JA_MacTaggart_Scott_and_Company_Ltd_Redacted.pdf

Justification for Other Than Full and Open Competition Under 41 U.S.C 1901 & 10 U.S.C 2304(c)(1)

Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements

RFQ Number HSCG85-16-Q-P4500A

Pursuant to the requirements of the Competition in Contracting Act (CICA) as implemented by FAR Part 13.5, Simplified Procedures for Certain Commercial Items, this justification for the use of the statutory authority of 10 U.S.C. 2304(c) (1) and 41 U.S.C. 1901 is supported by the following facts and rationale required by FAR 6.302-1 and FAR 13.501(a)(1)(ii) as follows:

(1) Agency and Contracting Activity:

The Department of Homeland Security (DHS), United States Coast Guard (USCG), Surface Forces Logistics Center (SFLC), Icebreaker, Buoy and Construction Tender Product Line (IBCTPL) Contracting Office located at 300 E. Main St. Suite 600, Norfolk, VA 23510 proposes to enter into a sole source Requirements type contract with MacTaggart Scott & Co. Ltd. under the Simplified Procedures for Certain Commercial Items of Federal Acquisition Regulation (FAR) subpart 13.5 on the basis of other than full and open competition.

(2) Nature and/or description of the action being approved:

This justification for other than full and open competition seeks approval to award a Requirements type contract on a sole source basis with firm fixed price task orders for WLM 175 and WLB 225 Buoy Tenders and WLBB 240 foot Great Lakes Icebreaker class vessels to perform in-haul winch hydraulic motor overhauls. The contract term will be a base year with four (4) one (1) year options on the basis of other than full and open competition to the Original Equipment Manufacturer (OEM) MacTaggart Scott & Co. Ltd., PO Box 1, Hunter Avenue, Loanhead, Midlothian, EH20 9SW, United Kingdom. The intent of this procurement is to overhaul hydraulic motors, with the option to procure new OEM in-haul winch hydraulic motors. After the initial open and inspection of motors the contractor shall make a determination as to the condition of the motors and report to the program manager whether the motors are beyond economical repair (BER). If they are, new motors will be shipped to the warehouse. If they aren’t, the motors will be overhauled. The in-haul winch hydraulic motors are used onboard the 175 foot (ft) WLM and 225-ft WLB class buoy tenders, and the 240-ft WLBB Great Lakes icebreaker.

The Independent Government Estimate (IGE) is $2,376,435.39 over five (5) years. The type of funding shall be Operations and Maintenance and Sustainment. Base year task orders through September 30, 2016 will be funded with FY16 O&M funding. All subsequent task orders will be funded with O&M funding for that current year.

(3) Description of Supplies/Services:

The SFLC IBCTPL requires inspection, overhaul, and purchase of in-haul winch hydraulic motors. The Coast Guard will procure motors beyond economic repair from MacTaggart Scott using part number HMB4.0A-A04-A01-038, which is configured on the 175’ WLM and 225’ WLB class buoy tenders, and the 240’ WLBB Great Lakes icebreaker. It is estimated that up to eight defective hydraulic motors will be submitted each year for inspection, requiring activation of one or more of the line items noted in the table below. Six of the eight motors are expected to be suitable for overhaul. There is an option to procure two new motors each year of the contract if the motor is deemed beyond economical repair. Exact quantities will depend on the cutter availabilities, individual cutter needs and SFLC warehouse inventory levels. In the event any motor inducted for overhaul is deemed beyond economical repair (BER), the Government may exercise an option to purchase a new OEM in-haul winch hydraulic motor. This option may also be exercised when necessary to increase the pool of spares in warehouse inventory. For motors deemed BER, the Contractor will scrap the material locally and submit a completed Inventory Disposal Report, Standard Form SF-1424 to the Contracting Officer. The overhaul must be conducted by a MacTaggart Scott certified technician in accordance with OEM specification and standards in order to ensure operability and proper warranty of the equipment. The government intends to award one requirements type contract for the following Contract Line Item Numbers (CLINs):

CLIN Description 0001-4001 Submit preliminary inspection report

0001AA-

4001AA

Deliver overhauled hydraulic motor

0001AB-

400AB

Scrap BER material at Contractor’s facility and submit SF-1424 to the Contracting Officer

0002-4002 Option to purchase new hydraulic motor

The MacTaggart Scott HMB4.0A-A04-A01-038 hydraulic motor is an integral and critical component of the buoy chain in-haul winch used onboard the WLB-175, WLB-225, and WLBB- 240 class vessels for removal and renewal of aids to navigation. Failure of the motor could cause equipment damage, loss of vessel operational hours and possible personnel injury.

The estimated dollar value for this requirement is:

Period Total

Base Year Option Year 1 Option Year 2 Option Year 3 Option Year 4

$413,240.00 $442.166.80 $473,118.48 $506,236.77 $541,673.34

Total $2,376,435.39

It is estimated that seventy-five percent of the motors submitted each year for inspection will be suitable for overhaul. Therefore the NAICS code is 333249 - Other Industrial Machinery

Manufacturing. This is determined to be a service as defined in FAR Subpart 37.101titled Service Contracts-General.

(4) Identification of Statutory Authority Permitting Other Than Full and Open Competition:

The statutory authority permitting other than full and open competition is 10 U.S.C. 2304 (c)(1) and 41 U.S.C. 1901 as implemented by Federal Acquisition Regulation (FAR), Subpart 13.5 entitled Simplified Procedures for Certain Commercial Items.

(5) Demonstration that the nature of the acquisition requires use of the authority cited:

The necessary manufacturing data and special tools are proprietary and controlled by MacTaggart Scott & Co. Ltd. The Government did not procure, nor has the right to recreate or distribute design drawing and special tools for the HMB4.0A-A04-A01-038 hydraulic motor. As such those proprietary documents are not available for release to generate competition for overhaul and manufacture. The MacTaggart Scott HMB4.0A-A04-A01-038 hydraulic motor is installed on all the USCG 175-ft and 225-ft buoy tenders and the USCG 240-ft Great Lakes icebreaker.

Background: MacTaggart Scott & Co. Ltd. is the OEM and the only vendor who can provide OEM certified technicians to overhaul the in-haul winch hydraulic motors and provide OEM parts. This requirement has previously been sole sourced to MacTaggart Scott under purchase orders and contracts HSCG40-11-P-42015 and HSCG40-13-C-40003, and overhaul orders HSCG40-12-P-49018 and HSCG40-14-P-49029. The need still exists to sole source this requirement because the USCG did not procure the design and special tools required to overhaul or manufacture these hydraulic motors.

Statutory Authority 10 U.S.C. 2304(c)(1) and 41 U.S.C. 1901 applies because only one responsible source and no other supplies or services will satisfy USCG requirements. Due to the existence of limited rights in data patent rights the required overhaul and procurement of the in-haul hydraulic motors are available from only one source which is MacTaggart, Scott and Company, Ltd. MacTaggart, Scott and Company has also provided a letter indicating its proprietary data rights to the technology and technical data for the subject requirement.

Impact on mission if J&A is not approved: If a contract is not awarded it could jeopardize the WLM-175, WLB-225, and WLBB-240 vessels’ missions, because the hydraulic motor would not be properly maintained. Failure of the motor and associated equipment could result in equipment damage, loss of vessel operational hours, inability to complete mission requirements and possible personnel injury.

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

The SFLC IBCTPL Acquisition Planning Forecast Record number F2014023168 was posted November 12, 2015 at https:///apfs.dhs.gov to notify the industry of the Coast Guard’s need for https://apfs.dhs.gov this acquisition package. Pursuant to FAR Subpart 5.2, in an effort to solicit as many potential sources as practical, a sources sought notice was posted to Federal Business Opportunities (FBO) at www.FBO.gov on July 27, 2015 detailing the required work, that proprietary data was involved and notifying industry that it is the Coast Guard’s intent to award a sole-source contract to the OEM, MacTaggart Scott & Co. Ltd. for this acquisition. The sources sought notice also invited vendors with the expertise and required knowledge to accomplish this work to submit information discussing such capabilities.

Two responses were received. Below is a summary of the responses received:

Contractor Name DUNS Primary NAICS Code Small Business Concern (Y/N)

A-Tech Hydraulics 332710 Y (Small Disadvantaged Business) ECI Defense Group, Inc 332911 Y (Small Business)

Notably, neither responding contractor presented documentation demonstrating they are authorized MacTaggart, Scott, Ltd facilities, possess the requisite certified technicians and required knowledge to perform overhauls or replace the OEM in-haul hydraulic winch motors.

Prior to the sources sought notice being issued, the IBCT Contracting Office received confirmation from MacTaggart Scott in a letter dated May 17, 2015 stating:

“The technology and other technical data for the [HMB 4.0-A04-A01-038] motors are proprietary to MacTaggart Scott & Co. Ltd. based on years of self-funded development and product improvement. The proprietary information is not available for acquisition as in addition to the forfeiting of a source of income to the company, it would result in that technology being used by less qualified organizations.”

MacTaggart Scott is the only known source that possesses the required capabilities, drawings, parts and specifications to ensure the latest design configuration, manufacturing and quality control required to maintain and support the hydraulic motor. As a result, it was determined that MacTaggart Scott & Co. Ltd. is the only contractor that can adequately support the HMB4.0A- A04-A01-038 hydraulic motor.

(7) Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The Contracting Officer anticipates the awarded price will be fair and reasonable based on comparison with the IGE and historical prices paid under purchase order and contract numbers HSCG40-11-P-42015, HSCG40-12-P-49018, HSCG40-13-C-40003, and HSCG40-14-P-49029 for similar work. Price analysis will be performed to ensure a fair and reasonable price is determined in accordance with FAR Subpart 13.106-3.

(8) Description of market research:

http://www.fbo.gov/

There were no responses from any contractors except MacTaggart Scott & Co. Ltd. to previous Coast Guard solicitations for the same requirement. As a result, those requirements were sole sourced to MacTaggart Scott.

Market research as prescribed in FAR Part 10.001 (a)(2) was conducted via the internet using NSN, part number, and item name for a list of manufacturers/vendors that could overhaul and provide suitable hydraulic motors. The market research showed that only MacTaggart Scott & Co. Ltd could provide the services and parts. FedLog, IHS-Haystack Gold, NE-TIMS, Supply Support Grams, and the internet were used to attempt to identify additional manufacturers and vendors, with no success.

(9) Any other facts supporting the use of other than full and open competition:

The USCG SFLC does not possess the proprietary rights to the engineering data, drawings, or overhaul manuals needed to overhaul or manufacture these motors. The technical data available to the Coast Guard is inadequate to ensure that other manufacturers’ parts offer the same form, fit, and function as the OEM’s parts. Therefore, the Coast Guard does not have any substantive data to compare other manufacturers’ parts to ensure the same fit, form and function nor does the Coast Guard possess the independent expertise to evaluate other manufacturers’ parts. The use of other than OEM parts, specifications, and standards could result in the failure of the hydraulic motor and create shipboard hazards. MacTaggart Scott & Co. Ltd. is also the only known source that can provide the OEM services and parts to meet the OEM procedures and performance standards, guaranteeing the latest technologies and designs.

To keep the existing hydraulic motor and attempt to support it through another company (other than MacTaggart Scott & Co. Ltd.): If awarded to other than the OEM, the new contractor would have to take custody of one hydraulic motor and reverse engineer all the system components as well as develop knowledge required by certified technical representatives to oversee servicing of the equipment. Reverse engineering would entail material composition analysis of all hydraulic motor components, determination of dimensions and tolerances, and development of OEM-equivalent overhaul and manufacturing procedures. The Coast Guard does not possess the OEM tolerances, testing, and quality control procedures for use in comparing the reverse engineered data. The reverse engineering timeline is estimated at approximately 10 months. Production and quality assurance of the reverse engineered items would have to be managed and approved by a technical expert that is well versed in fluid power machinery and considered a subject matter expert (SME). The entire process, including the efforts of other fields such as contracting and project management is estimated to at least 1.5 to 2 years during which time the 31 hydraulic motors currently in service would not be supported.

If the Coast Guard were to purchase a whole new design from a different contractor:

Requirements for 31 new hydraulic motors (plus at least 10 spares to support scheduled and unplanned maintenance) to include design capabilities, compatibility with existing cutters, and supportability would have to be created and vetted through the proper Coast Guard entities, estimated at approximately 10 months. Solicitation and award of the new requirement would have to be completed, estimated at approximately 6-8 months. Production of the new design, installation and prototyping of the first hydraulic motor would take 1.5 to 2 years; follow on hydraulic motors would be built and installed over the next 8 years based on completing 4 per year. Additional motors would need to be purchased each year during this time frame to build an adequate pool of spares in warehouse inventory to support scheduled and unplanned maintenance. All applicable allowance parts lists, documents, drawings, tech-pubs, and maintenance procedure cards would have to be updated to reflect the new design. The time required for such a project would be extensive and personnel hours associated with the above tasks would be diverted from other important work for which resources are already scarce.

The cost for both of these alternative options is not easily quantifiable and would be substantially higher than continuing to sustain the existing support through the sole source entity MacTaggart Scott & Company, Ltd. There is also substantial risk in venturing out to a new design and/or different contractor, particularly in the operational and supportability areas. The USCG does not possess the manpower, expertise or funding to execute these alternatives.

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

Two sources responded to the sources sought notice posted on July 27, 2015. A summary of the responses is provided below:

Contractor Name DUNS Primary NAICS Code Small Business Concern (Y/N)

A-Tech Hydraulics 118329940 332710 Y (Small Disadvantaged Business) ECI Defense Group, Inc 144387615 332911 Y (Small Business)

Although MacTaggart Scott did not respond to the sources sought notice, they are the only known source capable of performing the requirement based on the letter from MacTaggart Scott letter dated May 17, 2015. It is anticipated that only the OEM can effectively respond to all of the solicitation requirements once it is posted. In accordance with FAR subpart 13.501(a)(iv) the approved J&A will be posted with the solicitation at the www.fbo.gov website. If proposals are received from qualified sources, they will be considered.

(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 maintenance and purchase of the hydraulic motors will continue to be an ongoing need for the Coast Guard. The Coast Guard does not own the required technical data, drawings, specifications, etc., to evaluate other than OEM parts, therefore, it is not anticipated that any future requirements can be competed on a full and open competition basis. In the past when MacTaggart Scott & Co. Ltd. was asked about selling the data rights to the Coast Guard, the company indicated no interest or intention to sell the data rights. On May 17, 2015 MacTaggart Scott issued a letter in regards its proprietary rights for the subject in-haul winch motors. The letter asserts MacTaggart Scott’s ownership of the proprietary rights to the motors and that it believes that the sale of the related proprietary information would not be in their best interest as it would result in less than optimal performance of the product. Therefore MacTaggart Scott indicated no interest or intention to sell the data rights. The Coast Guard cannot force any OEM to release proprietary information and it is highly unlikely that the Coast Guard will have the required funding to purchase such rights if offered by the OEM. However, every attempt will still be made to obtain applicable drawings, technical data, specifications, etc before any subsequent acquisitions occur.