ii_Lydall_JA_Redacted.pdf

Justification and Approval (J&A) for Other Than Full and Open Competition

FOR OFFICIAL USE ONLY

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I. Contracting Activity.

Department of the Air Force Air Force Materiel Command Air Force Life Cycle Management Center Agile Combat Support Directorate (AFLCMC/WN) Bldg 16, Area B 2275 D Street Wright-Patterson AFB, OH 45433-7239

II. Nature and/or description of the action being processed.

This individual Justification and Approval (J&A) is for the award of a new contract to Lydall Performance Materials, Inc.

(hereafter referred to as Lydall) for the acquisition to expedite and expand the domestic production of fine meltblown fiber (MBF) non-woven materials. MBF is a critical material input used to produce N95, surgical, and other protective masks identified as PPE needed to resolve urgent supply needs for the COVID-19 Pandemic. N95 respirators and surgical masks have been identified as a critical item of PPE and have been depleted within the existing Strategic National Stockpile. Because the current U.S. production of MBF media is inadequate, there exists an immediate need to increase production capabilities. Production capacity of MBF must be increased and reserve must be rebuilt as soon as possible to provide the critical material input in the highly demanded N95 respirators and surgical masks. Lydall has provided a solution to expand their capacity to increase the MBF production to support 100 million N95 respirators per month by June 2021. The production capacity will be accomplished in Lydall's Rochester, NH facility. The contract for this effort was awarded on 19 June 2020 as a Undefinitized Contract Action (UCA), has a one-year Period of Performance (PoP), and an NTE of $13.5M. It is a commercial, FAR Part 12 acquisition employing a Firm-Fixed Price contract type.

Definitization is planned to be complete within 180 days from contract award.

III. Description of supplies/services required to meet agency needs.

The Agile Combat Support (ACS) Directorate awarded a contract to Lydall to procure and implement the necessary equipment purchases to expedite the delivery schedule of MBF material input to domestic suppliers to support the production of N95 respirators and surgical masks. In order to increase their production capacity, Lydall has proposed that they will install lines in their plant in Rochester, New Hampshire. Additionally, Lydall has proposed that they will make an operational investment for staffing and training talent in order to grow a domestic center of excellence for MBF technology. As a result, Lydall shall increase its existing domestic MBF production to support the production of 1.2B N95 respirators per annum. Lydall shall be responsible for planning, execution, and follow-through regarding all necessary certification of the equipment upgrades to comply with the appropriate certifications and local, state, and federal regulations.

Lydall is already experiencing challenges with equipment manufacturers as China is aggressively placing orders ahead for the specialty filtration machinery. Lydall has been given commitments from an equipment supplier to the cost and timeline proposed, and an American N95 mask-producing company is prepared to acquire a significant portion of the additional capacity from this expansion over the next 24 months. This manufacturing growth will significantly improve the United States' production footprint for critical materials to provide adequate PPE. Lydall plans to invest $13,500,000 itself to fund half of their overarching production capacity expansion plan to reach the increased production rate to support 1.2B N95 Respirators per annum. To fully execute the entire production capacity expansion will require support of the U.S. Government to provide an additional $13,500,000 investment. Without the issuance of the UCA, significant acquisition delays will severely hamper the manufacturing capabilities needed to reduce the current strain on the limited N95 respirators and surgical masks available.

The requested $13.5M J&A ceiling is based on an 18 June 2020 Not-To-Exceed (NTE) quote submitted by Lydall in response to a draft Request for Proposal (RFP) and Statement of Objectives (SOO) released by the ACS Directorate on 16 June 2020. The Department of Health and Human Services (DHHS) is providing Coronavirus Aid, Relief, and Economic Security (CARES) Act funds through the Economy Act to fund this effort.

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IV. Statutory authority permitting other than full and open competition.

The contracting actions covered by this Individual J&A falls within the authority found under 10 U.S.C. 2304(c)(2), as implemented by Federal Acquisition Regulation (FAR) 6.302-2(a)(2) - Unusual and Compelling Urgency.

V. Demonstration that the contractor's unique qualifications or nature of the acquisition requires the use of the authority cited above (applicability of authority).

On 13 Mar 2020, the President declared a national emergency, under section 501(b) of the Stafford Disaster Relief and Emergency Assistance Act 42 USC 5121-5207 (the “Stafford Act”), recognizing the threat that the novel (new) coronavirus known as SARS-CoV-2 poses to national security. On 25 Mar 2020, Under Secretary of Defense for Acquisition and Sustainment Ms. Ellen Lord established the COVID-19 Joint Acquisition Task Force (JATF). Led by the Principal Deputy Assistant Secretary of Defense, Acquisition Enablers, Ms. Stacy Cummings, the JATF team includes acquisition professionals from the Military Departments and DoD Agencies, and is synchronizing and supporting the acquisition execution of DoD's COVID-19 response to the inter-agency (Federal Emergency Management Agency (FEMA) and DHHS) for medical resources. On 27 Apr 2020, the Head of the Contracting Agency for DHHS, Assistant Secretary for Preparedness Response (ASPR), signed a Determination and Findings in accordance with the authority of the Economy Act (31 U.S.C. 1535), as implemented in subpart 17.5 of the Federal Acquisition Regulation (FAR), on behalf of the requesting agency, DHHS, to enter into an inter-agency agreement for acquisition assistance with the servicing agency, the Department of Defense (DoD), United States Air Force (USAF). In accordance with the Economy Act, DHHS is in need of urgent acquisition assistance from USAF that only USAF can provide within the time-frame required.

The global pandemic drives the need for DHHS to rapidly support, maintain, and expand critical US industrial capacity for medical supplies and services. The DoD, through the Joint Acquisition Task Force, has significant expertise, robust capability, and extensive processes in place to acquire supplies and services necessary to expand US industrial production in response to the COVID-19 pandemic.

Public health requires the immediate increase of production capability to address critical inventory and production gaps for MBF to support N95 respirators, surgical masks and other PPE, and any delay in award of a contract would result in serious injury to the Government. Current U.S. production capacity of MBF (which is critical for N95 respirators and surgical masks and other PPE) is so inadequate that on 23 Mar 2020, the President issued Executive Order 13910 on Preventing Hoarding of Health and Medical Resources to Respond to the Spread of COVID-19, delegating to DHHS the authority to enforce. Failure to immediately increase MBF production capability will deplete N95 respirator and mask inventories, leaving the government and the nation critically unprepared for this and the next pandemic emergency. The US Government is pursuing contracts with several domestic manufacturers of MBF, but does not have time to formally compete the requirement due to the emergency circumstances. In the case of the National Response to the Spread of COVID-19, the contracting officer has determined that Lydall Performance Materials, Inc., Rochester, NH, is a responsible domestic source for producing the required critical component for N95 respirators, surgical masks, and other PPE, suitable to provide the needed response to the spread of COVID-19.

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

In accordance with FAR 5.202 (a)(2), the contracting officer did not submit the notice required by 5.201 because the contracting officer has determined that the proposed contract action is made under the conditions described in 6.302-2 (or, for purchases conducted using simplified acquisition procedures, if unusual and compelling urgency precludes competition to the maximum extent practicable) and the Government would have been seriously injured if the agency complies with the time periods specified in 5.203.

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

Lydall has estimated the effort to expand the capacity of Fine Fiber MBF production (producing the critical component to produce 1.2B more N95 units per year) can be accomplished under a USG investment of $13,500,000.00 based on a contractor-provided spend plan comprised largely of machinery, equipment purchases, and the operational talent staffing and training investment. Although the commercial exemption to requesting certified cost or pricing data applies to this effort, the Contracting Officer will utilize various price analysis techniques to determine the definitized contract price is fair and reasonable. Since there are multiple domestic manufacturers of Fine Fiber MBF using similar machinery and equipment, the Contracting Officer anticipates having the ability to make comparisons to published price lists for the equipment being purchased by Lydall under this contract. Because the effort was issued as a UCA and will require definitization, the Contracting Officer will require actual incurred costs in the submittal of the qualifying proposal. The Government will conduct a technical analysis of the proposal to assess the materials and labor hours proposed.

VIII. Description of the market research conducted and the results, or a statement of the reasons market research was not conducted.

The Air Force Research Laboratory (AFRL) issued a Hybrid Open Funding Opportunity Announcement (FOA) to allow industry to self-identify to the Government a short-fall in various critical industrial bases, to include Melt- Blown Fiber production. In addition, through employment of the Economy Act, DHHS requested the USAF award a contract to Lydall to expand the production capacity of Fine Fiber MBF to support the increased production of N95 respirators.

DHHS has awarded a number of supply contracts for N95 respirators, but has concluded that the domestic supply of these respirators is insufficient to meet the needs of the nation to combat COVID 19. Through the Economy Act, DHHS seeks to "rapidly support, maintain, and expand critical US industrial capacity for medical supplies and services." Acting on DHHS's behalf, the Air Force has awarded several FAR Part 12 commercial contracts for production equipment purchases and equipment conversions to further expand the domestic N95 respirator (and its critical components) manufacturing capacity. DHHS will continue to purchase N95 respirators through existing contracts; the Economy Act transactions are intended to accelerate respirator deliveries under these existing DHHS contracts, not replace them.

IX. Any other facts supporting the use of Other Than Full and Open Competition.

X. List of any sources that expressed, in writing, an interest in the acquisition.

See Section VIII above.

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XI. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before making subsequent acquisitions for the supplies or services required.

In the absence of an emergency situation, such as the COVID-19 pandemic, the Air Force will publicize similar contract actions to increase competition, broaden industry participants, and assist small business concerns.

XII. Certification by the Contracting Officer.

As evidenced by my signature above, I have determined this document to be both accurate and complete to the best of my knowledge and belief.

XIII. Certification by the technical/requirements personnel.

As evidenced by my (our) signature(s) above, I (we) certify that any supporting data contained herein, which is my (our) responsibility, is both accurate and complete.