7147_7_JOTFOC_Redacted.pdf

HSCG40-17-Q-31723 12/20/2016 Page 1 of 6

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

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-31723

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), United States Coast Guard (USCG), Surface Forces Logistics Center (SFLC), located at 2401 Hawkins Point Road, Baltimore, MD, proposes to enter into a purchase order, 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 purchase MTU America Inc. Brand-name parts which support the operation and maintenance of the 20V1163 TB93 Main Propulsion Diesel Engines (MDE), installed on the USCG 418’ Maritime Security Cutter (WMSL) Legend Class of CG Cutters. The current CG fleet consists of six 418’ WMSL cutters, each with two MDE engines. Two cutters are being built at this time for a total of eight 418’WMSL cutters. The period of performance will be for a one base year. The IGCE for this acquisition is for an estimated value of

The proposed contract will be awarded to the OEM MTU America Inc. (USA Headquarters), 39525 Mackenzie Drive Novi, MI 48377 USA, utilizing the procedures established under FAR Part 15 Contracting by Negotiation, in conjunction with FAR Part 12 Acquisition of Commercial Items as defined in FAR Part 2.101(5)(i).

The OEM subsidiary and proposed contractor’s current Dun and Bradstreet (D&B) Legal Business Name is MTU America Inc. This contractor’s previous D&B Legal Name was Tognum America Inc. and has done business as Motoren-und Turbinen-Union (MTU) and MTU Detroit Diesel, Inc. For the continuity of the document, we shall only refer to the proposed contract as the current D&B Legal Business Name:

MTU America Inc.

3. Description of Supplies/Services.

The USCG anticipates awarding a purchase order to purchase MTU America Inc. parts used on model 20V1163TB93 diesel engines. The CG requires the use of OEM parts to match the unique design of existing cutter configuration on the 418’ WMSL cutters. The supplies are considered commercial items and are currently purchased under SFLC contract vehicle HSCG40-13-D-30010.

This purchase includes (7) line items for a total quantity of (39) maintenance parts used on the model 20V1163TB93 diesel engine. Theses spare parts will be stored at the SFLC warehouse and will be ready for issue to the fleet when required.

It is anticipated that more parts will be needed as the equipment ages and as additional cutters are delivered we incur stocking shortfalls due to having no formal contract avenue for purchases that exceed

HSCG40-17-Q-31723 12/20/2016 Page 2 of 6 the SAP threshold. Purchasing the components below provides significant protection against the Coast Guard not having the required items in stock should an immediate unforeseen need occur as well as expected maintenance these parts are needed for. Just as important is that this purchase allows the Coast Guard supply teams responsible for providing these parts to the fleet the ability to support current back-ordered items requested by the fleet in a timely manner.

This JOTFOC supports PR# 2117407B4500AB036. The following parts are to be ordered: The total estimated cost is

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.

This acquisition must be made using brand name parts and assemblies. The applicable statutory authority applicable is 10 USC 2304(c) (1) due to because the OEM is the only known source that possesses the required capabilities, drawings, specifications, engineering control procedures and proprietary methods to ensure the latest design configuration, manufacturing and quality control required to produce parts to the latest engineering specifications and requirements. Limitation to the use of OEM parts is as follows:

The 20V1163TB93 MDEs are critical to the safe and efficient operation of the 418’ WMSL cutters.

Using other than the OEM parts to maintain a failed engine assembly could result in a failure of the main propulsion system. Since the drawings, manufacturing processes, and other technical data is proprietary

Nomenclature CLIN QTY Cost Total Cost Part Name NIIN Circuit card Assembly

CLIN R1

5295308912 12-366-3436

Sea water pump CLIN R2 2

584-SWPMP-RPLM

01-619-2264

Seawater pump (CW turning)

CLIN R3

584-SWPMPCW-

RPLM 01-619-2696

HP Turbo replacement

CLIN R4

2 584-HPTURBO-RPLM

01-620-0381

LP Turbo replacement

CLIN R5

2 584-LPTURBO-RPLM 01-619-4969

Lube oil pump CLIN R6

1 584-LO-PMP-KIT 01-619-2729

Piston, Single CLIN R7 20 584-40301117 12-334-9610

HSCG40-17-Q-31723 12/20/2016 Page 3 of 6 information to the OEM, it is impossible for the CG to evaluate and determine whether another manufacturers’ component parts are equal to the 20V1163TB93 diesel engines parts currently installed on the 418’ WMSL’s. More than a casual visual inspection is required. The composition of the material, heat treatment (if required), determining whether the components are forged or cast, as well as all dimensions (with tolerances), and operating parameters would be the minimum information needed before an evaluation of another diesel engine components could be attempted. Even if this information was available, the CG does not have the organic capabilities to evaluate and determine if another manufacturer’s parts and assemblies meet the OEM standards. Contracting an outside source to perform these evaluations would be cost prohibitive due to the sheer number and complexity of the various parts and components that are included with a main propulsion diesel engine. Without the aforementioned data and manufacturing specifications from the OEM, proving that another company’s components are equal to MTU America Inc would be impossible. Using other than OEM components and parts would be an extremely high risk because the MDEs are critical to the maneuverability of the WMSLs. A malfunction or failure of MDEs would cause loss of maneuverability and the mission would be severely impacted.

The WMSLs operate independently, in remote areas of the world, on missions of homeland security, search and rescue, Alien Immigration Migration Operations (AIMO), drug interdiction, and fisheries patrol. Failure of the CG to complete any one of these crucial missions could compromise the safety and economic welfare of the United States and its territories. Additionally, because non-OEM parts manufacturers do not have access to drawing tolerances and material composition for the various parts that comprise the components of a model 20V1163TB93 diesel engine, reduced reliability and decreased lifespan of the components of a model 20V1163TB93 diesel engine may be experienced.

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

This requirement was posted in the Acquisition Planning Forecast System (APFS) on December 06, 2016.

The APFS number is F2016035418. In accordance with FAR Subpart 5.203, an effort to solicit as many potential sources as practicable, a Sources Sought Notice was posted on the Federal Business Opportunities Website from November 15, 2016 to November 21, 2016. This notice informed the industry of the CG’s intent to purchase these components of a model 20V1163TB93 diesel engine manufactured by the OEM, MTU America Inc. Other organizations having the expertise and required capabilities to provide equivalent parts were invited to submit information discussing such capabilities within six (6) calendar days after the posting date. The notice yielded one expressing interest in this project. The one interest was the OEM, MTU America Inc.

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 15.404. 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 October 2014 – April 2016 as an effort to identify companies that can provide the requested services.

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Market research was conducted by identifying various companies on 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 components.

Internet/Industry Contact –MTU America Inc. hosted an owners meeting for military users of their various engines in April 2015. This included CG and Navy interest in attendance. During the meeting MTU America Inc. explicitly stated they have no intentions of opening up the large engine division to a distribution network. MTU America Inc. claim due to the small number of large engines in service in the US, and the number of parts that would be required for vendors to store and provide the technical support would never be profitable to the vendors. MTU America Inc. has established and will continue to maintain facilities to store spare parts and provide technical support that will remain part of MTU America Inc. The 20V1163 TB93 engine falls under MTU America Inc. large engine division. Internet research revealed that MTU America Inc. is the only source identified. When “20V1163 TB93” is entered into a “Google” search, MTU America Inc. data pages are the only sources of information found.

MTU America Inc’s technical data currently available to the USCG is inadequate to seek out manufacturing resources of parts or repair facilities, that could satisfy performance, form, fit, and function requirements since this data remains proprietary to MTU America Inc.

FedLog – FedLog research revealed MTU America Inc as the incumbent for all National Stock Numbers associated with this justification.

Acquisition History –Previous acquisition history research revealed that MTU America Inc was contracted in the past under HSCG40-08-A-50461, which expired in 2011, and again under HSCG40-13- D-30010 which reached the contract ceiling in 2016.

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

The WMSL MDEs must conform to design, materials and operational requirements. As stated above, manufacturing drawings specifications and other technical data are proprietary to MTU. MTU refused to sell this proprietary data to the USCG. Any attempt to manufacture these parts without the proper specifications, drawings and technical data could result in damage to the diesel engines, fire and serious bodily harm if the system components were to fail.

The Government does not possess the technical data and/or drawings pertaining to the manufacturing of MTU America Inc. parts, which are proprietary. Therefore, the Government does not have any data to compare other manufacturer’s parts to ensure the same fit, form, and function nor does the Government possess the independent expertise to evaluate other manufacturer’s parts. These assemblies of a model 20V1163TB93 diesel engine 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. After market (non-OEM) parts manufacturers do not have access to this proprietary information and therefore could not produce parts that are equal.

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

A synopsis was issued in FedBizOpps on November 15, 2016 requesting that parties express their interest in writing to the contracting officer. MTU America Inc. is the only source that expressed interest in this requirement.

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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 Supplies or Services Required.

The Coast Guard does not own the rights to MTU’s technical data and is not resourced with the engineering staff or funds required to reverse engineer the thousands of parts required to support the assemblies in order to determine their dimensions, tolerances, or chemical composition. MTU has declined to sell their technical data rights upon repeated requests. The CG has made several attempts to acquire them with no success, including an attempt for this requirement on June 14th, 2016. MTU America Inc. declined (See Para 6) our request. The Coast Guard will continue to engage MTU America Inc. for release of proprietary data prior to any subsequent requirement.

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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.

13.