AE2100.J A.Redacted.pdf

Justification for Other Than Full and Open Competition

Under 10 U.S.C. 2304(c)(1)

Only One Responsible Source and No Other Supplies or Services will Satisfy

Agency Requirements

Pursuant to the requirements of the Competition in Contracting Act (CICA), as implemented by FAR 6.3 and in accordance with the requirements of FAR 6.303-1, the justification for the use of the statutory authority under

FAR 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), Long Range Surveillance (LRS) Product Line intends to solicit, negotiate and award one (1) contract for Power-by-the-Hour (PBH) services in support of the Coast Guard’s HC-

130J AE2100D3 engines on the basis of other than full and open competition. The proposed action or “bridge” contract will consist of a nine (9) month base period and a three (3) month option period, not to exceed one (1) year in duration.

2. Nature and/or description of the action being approved. As part of a twenty-eight (28) aircraft fleet, the

USCG currently utilizes six (6) HC-130J aircraft in the execution of numerous DHS mandated missions. The

HC-130J utilizes four (4) AE2100D3 engines which have been sustained under Contract HSCG38-06-D-C00002, under a PBH pricing construct with Rolls Royce Corporation of Indianapolis, Indiana, the Original Equipment

Manufacturer (OEM). The proposed action will ensure critical sustainment services continue on an uninterrupted basis while the follow-on requirement to Contract HSCG38-06-D-C00002 is completed. Contract HSCG38-06-

D-C00002 will expire on 30 September 2016. The total estimated value of the proposed action is $4.7M.

3. Description of the supplies or services. The proposed action will provide for performance-based logistic sustainment support, Field Service Representative (FSR) support, Program Management and Engineering support on an annual basis. The proposed “bridge” contract will ensure continuation of this support for the following nine

(9) month period, with the potential for an additional three (3) months, while the follow-on requirement is solicited, evaluated and awarded. The follow-on requirement was posted to the Government Point of Entry (GPE) as Request for Proposal (RFP) HSCG38-16-R-H00004 on 3 August 2016 with a closing date of 3 October 2016.

Table 1 below depicts the services specified by this action for the nine (9) month base period and the three (3) month option period.

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Table 1:

Base Period

Item Item/Service Qty Unit Escalated Amount

1 PBH Support 12000 HR $246.57 $2,958,840.00

2 On-Site FSR Support 9 MO $25,345.71 $228,111.39

3 FSR Travel 3 EA $2,500.00 $7,500.00

Program Management &

Engineering Support 9 MO $28,802.00 $259,218.00

Price Adjustment for

Performance Incentive 3 EA $29,696.26 $89,088.78

$3,542,758.17

Opt 1

1 PBH Support 4000 HR $246.57 $986,280.00

2 On-Site FSR Support 3 MO $25,345.71 $76,037.13

3 FSR Travel 1 EA $2,500.00 $2,500.00

Program Management &

Engineering Support 3 MO $28,802.00 $86,406.00

Price Adjustment for

Performance Incentive 1 EA $29,696.26 $29,696.26

$1,180,919.39

$4,723,677.56

4. Identification of the justification and rationale. The statutory authority permitting other than full and open competition is 10 U.S.C. 2304(c)(1), as implemented by FAR Subpart 6.302-1, entitled “Only one responsible source and no other supplies or services will satisfy agency requirements.”

5. Demonstration that the nature of the acquisition requires use of the authority cited. In accordance with

FAR 6.302-1(a)(2)(iii), “For DoD, NASA and the Coast Guard, services may be deemed to be available from only the original source in the case of follow-on contracts for the continued provision of highly specialized services 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”. Rolls Royce is the Original Equipment Manufacturer (OEM) of the AE2100D3 engine and is the only source capable of providing the required engine support without a lengthy transition period or interruption of services. Services include depot overhaul, field maintenance and repairs, field inventory and replenishment of OEM engine parts, tooling, engineering design changes, and product improvements during the proposed period of performance. Rolls Royce owns the proprietary data, specifications and drawings necessary for performance and maintains the expertise and experience necessary to sustain the engines and improve engine performance and reliability. Efforts to process a follow-on requirement are on-going, however acquisition milestones indicate the estimated date of award will not occur before June 2017.

Failure to award a “bridge” contract while the follow-on is solicited and awarded will result in disenrollment of the Coast Guard’s AE2100D3 engines from the OEM’s Engine Health Monitoring program and a lack of ready-for-issue engines for the HC-130J aircraft. This action will ensure continued engine health monitoring, access to

OEM parts and continued parts replenishment at USCG air stations, Field Service Representative (FSR) support, OEM engineering expertise, program management and engine system training, all in accordance with the OEM’s current specifications, data and drawings.

6. A description of the efforts made to ensure that offers are solicited from as many potential sources as is practicable. Three (3) sources sought notices have been issued in support of the follow-on requirement over the past eighteen (18) months. Two responses were received; one from Rolls Royce Corporation and one from

Standard Aero Limited, an OEM licensed Authorized Maintenance Center (AMC).

7. Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable. Contract HSCG38-06-D-C00002 established standard flat PBH rates for all contractual periods which are subject to an economic price adjustment prior to the exercise of any option period. PBH rates established for the options, which cover costs for comprehensive PBH support are calculated using factors published by the Producer Price Index (PPI) and National Employment, Hours and Earnings indices from the

Bureau of Labor Statistics (BLS). Pricing for HSCG38-06-D-C00002 was determined fair and reasonable prior to award; these same indices were used to calculate the total of $4.7M for this action. The Contracting Officer anticipates that price analysis will be sufficient to determine the pricing for this “bridge” contract fair and reasonable based on comparison with the current established contract pricing, utilization of published indices as well as other than cost or pricing data, should it be required.

8. Description of market research. Extensive market research has been conducted in support of the follow-on requirement which included three (3) sources sought notices. The most recent notice was posted to the GPE on

16 November 2015, for comprehensive engine support on an engine flight hour basis which encompassed the HC-

130J aircraft and the HC-27J engines. The notice informed interested parties of the requirement to possess and submit a copy of a license from the OEM, Rolls Royce as part of their response. Two firms submitted capabilities statements; Rolls Royce and their Authorized Maintenance Center (AMC), Standard Aero Ltd; however due to proprietary information contained in the license between Rolls and its licensees, Standard Aero was and continues to be unable to submit an un-redacted copy of their license to verify the assertions in their response

9. Any other facts supporting the use of other than full and open competition. Rolls Royce Corporation is the

OEM of the AE2100D3 engines and is the only source capable of providing comprehensive engine support which includes depot overhaul, field maintenance and repairs, field inventory and replenishment of OEM engine parts, tolling, engineering design changes, and product improvements during the proposed period of performance. Rolls Royce owns the data, specifications and drawings necessary for performance and maintains the expertise and experience necessary to maintain the engines and improve engine performance and reliability.

Although there is some interest in the follow-on requirement, this action is critical to the Coast Guard’s ability to obtain engine sustainment and OEM engineering support while the follow-on requirement is processed. Failure to award this “bridge” contract will result in disenrollment of the Coast Guard’s engines from the OEM’s Engine

Health Monitoring program and a loss of engineering expertise needed to ensure safety of flight.

10. A listing of the sources, if any, that expressed, in writing, interest in the acquisition. As stated above in paragraph 8, extensive market research has been conducted in support of the follow-on requirement which included three (3) sources sought notices. The most recent notice was posted to the GPE on 16 November 2015, for comprehensive engine support on an engine flight hour basis which encompassed the HC-130J aircraft and the HC-27J engines. The notice informed interested parties of the requirement to possess and submit a copy of a license from the OEM, Rolls Royce as part of their response. Two firms submitted capabilities statements; Rolls

Royce and their Authorized Maintenance Center (AMC), Standard Aero Ltd; however due to proprietary information contained in the license between Rolls and its licensees, Standard Aero was and continues to be unable to submit an un-redacted copy of their license to verify the assertions in their response.

11. A statement of actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the required supplies or services. Due to the proprietary information contained in the license between the OEM and its licensees, the Coast Guard has been unable to verify any

AMC’s ability to provide all the services provided by the current contract or required by the follow-on contract on an engine flight hour basis. The Coast Guard has thoroughly evaluated alternatives to this construct, all of which were determined to be less effective and more costly to the Government. Due to the inability to verify any restrictions imposed by the OEM on its AMCs, the follow-on requirement is being processed under full and open competitive procedures. There are no alternatives to the proposed bridge contract that will ensure uninterrupted engine sustainment and OEM engineering expertise prior to expiration of the current contractual period. The

Coast Guard will continue to monitor market conditions as well as expedite the solicitation and award of the follow-on to the maximum extent practicable.

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12. Contracting Officer’s Certification. I certify that the data supporting the recommended use of other than full and open competition is accurate and complete to the best of my knowledge and belief.

Nancy DeBerry , Contracting Officer Date

ALC, LRS

13. Technical/Requirements Personnel Certification. I certify that this requirement meets the Government’s minimum need and the supporting data, which forms a basis for the justification, is accurate and complete.

John A. Carignan, Supply Branch Chief Date

ALC, LRS

14. Legal Review and Concurrence. I have reviewed this justification and deemed it legally sufficient.

Legal Counsel Date

LSE-9E

APPROVAL

David S. Burgess Date

Chief of the Contracting Office

ALC

Bonnie Hanger, CG-913 Date

Command Procuring Activity Competition Advocate

(CPACA)