Fairbanks Morse Engine N32205-21-R-4105 DE IDIQ - JA.pdf

J&A No. N32205-20-R-4105

JUSTIFICATION AND APPROVAL (J&A)

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Activity: Department of the Navy, Military Sealift Command (MSC), Engineering Services (N102).

2. Description of the Action Being Approved:

This action provides the basis and rationale for awarding a Multiple Award Contract (MAC) on an other than full-and-open competition basis for long-standing, recurrent requirements covering a broad range of diesel engine systems/items and services in support of the following MSC class vessels: AS (Submarine Tender), T-AH (Hospital), T-AKE (Dry Cargo/Ammunition), T-AO 187 (Fleet Replenishment Oiler), T-AO 205 (Fleet Replenishment Oiler), T-ESB (Expeditionary Mobile Base), and T-ESD (Expeditionary Transfer Dock), T-AKR (Bob Hope Class, Gordon Class, Shughart Class), and T-AK (Kocak Class). The diesel engine systems are critical ship safety items for purposes of coms series instructions setting policy for maintenance, repair, parts procurement, and related technical services for such items.

MSC recognizes its obligation to further competition to the maximum extent possible, which it routinely does and will continue to do. However, as further described in the paragraphs below, the decision to procure these items via limited sources is based on a significant amount of MSC experience operating and maintaining its fleet of vessels, and in purchasing the very system items listed in paragraph 5. Specifically, contract history shows consistently procuring parts and services for these systems/items utilizing other than full-and-open competition for the past decade.

3. Description of Supplies/Services Required to Meet the Agency’s Needs:

MSC requires a broad range of Original Equipment Manufacturer (OEM) systems/items and and/or exclusively authorized OEM manufacturer/parts provider/service technician services to maintain the following diesel engines, which constitute critical ship safety items, contained within multiple MSC classes of ships. These systems/items and related services are for:

a. ALCO 251F (Ship Service Diesel Generator)

b. Colt-Pielstick PC4.2 (Main Propulsion Diesel Engine)

c. Fairbanks Morse 38D 8-1/8 (Emergency Diesel Generator)

d. MAN 6L 48/60 (Diesel Engine)

e. MAN 8L 48/60 (Diesel Engine)

f. MAN 9L 48/60 (Diesel Engine)

g. MAN 12V 48/60CR (Diesel Engine)

h. MAN 12V 25/30 (Ship Service Diesel Generator)

i. MAN 18V 20/27 (Emergency Diesel Generator)

j. MAN 12L90GFCA (Diesel Engine)

k. MAN 12K84EF (Diesel Engine)

l. MAN S28LH-2 (Ship Service Diesel Generator)

m. MAN 9K84EF (Diesel Engine)

n. SULZER 8AL25/30 (Diesel Engine)

o. MAN 8S28LH

p. MAN 7S28LH

q. MAN K7 SZ 90/160BL

Maintenance may include, but is not limited to, appraisals, groom, inspections, life cycle management, overhauls, refurbishment, repairs, reports, tests, and upgrades.

It is anticipated the MAC will have a five (5) year ordering period, commencing upon award. The period of performance for each order under the MAC will be determined at the time the time the individual requirement is developed. The total maximum value of this requirement is $169,890,711.00, which includes the entire five (5) year ordering period. It is anticipated that each issued order will be funded utilizing corresponding Fiscal Year (FY) United States Navy Working Capital Funds (NWCF) and/or Transportation Working Capital Funds (TWCF).

4. Statutory Authority Permitting Other Than Full and Open Competition:

The statutory acquisition authority permitting other than full-and-open competition is 10 U.S.C. 2304(c)(1), as implemented by FAR 6.302-1(a)(2), whereby this requirement can only be fulfilled by one or a limited number of sources. This authority is appropriate for use in this procurement as further described in the paragraphs below, and pursuant to FAR 6.302-1(b)(2), whereby the existence of limited rights in data make the supplies and services available from only one or limited sources; and 6.302- 1(b)(4), whereby the agency head has determined that only specified makes and models of technical equipment and parts will satisfy the agency’s needs for additional units or replacement items, and only one or a limited number of sources are available.

5. Rationale Justifying Use of Cited Authority:

This is a longstanding and continuing requirement. Based on the need for optimum operational reliability in critical ship safety systems, MSC has acquired the below systems/items and services for decades on an other than full-and-open competition basis using a series of J&As. Only OEM parts and services can effectively and efficiently fulfill MSC's requirement for optimal vessel safety and operational reliability. The previous contract was not competed. Over the past two (2) years, the required systems/items and services to maintain the diesel engines used in the above-described ship classes were procured through the use of a limited-source MAC issued to MAN Diesel SE (MAN) and Fairbanks Morse Engines (FME). Previously, these items and services were procured through individual contracts and purchase orders utilizing other than full-and-open competition.

FME/MAN Engines:

FY21 FY22 FY23 FY24 FY26 TOTAL

NWCF/

TWCF

$30,582,906 $36,606,323 $39,928,319 $41,288,477 $21,484,633 $169,890,711

a. ALCO 251F (Ship Service Diesel Generator)

b. Colt-Pielstick PC4.2 (Main Propulsion Diesel Engine)

c. Fairbanks Morse 38D 8-1/8 (Emergency Diesel Generator)

d. MAN 6L 48/60 (Diesel Engine)

e. MAN 8L 48/60 (Diesel Engine)

f. MAN 9L 48/60 (Diesel Engine)

g. MAN 12V 48/60CR (Diesel Engine)

h. MAN 12V 25/30 (Ship Service Diesel Generator)

i. MAN 18V 20/27 (Emergency Diesel Generator)

j. MAN 12L90GFCA (Diesel Engine)

k. MAN 12K84EF (Diesel Engine)

l. MAN S28LH-2 (Ship Service Diesel Generator)

m. MAN 9K84EF (Diesel Engine)

n. SULZER 8AL25/30 (Diesel Engine)

o. MAN 8S28LH

p. MAN 7S28LH

q. MAN K7 SZ 90/160 BL

The OEM for the engines listed above are MAN and FME. MAN, and its U.S.

representative and OEM-authorized service and parts provider, FME, are the only sources with access to the design information to engineer, manufacture, and service this equipment as they own the proprietary drawings, technical manuals, and design information for this equipment. Parts and services provided by the OEM maintain all OEM warranties, ensure equipment reliability, and ensure crew safety, therefore precluding consideration of non-OEM parts and non-OEM authorized technical representative services. The engineering, construction drawings, and technical characteristics for the manufactured parts for these engines are proprietary to FME and MAN; the Government does not own rights for this data, thus must utilize the OEM for FME and MAN required parts and services (FAR 6.302-1(b)(2)). In accordance with FAR 6.302-1(a)(2)(ii)(A), it is likely that award to any other source would result in both Substantial duplication of cost to the Government that is not expected to be recovered through competition, and Unacceptable delays in fulfilling the agency’s requirements, as no other company owns the proprietary data necessary to provide the required parts and services, and such data is not obtainable by any party outside MAN and FME. In order for another company to fulfill the fleet’s requirement for main engine parts and services without such data, the Command would have to replace the subject engines with equipment for which the Government or another party could purchase data rights.

The cost and time delay for the Government to procure a Diesel Engine system that allows for a vendor outside of FMEMAN to service and provide parts for this equipment would be $2,570M or $36M per a ship and 118 years or 20 months per a ship for the 185 FME/MAN engines on 71 MSC ships. This cost is based on actual cost of $35M to replace Main Control Console Systems on the USNS SUPPLY, N00033-10-C-7501, as well as an estimated cost of $85M or $5M per an engine line (17 total within the MSC fleet) for a company to reverse engineer all of the engine systems’ (engine, fuel pump, lube oil pump, turbos, etc.) material, coating, surface finish, and tolerances instead of replacing 185 engines within the MSC fleet. The length of delay for the Government to procure a Diesel Engine system that allows for a vendor outside of FME and MAN to service and provide parts for this equipment would be approximately 20 months (1.7 years) per ship based on actuals for the USNS SUPPLY, N00033-10-C-7501. Therefore, if ship were completed in series, it would take 118 years to replace the 71 FME and MAN engine control systems throughout the MSC fleet. This estimate does not include the estimated time for a company to reverse engineer all of the engine systems’ (engine, fuel pump, lube oil pump, turbos, etc.) prior to the start of installation.This substantial duplication of costs and significant delays would be unacceptable for meeting the Command’s mission, as the ships would be out of commission for a substantial amount of time.

FME and MAN provide OEM parts and technical data/drawings that satisfy the ship inspection and certification requirements of the United States Coast Guard (USCG) and American Bureau of Shipping (ABS) regulations. This mandatory regimen maintains all OEM warranties, ensures equipment reliability, and ensures crew safety, therefore precluding consideration of non-OEM parts and non-OEM authorized technical representative services. Commander, Military Sealift Command, through his directive COMSCINST 4490.1 series and Safety Management Systems (SMS) number 10.4-001- ALL Revision 2.2, and in accordance with FAR 6.302-1(b)(4), requires that the vessel equipment be maintained in accordance with OEM recommendations, MSC policy, and regulatory body requirements. SMS number 10.6-002-ALL lists the diesel generators as critical ship safety equipment. Failure of the SSDGs would restrict the ship to port and it would not be able to perform its required mission. Safe vessel operations require proper refurbishment and maintenance of the SSDGs in accordance with USCG, ABS, and MSC requirements.

If the Government procured a new system from a vendor outside of FME and MAN, then the Government would require a new vendor to support their newly installed system as the vendor would have legacy knowledge, own proprietary data rights and be needed for engineering software updates, verifying engine characteristics in accordance with regulatory bodies, maintaining a drawing and software repository, failure analysis, logistics support, and training.

If the Government wanted to own the proprietary rights of any vendor then the Government would need a vast amount of resources to complete or oversee the Diesel Engine System reverse engineering and design. Once the Government recreated the design, then the Government would need to staff to manage services offered by the vendor. In particular, more in-depth government quality assurance (i.e. government resources) would be required with multiple different vendors performing software modification or part manufacturing as the various contractor would not have the legacy knowledge such as the software’s format and functionality or impact of material characteristics. Furthermore, per FME and MAN’s exclusive licensing agreement, no other company has rights to purchase and distribute FME and MAN parts or provide service on the subject engines. FME is MAN’s exclusive US provider of services and parts for engines which are located in the US territory, which were built by FME. When services or parts delivery outside US territory are required in support of FME built engines, the sole authorized provider outside of FME is MAN. For MAN engines not built by FME, MAN is authorized to provide direct support worldwide. No other company is authorized to provide service on or parts for FME or MAN built engines. Because all engines covered under this requirement are mission critical ship safety items in accordance with COMSCINST 4490.1 series and Safety Management Systems (SMS) number 10.4-001-ALL Revision 2.2, and due to the fact that FME and MAN own all design and technical data for the subject engines, it is imperative that OEM manufactured parts and authorized service providers are procured in support of this requirement, as further described in the paragraphs above.

6. Description of Efforts Made to Solicit Offers from as Many Offerors as Practicable:

In accordance with FAR 5.102, MSC intends to make publicly available the solicitation for this requirement by posting to the Government-wide Point of Entry (GPE). In accordance with FAR 5.203(a), MSC intends to issue a synopsis of proposed contract action to the GPE. In accordance with FAR 6.305(a), MSC intends to post this J&A to the GPE within 14 days after contract award. MSC will continue to work with its contracting, engineering support, and program manager offices to identify potential manufacturing and authorized service providers. Further, MSC constantly communicates with the industrial base to assure that all potential alternatives are identified and receive consideration for these requirements. In sum, manufacturing facilities capable of the manufacturing and servicing the systems/items are limited to the OEM and OEM-authorized sources described in paragraph 5.

MSC does not have manufacturing and technical information required to evaluate and determine whether non-OEM systems/items potentially offered as equivalent to the OEM components and replacement parts are technically acceptable. These systems/items require special tools, specialized repair parts and technical expertise unique to these engines; only approved OEM parts are authorized to be installed for this highly sophisticated equipment. The OEM/OEM representative and its authorized parts providers and service technicians have access to provide parts and technical data/drawings for manufacture, and as required to properly repair and maintain the equipment. All OEM repair parts are therefore to be in compliance with USCG, ABS, and International Maritime Organization (IMO) regulatory requirements.

Market research conducted reveals that there are no other sources outside MAN and FME that are able to provide parts and services in support of this requirement. Discussions between MSC’s Engineering Directorate (N7), Contracting Division (N10), MAN, and FME revealed that the licensing agreement between FME and MAN limits the use of other sources, and would render the findings of other potential sources useless, as neither MAN nor FME will sell their parts to other distributers or provide required technical data to other service providers outside of this licensing agreement. To date, no additional sources have expressed interest. However, this requirement will be made publicly available via the GPE, in order to afford maximum visibility and competition.

Pursuant to DFARS PGI 206.302-1, MSC’s Head of the Contracting Activity has waived the requirement to post a Request for Information of Sources Sought notice. The Acquisition Team determined that the use of a Request for Information or Sources Sought Notice would serve no purpose, as the licensing agreement between Fairbanks Morse Engine and MAN Diesel would negate any potential results of the notice. In fact, it would be counterproductive, causing delay and additional administrative burden. This requirement has been waived, as attempting to obtain parts or services from other companies not party to the licensing agreement would not satisfy long-standing agency policy, would not satisfy MSC's requirement, and would therefore not be in the best interests of the Government.

7. Determination of Fair and Reasonable Cost:

Prior to contract award, a fair-and-reasonable determination will be made using the techniques described in FAR 15.404-1. The Contracting Officer has surveyed the history of acquisitions for the subject requirement, for which fair-and-reasonable determinations were established. The Contracting Officer will ensure that the anticipated contract will be awarded with pricing which is commensurate with earlier pricing, adjusted for the current market conditions and applicable inflation.

8. Actions to Remove Barriers to Future Competition

For the reasons set forth the paragraphs above, MSC has no plans at this time to engage in full-and-open competition for this requirement. If another potential source emerges, MSC will assess whether additional competition for future requirements is feasible. The Government will continue to monitor the market and conduct market research to identify additional sources and solutions, should they arise in the marketplace.

CERTIFICATION AND APPROVALS

TECHNICAL/REQUIREMENTS CERTIFICATION

I certify that the facts and representations under my cognizance which are included in this justification and its supporting acquisition planning documents, except as noted herein are complete and accurate to the best of my knowledge and belief.

TECHNICAL/REQUIREMENTS COGNIZANCE

Signature Name (Printed) Phone No. Date

LEGAL SUFFICIENTLY REVIEW

I have determined this Justification is legally sufficient.

CONTRACTING OFFICER CERTIFICATION

I certify that this justification is accurate and complete to the best of my knowledge and belief.

CHIEF OF THE CONTRACTING OFFICE RECOMMENDATION

Upon the basis of the above justification, I hereby recommend approval, as director of Contracts, of the solicitation of the proposed procurement(s) described herein using other than full and open competition, pursuant to the authority of 10 U.S.C.

2304(c)(1).

HEAD OF THE CONTRACTING ACTIVITY RECOMMENDATION

Upon the basis of the above justification, I hereby approve as the Head of the Contracting Activity, the solicitation of the proposed procurement(s) described herein using other than full and open competition, pursuant to the authority of 10 U.S.C.

2304(c)(1).

ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH,

DEVELOPMENT, AND ACQUISITION APPROVAL

Upon the basis of the above justification, I hereby approve, as Assistant Secretary of the Navy for Research, Development and Acquisition of the proposed solicitation described herein using other than full and open competition, pursuant to the authority of 10 U.S.C. 2304(c)(1).