Holston AAP - JA Restricting Competition - Industrial Mobilization (final) (redacted for release).pdf

Control No: 20-069

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Department of Army Justification and Approval for Other than

Full and Open Competition

1. Contracting Agency: U.S. Army Contracting Command - Rock Island (ACC-RI), Rock Island Arsenal, Rock Island, IL 61299-8000.

2. Description of Action: Product Director Joint Services (PD JS) seeks a single, hybrid firm-fixed-price (FFP) and cost reimbursement indefinite delivery-indefinite quantity contract for the production of explosives and the operation and modernization of the Holston Army Ammunition Plant (HSAAP) beginning in FY23.

The production of explosives will be on a FFP basis. Plant operation will be funded via inclusion in explosives unit prices. Production Base Support (PBS) modernization efforts to replace antiquated/obsolete equipment and upgrade explosive production capabilities at HSAAP may be executed after contract award and will be directly funded via either fixed price or cost reimbursement type actions, depending on the level of scope and complexity. The award is anticipated for April 2023, and is valued at $8,823,564,140. Procurement Ammunition (PA) funds will support this procurement. PD JS requests that the procurement and award be restricted to the United States (U.S.) or its outlying areas, to maintain the domestic industrial base as detailed in paragraph 5, thus necessitating this Justification and Approval (J&A) for Other than Full and Open Competition. In accordance with Defense Federal Acquisition Regulation Supplement (DFARS) 207.103(d)(i)(B), an acquisition plan is required and was approved by the Deputy Joint Program Executive Officer Armaments and Ammunition on 21 July 2021. In accordance with DFARS 217.204(e), Use of Options, AFARS 5117.204(e), Options, and AFARS Appendix GG, a Determination and Findings (D&F) to extend the contract beyond the 10-year regulatory limit is also required and was approved by the Head of the Contracting Activity on 01 November 2021.

3. Description of Supplies:

a. HSAAP is a government-owned, contractor-operated (GOCO) explosives manufacturing facility in Kingsport, TN that produces various types of Research Development Explosive (RDX), High Melting Explosive (HMX), and Insensitive Munitions Explosive (IMX) based explosives in support of military operations, training, and stockpile replenishment executed by active and reserve components of all U.S. uniformed services. HSAAP is critical to industrial base readiness as it is the Department of Defense’s (DoD’s) primary source for explosives and is the only source for RDX, HMX, and IMX explosives within the U.S.

b. Items to be acquired under this acquisition include multiple variations of RDX, HMX, and IMX. Production items will be procured in accordance with U.S.

technical data packages, drawings, and specifications. A Secret facility

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clearance will be required to facilitate the production of explosive items that support sensitive ammunition programs.

c. In addition to production, the contract will include services for operation and modernization of HSAAP. The cost for facility operations, which are incidental to production (e.g. maintenance, safety, security, fire and emergency, etc.), will be indirectly funded via their inclusion in the product unit prices in accordance with Department of Defense Instruction 5160.68, Single Manager for Conventional Ammunition (SMCA), and Army Regulation 700-90, Army Industrial Base Process, Paragraph 5-1c.

d. Modernization efforts to replace antiquated/obsolete equipment and upgrade explosive production capabilities at HSAAP will be directly funded via fixed price or cost-type actions depending on their level of complexity and uncertainty.

e. This acquisition will result in the award of a production and operation contract, consisting of a base period with five, one-year ordering periods; an evaluated option with five, one-year ordering periods exercised at time of award; and two additional unevaluated five-year option periods. Therefore, the total potential ordering period is 20 years, beginning in FY23. The contract will also include a 12-month transition-out period that will commence when the final ordering period expires to allow for completion of deliveries and ongoing modernization efforts (known as PBS projects). This transition-out period will commence either in Year 11 or Year 16 upon a decision to not exercise an available option, or in Year 21 if all option periods are exercised. Accordingly, the total potential period of performance for operation and modernization is 21 years. If, during contract performance, a decision is made to exercise the available unevaluated option(s), a J&A will be required and routed at that time.

f. Based on the projected PA funding, inclusive of the Provision of Industrial Facilities budget line, as well as supplemental funding and HSAAP production capacities, the potential value of this 21-year indefinite-delivery contract is $8,823,564,140. Pursuant to DFARS 216.504, Indefinite-quantity contracts, and in accordance with section 816 of the National Defense Authorization Act for FY 2020 (Pub. L. 116-92), a determination under FAR 16.504(c)(1)(ii)(D) is not required for this single-source delivery order contract valued at greater than $100 million if this J&A is approved.

HMX Products IMX Products RDX Products Other

Products Production Base Support (PBS)

Total

FY23

FY24

FY25

FY26

FY27

FY28

FY29

FY30

FY31

FY32

FY33

FY34

FY35

FY36

FY37

FY38

FY39

FY40

FY41

FY42

Total $8,823,564,144

4. Authority Cited: 10 U.S.C. 2304(c)(3), as implemented by FAR 6.302-3, Industrial mobilization; engineering, developmental, or research capability; or expert services.

5. Reason for Authority Cited:

a. As set forth in FAR 6.302-3(b)(1)(i) and FAR 6.302-3(b)(1)(iv)(A), full and open competition need not be provided for when it is necessary to award the contract to a particular source or sources in order to keep vital facilities or suppliers in business or make them available in case of a national emergency; and, to create or maintain the required domestic capability for production of critical supplies by limiting competition to items manufactured in the U.S. or its outlying areas.

b. The Army, as the SMCA, is responsible for ensuring there are critical and affordable industrial capabilities to meet current and future explosive production requirements. Production of explosives require special skills, equipment, and facilities that the SMCA must maintain within the U.S. or its outlying areas in order to protect the domestic capability for production of these critical items. The

4)

5)

6)

Award Date: August 2019 Period of Performance: FY2019 – FY2022 Competitive Status: Sole Source to BAE Systems IAW 10 U.S.C. 2304(c)(3) Authority: FAR 6.302-3, CMO#: 17-117 Summary: Competition was not sought out for this action IAW FAR 6.302- 3(b)(1)(i). This action resulted in successful negotiation and award of four years of the production and operation at HSAAP.

Supply Contract: W52P1J-12-D-0037, 4th Extension Contractor: BAE/OSI Award Date: 31 July 2017 Period of Performance: FY2018 Competitive Status: Sole Source to BAE Systems IAW 10 U.S.C. 2304(c)(3) Authority: FAR 6.302-3, CMO#: 17-026

Supply Contract: W52P1J-12-D-0037, 3rd Extension Contractor: BAE/OSI Award Date: 31 July 2017 Period of Performance: FY2013 – FY2017 Competitive Status: Sole Source to BAE Systems IAW 10 U.S.C. 2304(c)(3) Authority: FAR 6.302-3, CMO#: 12-011

Supply Contract: W52P1J-09-D-0003, 2nd Extension Contractor: BAE/OSI Award Date: December 2008 Period of Performance: FY2008 – FY2012 Competitive Status: Sole Source to BAE Systems IAW 10 U.S.C. 2304(c)(3) Authority: FAR 6.302-3, CMO#: 06-037

Supply Contract: DAAA09-03-D-0007, 1st Extension Contractor: BAE/OSI Award Date: June 2003 Period of Performance: FY2003 – FY2007 Competitive Status: Sole Source to BAE Systems IAW 10 U.S.C. 2304(c)(3) Authority: FAR 6.302-3, CMO#: 01-035

Supply Contract: DAAA09-98-D-0005 Contractor: BAE/OSI Award Date: June 1998 Period of Performance: FY1998 – FY2002 Competitive Status: Full and Open Competition

Facility Contract: DAAA09-98-E-0006 Contractor: BAE/OSI (Previously Royal Ordnance North America Inc.)

Award Date: June 1998

Period of Performance: Jan 1999 – Dec 2023 Competitive Status: Full and Open Competition

b. Acquisition data availability: N/A

c. Unusual and compelling urgency: N/A