Final_Version_for_Public_Release_-_Reference_A_THAAD_Class_Justification_and_Approval_(16-0044).pdf

J&A No: 16-0044

DISTRIBUTION STATEMENT A. Approved for public release; distribution is unlimited Approved for Public Release 17-MDA-9240 (14 June 17)

CLASS JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

MISSILE DEFENSE AGENCY

TERMINAL HIGH ALTITUDE AREA DEFENSE

1. Introductory Paragraph.

Upon the basis of the following justification, I, as Director of the Missile Defense Agency, hereby approve the issuance of the contractual actions discussed below using other than full and open competition pursuant to the authority cited herein.

2. Agencies and Contracting Activity, (FAR Part 6.303-2(b)(1)).

This Justification and Approval (J&A) is for the Missile Defense Agency (MDA) Terminal High Altitude Area Defense (THAAD) Project Office. The contracting activity is THAAD Contracts (DACD), 5222 Martin Road, and Attention: VBII (DACD) Redstone Arsenal, AL 35898.

3. Nature and Description of the Action being Approved (FAR Part 6.303-2(b)(2)).

The action being approved is for award of one or multiple sole source contract(s) for additional THAAD Interceptors (Lots 10-12) on a class basis to Lockheed Martin (LM) Missiles and Fire Control for the production of THAAD Interceptors. Production Decision Authority approval was granted by the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics (OUSD(AT&L)) in August 2016.

The Lot 9 Request for Proposal (RFP), HQ0147-16-R-0024, was issued on 31 May 2016, and was amended to include Lot 10 quantities. Lots 9/10 will be awarded on a new production contract. Any future buys, to include Lots 11/12 will be issued under new solicitations(s) for either incorporation into the resulting Lots 9/10 production contract, or as a new stand-alone contract. Based on timing of contract award and availability of funds, options may be used to secure unit price savings and cost efficiencies. The contract type for Interceptor procurement will be a fixed-price incentive (firm target) (FPIF). Pursuant to OUSD/AT&L’s “Better Buying Power Initiatives” as well as DFARS 216.403-1, contracting officers are encouraged to use FPIF contract types for acquisitions in production with a stable design. The FPIF contract type offers contractors a significant incentive to control costs. Cost and performance incentives will be used to the maximum extent practical. In accordance with DoD Financial Management Regulation Volume 2A Paragraph 010204 any “savings” realized during contract negotiations may result in the acquisition of a higher quantity of interceptors than the quantity specified in the applicable Appropriations Acts.

4. Description of Supplies and/or Services Required to Meet the Agency's Needs

(Including the Estimated Value) (FAR Part 6.303-2(b)(3)).

The THAAD element provides the Ballistic Missile Defense System (BMDS) with a globally-transportable, rapidly-deployable capability to intercept and destroy ballistic missiles inside or outside the atmosphere during their final, or terminal, phase of flight.

The future contract(s) will meet the Government’s need for associated engineering support and Interceptors.

This effort will be funded with Procurement, Defense Wide appropriation funds or other funds as authorized and appropriated by Congress. The Government may procure additional quantities, not to exceed available funding, based on negotiated unit cost savings.

The overarching Acquisition Plan entitled, “Terminal High Altitude Area Defense (THAAD) Enhancement Capability Development, Fire Unit Fielding and Fielding Support and Contractor Logistics Support” was approved on February 6, 2006. This Class J&A is supported by Amendment #4, signed October 2016, to the overarching Acquisition Plan.

5. Statutory Authority Permitting Other than Full and Open Competition (FAR Part 6.303-2(b)(4)).

The statutory authority permitting other than full and open competition for future Interceptor Production contracts and solicitations is 10 USC 2304 as implemented by FAR 6.302-1(a)(2)(ii):

“(ii) Supplies may be deemed to be available only from the original source in the case of a follow-on contract for the continued development or production of a major system or highly-specialized equipment, including major components thereof, when it is likely that award to any other source would result in—

Substantial duplication of cost to the Government that is not expected to be recovered through competition; or Unacceptable delays in fulfilling the agency’s requirements.”

6. Demonstration of Contractor's Unique Qualifications or the Nature of the Acquisition Requires use of the Authority Cited (FAR Part 6.303-2(b)(5)).

See classified Annex to Justification and Approval (J&A), For Other Than Full and Open Competition, Missile Defense Agency, Terminal High Altitude Area Defense

(THAAD).

7. Description of Market Research Conducted (FAR Part 6.303-2(b)(6), (8) and (10)).

In accordance with Defense Federal Acquisition Regulation Supplement, Procedures, Guidance and Information 206.302-1(d), I, as Head of the Contracting Activity for the

17-MDA-9240 (14 June 17)

MDA, waive the requirement to post a request for information or sources sought notice to the Federal Business Opportunities website for the purpose of market research. See classified Annex to Justification and Approval (J&A), For Other Than Full and Open Competition, Missile Defense Agency, Terminal High Altitude Area Defense

(THAAD).

8. Determination of Fair and Reasonable Cost (FAR Part 6.303-2(b) (7)).

In accordance with FAR 15.402, the Contracting Officer shall ensure that all supplies and services ordered under this contract are procured at a fair and reasonable price. The Contractor will submit a formal price proposal with certified cost or pricing data and sufficient information to support the accuracy and reliability of the estimate. The Contractor's proposed cost will be reviewed by experienced technical analysts, contract specialists, and price analysts with the aid of necessary field pricing support. Analysis will be based on historical cost data, current market data, rate information and assist audit reports provided by Government field pricing support agencies. The Contracting Officer will use the cost and price analysis as the basis for negotiating a fair and reasonable price. The THAAD Project Office expects to receive cost efficiencies from a synergy buy due to overlapping PoP and economies of scale savings for all future lots.

The use of an Office of the Secretary of Defense/Defense Procurement Acquisition Policy (DPAP) approved pricing model will be utilized to negotiate a fair and reasonable price IAW FAR Part 15.402. This pricing model is based on certified cost and pricing data and other than cost and pricing data, Government technical evaluations, cost and price analyses, field support audits, historical actuals, and evaluation of cost, technical/performance, and schedule risks.

9. Any Other Facts Supporting the Use of Other Than Full and Open Competition (FAR Part 6.303-2(b)(9).

FAR clause 52.244-5, Competition in Subcontracting, will be included in the contract.

LM Missiles and Fire Control will be required to select subcontractors on a competitive basis to the maximum extent practicable. LM Missiles and Fire Control submits a Comprehensive Small Business Subcontracting Plan annually that is evaluated and approved by the Defense Contract Management Agency. LM is also required to submit a Contract Data Requirement List titled, “Small Business Subcontract Report” semiannually to the THAAD Program and the MDA’s Small Business Office for evaluation and approval. The THAAD system consists of a highly-complex technical data package requiring special knowledge and engineering expertise to insure and maintain stringent performance requirements and extremely tight tolerances. The current THAAD System TDP does not include special and/or critical processes required to manufacture a first-time quality product. Procuring THAAD Interceptors from another vendor would significantly duplicate costs to the Agency and would not be expected to be recovered through competition. We would also have unacceptable delays in fulfilling the Agency’s needs should the requirement be competed.

Additionally, the Agency would experience technical, cost, schedule and concurrency risks if competed.

10. Actions Taken to Remove Barriers to Competition (FAR Part 6.303-2(b)(11).

In addition to FAR clause 52.244-5, Competition in Subcontracting, the THAAD Project Office will carefully consider requirements for competition to the maximum extent practicable as emerging needs become known to the Government. The appropriate contract deliverables, such as Production Drawings/ Models and Computer Product Software End Items, will be utilized when there are any changes to the production line to address any obsolescence or parts change notices that occur during Interceptor Production. The Deferred Ordering of Technical Data or Computer Software Clause resident in the existing development contracts will be used, as practicable, to acquire data or software needed to develop second sourcing opportunities for parts and services procured in the coming years.

*In accordance with FAR Part 6.304, the above justification for other than full and open competition was approved on December 16, 2016 by The Director of the Missile Defense Agency.