Sole_Source_JA_Pega_Redacted.pdf

FOR OFFICIAL USE ONLY

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

COORDINATION AND APPROVAL DOCUMENT

NEW OR AMENDED J&A DOCUMENT: New

IS THIS A BRIDGE ACTION: No

FUNDING LEVEL FOR THIS ACQUISITION:

CONTRACTING ACTIVITY: Air Force Research Laboratory/RIK, 26 Electronic Parkway, Rome NY 13441-4514

PURCHASE REQUEST/LOCAL IDENTIFICATION NUMBER: FA8751-19-R-0010

PROGRAM NAME: Intelligent Business Process Management Suite (iBPMS) Production Licenses

TYPE PROGRAM: Other Contracting

AUTHORITY: 10 USC 2371b (f)(2)

TYPE J&A: Class

ESTIMATED CONTRACT COST: (Maximum, including all priced Options)

- Annual Term License Pricing – PGP Core Bundle: - Annual > Perpetual (FY2021) – PGP Core Bundle:

- Basic, Yr. 1 -

- Option 1, Yr. 2 -

- Option 2, Yr. 3 - - Option 3, Yr. 3 -

- Option 4, Yr. 4 - - Option 5, Yr. 4 -

- Option 6, Yr. 5 - - Option 7, Yr. 5 -

- Total Annual License Cost: - Total if Converted to Perpetual:

* Option costs anticipate escalation. Options 2, 4 and 6 will not be exercised if Options 3, 5, and 7 are exercised (mutually exclusive).

COORDINATION:

Program Manager: _____________ Date Signed

Legal Reviewer: _____________

AFRL/RCB

AFRL/RIJ Date Signed

Contracting Officer: _______________________________________ _____________ AFRL/RIKC Date Signed

Chief of Contracting Office: ______________________________________ _____________ Date Signed

Chief, Contracting Division

AFRL/RIK,

Director: ______________________________________ _____________ Date Signed

Director, Information Directorate Commander, AFRL/Detachment 4 Air Force Research Laboratory

Senior Contracting Official: ______________________________________ _____________ Date Signed

Director of Contracting Air Force Research Laboratory

Local Small Business Office: See DD Form 2579 for local Small Business Office approval.

APPROVED:

Date Signed

Air Force Research Laboratory (AFMC) Wright-Patterson AFB OH

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Activity.

a. Requiring Activity: AFRL/RCB,

b. Contracting Activity: AFRL/RIKC, 26 Electronic Pkwy, Rome, NY 13441

c. RFP Number: FA8750-19-R-0010

2. Nature and/or Description of the Action being processed.

This action is a new firm fixed price follow-on production contract for the Pegasystems, Inc. (hereafter referred to as Pega) intelligent Business Process Management Suite (iBPMS) annual enterprise license with associated annual software maintenance with premium support, to support and streamline AFRL Enterprise business processes. Options may be exercised with Pega to convert annual enterprise licenses to a perpetual licenses at an estimated total cost of .

3. Description of the Supplies/Services required to meet the Agency’s needs.

Under the contemplated contract, Pega will provide production software licenses for the iBPMS platform and prototype applications that were developed under an Other Transaction for Prototype Project (Agreement No. FA8750-16-9-9000, Project No. RIK-OTA-18-FDP).

The Key tenets of the iBPMS software are:

• Hosts executable models

• Provides a collaborative workbench for business and Information Technology (IT) across the entire process lifecycle

• Provides advanced analytics and process intelligence to compress insight to action in dynamic and improvisational processes

More specifically, key features of an iBPMS include the following:

• Graphical modeling of processes

• Workflow capabilities / executable process models

• Capability to test / simulate / analyze process models

• Metadata repository

• Continuous intelligence and analysis of process performance

• Supports routine and dynamic / ad hoc non-routine work

• Leverages a low-code environment to generate business user friendly applications for mobile and non-mobile devices

The following Key Technical Attributes are what AFRL requires for the iBPMS software to deliver the intended value:

AFRL will buy one enterprise license which will allow all AFRL employees access to the platform. Pega offers an enterprise license model which does not limit Full Time Equivalents (FTEs). For AFRL, the estimated cost of an enterprise license for one year is:

• The total estimated iBPMS cost associated with the contemplated contract (Annual License basis) over years given an inflation rate of is:

• The total estimated iBPMS cost associated with possible future conversion (Annual License converted to Perpetual basis in FY21) over years given an inflation rate of is:

4. Statutory Authority permitting other than full and open competition.

10 USC 2371b (f)(2), Authority of the Department of Defense to carry out certain prototype projects.

Follow-on Production Contracts or Transactions entered into under this section for a prototype project may provide for the award of a follow-on production contract or transaction to the participants in the transaction. A transaction includes all individual prototype subprojects awarded under the transaction to a consortium of United States industry and academic institutions.

A follow-on production contract or transaction provided for in a transaction may be awarded to the participants in the transaction without the use of competitive procedures, notwithstanding the requirements of section 2304 of this title, if: (a) competitive procedures were used for the selection of parties for participation in the transaction; and (b) the participants in the transaction successfully completed the prototype project provided for in the transaction.

On the basis of this authority, there is only one responsible source that possesses the specialized capability that will satisfy AFRL requirements (FAR 6.302-1).

5. Applicability of authority.

A follow-on Production Contract entered into under 10 USC 2371b (f) may be awarded to the participant in a transaction without the use of competitive procedures, if competitive procedures were used for the selection of parties for participation in the transaction; and the participants in the transaction successfully completed the prototype project provided for in the transaction. Having successfully completed Other Transaction Agreement (OTA) for prototype project number RIK-OTA- 18-FDP on 31 December 2018, Pega is the only provider of an iBPMS that will satisfy the requirements for federated development in a shared platform.

AFRL requires a system that handles federated development due to the geographically dispersed nature of the enterprise.

Federated development ensures all organizations within AFRL are able to meet their own needs. Inheritance and reuse ensures efficient development of applications that can be shared across AFRL. The low code environment supports faster development of new applications and easier maintenance of existing applications.

Other providers were able to meet some of the Government’s requirements, but Pega is the only iBPMS that fulfilled the requirements listed. This determination was made during the course of the previously mentioned OT for prototype project.

If the iBPMS Production License is not acquired, then AFRL will not be able to meet the program goal of unified business IT in support of the One AFRL initiative and the Air Force Science & Technology 2030 strategy.

6. Description of efforts made to ensure offers are solicited from as many sources as practicable.

AFRL initiated an OT for prototype (RIK-OTA-18-FDP) to acquire an iBPMS. This was initiated due to a need identified through market research and future planning at AFRL/RCB. AFRL competitively solicited white papers from members of the SOSSEC, Inc. consortium, and selected the relevant vendors to submit more detailed proposals. Vendors were informed in the solicitation that this OT for prototype project could result in a production contract. In addition, Article 1.042 (See Attachment No. 1) in Agreement No. FA8750-16-9-9000 stated that the prototype project may transition to award of a follow-on production contract provided competitive procedures were used in the selection of parties in the initial prototype and the successful completion of the project.

Four whitepapers were received; of those four, two (Pega & ) were invited to submit full proposals. Both proposals were successful, and both & Pega moved on to the cloud pilot. Those two vendors (Pega and ), were instructed to pilot their platforms in a cloud environment by demonstrating how their software would be used to create representative solutions for AFRL needs. The resulting applications in each platform were graded based on the requirements provided to the vendors. In the spring of 2018, Pega was selected for the on-premises pilot. Pega’s ability to fulfill AFRL requirements regarding federated development for geographically separated units within AFRL was considered a deciding factor. The on-premises pilot was designed to test Pega on all of AFRL’s requirements. Four applications were developed as part of the on-premises pilot: . In combination, each required capability was tested by at least one of the four applications, or by the interoperation of the four applications. The successful completion of the prototype (31 December 2018) means that the AFRL Enterprise Business System Program Office (EBS PO) has determined that the Pega iBPMS Platform and prototype applications fully satisfy the Government’s Key Technical attributes for the iBPMS requirement.

Additional market research was conducted in accordance with FAR Part 10, via synopsis of the proposed acquisition. A Request for Information was published to FedBizOpps on 20 Dec 18 with a response date of 09 Jan 19. No responses were received in response to the Request for Information.

7. Determination by the Contracting Office that the Anticipated Cost to the Government will be fair and reasonable.

The Contracting Officer determined that the anticipated cost to the Government will be considered fair and reasonable in accordance with FAR 12.209, Determination of Price Reasonableness, FAR 13.106-3(a)(2)(ii), Comparison of proposed price with prices found fair and reasonable on previous purchases of the same or similar items in the same industry, FAR 13.106-3(a)(2)(iii), Current price lists, and FAR 15.404-1(b)(2)(vii), Proposal Analysis Techniques.

IAW FAR 12.209, Determination of Price Reasonableness, Contracting Officers should be aware of customary commercial terms and conditions when pricing commercial items. Commercial item prices are affected by factors that include, but are not limited to, speed of delivery, length and extent of warranty, limitations of seller’s liability, quantities ordered, length of the performance period, and specific performance requirements. The contracting officer considers the contract terms, conditions, and prices to be commensurate with the Government’s need, and considers it to be in the Government’s best interest to negotiate license costs including conversion to Perpetual licenses at the earliest practicable opportunity during the period of performance. Successful prototype completion assures the Government the necessary availability, quantities and performance specifications at the lowest cost over the duration of the acquisition lifecycle.

IAW FAR 13.106-3(a)(2)(ii), Comparison of proposed price with prices found fair and reasonable on previous purchases of the same or similar items in the same industry; a search of the GSA Advantage Website shows pricing for a similar Pega Government Platform (PGP) Core Bundle at per month per regular user. This price amounts to per year per regular user, and per year for all of AFRL . In contrast, Pega quoted for the Enterprise license for the core bundle in the Cost Proposal CDRL, thus indicating a substantial cost reduction.

IAW FAR 13.106-3(a)(2)(iii) Current price lists, the Contractor provided a price list entitled “AFRL Cost Proposal CDRL”, dated 2 August 2018. The cost proposal includes quotes for four (4) levels of software use, each with or without robotic software. This price list was solicited under competition with during the cloud pilot phase of the OT.

IAW FAR 15.404-1(b)(2)(vii), other than certified cost or pricing data will be analyzed if available; has purchased the Pega Government Platform, which is the commercial item that served as a basis for prototype development under the OTA. Details such as price, license terms, data rights, options, and any other relevant details which would distinguish the contract from a typical software license supply buy have been requested.

8. Description of market research conducted and the results.

At each stage of the OT prototype project, vendors were informed the OT could result in a production follow-on contract, and provided cost estimates for production licenses of their platform throughout. License costs posted on GSA Advantage provide the Government with an upper limit for what the licenses should cost. Market Research efforts have been conducted as follows:

(a) Market Research was conducted in accordance with FAR Part 10.001 & 10.002 and completed in the Spring of 2018.

The market research techniques used were as follows: The team reviewed industry reports, trends & product developments;

held discussions with industry representatives; used Requests for Information, & performed internet searches.

(b) Starting in 2017, AFRL initiated the Other Transaction for Prototype project (Number RIK-OTA-18-FDP) under Agreement No. FA8750-16-9-9000 to acquire an intelligent Business Process Management Suite (iBPMS). This was initiated due to a need identified through market research and future planning at AFRL/RCB. AFRL solicited white papers from The System of Systems, Inc. (SOSSEC) consortium, and selected the relevant vendors to submit more detailed proposals. Vendors were informed that this OT for prototype project could result in a production contract.

Four whitepapers were received; of those four, two (Pega & ) were invited to submit full proposals. Both proposals were successful, and both Pega & moved on to the cloud pilot. Those two vendors, Pega and , were instructed to pilot their platforms in a cloud environment by demonstrating how their software would be used to create representative solutions for AFRL needs. The resulting applications in each platform were graded based on the requirements provided to the vendors. In the spring of 2018, Pega was selected for the on premises pilot. Pega’s ability to fulfill AFRL requirements regarding federated development for geographically separated units within AFRL was considered a deciding factor. The on premises pilot was designed to test Pega on all of AFRL’s requirements. Four applications are being developed as part of the on premises pilot: . In combination, each required capability is tested by at least one of the four applications, or by the interoperation of the four applications. The successful completion of the prototype means that the EBS PO has determined that the Pega Government Platform is a responsible source for the iBPMS requirement.

(c) Further market research was conducted in accordance with FAR Part 10, via synopsis of the proposed acquisition, advising industry of the pending acquisition and soliciting inquiries from interested parties. A Request for Information was published to FedBizOpps on 20 Dec 18 with a response date of 09 Jan 19. No responses were received in response to the Request for Information.

9. Any other facts supporting the use of Other than Full and Open Competition.

There are no other facts supporting this justification.

10. List of Sources, if any, which expressed interest in the acquisition.

Pegasystems, Inc., 1 Rogers Street, Cambridge, MA 02142-1209

11. Statement of Actions to Remove/Overcome Barriers to Competition.

This acquisition uses the statutory authority to issue a noncompetitive follow-on production contract for a prototype project that used competitive procedures. This approach embraces the DoD’s desire to rapidly obtain supplies and services from nontraditional defense contractors using streamlined methods.

To overcome barriers to competition, the Government team will continue its due diligence in researching various avenues for iBPMS source development. Competitive procedures are expected to be used for future contract actions beyond the year delivery schedule for the iBPMS Production License.

12. Certification by the Contracting Officer.

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.

13. Certification by the Technical/Requirements personnel.

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.

1 Attachment:

1. FA8750-16-9-9000, Article 1.042

CONTINUATION

"Small Business" means a small business concern as defined under Section 3of the Small Business Act (15 USC 632). Applicable NAICS Code is 541712 with a size standard of 1,000 employees.

"Subrecipient'' includes an entity performing work pursuant to a PAL to include lower tier project performers. Additionally, this term includes any entity with which the OT Lead issues a PLA in order to acquire supplies or services needed to carry out its function as described in the Statement of Work of this Agreement.

"Subagreement" means any agreement or contractual relationship between the Recipient and a PLP or lower tier project performer (e.g., a PLA).

"Systems and other concept formulation studies" means analyses and study efforts either related to specific IR&D efforts or directed toward identifying desirable new systems, equipment or components, or modifications and improvements to existing systems, equipment, or components.

'Vendor'' means all prospective project-level performers regardless of consortium membership.

Vendors, however, must become a Recipient Member Entity in order to become a PLP under this Agreement.

1.042 FOLLOW-ON PRODUCTION CONTRACTS OR TRANSACTIONS FOR COMPETITIVELY

AWARDED PLAs (MAY 2016)

(a) A prototype project may transition to award of a follow-on production contract or transaction without the use of competitive procedures provided the following conditions are met:

(1) Competitive procedures were used in the selection of parties for participation in the initial prototype Project-Level Agreement; and

(2) The Project-Level Performer (PLP) successfully completed the prototype project.

PART2 TERM

2.010 TERM OF THE AGREEMENT (MAY 2015)

The terin of this Agreement is sixty (60} months from the effective date reflected on the award/cover page. For projects that are incrementally funded in accordance with Article 4.060, Incremental Funding, if all funds are expended prior to the end of the term {including Recipient contributions, both cash and in kind), the Parties have no obligation to continue and may elect to cease performance at that point on that project. Articles in this Agreement (e.g., 4.041, Retention and Access to Records) which, by their express terms or by necessary ilTlplication, apply for periods of time other than as specified in this article shall be given effect, notwithstanding this article. In any event, total period of performance of this Agreement, including all Project-Level Agreements issued hereunder, shall not exceed sixty (60) months.

2.020 TERMINATION (MAY 2015)

{a) The Agreements Officer may unilaterally terminate this Agreemerit by written notice to the Recipient upon a finding that the Recipient has failed to comply with the material provisions of this Agreement. The Agreements Officer may unilaterally terminate a project funded under this Agreement by written notice to the Recipient upon a finding that a Project-Level Performer (PLP) has failed to comply with the material provisions of this Agreement.

CONTINUATION FA8750c\6-9-9000

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