Attachment_2_JOTFOC_SSDG_P45L80_Redacted.pdf

SOLE SOURCE JUSTIFICATION

Under 41 U.S.C. 1901 Per FAR § 13.501(a) Sole source (including brand name) acquisitions

Solicitation HSCG85-17-R-P45L80

Pursuant to the authority of 41 U.S.C. 1901 as implemented by Federal Acquisition Regulation (FAR) Subpart 13.501 and consistent with the content requirements of FAR 6.303- 2, the following facts and rationale support this sole source justification:

1. AGENCY AND CONTRACTING ACTIVITY.

The Department of Homeland Security, United States Coast Guard (USCG), Surface Forces Logistics Center (SFLC), Long Range Enforcer Product Line (LREPL) located at 1301 Clay Street Oakland CA 94612 proposes to enter into a one-year commercial firm fixed price contract on a basis other than full and open competition.

2. NATURE AND/OR DESCRIPTION OF THE ACTION BEING APPROVED.

The USCG SFLC has a requirement for a design study to provide 6 alternative design solutions, to correct known problems associated with the bearing housing sub-systems for the Caterpillar Ships Service Diesel Generators (SSDG) on the 418-ft National Security Cutters (WMSL).

These studies are expected to require evaluation and analysis of different design modifications, prototype installations, and testing at the estimated cost of for Non-Recurring Engineering costs. The SFLC anticipates that a firm fixed price commercial contract will be awarded utilizing the procedures set forth in FAR Part 12, Acquisition of Commercial Items, FAR Subpart 13.5 Simplified Procedures for Certain Commercial items, and FAR Part 15, Contracting by Negotiation. The period of performance will be for one year.

Based on market research, the only company that can satisfy this requirement is:

Name and Address of the proposed contractor Original Equipment Manufacturer (OEM) -

Caterpillar Inc.

Caterpillar Defense & Federal Products 14009 N Old Galena Rd Mossville, IL 61552-7574 POC: Tim Booth, 309-578-4180

3. DESCRIPTION OF SUPPLIES/SERVICES.

The requirement is for the contractor to review and evaluate the existing Ship Service Diesel generator and bearing system (SSDG) and provide a report that details six alternative preliminary re-designs to be considered by the USCG to assess alternative solutions to recurring failures of the generator and bearing system.

The Coast Guard currently has a generator and bearing system on the National Security Cutters that is failing prematurely; failures are occurring within of SSDG operation, far earlier than expected. Caterpillar developed this bearing system, which is unique to the National Security cutter, under sole source contract HSCG23-13-C-ADB014 and is the only manufacturer that can provide the modifications to the SSDGs. The government intends to award one commercial firm fixed price contract for the following work items:

Work Item Description 0001 Existing SSDG generator and bearing system, Review and Evaluate 0002 Alternative generator design solution 1 0003 Alternative generator design solution 2 0004 Alternative generator design solution 3 0005 Alternative bearing system design solution 1 0006 Alternative bearing system design solution 2 0007 Alternative bearing system design solution 3 0008 Alternative designs comparison table 0009 Design drawings 0010 Quality Assurance/Quality Control Plan 0011 CAD drawings 0012 Maintenance and Repair plan

The Government estimated dollar value for this requirement is:

Period Total

Base Year

Design study will be funded by AFC-45 funds as this is in support of a Naval Engineering project.

4. IDENTIFICATION OF THE STATUTORY AUTHORITY PERMITTING

OTHER THAN FULL AND OPEN COMPETITION.

The statutory authority permitting other than full and open competition is 41 U.S.C. 1901 as implemented by FAR 13.5, Simplified Procedures for Certain Commercial Items.

5. DEMONSTRATION THAT THE NATURE OF THE ACQUISITION

REQUIRE USE OF THE AUTHORITY CITED.

In CY2013, the generator bearing system was procured via sole source under contract HSCG23-13-C-ADB014 to Caterpillar. Three SSDGs are installed on each WMSL 418-ft National Security Cutter. The SSDGs are the primary equipment used onboard the WMSL 418-ft National Security Cutters for providing electrical power to the ship.

Failure of the system and associated equipment would cause severe equipment damage, loss of vessel operational hours and possible personnel injury.

Caterpillar is the OEM for the generator bearing system. The necessary manufacturing data and special tools are proprietary and controlled by Caterpillar. The Government did not procure and does not have Government purpose rights to recreate or distribute design drawings and special tools for the SSDGs and associated equipment, which would be necessary for any other source to perform failure analysis and re-design efforts. The Ships Service Diesel Generator and associated equipment is installed on all the USCG WMSL 418-ft National Security Cutters.

If the Coast Guard were to purchase a whole new design from a different contractor: Requirements for new SSDGs to include investigation of design capabilities, compatibility with existing cutters, and supportability would have to be created and vetted through the proper Coast Guard entities, estimated at approximately 18 months. Solicitation and award of the new requirement would have to be completed, estimated at approximately 6-8 months. Preliminary design reviews, down selection, production of the new design for prototype and installation of the prototype SSDG, 1.5-2 years; follow on SSDGs would be built and installed over the next years based on completing per year (Note: year 1 would only require new SSDGs as the prototype SSDG would remain installed). All supportable documents, drawings, tech-pubs, and MPCs would have to be updated to reflect the new design. The time investment would be extensive and personnel hours associated with the above tasks would also be extensive, while the Coast Guard would continue to experience failures across the WMSL cutter class.

The cost for this alternative option is estimated to be per SSDG) and would be substantially higher than continuing to sustain the existing support service through the sole source entity Caterpillar. There is also substantial risk in venturing out to a new design and/or different contractor, particularly in the operational and supportability areas. Additionally, the decision would be made at a different USCG level; LRE Product Line is a sustainment office and does not manage Coast Guard

Acquisition Programs or develop Operational Requirements. USCG does not possess the manpower, expertise or funding to execute these alternatives, which are duplicative of efforts already performed for the Caterpillar awarded efforts.

Impact on mission if J&A is not approved: If a contract is not awarded it could severely jeopardize the WMSL 418-ft National Security Cutter’s mission, because the bearings would continue to fail prematurely with no foreseeable remedy. A design study is a necessary first step to develop a long-term solution to resolve the on-going bearing failures. The lack of a design study will continue to delay any meaningful engineering changes that will reduce maintenance costs and negative impacts to executing Coast Guard missions.

Failure of the bearing system and associated equipment could result in equipment damage, loss of vessel operational hours, inability to complete mission requirements and possible personnel injury.

6. DESCRIPTION OF THE EFFORTS MADE TO ENSURE THAT OFFERS

ARE SOLICITED FROM AS MANY POTENTIAL SOURCES AS IS

POSSIBLE

In an effort to promote full and open competition, on 31 July 2017, an email was sent to Caterpillar requesting the release of data rights to the USCG. On 01 August 2017, our request was refused (see attached).

A sources sought notice was posted on 27 July 2017 in the Federal Business Opportunity website to notify industry that the USCG’s intent is to issue a solicitation to the OEM Caterpillar to complete a redesign study on the SSDGs. Other organizations having the expertise and required capabilities to provide equivalent services were invited to submit information discussing such capabilities. Please refer to Section 10 for the outcome of this sources sought effort.

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(s) will be fair and reasonable based on comparisons with the Independent Government Estimate, Market research including searching pricing information on the Internet, and historical pricing for awarded work of the same nature as well as comparison with other contracts of a similar nature. Additionally, if determined necessary by the Contracting Officer, 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 April and August 2017. 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 technical capabilities complete the design study for the CG.

As detailed above, recent sources sought notice posted in FedBizOpps on July 27, 2017 resulted in no other capable firms expressing interest in this requirement. Caterpillar had expressed interest in this follow on requirement prior to the posting of the latest sources sought notice. The necessary manufacturing data and special tools are proprietary and controlled by Caterpillar. Caterpillar is the only known source that possesses the required capabilities, drawings and specifications to ensure the latest design configuration, manufacturing and quality control required to complete the redesign study on the SSDGs and associated equipment.

Internet/Industry Contact - Through extensive market research, Caterpillar is the only known vendor who has the capabilities to complete the design study on the SSDG onboard the WMSL cutters. Caterpillar does not team or license other vendors.

Caterpillar’s detailed design and specific data is proprietary. Any other source would not have access to the needed data, drawings and proprietary information to perform this work.

Acquisition History – This is a brand new requirement. No prior acquisition history.

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 repair manuals needed to complete a design study analyzing alternative SSDG design options. The technical data available to the Coast Guard is inadequate to ensure that a suitable alternative generator bearing design is identified for further evaluation and development to resolve the on-going original configuration premature bearing failures. Caterpillar is the only known source that can provide the required services to develop alternative options.

10. A LISTING OF 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 27 July 2017 requesting that parties express their interest in writing to the Contracting Officer. The Government received one response before the Sources Sought Notice closed on 11 August 2017. The response received on 01 August 2017 was from the OEM Caterpillar confirming their capabilities of meeting our requirements and their planning of submitting a proposal to our solicitation. No other responses were received before the Sources Sought Notice closed. In summary, Caterpillar is the only known source who is capable of meeting the Government’s requirements.

11. A STATEMENT OF ACTIONS, IF ANY, THE AGENCY MAY TAKE TO

REMOVE OR OVERCOME ANY BARRIERS TO COMPETITION

BEFORE ANY SUBSEQUENT ACQUISITIONS FOR SUPPLIES OR

SERVICES Required.

The redesign study on the SSDGs is expected to be a one-time need for the Coast Guard.

On 31 July 2017, the Coast Guard inquired about the proprietary data and Caterpillar 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.

12. 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.

Date

Technical Representative/COR U.S. Coast Guard, SFLC, LRE, SES2

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.

Date

Contracting Officer

14. REVIEWED BY:

Contracting Section Chief Date

USCG, Procurement Law Attorney Date

08/21/2017

21 AUG 2017