DEAMS_Inc_1_Req_Cont_FOE_Final_Redacted_Posting_Redacted.pdf

Justification for an Exception to Fair Opportunity

Avenue, Bldg. 266/Room 226 , Wright Patterson AFB, OH 45433-5769

(2) Nature and/or description of the action being approved:

The Defense Enterprise Accounting Management System (DEAMS) uses commercial-off-the-shelf Enterprise Resource Planning (ERP) software to provide accounting and financial management services and deliver a single integrated accounting capability for the Air Force. This Justification for an Exception to Fair Opportunity allows the Air Force to award a sole-source task order under the NETCENTS-2 Applications Services indefinite delivery indefinite quantity (IDIQ) multiple award contract (FA8732-15-D-0001), for continued maintenance and enhancement of the DEAMS program and Oracle 11i electronic Business Suite (eBS) support services to the current system integrator Accenture Federal Services, LLC (800 North Glebe Rd #300, Arlington, VA, 22203-1807;

Cage Code: 1ZD18), a large business. The task order will contain Firm Fixed Price (FFP) and cost-reimbursable type CLINs. The anticipated period of performance of the new task order is 01 May 2017 through 30 April 2020 (1 twelve-month base period, 3 six-month option periods and up to 6 additional months if FAR Clause 52.217-8 is exercised) at an estimated cost of .

The task order will extend Accenture's Oracle 11i eBS sustainment and enhancement efforts until such time as the new Oracle R12 eBS Upgrade contractor has completed the transition to Oracle R12 eBS and begins Oracle R12 eBS sustainment. The new Oracle R12 eBS contract was awarded in February 2017. It is expected to take between 18-24 months to complete the upgrade at which point the new contractor will be responsible for sustaining the Oracle R12 eBS solution. This contract however does not include a requirement to support the Oracle 11i eBS solution. Therefore, there is a gap between the end of April 2017 and the implementation of the Oracle R12 eBS upgrade. Sustainment of the Oracle 11i eBS includes preventative maintenance of the system and enhancements necessary to enable the transition to the Oracle R12 solution.

Accenture has been performing required DEAMS sustainment and support services pursuant to a FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements, sole source contract (FA8770-15-C-0509) that was awarded on October 31, 2014 and ends on 30 April 2017. As a result of its tenure as the Oracle 11i eBS Integrator, Accenture is the only contractor capable of performing the unique and highly specialized services required for the Oracle 11i eBS sustainment effort.

a. Overview of the Air Force DEAMS program The DEAMS program is an ACAT 1A program. It is a joint, Office of the Secretary of Defense (OSD) approved, Deputy Chief Management Officer - Business Capability Lifecycle (DCMO-BCL) initiative to improve financial accountability across the Department of Defense (DoD), United States Transportation Command (USTRANSCOM), and the United States Air Force (USAF). The primary objective of DEAMS is to provide a modern integrated financial management system to record, summarize, and report financial information to support business decisions while instilling confidence in the controls over financial resources. The Department's aging collection of legacy business systems are unable to meet management and accountability needs. These shortcomings have resulted in DEAMS reporting a service-level material weakness over the reliability of its financial systems. DEAMS serves as the target core financial system for all Air Force financial and mixed financial system modernization and development programs and has demonstrated progress towards mitigating the material weakness. The DEAMS program provides the Air Force with a modern financial management system that leverages Enterprise Resource Planning (ERP) software in a secure hosting environment.

As of November 2016, DEAMS was in use by over fifty percent of the expected 22,500 users. The program has been deployed to over 131 Active Duty, Reserve, Air National Guard and DFAS sites. The DEAMS functionality is currently in use by elements of all Air Force and supported Commands. Funds tracking capabilities within DEAMS enabled the Air Force financial management community to have the best fiscal year close out ever, ending FY16 with 99.6% of funds obligated.

b. Critical Change History Critical Change activities caused a material delay in the DEAMS program schedule. DEAMS was granted a Limited Deployment Decision (LDD) on 30 September 2015 to enable the Air Force to work through a remediation plan and to conduct a Verification of Fixes (VoF) test prior to returning for a Full Deployment Decision (FDD). The VoF test conducted in January 2016 did not result in measurable improvement over the Initial Operational Test and Evaluation (IOT&E) results. The VoF results, coupled with recognition that the hardware and Oracle R12 eBS upgrades were going to drive changes to the program schedule, led to the conclusion that an FDD was not appropriate at that time. Via the 31 May 2016 Defense Acquisition Executive Summary (DAES) Report, the DEAMS Program notified AF Senior Officials that a Critical Change occurred in the DEAMS Program. As a result, the program underwent a Critical Change pursuant to 10 USC § 2445c(d)(3)(A). In the report, the Program identified a new path forward --which included new estimates of cost, schedule and performance --and well as reliance on the Oracle R12eBS upgrade. The report also emphasized the critical role of the Oracle R12eBS upgrade --particularly how Oracle 11i eBS sustainment reduces the functional and technical risk associated with the Oracle R12 eBS upgrade. In late January 2017, it was confirmed that the DEAMS Critical Change Report (CCR) had been delivered to Congress. Continued Oracle 11i eBS support and award of the Oracle R12 eBS contract were delayed until that CCR was delivered to Congress, removing restrictions on any new obligation(s). Currently, a new program baseline reflecting DEAM's post-critical change revised approach is being drafted for approval by the OSD AT&L. The revised program schedule is largely focused on completing planned deployments of all applications, including the Oracle R12 upgrade, to Increment 1 users --so that the Program can then pursue other requirements.

c. Description of Request

This Justification for an Exception to Fair Opportunity seeks approval to issue a task order on the NETCENTS-2 contract to extend Accenture's Oracle 11i eBS sustainment and enhancement efforts until such time as the new Oracle R12 eBS Upgrade contractor has completed the transition to Oracle R12 eBS and begins Oracle R12 eBS sustainment. The planned 12 month base period of the new task order is intended to cover the gap in support with three six month option periods for any additional unforeseen delays.

As designated in the CCR, continued Oracle 11i eBS support is necessary not only to work production issues but also to enhance program stability prior to the Oracle R12 eBS upgrade. This enhanced program stability will reduce the number of System Change Requests (SCRs) (through an SCR burn-down plan), decrease the rate of identification of SCRs (because of system stability), stabilize the requirements earlier in the process, and reduce the functional and technical risk associated with the Oracle R12 eBS upgrade (through fewer SCRs and specific data and/or code activities needed for a successful upgrade).

(3) Description of the supplies/services required to meet the agency's needs:

a. Contemplated Efforts The services to be procured under this Exception to Fair Opportunity are for Post Production Support (PPS)/ Cybersecurity/Performance releases, additional SCRs, performance monitoring, infrastructure support and migration for the DEAMS program. The description of services required include:

1. Providing additional operational support for Cyber Security patches, Deficiency Requests (DRs) and

SCRs inclusive of Performance Releases as defined by the DEAMS FMO and PMO. The intent of these changes against the Oracle 11i eBS baseline is to maximize or increase capabilities, eliminate manual workarounds to the extent possible, and leverage industry best practices and processes.

This support includes, but is not limited to, development and testing support for defined requirements, resolution of trouble tickets and process adjustments.

2. Providing additional operational and post-production support for all prior releases based upon support requirements and critical post-production support planning. This also includes providing additional Fiscal Year End (FYE) over-the-shoulder support resulting from prior FYE lessons learned with limited on-site Accenture support.

3. Providing on-site support for the planned deployments during the Period of Performance. This includes supporting additional local data conversion from legacy systems, training and deployment plan executions.

4. Providing operations, performance monitoring/assessment, maintenance and environment support of the 11i eBS application and database including data clean-up and/or software updates needed to support success of the Oracle R12 eBS upgrade as directed by the DEAMS PMO and FMO. This could include on- site support.

5. Providing transition support as required during the period of performance in support of the DEAMS

Oracle R12 eBS Upgrade contractor. This support includes, but is not limited to, knowledge transfer and preparation of the 11i eBS system for transition to Oracle R12 eBS as directed by the DEAMS PMO and FMO.

6. Providing analysis of and implementation support for Oracle System Requests (SRs) and patches that would enhance stability of the Oracle 11i eBS instance or help prepare for the Oracle R12 eBS upgrade.

7. Provide support to infrastructure changes and migration of applications from the current production environment into Oracle Super Cluster and associated external systems. This also includes support for the environment management plan, and configuration management controls for hardware upgrades.

b. Estimated Cost The Period of Performance for this effort is up to thirty-six (36) months, consisting of one (1) twelve-month base period, three (3) six-month option periods, and a six-month extension if needed. Funding will be provided by FY17, FY18, FY19, and FY20 Research, Development, Test and Evaluation (RDT&E) and Operations and Maintenance (O&M) funds. The estimated funding requirements, by fiscal year and funding appropriation type, are provided in Table 1. A breakout of the estimated cost for the base period and all of the options is contained in Table 2.

FY17 FY18 FY19 FY20 Totals

RDT&E

O&M

Total

Table 1: Estimated Cost Breakout by Funding Type and Fiscal Year

Base Period (01 May 17 - 30 Apr 2018)

Option Period 1 (01 May 18 - 31 Oct 2018)

Option Period 2 (01 Nov 18 - 30 Apr 2019)

Option Period 3 (01 May 19 - 31 Oct 2019)

Extension of Services (01 Nov 19 - 30 Apr 2020)

Table 2: Estimated Cost by Base and Option Period

(4) Identification of the exception to fair opportunity and the supporting rationale:

The statutory authority that permits procuring the required Oracle 11i eBS sustainment services from Accenture is 10 USC 2304c(b)(2), which is implemented by FAR 16.505(b)(2)(i)(B): only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized. In addition, this award is authorized pursuant to FAR 16.500(b), which permits a sole-source pursuant to 10 USC 2304(c)(1), as implemented by FAR 6.302-1, services are deemed to be available only from the original source in the case of a follow-on contract for the continued provision of highly specialized services when it is likely that award to any other source would likely result in the substantial duplication of costs that cannot be recovered through competition or present unacceptable delays. In this case, the required Oracle 11i eBS support is a follow-on contract as it requires the same Oracle 11i eBS sustainment work that Accenture has been performing on its existing contract (FA8770-15-C-0509).

Market Research was completed in the form of a sources sought synopsis (FA8770-17-C-0522) posted to the government point of entry FedBizOpps on 17 Jan 2017 to inform the business communities that DEAMS had an upcoming effort that will focus primarily on Oracle 11i eBS sustainment as well as infrastructure migration and support. The synopsis was posted from 17 Jan 2017 to 17 Feb 17. The Sources Sought generated no responses from potential vendors. The Government had planned to issue another stand alone contract to Accenture under the same authority (FAR 6.302-1) as the current contract. However, the Government has since determined this requirement is within scope of the NETCENTS-2 Application Services IDIQ contract (see e.g. PWS sections 3.1-3.2). Accenture is a multiple awardee on this contract and the Government has determined the NETCENTS-2 Application Services IDIQ contract to be the best contract vehicle for this acquisition. While the planned contract vehicle has changed, there is no change to the requirement posted on 17 Jan 2017 to which no potential vendors responded.

a. Highly Specialized Capabilities and Unique Services Accenture possesses the highly specialized capabilities and qualifications necessary to successfully support this unique effort. This requirement is unique because Accenture has developed and is sustaining custom built solutions for DEAMS users within the Oracle 11i eBS, which cannot be replicated. The complex customized code allows DEAMS to communicate with over 58 other financial systems. Currently, DEAMS is in the final development phase required to realize the required operational capabilities. As the sole developer and integrator of the systems, Accenture is the contractor who understands the current state of the system and what needs to be accomplished to sustain and stabilize the Oracle 11i eBS software so that it may be properly transitioned to the Oracle R12 eBS Upgrade contractor. Accenture has unique experience, expertise and understanding of the complex DEAMS system, including operations, Oracle 11i eBS system design/ configurations, RICEW customized coding, and unique DEAMS interfaces.Accenture, as the original integrator and current prime contractor for DEAMS, is the only known qualified source able to perform this Oracle 11i eBS support and stabilization effort within cost and schedule constraints.

b. Unacceptable Delays and Substantial Duplication of Cost Not Recoverable through Competition

1. Unacceptable Delays The PMO believes award to any other source at this time would result in unacceptable delays based upon a complex learning curve associated with the DEAMS. Any new contractor would have to analyze the latest versions of hundreds of design and process documents in order to execute the final development, operations and sustainment activities. The PMO estimates a new contractor would require at least six months to understand the current program before gaining the capability to maintain the system in its current state and to complete in-process or planned development and deployment efforts.

a. Possible Delay of Oracle R12 eBS Implementation - The PMO believes that in order to mazimize successful performance, it will likely require Accenture to provide consultation to the Oracle R12 eBS Upgrade contractor to ensure as smooth a transition as possible during the upgrade. In addition, the incumbent will develop and install patches in the Oracle 11i eBS instance that must be done to enable the Oracle R12 eBS upgrade. The absence of the incumbent's experience with this complex system during the upgrade would add significant risk to the critical implementation of Oracle R12 eBS within the allotted time-frame.

b. Source Selection Delay - If the proposed sole-source task order award to Accenture is not executed, the Air Force will be required to conduct a competitive source selection --which will, at a minimum, involve at least one year's delay. This delay in contract award would present serious concerns about how to best equip and support DEAMS. Without Accenture, no development or maintenance support would be available until the new Oracle 11i eBS sustainment contractor is brought on board. The resulting disruption would present a loss of service to the financial user community that would be severely prejudice any progress in achieving auditable financial statements or the successful performance of FIAR audits. Oracle 11i eBS sustainment during source selection would cause a high risk of instability of the software and the loss of proposed enhancements for the user community.

c. Risk to Program Schedule and Oracle R12 eBS Transition - Changing system integrators during this period in order to promote competition at this critical phase of the program is an exceedingly high risk alternative and not programmatically viable. The incumbent contractor will provide consultation to the Oracle R12 eBS Upgrade contractor to ensure as smooth a transition as possible during the upgrade to Oracle R12 eBS. The absence of the incumbents experience with this complex system during the upgrade would add significant risk to the critical implementation of Oracle R12 eBS within the allotted time frame.

2. Substantial Duplication of Cost Accenture is the only firm capable of providing the supplies and services described in Section 3 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 its requirements, as follows:

• Source Selection Costs for Continued Oracle 11i eBS Sustainment Contractor total -- DEAMS resources would be required for approximately one year to execute a source selection

• New Contractor “Ramp Up Costs” would be -- The new contractor would have to analyze the latest versions of hundreds of design and process documents in order to execute the final development, operations and sustainment activities

• Government Ramp Up Costs would total -- Government functional and technical resources would be required to provide a level of support and consultation while a new contractor gets acclimated. It is estimated that resources would be devoted to this effort for six months, spending about 25% of their time on the support activities

• Training Costs would total -- The new contractor must be trained on DEAMS and AF functionality. Trainers would plan for and deliver 12 train-the-trainer sessions over a period of six months. Tactical planning for the classes by the Training Supervisor would require at 25% for six months. [

• Environment Reassignment Costs would total -- DEAMS training environments are hosted by the incumbent and would be required to transfer these environments to the new contractor.

• Loss of Productivity would total -- A new contractor would be less efficient than the incumbent due to its unfamiliarity with the system. It is anticipated that, during the first year of the effort, the new contractor would resolve 50% of the number of remedy tickets that the current contractor can address during each planned patch cycle. Based on the new contractor's productivity rate, it would require an additional eleven months to deliver patches for these remedy tickets.

and

• Cost of Extended Performance (i.e. fixed life cycle costs) would be almost an additional -- The program would incur “fixed” costs to continue to operate and maintain the current fielded system for additional 11 months based upon loss of contractor productivity as described above. These fixed costs include the Government's costs to support DEAMS (i.e. Advisory and Administrative Support; Post- Production Technical Support; infrastructure support; ERP subject matter experts; renewal of hardware maintenance agreements and software support contracts; and operational test and evaluation

Based upon the above the total expected duplication of costs the U.S. Air Force would incur is if it were to hold a competition for this effort. The table below summarizes the elements of duplicative cost.

New Source Selection New Contractor Ramp-Up Costs Government Ramp-Up Costs Environment Reassignment Costs Loss of Productivity Cost of Extended Performance Total Duplication Cost

After examination of historical DEAMS data, the Government would expect to save conducting a competition for this effort (a recent competition for Oracle R12 eBS technical upgrade yielded labor rates which were 25-50% lower than the incumbent contractor for comparable labor categories and skill mixes.

As a result, the substantial duplication of cost as a result of holding a competition is significantly larger than the total savings achieved through competition.

(5) Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable:

For non-competitive acquisitions, sole source proposals are evaluated for determination of a fair and reasonable price and for analysis of factors such as cost elements, technical and management approach, and adequacy of the terms and conditions of the prospective contract.

The Procuring Contracting Officer (PCO) will make a determination that the negotiated price to the Government

1469548410C Sticky Note Rejected set by 1469548410C will be fair and reasonable. This will be accomplished by utilizing proposal analysis techniques per FAR 15.404-1.

The proposal analysis techniques that will be utilized by the Government are discussed below:

a. Historical Data - A comparison of proposed hours with historical pricing data will be evaluated along with other factors such as price escalation, quantity, scope of work, etc., to get a perspective on whether proposed costs are in line with what has been proposed in the past on DEAMS. While actual historical data does not mean those actuals are reasonable, it can highlight whether costs are significantly different than what has been paid for in the past. When using historical data, care will be taken to consider inefficiencies, rework, and differing complexity levels of proposed tasks.

b. Defense Contract Audit Agency (DCAA) - A DCAA audit of the proposal rates will be requested to ensure that the rates proposed are fair and reasonable. This will also assist in determining if the price is fair and reasonable.

c. Technical Evaluation - The technical analysis will be conducted by Air Force Subject Matter Experts (SMEs) and will assist the PCO in evaluating whether the contractor's technical proposal is acceptable as a basis for negotiation. The technical team will determine whether requirements are being met and if the labor categories, labor hours, types, and quantities are adequate.

d. Cost Analysis - A cost comparison of previous proposals from the incumbent will review individual cost elements. Examples of the proposed comparisons follow:

(1) Actual costs previously incurred by the incumbent;

(2) Previous cost estimates from the incumbent or from other offerors for the same or similar items;

(3) Independent Government cost estimates by technical personnel; and

(4) Forecasts of planned expenditures.

(6) Other facts supporting the justification:

Accenture Federal Services is the only firm capable of providing the 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 its requirements. Without a properly functioning DEAMS, the United States Transportation Command (USTRANSCOM) and the United States Air Force (USAF) would continue to rely on outdated legacy financial systems and data. Both organizations would fail the CFO Auditability Requirements and be without a qualified financial system.

Bringing on a new contractor at this critical juncture would result in serious delays and costs for the remaining design, future modifications and deployment of the mission essential capabilities and would significantly impact DEAMS' progress toward FIAR Compliance. Awarding this work to the incumbent is the only chance for the DEAMS program to achieve major milestones per the schedule and avoid a future critical change.

(7) Actions the agency may take to remove or overcome any barriers to increasing fair opportunity before any subsequent acquisition for the supplies or services:

The DEAMS program recently completed a small business competition and contract award for the upgrade to Oracle R12 eBS and sustainment, also known as DEAMS Technical Upgrade and Sustainment (DTUS). DEAMS will transition to the new Oracle R12 eBS contractor as quickly as possible. A three year coverage period and an estimated value of for this Exception to Fair Opportunity will provide the time and dollars needed to complete program milestones for DEAMS to continue toward Full Deployment.

(8) Contracting Officer's certification that the justification is accurate and complete:

The Contracting Officer's signature on the signature page provides evidence that he/she certifies that the justification is accurate and complete to the best of his/her knowledge and belief.

(9) Certification of technical/requirements personnel that supporting data is accurate and complete:

As evidenced by his/her signature on the signature page, the Program Manager certifies that any supporting data contained herein, which is his/her responsibility, is both accurate and complete.

(10) Determination by the approving official that one of the circumstances in FAR 16.505(b)(2)(i) applies to the order

As evidenced by my signature on the signature page, I hereby determine that the fair opportunity exception checked in block 6 (Page 1) applies.