ATTACHMENT_7_REDACTED_J&A.pdf

Justification for Other than Full and Open Competition Under 10 U.S.C. 2304(c)(l)

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 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), Smface Forces Logistics Center (SFLC), located at 2401 Hawkins Point Road, Baltimore, Maryland proposes to enter into a requirements contract on a basis of other than through full and open competition.

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

The Coast Guard intends to procure, on a brand name basis, the remanufacture of Original Equipment Manufacturer (OEM), Motoren Und Turbinen-Union (MTU)W6 main diesel engines and reduction gears used on the Coast Guard's 87' WPB. The NAICS code is 333618 and the PSC Code is 1028. The Coast Guard has 73 of these cutters that operate nationwide and has a total of 178 engines to support those 73 cutters. Each cutter has two engines, plus 32 spare engines held in inventory to be continuously rotated·for remanufacturing. The propulsion system installed on the 87' WPBs is a highly complex commercial system, comprised of hundreds of interrelated parts, designed and manufactured by MTU. The system was procured as a whole and was originally described by the Government as a brand name mandatory procurement in the initial acquisition for the fleet. OEM or OEM authorized parts are required to ensure configuration management in the Coast Guard cutter fleet and to eliminate the time and costs associated with the acquisition of new installation drawings, spare parts and components, technical manuals, and provisioning technical data for an alternative system. The vessel is designed to perform missions in adverse weather and sea conditions. The primary missions are maritime law enforcement and search and rescue, but the 87' WPB fleet is designed to support multi-mission operations.

The Independent Government Cost Estimate (IGCE) for this acquisition is······· which includes one (1) base year and four (4) one year options. USCG intends to award a requirements type contract with firm fixed price delivery orders 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). As a commercial item acquisition, neither the Service Contract Labor Standards (SCLS) nor Walsh Healy applies.

Since this will be a requirements contract, no funding will.be obligated at contract award.

Delivery Orders will be issued against the contract, which will use annual Operating Expense funds for the particular fiscal year of the order.

This requirement is for the support of an existing system that was designed and installed during the original acquisition of the 87' cutters. The original performance based contract to design and build these ctHters included MTU engines. The USCG currently has a successful requirements contract HSCG40-l l-D-l l 910 with Pacific Power Group to remanufacture these engines which is due to expire in December 2016. The need for a remanufacturing contract is based on the age of these engines and the number of operating hours accumulated through their life span.

Only vendors with MTU certified technicians will be eligible for contract award. MTU certified technicians are considered those which have completed MTU's training requirements and possess a level lb service dongle and access to MTU's technical database containing proprietary engine calibration information. This level of training and database access is required in order to fulfill the requirements for remanufacturing and commissioning of MTU engines onboard USCG assets.

The Original Equipment Manufacturer (OEM) is Motoren Und Turbinen-Union (MTU). There are three (3) known vendors meeting the requirement for MTU certified technicians:

• Motoren Und Turbinen-Union (MTU)-ORIGINAL EQUIPMENT MANUFACTURER MTU America - Tognum

• Pacific Power Group

• Florida Detroit Diesel Allison-Stewart & Stevenson (FDDA)

3. Description of Supplies/Services.

USCG antidpates awarding a requirements contract with firm fixed price delivery orders to remanufacture MTU marine diesel engines model 8V396 TE94 used on the USCG's 87' WPB.

SFLC anticipates need for remanufacturing of approximately 22 propulsion units, annually, to ensure vessel readiness and operational capability. There are 2 propulsion units installed on each of seventy-three (73), 87' WPB Cutters. Services under this requirement include a MTU certified technician to perform engine commissioning and sea trials for each of the estimated 22 propulsion units once installed each year, along with technical representative support for unplanned maintenance needs. The contractor shall provide all labor, equipment, special tools, materials, and parts required to clean, inspect, disassemble/reassemble, test components, test engine, and deliver at least two (2) engines simultaneously every 35 calendar days.

2815-12-348-2440 30 I 0-12-345-0397

GOVERNMENT FURNISHED EQUIPMENT

DESCRIPTION

Enaine, Main Diesel Cou tin , Geislin er

Below is the IGCE for the base year and all four (4) one year options, utilizing an escalation rate of six (6) percent per year based on the Bureau of Labor and Statistics (BLS) Producer Price Index (PPI).

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)(l) implemented by Federal Acquisition Regulation (FAR) Subpart 6.302-l(c)(l) 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.

The propulsion system installed on the 87' WPBs is a highly complex system, comprised of hundreds of interrelated parts, designed and manufactured by MTV. The system was procured as a whole and was originally described as such by the Government. The 87' WPBs are the only vessels that use these engines in this particular configuration. There are many other 396 series engines in the commercial market place, but they are all configured to their particular application and do not meet the requirements of this solicitation. Other than basic part/component descriptions (part numbers, etc.) provided by MTU, the Government does not possess descriptions adequate for procuring all the various components using full and open competition procedures. The requirement to remanufacture the engines will be satisfied by the vendor's use of OEM or OEM authorized parts and MTU certified technicians. The 1 b service dongle is a software key used by the OEM and its certified technicians to view and make changes to the engine calibration data within the control system software. Non-OEM vendors are not permitted to possess or use the OEM provided 1 b service dongle, nor do they have access to MTU's technical databases which store proprietary calibration parameters for each engine.

The reliability of the main propulsion system, which may be the most important system on the 87' WPB platform, is critical to mission and safety, and engine failure could potentially result in loss of life. The reliability of MTV manufactured/certified parts is known and acceptable and meets USCG mission requirements and safety standards through more than a decade of full operational use and hundreds of thousands of operational hours.

The actual equivalency of any non-MTV manufactured/certified or authorized parts is not known, may not be easily determined, and the risk of accepting those parts without fully vetting their equivalence is an unacceptable risk that may result in excessive cost to the Government, reduced reliability, reduced safety, potential loss of life, and may seriously compromise support of vital USCG Missions. The USCG does not possess the proprietary technical data required to make such an evaluation for equivalency or reliability.

The 87' WPB class cutters routinely operate in hazardous weather and sea state conditions during its multi-faceted operations. These operations include search and rescue, counter drug operations, counter-migrant operations and homeland security missions. Only MTU trained & ce1tified technicians can remanufacture, make repairs and adjustments to these engines. Only MTU certified technicians have the tooling, testing facilities and software to perform the remanufacture in accordance with the engine's marine high speed low load marine configuration.

Different configurations or applications have very different parts requirements, especially regarding internal engine parts such as bearings, cooling, pistons & rings etc. In order to meet the requirement demand of 22 propulsion units per year, it is imperative that the contractor selected has invested in the tooling, testing equipment/dynamometer to work on this particular configuration.

MTU is the sole proprietor of the drawings, technical data and proprietary tooling necessary to the repair and testing requirements of the 8V396TE94 engine.

The existing system requires the use of a proprietary software key to access and make adjustments to the propulsion unit control system, update system configuration and engine calibration data. This is especially critical during the dynamometer testing and commissioning of each remanufactured propulsion unit when installed onboard a cutter. Only MTU certified technicians with access to MTU' s engine calibration database are able to complete this work.

6. Description of Effort 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 August 21, 2015. The APFS number is F2015028480.

In accordance with FAR Subpart 5.203, in an effort to solicit as many potential sources as practicable, a Sources Sought Notice was posted on the Federal Business Opportunities Website, from January 27, 2016 -February 10, 2016. This notice yielded three (3) vendors expressing an interest in this project, stating they have the capabilities to remanufacture and repair the 87' engines.

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

The Contracting Officer will utilize techniques outlined in FAR 15.404 in determining that prices are fair and reasonable based on historical pricing of previous awards, comparison of pricing in the Naval and Electronics Supply Support System (NESSS) for similar SAP purchases, comparison with the IGCE, competition among authorized repair facilities, and if necessary, will request data other than certified cost or pricing data in accordance with FAR 15.403-3, to support negotiations.

8. Description of Market Research.

Extensive market research as prescribed in FAR Part 10 was conducted by the Contracting Officer's Representative (COR) from August 2015 - February 2016 in an effort to identify companies that can provide the requested services. Market research was conducted by identifying various companies on the internet, Federal Supply Schedules, and companies previously contracted with that provided MTU OEM parts and services.

Due to the age of these engines and the limited resources for acquiring parts and certified technicians capable of remanufacturing of these engines and gears, the market research concluded that only MTU and their authorized repair vendor network possess this capability. All technical information is proprietary to the OEM and is unavailable to allow the Government to evaluate other options.

The market research al~o consisted of the sources sought notice discussed in paragraph 6, which was posted in an effort to identify potential OEM network vendors for competition.

These market research efforts revealed that the OEM has a service network of independent vendors wilhin the US. Of these vendors, at least (three) 3 vendors are expected to compete for this requirement as evidenced by their responses to the Sources Sought Notice. Companies who have previously provided these services include Pacific Power Group and Florida Detroit Diesel Allison-Stewart & Stevenson.

USCG offered to potentially purchase the proprietary data from MTU, but MTU was not willing to release the data.

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

Other than stated herein, there are no additional facts supporting this brand name competition.

10. List of the Sources, if any that Expressed, in Writing, an Interest in the Acquisition.

As a result of the Sources Sought notice published on FBO January 27, 2016, the following vendors expressed interest in receiving a copy of the solicitation when released and were verified to be the Original Equipment Manufacturer (OEM) or an OEM authorized repair facility with certified technicians:

• MTU America - Original Equipment Manufacturer (OEM)

• Pacific Power Group - Authorized OEM Repair Facility

• Florida Detroit Diesel Allison-Stewart & Stevenson (FDDA) - Authorized OEM

Repair Facility

While a fourth company, Marine Engine Maintenance (MEM) also responded to the Sources Sought notice, the Contracting Officer has verified with MTU their status and confirmed they do not fulfill the requirement for MTU certified technicians, do not possess the required level l b service dongle, or access to MTU' s proprietary technical database.

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

The Coast Guard does not own the rights to MTU's proprietary technical database or component manufacturing data, which MTU has developed exclusively for their internal use at private expense. The USCG is not resourced with the engineering staff or funds required to reverse engineer the thousands of parts or the required software to support the propulsion units, including dimensions, tolerances, chemical composition, and electronic component calibration and parameters. MTU has declined to sell their proprietary technical data rights upon repeated requests. MTU has only provided to the USCG basic maintenance publications, which are customarily provided to customers of commercial items or services, generally to complete operational level maintenance.

At this time MTU will not ~onsider the rdtase of any proprietary data, which is required for parts manufacturing, engine testing and commissioning. However, if in the future MTU reconsiders and quotes a price for the proprietary data rights including engine software and calibration data, the USCG will weigh the benefits of purchasing the data rights at that time. To increase competition on future acquisitions, the Coast Guard will continue to monitor the market for additional OEM vendors with certified technicians.