their use on AFSAT, also considered highly specialized equipment.

Failure to maintain a timely flow of required spares will negatively impact the government in many ways including:

1) An increase in the number of targets becoming Non-Mission Capable (NMC) and unavailable to support user mission requirements; 2) an increased workload (and overtime labor cost) on O&M contractor to maintain/manage excessive NMC inventory; and 3) higher cost to repair items that would not otherwise have been repaired in an effort to return targets to Mission Capable status.

KUAS is the only contractor with the experience and in-depth knowledge of the functions and intricacies of the AFSAT. Therefore, this acquisition will be a follow-on effort for the continued production of highly specialized equipment.

Award to any other source would result in substantial duplication of cost to the Government that is not expected to be recovered through competition and unacceptable delays in fulfilling the Air Force's requirements. The contractor maintains and controls configuration management for the BQM-167A

March 2018 FOR OFFICIAL USE ONLY Page 8 of 13 software, firmware, and documentation IAW EIA Standard IS-649 or equivalent. Due to airworthiness and safety/suitability responsibilities, engineering will not authorize parts from "new vendors" be installed on AFSAT without testing. Reverse engineering would be required to establish test procedures since the Government does not own the TDP. The AFSAT Program Office has confirmed that award to any other source would result in unacceptable delays in fulfilling the Air Force's requirements. To meet the time sensitive schedule requirements, all new source(s) would have to test, qualify, apply for and receive an air worthiness certificate, and apply for and receive Stage Four radio frequency (RF) authorizations for all subsystem components of the system that transmits or receives RF. The testing and certification are time-consuming processes, which can take anywhere from six (6) months to two (2) years for a single part, depending on the complexity of the part. These activities would require Government action and approval before the new source(s) could field an operational AFSAT. Depending on the number of parts requiring certification, these limitations would create a multi-year interruption in AFSAT deliveries which would cause Air Combat Command (ACC) to fall below their required AFSAT inventory of assets. For instance, with an expected attrition rate of losses per year, a three-year interruption would result in far less than the required AFSAT inventory in years 2019-2025.

As mentioned above, the Government does not own an AFSAT TDP. As part of the Lots 14-16 Production/CLS market research in 2015, the Government received a Rough Order of Magnitude (ROM) from KUAS to purchase the TDP and data rights. As part of on-going market research for the Lot 17-21 Production/CLS procurement, the Government received an updated ROM from KUAS on 11 June 2019 to purchase the TDP for the BQM-167. It has been determined that it is not in the best interest of the Government to acquire the technical data required to facilitate a competitive acquisition of the peculiar spares required, because it is not anticipated that the cost could be recouped through competition of the quantities of spares required to support continuous operations at Tyndall AFB, FL and UTTR. The extensive timetable required to qualify alternate sources is mission prohibitive. These spares must be designed to be compatible with the existing AFSAT design and delivery is required on a continuous basis in order to support continued AFSAT operations. As part of KUAS's scope of this acquisition, they perform the acceptance testing of the articles, ensuring the components comply with technical specifications and technical data.

Based on current market research, the estimated cost to qualify another source or sources for the peculiar spares would be for the TDP, plus integration cost for both the new spares source(s) and the target prime, as well as other Government cost associated with establishing multiple sources for spares and consumables and managing the integration effort. The estimated price of the TDP does not include the cost of updates to incorporate changes that are expected due to engineering changes, including product improvements. Any data package that would be purchased at this point in the program would need to be updated and maintained to allow for spares buys to be continually competitively awarded. Additionally, an undefined amount of cost and schedule risk would be assumed by the Government as they assumed the role of integrator for the peculiar spares/ target interface.

The Government estimate for annual re-procurement of peculiar spares is per year, which includes all items currently part of the AFSAT spares menu and the approximately 20% increase in parts (both KUAS “make parts” and "buy parts"). The life cycle of the system is

March 2018 FOR OFFICIAL USE ONLY Page 9 of 13 estimated at 28 years with the initial spares already procured covering the first 13 years. This results in 15 years of annual re-procurements at an estimated cost of per year, for a total cost of

. Even if competition resulted in a savings of , which is assumed to be optimistic, the Government would realize an estimated total savings of only over the life of the system.

When comparing the estimated cost associated in qualifying a second or multiple sources with the estimated in cost savings from competition, it is clear that the potential cost far exceeds the savings from competition and is not in the best interest of the Government.

The AFSAT Program Office believes that award to any source other than KUAS would result in a significantly impaired sustainment capability delay of up to six (6) years if the Government pursues a competitive acquisition strategy. This estimate is based on one (1) year to compete contract(s) assuming an adequate supplier or suppliers are identified. It is estimated that it will take up to two

(2) years to reverse engineer each of the peculiar parts without a TDP. Finally, before deliveries could begin, each of the peculiar parts would have to be tested for form, fit and function on the AFSAT system which could take an additional two (2) years. In order to maximize efficiencies, all parts integration testing would be done at one time. Upon completion of all the testing, the contractor(s) could start manufacturing these AFSAT peculiar parts that have lead times of up to one

(1) year. The ability for AFSATs to launch could easily depend on the availability of one or two important spare parts and if the item(s) are coming from a source other than the Original Equipment Manufacturer (OEM), they would need to go through this process.

In addition, the DLA Parts Management Program (PMP) is a DoD program that promotes use of standard parts in design of weapon systems, subsystems and equipment by managing common (multiple platform), consumable (one- time use) equipment. DLA manages parts which are used on the AFSAT system today, which are in addition to the parts that are currently part of the AFSAT spares menu and the approximate 20% variance in parts needed for procurement. The AFSAT program office continuously researches DLA databases to identify possible suitable substitute replacement consumable parts that meet or exceed the original manufacturer's equipment part number specifications that can be used on AFSAT. If such a part is identified, with KUAS engineering concurrence, AFSAT requirements for that consumable spare is passed to DLA for management. In addition, prior to any new part being recommended as a new spare replacement part, a thorough research of DLA's databases is performed to identify possible suitable substitute replacement parts that meet or exceed the original manufacturer's equipment specifications prior to approving the Engineering Change Proposals that adds the spare part number or replacement part number. The supply support that KUAS offers on the

"buy parts" identified in this effort is a multifaceted process that includes: receipt, warehouse storage, issue, transportation, and physical inventory control of those items. Duplication of KUAS's role for the "buy parts" would result in additional costs of establishing processes moving material, storage of material, transportation of material and inventory control of the material and excessive delay in taking time to set up infrastructure. KUAS is unwilling to store other vendors' items in their warehouse. KUAS owns and controls the AFSAT design and is the only source in a position to qualify parts/spares that will keep the AFSAT system performance at specification levels. KUAS performs value-added duties as the BQM-167A item manager. KUAS Quality Control inspects every “make part” and “buy part” prior to the DCMA inspection and government acceptance. The parts are inspected to ensure they meet the drawing and manufacturing specification and KUAS certifies authenticity. All “buy parts” are designed or selected by KUAS and contracted to sub vendors and manufactured to the KUAS design

March 2018 FOR OFFICIAL USE ONLY Page 10 of 13 specifications as proprietary parts. Therefore, additional duplication of cost and unacceptable delay is in creating the infrastructure and system to maintain the spares supply that maintains system performance specification compliance.

Accordingly, KUAS is the only firm capable of providing the supplies and 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 requirements.

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

Most recently, and in preparation for this requirement, AFLCMC/EBYK posted a Sources Sought Synopsis (SSS) to FedBizOpps on 6 March 2017 with a closing date of 14 April 2017 under solicitation FA8678- J6-D - SPARES. A revised SSS was posted to FedBizOpps on 18 July 2017 with a response date of 17 August 2017. The revised SSS included a list of all AFSAT Peculiar Parts currently on the spares menu, to include the part number, item description noun, and National Stock Number (NSN) for each spare component. The SSS invited all interested vendors to submit a capabilities statement to demonstrate their ability to meet the requirement. CEi submitted a capability statement on 4 August 2017. In accordance with FAR 5.20 l(b)(l), a Notice of Contract Action (NOCA) was posted to FedBizOpps on 28 August 2017 with a response date of 29 September 2017. No responses were received in response to the NOCA. AFLCMC/EBYA will continue to perform market research on any additional parts that will or may be added to this effort.

VII. Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The Contracting Officer will ensure that the final price of the contracting actions awarded under this Individual J&A shall be fair and reasonable to the Government in strict accordance with guidance contained in the Federal Acquisition Regulation and its respective supplements. The Program Office has completed an independent cost estimate for the follow-on contracting actions. The Government will obtain actuals from both the prime and subcontractors in development of the Government objective. Certified cost or pricing data will be required in support of cost and price analysis. The Defense Contract Audit Agency resident office in Sacramento, CA will provide field pricing support and will obtain audits as required for major subcontracts. A technical team familiar with the current effort and qualified to make recommendations relative to the offeror's proposed labor hours and materials will assist the Contracting Officer during negotiations. At the conclusion of negotiations, a Certificate of Current Cost or Pricing Data will be obtained IAW FAR 15.406-2(a).

VIII. Description of the market research conducted and the results, or a statement of the reasons market research was not conducted.

In addition to releasing the SSS, the Aerial Targets Program Office contacted the Army and Navy Targets Management Offices to identify any potential subscale aerial target sources. In 2011, the Navy conducted a full and open competition for their similar, but unique subscale aerial target requirements. While three responsible offerors responded, no source existed with a mature system design ready for production. Subsequently, the Navy leveraged the BQM-167 A program, awarded CEi a three year, development contract for the BQM-177, exercised LRIP Lot I in June 2017, March 2018 FOR OFFICIAL USE ONLY Page 11 of 13 and is currently awaiting first article delivery. There are only common parts on the spares contract PMA-208 awarded in September 2017, and no IDIQ is in place to buy those parts.

The Army conducts limited spares buys due to limited ops. There are minimal to no opportunities to partner with or leverage USN or USA procurement of spares.

Key program management and engineering employees remain cognizant of industry capabilities.

Technical personnel also remain aware of industry improvements and capabilities by their continual search through technical journals and trade publications. The Aerial Targets Program Office continually conducts market research by remaining cognizant of potential suppliers of subscale aerial targets and the specialized, peculiar, reparable spares and peculiar consumables available in the marketplace and through interaction with the targets industry at conferences such as those organized by the National Defense Industrial Association (NDIA). These methods have not identified new qualified sources, nor have these methods identified potential alternative approaches to satisfy the core requirements of this program. This market research verified to high fidelity that KUAS is the only source with the requisite unique engineering expertise, necessary data, and BQM-167A support equipment/special test equipment required to produce/procure AFSAT Peculiar Items for the proposed upcoming period of performance.

As described in Section VI above, market research, in accordance with FAR Part 10, was conducted by synopsis of the proposed acquisition, advising industry of the pending acquisition and soliciting inquiries from interested parties.

IX. Any other facts supporting the use of Other Than Full and Open Competition.

It was anticipated from the inception of the program that the successful bidder of the competition to produce the AFSAT would also provide all the support, including peculiar spares, as part of the "ensuing" effort. The Government does not own the TDP, nor have re-procurement data rights as government funds were not used to develop the target. The BQM-167A TDP is proprietary property of KUAS; therefore the Government would have to purchase the TDP and data rights. As part of the Lots 14-16 Production/CLS market research in 2015, the Government received a ROM estimate of from KUAS to purchase the TDP and data rights. As part of on-going market research for the Lot 17-21 Production/CLS procurement, the Government received an updated ROM from KUAS on 11 June 2019 offering to purchase the TDP for the BQM-167.

Recovering these costs is unlikely with 50% of the program procurement already committed

. KUAS owns and controls the AFSAT design and is the only source in a position to qualify parts/spares that will keep the AFSAT system performance at specification levels. AFLCMC/ EBYK has not pursued TDP procurement for individual components of AFSAT; there were no respondents to the sources sought. The Government does not have the right to force KUAS to sell their proprietary data, nor is there a reasonable likelihood for the Government to recover the cost through competition. Due to the prohibitive cost and unacceptable schedule delay outlined in Section V; neither acquisition of the technical data package nor development and qualification of new vendor(s) for these AFSAT System Peculiar Items could be accomplished without a significant break in operations and lapse in availability of subscale targets sustainment to support DoD test activities IAW Title 10 USC requirements dictated by Air Force WSEP.

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X. List of any sources that expressed, in writing, an 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.

As stated above, the AFSAT program was a competitively awarded program in FY 2002. The Air Force is not planning any buys beyond the 800 targets acquired through FY2037, as outlined in Section V. Also as discussed in Section V, without a TDP, the Government is limited to the number of sources for the AFSAT System Peculiar Items due to the uniqueness of each part. The estimated up to 6 year delay discussed in Section V prohibits the Program Office from removing these barriers due to the detrimental mission impacts. The Program Office will continue to conduct market research identified in Section VIII by remaining cognizant of potential suppliers of subscale aerial targets available in the marketplace through interaction with the targets industry where applicable and appropriate, and try to identify companies that develop similar products to preclude the necessity for future sole source acquisitions. In addition, AFLCMC/EBYA will continue to maintain contact with the U.S. Army and Navy Targets Management Offices to share information on subscale industry partners. During the execution of the AFSAT System Peculiar Spares effort, the Program Office will

1) engage with Air Combat Command to reevaluate AFSAT requirements and, 2) identify potential opportunities to foster competition with the goal of realizing cost efficiencies. The Government did not procure the component technical specifications that would be required to breakout individual spare parts for separate procurement. Without these specifications the Government would not be able to ensure compatibility of the breakout part with target system integration and performance requirements. In addition, the Government anticipates receiving quantity discounts for those spares procured from the incumbent in conjunction with on-going production buys. The Government would lose these savings for any breakout parts acquired via a separate procurement, and would incur additional costs to procure from and mange additional suppliers. Finally, the Government would bear an undefined amount of cost and schedule risk if it assumed the role of integrator for the "buy parts" procured directly from vendors.

During the parts provisioning/cataloging -process, all new items brought into DoD inventory are screened to identify possible suitable replacements that are already managed in the supply system or it is provided its own, unique national stock number (NSN) and a source of supply (SoS) is identified.

For the purpose of this acquisition, KUAS has been identified as the SoS for all NSNs listed on this procurement action. If another DoD program is identified as a user of any of the NSNs where KUAS is listed as SoS, the NSN would be subject to the DoD-wide logistics reassignment process, which assigns SoS responsibility to a supply chain management office or DLA, depending on the type of the part. For example, if an AFSAT consumable peculiar part becomes a "common item" with another DoD user, DLA pursues acquiring and stocking that part for all DoD users. The Government assessed AFSAT's parts commonality to identify potential candidates in 2014 and reassigned parts to DLA at that time. The Government is currently in the process of reassessing parts commonality for the consumable parts on the spares list to ensure no others are candidates for DLA transition. The Government also assesses parts commonality to identify potential candidates every time there is a configuration change. The proposed IDIQ structure supports ongoing migration from 'AFSAT Peculiar' to DLA's competitive sourced 'Common' status when applicable.

The previous justification on the amended J&A for contract FA8678- l 6-D-0008 included the following as actions planned to overcome barriers to competition:

"The Program Office is not currently taking any actions to remove any barriers to competition. As

March 2018 FOR OFFICIAL USE ONLY Page 13 of 13 discussed in Section V, without a TDP package, the Government is limited to the number of sources for the AFSAT System Peculiar Items due to the uniqueness of each part. The estimated five (5) year delay discussed in Section V prohibits the Program Office from removing the barriers due to the detrimental mission impacts. The Program Office will continue to conduct market research identified in Section VIII and try to identify companies that develop similar products to preclude the necessity for future sole source acquisitions."

The Program Office did not commit to pursuing the removal of barriers to competition for this program. As the applicable Section VIII stated, the Program Office team members did regularly attend industry-sponsored national symposia to remain cognizant of industry capabilities, and continues to search through technical trade journals and trade publications. These methods have not identified new qualified sources, nor have these methods identified potential alternative approaches to satisfying the core requirements of this program.

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.