JA_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

Solicitation No. HSCG40-17-Q-31716

Pursuant to the requirements of the Competition in Contracting Act (CICA) as implemented by 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), U.S. Coast Guard Surface Forces Logistics Center (SFLC), located at 2401 Hawkins Point Road, Baltimore, MD, proposes to enter into a requirements type contract, on a basis of other than full and open competition.

2. Nature and/or Description of the Action Being Approved.

The United States Coast Guard (USCG) has a requirement, on a sole source basis, to overhaul Coast Guard (CG) owned Wartsila Defense, Inc. ZA40S Diesel Engine Cylinder Heads. The SFLC intends to repair various quantities of the ZA40S Diesel Engine Cylinder Heads per year with a period of performance of one (1) 12-month base year and one (1) 12-month option.

a. Type of Action: Requirements contract

b. Amount:

c. Type of funding: Operations and Maintenance AFC 45

d. Years of funding FYs 17, 18, 19

e. Name and Address of the proposed contractor:

Original Equipment Manufacturer (OEM)

Wartsila Defense, Inc. (WDI) Chesapeake, VA 23323-2531 Marine Propulsion & Power and Stationary Power Plants U.S. West Coast, Pacific Far East, & U.S. Great Lakes Seattle, WA Office 206-227-2114

3. Description of Supplies/Services.

The requirement is for the repair/overhaul of Coast Guard owned 420 foot WAGB Icebreaker Healy Wartsila Defense, Inc. ZA40S Diesel Engine Cylinder Heads. The current Coast Guard fleet consists of

(1) one 420 foot WAGB Icebreaker. The overhauled ZA40S Cylinder Heads will be stored at the SFLC warehouse and will be ready for issue to the fleet when required. The cylinder heads will be issued to the contractor for overhaul services.

DESCRIPTION PART NUMBER NSN

Cylinder Head with Dummy Start Air Valve WDI002093-002 2815-01-653-7224 Cylinder Head with Start Air Valve WDI002093-001 2815-01-653-7692

The Independent Government Estimate (IGE) for this acquisition is

Base Year Option 1 Total

4. Identification of the Statutory Authority Permitting Other than Full and Open Competition.

The statutory authority permitting other than full and open competition is 10 USC 2304(c) (1) 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.

Wartsila Defense Inc., the OEM, is the only source capable of repairing the required cylinder heads because they own all of the repair procedures, specifications, standards, drawings, test procedures, parts, and bulletins. This requirement is restricted to Wartsila Defense Inc. based on the following information:

SAFETY: Wartsila Defense Inc., Inc. repaired Cylinder Heads are critical to the safe and efficient operation of the 420 foot WAGB Icebreaker Healy. Using other than an OEM repair facility or parts to repair these Healy Cylinder Heads could result in a malfunction of the Healy propulsion equipment.

Since the repair procedures, specifications, standards, drawings, test procedures and manufacturing processes and other technical data is proprietary information to the OEM, it is impossible for the Coast Guard to evaluate aftermarket parts and repair procedures and determine if they are equal to OEM parts and procedures. More than a casual visual inspection is required. The composition of the material, heat treatment (if required), determining casting, venting, and processes, as well as all dimensions (with tolerances), would be the minimum information needed before an evaluation of aftermarket parts and repair procedures could be attempted.

The Cylinder Heads are a vital part of the Main Propulsion System. If the Cylinder Heads failed to operate correctly, the cutter’s mission would be severely jeopardized. A malfunction or failure in the Main Propulsion System would cause the mission of the 420 foot WAGB Icebreaker Healy to be severely impacted. The Healy operates independently, in the remote regions of the Arctic, on missions of Homeland Security, icebreaking operations, search and rescue, and scientific exploration as well as a host of other operations.

6. Description of Efforts Made to Ensure that Offers are Solicited from as Many Potential Sources as is Practicable.

In an effort to solicit a many potential sources as practicable, a Sources Sought Notice was posted on the Federal Business Opportunities Website on June 15, 2016. This notice informed the industry of the CG’s intent to repair ZA40S Diesel Engine Cylinder Heads manufactured by the OEM, Wartsila Defense, Inc.

Other organizations having the expertise and required capabilities to provide equivalent parts were invited to submit information discussing such capabilities within fifteen (15) calendar days after the posting date.

7. Determination by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable

The Contracting Officer determines that the anticipated prices will be fair and reasonable based on comparisons with the IGE, market research, previous history, and if necessary, will conduct price negotiations. Price analysis will be performed to ensure a fair and reasonable price is determined in accordance with FAR 15.305. Finally, the Contracting Officer may request data other than certified cost or pricing data in accordance with FAR 15.403-3 if the initial price analysis does not result in the Contracting Officer’s ability to determine the proposed prices fair and reasonable.

8. Description of Market Research:

Extensive market research was conducted by the Contracting Officer’s Representative (COR) between January 2013 and May 2016. Internet searches, direct contact with industry, as well as reviews of previous government contracts were researched to look for companies that were capable of providing sufficient overhaul capabilities.

Internet/Industry Contact - The internet research and industry contact revealed that Wartsila Defense Inc. is the only known contractor identified as possessing the necessary technical data, drawings, manufacturing data, specifications and repair tolerances.

Acquisition History - Research indicated that past simplified and formal acquisitions have been awarded requiring the same OEM parts and labor to the following contractors:

HSCG85-15-Q-P45L00 Wartsila Defense Inc. (WDI)

Sources Sought Notice - A sources sought notice was issued on June 15, 2016 of the Coast Guard’s intent to repair ZA40S Diesel Engine Cylinder Heads. The notice asked for responses by June 30, 2016 for potential sources to provide their capabilities to provide the necessary services. USCG did not receive any response to the sources sought notice.

Request for Proprietary Data – In an effort to promote full and open competition was accomplished on July 5, 2016 with an email request to Wartsila Defense Inc., Inc. This email requested the release of data rights and proprietary information to the Coast Guard. Previous requests made for past acquisitions, under contracts requiring these OEM parts have been unsuccessful. Each time, the OEM has either failed to respond or declined our request for such rights. On July 5, 2016, Wartsila Defense Inc., Inc. chose to retain such information and declined to grant the request for proprietary information.

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

The Government does not possess the technical data and/or drawings pertaining to the repair and manufacturing of Wartsila Defense Inc. Cylinder Heads, which are proprietary. Therefore, the Government does not have any data to compare other manufacturer’s parts and repair processes to ensure the same fit, form, and function nor does the Government possess the independent expertise to evaluate other manufacturer’s parts or repair processes. These Wartsila Defense Inc. Cylinder Heads are designed, engineered and built to close tolerances and have undergone numerous shop tests and rigorous operational testing before being certified and approved by the OEM for use by the end user. Non-OEM parts manufacturers do not have access to this propriety information and therefore could not produce parts or perform inspections, overhauls and testing that are equal.

10. A Listing of Sources, if Any, That Expressed, in Writing, and Interest in the Acquisition.

A sources sought notice was issued on the Federal Business Opportunities website on 07/15/2016 requesting that parties express their interest in writing to the Contracting Officer. The USCG did not receive a response from any sources expressing their interest.

11. A Statement of Actions, if Any, the Agency May Take to Remove or Overcome Any Barriers to Competition Before Any Subsequent Acquisition for Supplies or Services Required.

Due to the fact that Wartsila Defense Inc. owns the technical data and drawings, it is unlikely they will sell the rights of such data to the Coast Guard. The Coast Guard has made several attempts to acquire them with no success, including an attempt for this acquisition. On July 5, 2016, the Contracting Officer sent an email to Wartsila Defense Inc. requesting the release of data rights and was declined (Section 8).

The Coast Guard will continue to engage Wartsila Defense Inc. for release of proprietary data prior to any subsequent acquisition.

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.

Contracting Office Date

13. TECHNICAL AND REQUIREMENTS CERTIFICATION: I certify that this requirement meets the Government’s minimum need and that the supporting data, which forms a basis for the justification, is accurate and complete.

Contracting Officer Representative Date

14. LEGAL REVIEW:

USCG, Procurement Law Attorney Date

APPROVAL:

Contracting Officer Date