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Justification for Other Than Full and Open Competition Under 10 U.S.C. 2304 (c)(1) Only One Responsible Source and No Other Supplies Will Satisfy Agency Requirements

Tail Rotor Blades Procurement Solicitation No: HSCG38-15-R-J00008

Pursuant to the requirements of the Competition in Contracting Act (CICA), as implemented by the Federal Acquisition Regulation (FAR) Subpart 6.3 and in accordance with the requirements of FAR 6.303-1, the justification for the use of the statutory authority under FAR Subpart 6.3 is justified by the following facts and rationale required under FAR 6.303-2 as follows:

(1) Agency and Contracting Activity.

The Department of Homeland Security (DHS), United States Coast Guard (USCG), Aviation Logistics Center (ALC), Medium Range Recovery (MRR) Procurement Branch, proposes to enter into a contract on a basis other than full and open competition.

(2) Nature and/or description of the action being approved.

The MRR Procurement Branch requests approval to award, on a sole source basis, an Indefinite Delivery Requirements type contract for MH-60T Tail Rotor Blades hereafter referred to as Blades. Firm Fixed Price (FFP) delivery orders will be issued off the base contract as Blades are required. The Original Equipment Manufacturer (OEM) of the Blades is Sikorsky Aircraft Corporation (SAC). All specifications, manufacturing drawings, data, test equipment, and tooling required to manufacture the Blades are proprietary to SAC. Award of this requirement will provide inventory replacements for Blades determined Beyond Economical Repair (BER) and subsequently scrapped.

Responsible sources are limited to Naval Supply Weapons Systems Support (NAVSUP WSS) approved sources. SAC is the only known NAVSUP WSS certified source for the Blades. Stakeholders include the MRR Product Line and supported USCG Air Stations. This requirement will be solicited utilizing FAR Part 12 Acquisition of Commercial Items and FAR Part 13.5 Test Program for Certain Commercial Items.

The estimated contract value is $2.8M which includes a one (1) year base ordering period with four (4) one (1) year optional ordering periods. The Blades are currently ordered under HSCG38-11-D-J00001, an Indefinite Delivery Requirements type contract with FFP delivery orders valued at $4.7M. The contract includes a one (1) year base ordering period and four (4) one (1) year optional ordering periods.

The current contract was awarded on a sole source basis and expires December 21, 2015. Please Note:

The Blades are a life limited component with a life limit of 18,000 flight hours. Due to excessive corrosion, the Blades are being scrapped prior to reaching their life limit at a significant rate resulting in rapid depletion of available replacement inventory. A large order was placed under the current contract to mitigate this issue and replacement inventory has returned to an acceptable level. This influx of inventory has decreased demand projection for the new requirement.

(3) Description of Supplies/Services.

The USCG currently operates a fleet of forty-four (44) MH-60T rotary wing aircraft manufactured by SAC. This specialized, high demand, aircraft currently enables the USCG to perform missions such as search and rescue, law enforcement, international ice patrol, marine environmental protection, and marine resource conservation. With such a demanding operational tempo, aircraft condition and availability are essential to mission success. When properly outfitted, there are two (2) Blades per aircraft. The Blades are defined as a flight critical safety item (CSI). A CSI is a part, assembly, installation, or production system with one or more critical characteristics that, if not conforming to the design data, or quality requirements, would result in an unsafe condition. Unsafe conditions relate to mishap severity I (Catastrophic) and II (Critical), and include conditions which could cause loss or serious damage to the end item or major component, loss of control, serious injury to personnel, or death of personnel. In order

2 | P a g e to successfully maintain airworthiness of the aircraft and aircraft systems, protect personnel safety, and perform the USCG’s mission, the acquisition of CSI items is restricted to approved sources. Delivery is requested one hundred and eighty (180) days After Receipt of Order (ARO).

Nomenclature Ordering Period Estimated Contract Value

Tail Rotor Blade

NSN: 1615-01-158-9678

P/N: 70101-31000-046

Base Ordering Period: December 22, 2015 – December 21, 2016 $500,000* Optional Ordering Period 1: December 22, 2016 – December 21, 2017 $500,000* Optional Ordering Period 2: December 22, 2017 – December 21, 2018 $600,000* Optional Ordering Period 3: December 22, 2018 – December 21, 2019 $600,000* Optional Ordering Period 4: December 22, 2019 – December 21, 2020 $600,000* Total Estimated Contract Value $2,800,000*

Note* Rounded to nearest 100K

(4) Identification of the justification and the rationale.

The statutory authority permitting other than full and open competition is 10 U.S.C. 2304 (c) (1) as implemented by the FAR 6.302-1 entitled “Only One Responsible Source and No Other Supplies will Satisfy Agency Requirements.” SAC is the OEM and only NAVSUP WSS approved source of supply for the Blades, a CSI. All specifications, manufacturing drawings, data, test equipment, and tooling required to manufacturer the Blades is proprietary to SAC. There were no other supply sources or alternate part numbers (commercial or non-developmental) available to meet the Government’s requirements.

(5) Demonstration that the nature of the acquisition requires use of the authority cited.

The CSI Blades are manufactured by SAC and all specifications, manufacturing drawings, data, test equipment, and tooling required to manufacture the Blades is proprietary to SAC. The USCG did not purchase rights to the proprietary technology required to foster a competitive environment as part of any original provisioning for use on the MH-60T rotary wing aircraft and the cost to purchase rights to this proprietary technology would be cost prohibitive. SAC was contacted to inquire about the release of any proprietary technology to the USCG or any other distributors. SAC responded that their technology is proprietary and resale of their proprietary technology is prohibited.

The Aviation Critical Safety Item Management Handbook, March 16, 2011, Paragraph 7.1 CSI Procurement Restrictions, states “CSIs and services (such as repair, overhaul, etc.) for CSIs must be procured only from approved sources.” NAVSUP WSS is the Primary Inventory Control Agency and has sole authority and responsibility for certifying sources of supply and support for H-60 components.

Certification of sources of supply is executed in accordance with Public Law 108-136 Section 802 of the Defense Appropriations Act of 2004 and Naval Air Systems Command Instruction (NAVAIRINST)

4200.56. SAC is the only known NAVSUP WSS approved source for the Blades.

(6) A description of the efforts made to ensure that offers are solicited from as many potential sources as is practicable.

This procurement forecast is posted as DHS – Acquisition Planning Forecast System (APFS) No:

F2014024633 on http://apfs.dhs.gov, and was included in the DHS Forecast of Small Business Opportunities. Sources Sought Notice HSCG38-15-S-J00007 was released to the Governmentwide Point of Entry (GPE) on October 17, 2014 and closed October 31, 2014. No capability statement was received in response. However, SAC is a NAVSUP WSS approved source of supply. Market research confirmed SAC is the only source of supply capable of manufacturing the Blades specified herein. Prior to award, a Notice of Intent to award a sole source contract fulfilling the notice requirement of FAR 5.201 will be

3 | P a g e posted to the GPE via http://www.fedbizopps.gov. A copy of the approved Justification for Other Than Full and Open Competition (J&A) will be uploaded with the notice. Any capability statement, proposal, or quotation received in response to the notice will be considered prior to award.

(7) Determination by the Contracting Officer that the anticipated cost to the government will be fair and reasonable.

Pricing information collected from market research and the current contract was used in the development of the IGCE for this requirement. The average prices were multiplied by the quantity estimated for each Blade to derive the base and optional ordering period pricing. The current Producer Price Index (PPI) escalation rate based on the Final Demand-Intermediate Demand (FD-ID) aggregation system was applied to the optional ordering periods. The Contracting Officer (KO) anticipates comparison of prices proposed with historical pricing and the IGCE will establish price reasonableness.

(8) Description of market research.

Market research was conducted from October 2014 through March 2015. Sources Sought Notice HSCG38-15-S-J00007 was released to the GPE on October 17, 2014 and closed October 31, 2014. No statement was received in response. However, SAC is a NAVSUP WSS approved source of supply.

Market research confirmed SAC is the only source of supply capable of manufacturing the Blades specified herein. The CSI Blades are commercial. All terms and conditions (including payment, delivery, inspection, acceptance, and warranties) are not expected to differ from customary terms and conditions in the marketplace or standard Government practices. Contract financing is not applicable to this requirement. There are no laws or regulations unique to this requirement. No environmentally preferable supplies were identified during market research and Section 508 regulations/The Safety Act are not applicable to this requirement. The Buy American Act is applicable to this requirement. SAC will be required to submit a subcontracting plan for KO consideration.

(9) Any other facts supporting the use of other than full and open competition.

SAC was contacted to inquire about the release of any proprietary data to the USCG or any other distributors. SAC responded that their data is proprietary and resale of their proprietary data is prohibited.

NAVSUP confirmed SAC is the only approved source of supply for the blades. Failure to approve this Justification For Other Than Full and Open Competition will jeopardize performance of MRR’s mission due to grounding of the aircraft as a result of safety concerns stemming from non-availability of Ready For Issue (RFI) Blades.

(10) A listing of the sources, if any, that expressed, in writing, an interest in the acquisition.

Sources Sought Notice HSCG38-15-S-J00007 was released to the GPE on October 17, 2014 and closed October 31, 2014. No capability statement was received in response. The following is a summary SAC’s information:

Company Information/Description Size

Classification Capability Evaluation

Sikorsky Aircraft Corporation (78286) 6900 Main Street Stratford, CT 06614 POC: Lindsay Megaro-DeLorenzo Email: Lindsay.Megaro-DeLorenzo@sikorsky.com Phone Number: (203) 383-8039

Large Business No capability statement submitted. However, SAC is a NAVSUP WSS approved source of supply.

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(11) A statement of actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for required services.

Every reasonable effort will be made to remove barriers to competition for future requirements. The NAVAIR Research and Engineering Group (AIR-4.0) and NAVSUP WSS are responsible for providing the engineering policies, processes, and support necessary to ensure design integrity and airworthiness throughout the life cycle of the H-60 aircraft. The USCG will continue to work with NAVAIR and NAVSUP WSS in order to learn of any alternate approved sources. If alternate sources of supply are approved by NAVSUP WSS, future requirements will be competed among all approved sources. It is in the best interest of the Government to proceed with a sole source award to SAC for the manufacture of the Blades used on the MH-60T rotary wing aircraft.