JOTFOC_STRATTON_J A_for_FBO.pdf

HSCG85-16-R-P45J97

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

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 Federal Acquisition Regulation (FAR) Part 13.5, Test Program for Certain Commercial Items, this justification for the use of the statutory authority is supported by the following facts and rationale required under FAR 13.501 (a)(1)(ii):

1. Agency and Contracting Activity: The Department of Homeland Security (DHS), United States Coast Guard (USCG), Surface Forces Logistics Center (SFLC), Long Range Enforcement Product Line (LRE PL).

2. Nature/Description of the Action: SFLC LRE PL proposes to enter into a contract on the basis of other than full and open competition with MTU America, Inc. (MTU), 39525 MacKenzie Drive, Novi, MI 48377-1602, for services and materials required to conduct the required Main Propulsion Diesel Engine (MPDE) preventative maintenance and Diesel Engine Inspection (DEI). MTU was used as the Main Propulsion Integrator for the National Security Cutters (NSCs) during acquisition. MTU’s experience is critical to the safe and accurate execution of the sensitive work required to repair the MDPE. The total estimated value of this acquisition is $445,049.83. A firm-fixed price commercial solicitation will be issued using the procedures set forth in FAR Parts 12.6 – Acquisition of Commercial Items, FAR Part 13.5 – Test Program for Commercial Items, and with the elements of FAR Part 15 – Contracting by Negotiation. The anticipated period of performance for this contract is 30 September 2016 thru 23 December 2016.

NSC OE fiscal year 2016 funds will be utilized for this requirement.

3. Description of Supplies/Services: This contract will address the critical need onboard the USCGC STRATTON to complete Maintenance and DEI. Completing this new maintenance is required to keep the high performance diesel engines installed on STRATTON operating efficiently and reliably. Failing to complete this maintenance will void warranties and place the MPDE’s in significant risk of having a catastrophic casualty. Not completing the Maintenance places an unacceptable risk on the MPDE’s.

The effects of not completing the maintenance will be felt on STRATTON’s next patrol.

If the Maintenance is not completed prior to STRATTON’s next patrol, the USCG can expect the following events to unfold: The MPDE’s will begin to operate outside of their designed parameters, which will cause a degradation of performance and will put the MPDE’s at risk of a catastrophic casualty.

A catastrophic casualty while underway will have a crippling impact on STRATTON’s patrol. The USCG and non-OEM (Original Equipment Manufacturer) contractors do not have the technical expertise to correct catastrophic casualties on the MPDE’s, which means the repairs will need to be contracted out to the OEM. The OEM is not always available to complete work on short timelines, which can leave the cutter stranded in a foreign port. Further, correcting catastrophic casualties on a short timeline is exceptionally expensive and makes deferring maintenance a financially imprudent decision; the USCG saves money and maximizes operational time by not deferring maintenance.

MTU was the designer and integrator of the 418’ WMSL Main Propulsion system. They calculated how each engine sub-system would be able to meet the system requirements, and have continued to refine their calculations based on inspections and operations data.

The maintenance is a product of their latest guidance.

Period of Performance: 30 September 2016 thru 23 December 2016. A breakdown of the government estimate follows:

CLIN Item Description Total

Main Propulsion Diesel Engine (MPDE) 8000 Hourly Maintenance Tasks $126,482.40

002 MPDE – Diesel Engine Inspection $16,918.83

003 MPDE Start Air System, Clean and Inspect $82,220.60

004 MPDE Exhaust Turbochargers, Renew $177,078.00

005 MPDE Turbocharger Control, Overhaul $42,350.00

Total $445,049.83

4. Identification of 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 the FAR Subpart 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:

Because of the complexity and extensive amount of work, MTU is the only source who can complete all of the required work onboard STRATTON within the designated performance period safely, proficiently, and with an acceptable risk to the USCG’s finances and operational readiness. During acquisition of the NSCs, MTU served as the Main Propulsion System Integrator. This role enabled them to establish working relationships with all of the commercial vendors that provided Main Propulsion equipment for the NSCs. These relationships give them the ability to provide a unique service and product not available from other contractors. In order to insure this project is completed correctly and on time, it is vital to utilize these capabilities.

One of the derivatives of this unique relationship is the greater ease in sharing proprietary knowledge and then retaining it. The high-level technical information required for this work is proprietary knowledge that the company guards closely and only discloses to trusted entities. Having this proprietary knowledge readily available to the technicians completing the work is vital to the health of the project. It is unrealistic to assume that a general contractor will be able to provide accurate information to technicians either accurately or in a timely manner.

Attempting to complete this work without OEM proprietary data or using other than OEM parts could cause failure to occur; degradation to the vessel’s primary mission could result in a failure to meet USCG operational commitments. Using inferior quality parts, parts that do not fit or are not fully compatible with the equipment being repaired would not only delay the already expensive repair, but could further degrade the reliability and functionality of the equipment being repaired. Using other than OEM parts could shorten the mean time between failures of this equipment. Any schedule slip in the execution of this maintenance jeopardizes the USCGC STRATTON’s congressionally mandated operational schedule.

Following the in port, USCGC STRATTON will embark on another long patrol. This makes it critical that the scheduled Maintenance is completed. Not completing this scheduled maintenance in a timely fashion jeopardizes the reliability and performance of the high performance diesel engines in service on STRATTON. If some of the components that are affected by the maintenance were to fail, it would cost untold money to repair and would consume an unacceptable number of operational days. From a financial and operational readiness perspective, the USCG cannot afford to defer this maintenance.

Maintaining the MPDEs and ensuring their reliability is necessary to complete critical missions. Congress has mandated that the USCG increase the 418' WMSL Days Away From Home Port (DAHFP) from the current standard of 185 DAFHP to 210 DAFHP. This congressional mandate also requires the USCG to eventually increase this operational tempo to 235 DAFHP. The new maintenance takes the increased operational tempo into account, so as to ensure they meet the high reliability-standard. It also puts STRATTON's congressionally mandated operational schedule at significant risk. The operational impact to primary and secondary missions is described below:

- Search and Rescue: This is the most common and visible mission of the USCG. Since these missions deal with life and death, the MPDE must meet an exceptionally high standard for reliability and performance. Completing all the planned maintenance is the best way to assure this.

- Counter Narcotics Operations: When intelligence is received or a target is located, the

MPDEs will be ramped up, so the cutter can respond as fast as possible. Repairing an MPDE, or limiting its performance due to symptoms (ex: overheating, unusual noise, high vibration), will significantly degrade the cutter’s ability to respond.

- Fisheries Enforcement: These are endurance operations that require the MPDEs to either be sprinting to the next fishing fleet, or be on standby, while the cutter station-keeps off of a fishing vessel with a boarding team onboard. Fisheries Enforcement patrols will require the MPDEs to be constantly engaged with predictable performance.

- Defense Operations: Defense Operations are extremely high tempo with an exceptionally slim margin for error. While in a precarious situation, halting the MPDEs for even short periods to correct minor casualties is unacceptable. They must be performing at their peak.

- Training: The USCG has not become proficient enough to complete the maintenance with 100% certainty. The USCG plans on having technicians shadow and learn from the OEM. Having the maintenance completed by the OEM will ensure that the USCG learns the correct methods and will be able to complete it in the future.

These combined impacts significantly reduce the ability of STRATTON to support US interests around the globe.

Due to the proprietary nature of the technical knowledge surrounding the propulsion systems and as the experienced propulsion systems integrator, it is in the best interest of the Government to have MTU be responsible for all aspects of the completion of this maintenance and inspection.

6. Description of efforts made to ensure that offers are solicited from as many potential sources as is practicable:

An effort to promote full and open competition was completed on 24 May 2016, with an email request to MTU for release of any manufacturing drawings, specifications, and other technical data pertaining to this maintenance to the USCG. MTU responded on this same date stating that MTU will not release manufacturing drawings, specifications or other technical data as it relates to the engine. All reproduction manufacturing drawings, specifications, and other technical data pertaining to this maintenance and these parts were not purchased with the original acquisition of this asset and unsuccessful attempts have been made to procure the data rights. The technical data needed is proprietary. However, MTU also stated that the general service information related to the service they would provide are covered in the factory authorized service manuals MTU provides to the USCG.

In addition to this request, an effort to solicit as many potential sources as practicable was accomplished with a sources sought notice (HSCG85-16-S-P45J97) posting on 20 May 2016 on Federal Business Opportunities (FBO) with a closing date of 3 June 2016. This FBO publication notified industry of the USCG’s intent to acquire services and materials required to conduct the required 8K hour MPDE preventative maintenance and DEI.

Finally, this procurement is posted as DHS-Acquisition Planning Forecast System (APFS) No. F2016032522 at http://apfs.dhs.gov.

In accordance with FAR 5.203(a)(1), the proposed contract action (presolicitation notice) will be published in FBO, stating that the Government intends to solicit and negotiate with only one source under the authority of 6.302

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

The Contracting Officer anticipates the prices will be fair and reasonable based on comparisons with the Independent Government Estimate; extensive history with MTU; and a recent similar acquisition for the USCGC WAESCHE (WMSL 751) and USCGC BERTHOLF (WMSL 750). A price analysis will be performed to ensure a fair and reasonable price is negotiated in accordance with FAR 15.404. Additionally, in accordance with DHS policy, the offeror may be required to submit Data Other than Certified Cost of Pricing Data (FAR 15.403-3) to support negotiations.

8. Description of Market Research:

Market research was conducted from 1 May 2016 through 3 June 2016. Market research included a review of acquisition history, commercial and Government data bases (Fed Log, Inventory Locator Service research tools, internet research, and FBO). In addition, distributors were contacted via telephone to search for any authorized distributors/service providers for MTU 20V 1163 TB93 engine systems utilized in the USCG NSCs. Market research confirmed that MTU does not have any authorized distributors or certified service centers for this model engine.

Other Marine Contractors on the West Coast and throughout the country, such as Bay Ship and Yacht, Integrated Marine Services (IMS), and Federal Marine and Defense Services (FedMar), do not have the technical knowledge to complete the work properly and on time, without the USCG assuming significant risk. The USCG has determined that hiring another vendor would result in an unacceptably high level of risk unless that vendor subcontracted a majority of the work to MTU, and had a senior MTU Technical representative supervising all the work. This would significantly raise the price of the work and make the administrative side of the contract more complicated. Removing MTU from the contract, or giving them a small role, would subject the execution of this contract to an unacceptable schedule risk that would jeopardize STRATTON’s congressionally mandated operational schedule and would expose the USCG to unacceptable amounts of technical risk. No other company, other than the OEM, MTU, was found to be able to provide the required parts and service.

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 manufacturing or the maintenance of these engines, which are proprietary. These engines 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. MTU is the only known company possessing the original drawings, specifications, engineering control procedures and proprietary methods to ensure the design configuration, manufacturing and quality control required to ensure these engines operate in accordance with engineering specifications and requirements.

Additionally, MTU owns special tooling required to perform his maintenance. Per the OEM, this tooling is proprietary and has not been sold in the marketplace. There are currently no authorized tech reps with ownership of this tooling. The USCG is working toward purchasing this tooling to be able to pursue other competitive routes in the future.

Since the special tooling, drawings, manufacturing processes and other technical data are proprietary to the OEM, it is impossible for the USCG to evaluate aftermarket parts and overhaul processes which could be inferior. After market (non-OEM) vendors do not have access to this proprietary information and therefore could not perform this maintenance as required. Additionally, updates/upgrades are incorporated periodically by the OEM to ensure continued reliable and safe information.

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

In accordance with FAR Subpart 5.2, in an effort to solicit as many potential sources as practicable, a sources sought notice (HSCG85-16-S-P45J97) was advertised on FBO from 20 May 2016 through 3 June 2016. A response was received from MTU. No other responses were received.

11. A statement of the 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 MTU America owns the technical data and drawings, it is unlikely they will sell the rights of such data to the USCG. The USCG has made several attempts to acquire the proprietary data with no success, including an attempt for this acquisition. The USCG will continue to engage MTU America 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 vendors have the required knowledge, special tooling, and access to OEM parts to be capable of performing this work.

Currently, the USCG is developing and growing its expertise with the 418’ WMSL.

Therefore, it is vital that we have OEM Technical Representatives on site to lead the repairs and act as technical experts. We will have senior USCG Technicians on site to learn from the OEM Technical Representatives to enable us to lead repairs of this nature in the future.

12. Technical/Requirements Personnel Certification. I certify this requirement meets the Government’s minimum need and that the supporting data, which forms a basis for this justification, is complete and accurate.

ENG2 Marlene Tolliver Date Technical Representative

13. 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.

Wilma L. Estrada Date Contracting Officer

Level Above Review and Approval:

Ryan dela Cruz Date

Contracting Officer/Section Chief

14. Legal Review and Concurrence:

Monica Vigil Date Procurement Law Attorney

HSCG85-16-R-P45J97