Redacted_Justification.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-R-31718

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, U.S. Coast Guard Surface Forces Logistics Center (SFLC), Long Range Enforcer (LRE) Product Line (PL), located at 2401 Hawkins Point Road, Baltimore, MD 21226-5000, proposes to enter into a 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 repair Coast Guard (CG) owned Rolls-Royce Propeller Blades and Hubs for the 420 foot WAGB Icebreaker Healy. The SFLC intends to repair one LH Hub, one RH Hub, one LH set of Blades and one RH set of blades, , with a period of performance of two-hundred ten (210) days. a. Type of Action: Fixed Price Services contract

b. Amount:

c. Type of funding: Operations and Maintenance AFC 45

d. Year of Funding: FY 17

e. Name and address of proposed contractor:

Original Equipment Manufacturer (OEM):

Rolls-Royce Marine North America, Inc.

110 Norfolk Street Walpole, MA 02081

Phone: 508-734-1199 Peter Bertone

(3) Description of Supplies/Services.

This acquisition is for the repair of one LH Hub, one RH Hub, one LH Blade set and one RH Blade set of CG owned 420 foot WAGB Icebreaker Healy Propeller Blades and Hubs. The current Coast Guard fleet consists of (1) one 420 foot WAGB Icebreaker.

Award of this contract to support this platform includes 42 line items of definite and optional labor and parts needed to repair these Propeller Blades and Hubs. The repaired Rolls-Royce Marine North America, Inc. Propeller Blades and Hubs will be stored at the SFLC warehouse and will be ready for issue to the fleet when required.

The Contractor has the proven capability to repair Rolls-Royce brand -name Hubs and Blades, utilizing established repair procedures, specifications, standards, test procedures, OEM parts, and bulletins. This repair requirement will utilize the procedures set forth in FAR Part 15 - Contracting by Negotiation, as appropriate. The period of performance will be for two-hundred and ten (210) days at an estimated value of

Government Estimate

Firm Fixed Price Items

Totals

(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) and FAR 6.302-1, 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.

Rolls-Royce Marine North America is the only source capable of repairing the required hub assemblies and blade sets because they own all of the repair procedures, specifications, standards, drawings, test procedures, parts, and bulletins. This requirement is restricted to Rolls- Royce Marine North America based on the following information:

SAFETY: Rolls-Royce Marine North America, Inc., repaired Propeller Blades and Hubs 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 Propeller Blades and Hubs could result in a malfunction of the Healy Propeller Blades and Hubs.

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 Propeller Blades and Hubs are a vital part of the Main Propulsion System. If the Propeller Blades and Hubs 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.

WARRANTY: The standard warranty on all repaired Rolls-Royce Marine North America, Inc.

Propeller Blades and Hubs is 12 months from date of delivery or 6 months from the date the item is placed into service whichever occurs earliest. The use of non-OEM repair procedures and processes on the Propeller Blades and Hubs will nullify any warranty on the OEM Propeller Blades and Hubs already installed due to the symbiotic relationship of all items that make up the Propeller Blades and Hubs. Additionally, because non-OEM parts manufacturers do not have access to drawing tolerances and material composition for the various parts that comprise the Rolls-Royce Marine North America Propeller Blades and Hubs, reduced reliability and decreased lifespan of the Propeller Blades and Hubs may be experienced.

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

A notice of intent to sole source this requirement will be publicized on the Federal Business Opportunity website, as required by FAR 5.2. The notice will be publicized at least 15 days before issuance of the solicitation.

(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 price will be fair and reasonable based on historical information, a government estimate, and a price analysis based on formal contracts for similar repairs to Healy propeller blades and hub assemblies. Additionally, in accordance with DHS policy, the offeror may be required to submit Other Than Certified Cost or Pricing Data (FAR 15.403-3) to support price negotiations.

(8) Description of market research.

Extensive market research was conducted by the Contracting Officer’s Representative (COR) between June 2015 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 repair capabilities.

Internet/Industry Contact - The internet research and industry contact revealed that Rolls- Royce Marine North America 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:

DTCG40-02-P-69240 Rolls-Royce Naval Marine, Inc.

HSCG40-12-C-30017 Rolls-Royce Naval Marine, Inc.

Sources Sought Notice - A sources sought notice was issued on May 12, 2016 of the Coast Guard’s intent to repair Healy hub and blade sets. The notice asked for responses by May 19, 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 May 17, 2016 with an email request to Rolls-Royce Marine North America, 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 May 23, 2016, Rolls-Royce Marine North America, 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 Rolls-Royce Marine North America Inc. Propeller Blades and Hubs, 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 Rolls-Royce Marine North America, Inc. Propeller Blades and Hubs 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 proprietary information and therefore could not produce parts that are equal.

This contract currently includes one ship set of Propeller Blades and Hubs that are installed on the 420 foot WAGB Icebreaker Healy. For the Coast Guard to consider another manufacture's Propeller Blades and Hubs, the Coast Guard would first have to evaluate the other manufacturer's Propeller Blades and Hubs to ensure that they are the same form, fit, and function to the currently installed Rolls-Royce Marine North America, Inc. Propeller Blades and Hubs. Since the Coast Guard does not possess the proprietary OEM data for the Propeller Blades and Hubs, it would first have to purchase this data from the OEM.

Additionally, since the Coast Guard does not possess the organic engineering or testing capabilities to evaluate and assess the other manufacture's Propeller Blades and Hubs to determine if they are equal to our currently installed Rolls-Royce Marine North America, Inc.

Propeller Blades and Hubs, this task would have to be contracted to an independent testing and evaluation facility not associated with the other manufacturer's Propeller Blades and Hubs.

If another manufacture's Propeller Blades and Hubs were qualified and approved, the Coast Guard would have to repeat this whole process in three years when another set of 420 foot WAGB Icebreaker Healy Propeller Blades and Hubs were due for inspection and repair to promote competition. This process would be exorbitantly time consuming and not economically feasible for just one ship set of Propeller Blades and Hubs.

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

A sources sought notice was issued on the Federal Business Opportunities website on 05/12/2016 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 required supplies or services.

Due to the fact that Rolls-Royce Marine North America, 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 May 17, 2016, the Contracting Officer sent an email to Rolls-Royce Marine North America, Inc. requesting the release of data rights and was declined (Section 8). The Coast Guard will continue to engage Rolls-Royce Marine North America, Inc. for release of proprietary data prior to any subsequent acquisition.

All future requirements will be synopsized. Unsuccessful efforts to obtain OEM data make it unlikely that barriers to competition will be overcome. At the present time, no other known equipment manufacturers produce aftermarket Rolls-Royce Marine North America, Inc.

Propeller Blades and Hubs which are suitable or interchangeable with the OEM, Rolls-Royce Naval Marine, Inc.

(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.

(13) Technical/Requirements Personnel 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.

14) Legal Review and Concurrence:

APPROVAL: