Redacted_JA.pdf

JUSTIFICATION FOR OTHER THAN FULL AND

OPEN COMPETITION (OTFAOC)

Federal Acquisition Regulation (FAR) Part 6 Justification, Supporting Procurements under FAR Part 12, FAR Subpart 13.501, and FAR Part 15

Purchase Request Number: MPLSLEI1419801 Contract Number: To be determined (TBD) Task/Delivery Order Number: TBD Procurement Title: Warehouse Management Solution Contracting Office: Defense Information Systems Agency (DISA)/ Defense Information Technology Contracting Organization (DITCO) Scott/ PL8321

Statutory Authority: 10 U.S.C.§2304(c)(1) and FAR 6.302-1

JUSTIFICATION FOR OTFAOC

Justification for OTFAOC Number: JA15-020

Upon the basis of the following justification, I, as Procuring Activity Competition Advocate (PACA), hereby approve the use of OTFAOC of the proposed contractual action, pursuant to the authority of 10 U.S.C.§2304(c)(1) and FAR 6.302-1, only one responsible source and no other supplies or services will satisfy agency requirements.

JUSTIFICATION

1. REQUIRING AGENCY AND CONTRACTING OFFICE:

(a) Requiring Agency Defense Commissary Agency (DeCA) 1300 East Avenue Fort Lee, Virginia 23801

(b) Contracting Office:

DISA/DITCO Scott/PL8321 2300 East Drive, Building 3600 Scott Air Force Base, Illinois 62225-5406

2. NATURE/DESCRIPTION OF ACTION(S):

(a) The nature of this action is to procure a warehouse management solution in support of DeCA. This procurement will be a firm-fixed-price (FFP) sole source follow-on contract with Manhattan Associates, Inc., for customization completion and deployment of their proprietary commercial off-the-shelf (COTS) Warehouse Management Open System (WMOS) to DeCA’s outside the continental United States (OCONUS) Central Distribution Centers (CDC). Under the existing contract, HC1028-10-C-2008, which expires March 21, 2015, Manhattan has made 44

Warehouse Management Solution-JA15-020 customizations to their COTS WMOS package to accommodate DeCA’s unique warehouse processes and interface seamlessly with legacy systems. The current contract deployed this customized solution to two CDCs - Kaiserslautern Cold Storage (KCS) and Germersheim, in Germany. Under this follow-on contract, Manhattan will provide a tech refresh of the customized solution at the two original CDCs and deploy this customized version of their COTS solution to six additional CDCs.

(b) The period of performance will consist of a 1-year base period, beginning date of award, and four 1-year option periods. Fiscal year (FY) 2015 surcharge collections funds will be used under Military Interdepartmental Purchase Request MPLSLEI1419801. The applicable North American Industry Classification System code is 511210, Software Publishers, with sales size standard of $38,500,000.

3. DESCRIPTION OF SUPPLIES/SERVICES:

(a) To date, DeCA has deployed Manhattan’s COTS WMOS in two CDCs. The remaining CDCs use DeCA’s Interactive Business System (DIBS), a legacy system developed in the mid- 1980s to manage commissary backroom operations, not CDC operations. Using this system does not allow DeCA to optimize operations or to leverage commercial best practices. To achieve DeCA’s goal to provide a 21st century shopping experience, its CDCs must operate similar to its commercial counterparts, which includes the use of a COTS warehouse management solution.

(b) WMOS currently processes all incoming shipments, verifies order accuracy, manages warehouse operations, optimizes picking, and provides pallet size, weight, and cube routing information. Also included in the system are software license, software configuration, development, and delivery; system and data conversion; documentation; installation, de-installation, and disposal of old equipment; testing; training; disaster preparedness and business continuity; hardware and software maintenance; system administration; 24x7 help desk (excluding Tier 1); consulting services; and program management. WMOS directly affects every commissary that relies on a CDC to keep its shelves stocked. It incorporates grocery industry best practices in reading and processing European Article Numbers and Japanese Article Numbers and voice picking technology. DeCA’s WMOS solution performs five primary business functions described below within the CDC:

(1) Inbound Management

(A) Receiving - CDC workers use radio frequency (RF) handhelds to inventory inbound shipments.

(B) Put away - CDC workers store palletized products, input product location, and manage the internal operations of the CDC, using RF handhelds.

(2) Inventory Management

(A) Physical and Cyclic Inventory - CDC workers physically count all of the products in each warehouse location. Cyclic inventories are performed under normal warehouse operations without freezing locations. CDC workers cycle count inventory by checking product locations to identify and correct discrepancies between current inventory in the WMOS and actual physical inventory.

Page 2 of 10 Pages

(B) Quality Control - CDC workers inspect merchandise being received or shipped to ensure that it is of adequate quality and that the LPN content specification is accurate.

(3) Task Management – Warehouse management solution generates warehouse worker tasks and enables management to prioritize the sequence of CDC activities in English, German, Japanese, or Korean to optimize workload efficiency.

(4) Outbound Distribution

(A) Replenishment - CDC workers move item inventory from a reserve storage location to the primary picking location or to another mode of storage from which picking is performed.

(B) Picking & Shipping – Voice picking directs CDC workers in English, German, Japanese, or Korean to identify product locations in the warehouse, pick inventory against store orders, and ship the picked inventory to requesting stores.

(5) Supply Chain Intelligence - Equips warehouse managers and supervisors with analytic reporting tool in a set of pre-configured reports; the tool allows managers and supervisors to create their own reports and queries.

(c) Manhattan’s 2010 WMOS is a multi-platform, multi-tier software solution that integrates with VoCollect (voice picking software and hardware) to enable voice picking, Supply Chain Intelligence to generate customized reports, utilizes Websphere MQ, and Manhattan Integration Frameware to process data and interface with other applications and functions within WMOS.

DeCA is licensed to use all of the integrated software and three modules of Manhattan’s Transportation Lifecycle Management that integrates to PC Miler software to allow for routing and delivery planning. This solution interfaces with DeCA’s supply chain to provide accurate inbound and outbound shipping requirements and inventory management.

(d) To achieve the agency’s goal and to leverage industry best practices, DeCA requires the deployment of the proprietary COTS WMOS solution customized to interface with DeCA’s business systems to eight CDCs. DeCA anticipates that Manhattan will deploy to an average of two sites per year. The contractor’s support will include:

(1) A tech refresh using the newest version of the customized COTS solution deployed at two sites (KCS and Germersheim),

(2) Deployment to six additional CDC’s from FY 2016 through FY 2020,

(3) User training, and

(4) Ongoing support.

4. IDENTIFICATION OF STATUTORY AUTHORITY:

Only one responsible source and no other supplies or services will satisfy agency requirements, 10 U.S.C.2304(c)(1). (FAR 6.302-1/Defense FAR Supplement 206.302-1).

5. DEMONSTRATION OF CONTRACTOR’S UNIQUE QUALIFICATIONS:

(a) Description of events. DeCA CDCs used DIBS to manage commissary backroom warehouse operations. Realizing that this legacy system was not capable of optimizing warehouse operations or leveraging commercial best practices in 2010, DeCA awarded a

Page 3 of 10 Pages contract to Manhattan Associates, Inc., to customize its proprietary WMOS solution and deploy it to three CDCs. Government delays with procuring system hardware requirements significantly delayed the start of the Manhattan deployment. However, the Manhattan WMOS was customized to interface with DeCA’s business systems and was successfully deployed at two CDCs. Manhattan also developed a propriety interface to VoCollect software that allows DeCA to utilize an automated voice picking system. Recently, Manhattan released a new version of its software. This new release is not available under DeCA’s current contract. Manhattan Associates, Inc. does not authorize resellers or maintenance partnerships, so the government must contract directly with Manhattan to leverage the benefits of the earlier contracts.

(b) Justification:

(1) Minimum Government requirements.

The government requires the newest version of the WMOS software to replace what is currently in use at two CDCs as well as deployment of the customized proprietary COTS WMOS to six additional OCONUS CDCs.

(2) Proposed sole source contractor.

Manhattan Associates, Inc. is the proposed sole source contractor. Manhattan Associates, Inc. is the developer of the WMOS solution that was customized to interface with DeCA’s legacy systems and is currently operational at two CDCs. Manhattan Associates, Inc. does not authorize other entities to support or resell their solutions. A sole source contract will allow the government to continue to use existing voice picking software and supporting hardware (e.g., RF handhelds). By using the current hardware and updating the existing WMOS software, market research revealed a cost savings of $2.7 million in duplication of costs to the Government to replace the current WMOS solution, $1.2 million to replace VoCollect software and hardware, and $2.0 million to maintain the current solution for approximately 2 years, until deployment of a new solution. This estimate does not include the cost of purchasing new software licenses; the current support license fee is based on a percentage of the cost of the original software license from 1998, which is a significant savings to the government. Warehouse Management is mission critical to DeCA; therefore, the current system is required to be maintained until a new system is deployed. In addition to the cost savings, an estimated 24 months required to deploy a new system will be saved. Therefore, as described in FAR 6.302- 1(a)(2)(ii)(A), replacement of the software and equipment would result in substantial duplication of costs to the government that are not expected to be recovered through competition.

(3) Discussion regarding cause of the sole source situation.

The current contract was awarded to Manhattan through full and open competition.

Under this contract, DeCA deployed Manhattan’s proprietary COTS solution with DeCA unique customizations to interface with legacy systems. This software has been deployed to two DeCA CDCs through the current contract. Initial customization, interface development, software configuration, and testing were required prior to deployment to the two CDC’s in Europe. Proven system stability in Europe was essential prior to deployment to the more complex CDCs in the Far East due to site preparation, customs regulations, multiple languages, and cultural differences that resulted in additional time to

Page 4 of 10 Pages prepare the sites for deployment. Manhattan Associates, Inc.’s business model precludes them from participating in partnerships and authorizing resellers. Manhattan Associates, Inc. is the only entity that provides its proprietary COTS WMOS software solution.

Procuring Manhattan’s WMOS solution will allow DeCA continuity of service until the implementation of the Enterprise Business Solution in FY 2020 that will replace the existing warehouse management solution.

(4) Demonstration of unique source.

Manhattan Associates, Inc.’s business model precludes them from participating in partnerships and authorizing resellers. Manhattan Associates, Inc. is the only entity that has the proprietary data rights for the interfaces to VoCollect that are required to implement a WMOS COTS package customized to DeCA-specific processes that is in compliance with Department of Defense (DoD) system requirements. The current Manhattan solution has 44 customizations covering printed documents, customized functionality, integration customization, reports, and security enhancements. DeCA developed nine interfaces between DeCA host systems and the current Manhattan WMOS platform. Documented security controls and Authority To Operate have been obtained per DeCA/DoD requirements. Upgrade of the current solution will also minimize the cost and time required for training, data migration, and impact on production.

(5) Procurement discussion.

The government requires deployment of a COTS warehouse management open solution to all of its CDCs by March 2020 in order to sunset a legacy system, as planned by the agency. Market research has identified that all COTS warehouse management solutions available in the marketplace are proprietary. Further, no COTS solution is capable of providing customization and interfaces to DeCA’s business systems, out of the box.

Successful implementation of any commercially available warehouse management solution will require customization to interface with DeCA’s unique legacy systems. The development of these interfaces requires time for coding and testing and certification.

These activities are time-consuming, expensive, and require an in-depth understanding of DeCA’s systems and operations as well as DeCA and DoD policies and security requirements. These activities have already been successfully accomplished by Manhattan, and this customized solution is fully operational at two CDCs. The Manhattan solution is proprietary, and Manhattan does not participate in any partnerships nor do they authorize product resellers. Thus, Manhattan Associates, Inc. is the only source able to provide and support DeCA’s currently proven customized COTS solution, and the only way DeCA can leverage the efforts that went into customizing the original software is to continue its engagement with Manhattan Associates, Inc.

(6) Impact:

This follow on contract will allow for a technical refresh of the current customized COTS warehouse management solution that has been deployed at two DeCA CDCs in Germany and deployment of the same solution to six additional CDCs throughout the Far East.

The six CDCs that are not currently using WMOS are utilizing a legacy system that is scheduled to be sunset in FY 20. The warehouse distribution function of WMOS is

Page 5 of 10 Pages critical to DeCA’s mission to deliver groceries to military members in an OCONUS environment. A lapse in this function would result in mission failure. Procurement of a new COTS warehouse management solution increases the risk of mission failure to deliver a vital benefit of the military pay system that sells grocery items at cost while enhancing quality of life and readiness for our OCONUS patrons. The current COTS WMOS has been highly specialized for DeCA; acquisition of a follow-on contract will ensure continuity of service through the sunset of the current legacy system and interoperability of the OCONUS Commissary Distribution Centers. If other than an exception to full and open competition were pursued, it would result in substantial duplication of costs and effort to the government that are not likely to be recovered through competition.

6. FEDBIZOPPS (FBO) ANNOUNCEMENT/POTENTIAL SOURCES:

(a) In accordance with FAR 5.2, a sources sought announcement was posted to FBO from November 6th to the 21st, 2014. Manhattan Associates, Inc. was the only contractor to submit a capabilities statement package.

(b) DeCA requires a sole source award to Manhattan for its proprietary COTS WMOS software solution. A synopsis for this requirement will be published to the FBO website, as required by FAR 5.2.

7. DETERMINATION OF FAIR AND REASONABLE COST:

A determination will be made by the contracting officer that the contract represents the best value to the government, as defined in FAR 2.101, and results in the lowest overall cost alternative (considering price, special features, and administrative costs) to meet the government's needs. The contracting officer will also determine the pricing information valid for comparative purposes. Certified cost and price data is not required for this commercial item acquisition, in accordance with FAR 15.403-1(b)(3). The contracting officer will determine whether the price is fair and reasonable, based on:

(a) Comparison of the proposed prices to historical and existing prices paid, whether by the government or other than the government, for the same or similar items.

(b) Comparison with competitive published price list, published market prices of the same commodities.

(c) Comparison of proposed prices with the independent government cost estimate.