REDACTED_CJA_-_SM-3_BLK_IB_Production_Class_JA_Rev2_Redacted.pdf

DEPARTMENT OF DEFENSE

MISSILE DEFENSE AGENCY

5700 18th STREET

FORT BELVOIR, VIRGINIA 22060-5573

J&A No: 14-0012

Contract No: TBD

CLASS JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

1. Introductory Paragraph.

Upon the basis of the following justification, I, as Director of the Missile Defense Agency

(MDA), 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 (Federal Acquisition Regulation (FAR) Part 6.303-

2(b)(1)).

This Class Justification and Approval (J&A) is for the MDA, Aegis Ballistic Missile Defense

(BMD) (MDA/AB) Program Office. The contracting activity is the MDA/AB Contracts Office

(MDA/DACG). The point of contact for this action is

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

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

(including the estimated value) (FAR Part 6.303-2(b)(3)).

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 this requirement is 10

U.S.C. 2304(c)(l) as implemented by FAR 6.302-1, entitled, "Only One Responsible Source and

No Other Supplies or Services Will Satisfy Agency Requirements" as further defined by FAR

6.302-1(a)(2)(ii) below:

(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 --

(A) Substantial duplication of cost to the Government that is not expected to be recovered through competition, or

(B) Unacceptable delays in fulfilling the agency’s requirements.

For Official Use Only

TY $ Millions

Number of Missiles 52

Missile Cost (DWP) $582.22

Advance Procurement (DWP) $68.88

Prior Year AP (DWP) $0.00 ( )

Production Support and Engineering (DWP) $50.34

Maintenance Spares (DWP) $0.00

CLS and Recertification (O&M) $6.81

Total Procurement $708.25

FY20 FY21 TotalFY15 FY16 FY17 FY18 FY19

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)).

MDA has a continued requirement for the production and integration of SM-3 Block IB missiles and the other requirements described in paragraph 3. The contracts contemplated by this Class

J&A are follow-on contracts for continued production of a major system, highly specialized equipment, and/or continued provision of highly specialized services.

Reasonable Government Requirements:

The Government’s technical, schedule, and other requirements are considered reasonable and are based upon the Warfighters’ BMD needs as described in paragraph 4.

Unique Qualifications:

RMS and its predecessor companies (General Dynamics, Hughes and Standard Missile

Company) have served as the U.S. Navy's Aegis Round Design Agent for all Standard Missile variants and the Aegis BMD SM-3 Design Agent since Aegis BMD program inception. The design and development of the SM-3 missile configuration through final design review was procured under U.S. Navy contracts N00024-96-C-5301, N00024-98-C-5364, N00024-02-C-

5319, and N00024-03-C-6111.

In December 2007, MDA awarded sole source contract HQ0276-08-C-0001 for SM-3 Block lB technology development to include TDACS development, Aegis BMD 4.0.1 integration, element testing, ground based testing, flight testing, system testing, and all AUR manufacturing.

RMS is performing SM-3 recertification and repair services for MDA under sole source contract

HQ0276-13-C-0001 and is performing other Standard Missile CLS services for the U.S. Navy under follow-on sole source Navy contract N00024-08-C-5377.

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 described in FAR 6.302-1(a)(2)(ii), it is likely that award to any other source would result both in substantial duplication of cost to the Government that is not expected to be recouped through competition and in unacceptable delays in fulfilling the Agency's requirements.

The Government does not possess a technical data package (TDP) considered adequate to permit an unfamiliar source to satisfactorily perform the required SM-3 Block IB build and other requirements described in paragraph 3 such as CLS. The first step in preparing for any competitive acquisition would be to solicit and negotiate a fair and reasonable price for the creation and delivery of a suitable TDP along with proprietary manufacturing process documentation. Conducting such an acquisition would take a minimum of 1 year with development and delivery of the data and documentation up to 2 years thereafter. The total cost of the data and documentation required to conduct a competitive source selection has not been quantified, but it is estimated to be prohibitively expensive in comparison to the savings that might be recovered through competition. The second step would be to conduct a competition to select another contractor to satisfy the requirements of this Class J&A which would take up to 2 years resulting in a total time of 5 years to award a contract to another contractor. MDA/AB estimates that another contractor would require at least 3 years after contract award to gain a sufficient working knowledge to deliver the highly complex SM-3. During this time, both the contractor and its subcontractors must qualify by producing their respective components or subcomponents, conduct risk reduction analysis and trade studies, and develop, prove out, and successfully execute a test profile. Missile manufacturing can begin only after contractor and subcontractor qualification. Plus, any new source would have to procure or manufacture special tooling and test equipment, as well as establish manufacturing, ground and flight facilities, and training for contractor personnel.

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

MDA is recognized as the Center of Excellence for Missile Detection and Hit to Kill technology.

As such, MDA representatives maintain a close working relationship with industry throughout the world. This working relationship with industry permits MDA to stay abreast of the available technologies, manufacturing and logistic capabilities worldwide providing a base of knowledge more extensive than would normally be obtained through a formal market survey. To date, MDA has not found another source, besides RMS, with the required engineering, manufacturing, logistics and software expertise necessary to meet the SM-3 Block IB missile full-rate production requirements described in paragraph 3.

On October 15, 2013, MDA published “Base Notice: Notice of Intent to Award Sole Source

Contract to RMS for Standard Missile-3 Block IB Missile Production” that stated (in part):

“MDA invites any other contractor that reasonably believes it can produce and integrate SM-3

Block IB missiles without incurring duplication of costs and without experiencing delays to provide a capability statement.” No contractor capability statements were received in response to the FBO Notice.

Based on MDA’s expertise in this area and a lack of contractor response to the FBO Notice, MDA concluded that no other company is capable of providing the required engineering, manufacturing, logistics and software expertise necessary to meet SM-3 Block IB missile full-rate production requirements described in paragraph 3 without incurring substantial duplication of cost that is not expected to be recovered through competition and without creating unacceptable delays in delivering SM-3 Block IB missiles to meet Agency requirements.

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

The Procuring Contracting Officer (PCO) anticipates the cost for this effort will be considered fair and reasonable. The contractor will bear the burden of submitting detailed, certified cost or pricing data with their initial proposal and for any future contract changes greater than

$700,000.00, in accordance with FAR 15.403-4 - Require Cost or Pricing Data (10 U.S.C. §

2306a and 41 U.S.C. § 254b). Subsequent to technical and cost evaluations of contractor proposals by the Government team, the PCO will conduct thorough negotiations to ensure the settlement of fair and reasonable costs that are in the best interest of the Government. The PCO will determine cost reasonableness based on a reconciliation of all sources of information, including, but not limited to: Defense Contract Audit Agency Audit Reports, Defense Contract

Management Agency recommendations, SM-3 Program Office technical evaluations, Should

Cost review analysis, and comparisons of proposed costs to costs experienced in prior contracts with RMS for the SM-3 program.

9. Any Other Facts Supporting the Use of Other Than Full and Open Competition (FAR

Part 6.303-2(b)(9)).

Final Summary:

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