J_A_Ceiling Increase 21D4105_4106.pdf

J&A No. N3220520R4105-0001

JUSTIFICATION AND APPROVAL (J&A)

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Activity.

Military Sealift Command (MSC), Services and Ship Support (N102).

2. Description of the Action Being Approved.

This Justification and Approval (J&A) will increase the joint ceiling on Multiple Award (MAC) Indefinite Delivery, Indefinite Quantity (IDIQ) contract numbers N3220521D4105 and N3220521D4106 to both IDIQ MAC holders -- MAN Diesel (MAN) and Fairbanks Morse Defense (FMD). This MSC MAC IDIQ is used by both MSC and Naval Supply Systems Command, Fleet Logistics Centers (NAVSUP). This modification will increase the MAC IDIQ maximum ceiling amount over the remaining five-year ordering period (07 May 2021 06 May 2026) from $170M by $163M to $333M. All other MAC IDIQ terms and conditions will remain the same.

3. Description of the Supplies/Services.

The MAC IDIQ contract is for repair or maintenance services and parts for a broad range of diesel engine systems/items for the following MSC class vessels: AS (Submarine Tender); T-AH (Hospital); T-AKE (Dry Cargo/Ammunition); T-AO 187 (Fleet Replenishment Oiler); T-AO 205 (Fleet Replenishment Oiler); T-ESB (Expeditionary Mobile Base); T-ESD (Expeditionary Transfer Dock); T-AKR (Bob Hope Class, Gordon Class, Shughart Class); and T-AK (Kocak Class). The diesel engine systems are considered critical ship safety items in accordance with MSC Instruction (COMSCINST) 4490.1C and MSC Quality Management System (QMS) N0750-100.00-AQ Revision 2.1, which jointly describe policy for maintenance, repair, parts procurement, and related technical services for such items. The MAC IDIQ provides several ship classes a broad range of Original Equipment Manufacturer (OEM) systems, items, and/or exclusively-authorized OEM parts and services to maintain and repair as critical ship safety items.

Maintenance or repair may include appraisals, groom, inspections, life cycle management, overhauls, refurbishment, repairs, reports, tests, and upgrades. Each issued order will utilize corresponding Fiscal Year (FY) United States Navy Working Capital Funds (NWCF) and/or Transportation Working Capital Funds (TWCF).

The total ceiling increase for services and parts is shown in the below table:

Appropriation Original Amount

(From) Est. Amount of

Increase (FY24-FY26) (By)

Requested Amount for Approval

(To) NWCF and TWCF $170M $163M $333M

DEPARTMENT OF THE NAVY

COMMANDER MILITARY SEALIFT COMMAND

471 EAST C STREET

NORFOLK VA 23511-2419

4. Statutory Authority Permitting Other Than Full and Open Competition.

The statutory acquisition authority permitting other than full-and-open competition is 10 U.S.C.

3204(a)(1), only one responsible source and no other supplies or services will satisfy agency requirements.

5. Rationale Justifying Use of Cited Statutory Authority.

MAN Diesel (MAN) is the Original Equipment Manufacturer (OEM) and maintains the intellectual property rights on all its engines and components. and its licensed U.S.-based builder, distributor, and servicer, Fairbanks Morse Defense (FMD) are the only known sources with access to the design information to engineer, manufacture, and service this equipment, as they have the proprietary drawings, technical manuals, and design information for this equipment.

The OEM parts and technical data and drawings that satisfy the ship inspection and certification requirements are mandated by the United States Coast Guard (USCG) and American Bureau of Shipping (ABS) regulations. Specifically, the OEM parts and services preserve all OEM warranties, ensure equipment reliability, and ensure crew safety, therefore precluding consideration of non-OEM parts and non- OEM authorized technical representative services. Additionally, FMD/MAN engines onboard MSC vessels are critical equipment for operations as outlined by the International Safety Management Code (ISM)/Safety Management System (SMS), regulations. No other company is authorized to provide services on or parts for FMD or MAN built engines because all engines covered under this requirement are mission critical ship safety items in accordance with COMSCINST 4490.1C and QMS N0750-100.00-AQ Revision 2.1.

Since the engineering, construction drawings, and technical characteristics for the manufactured parts for these engines are proprietary to FMD and MAN, the Government does not own rights for this data.

Notwithstanding USCG and ABS regulatory mandates, analysis per FAR 6.302-1(a)(2)(ii)(A) shows that award to any other source would result in both substantial duplication of cost to the Government that is not expected to be recovered through competition, and unacceptable delays in fulfilling the requirements. The cost for the Government to procure a Diesel Engine system that allows for a vendor outside of FMD and MAN to service and provide parts for this equipment is estimated in FY20 dollars at $36M per ship , resulting in a total duplication of cost of $2,570M that is not expected to be recovered through competition. There have been no changes to the industry or facts stated in the original J&A.

6. Description of Efforts Made to Solicit Offers from as Many Offerors as Practicable.

Recent market research revealed two non-OEM companies which initially were candidates to qualify for work on FMD/MAN diesel engines. Both companies were deemed qualified to provide OEM-equivalent maintenance and repair services on these engines. However, neither company has the authorization or license to procure and provide parts for these engines because FMD and MAN have an exclusive license agreement with each other, which prohibits any other company from being able to purchase the regulatory-required parts and provide services as a prime contractor for the government. A Sources Sought Notice was posted on 15 DEC 2023 (for market research purposes for the follow-on contract), with responses due 14 JAN 2024. MSC did not receive any responses from new sources. Therefore, it was determined that only FMD and MAN are capable of performing the required services and providing the required supplies.

7. Determination of Fair and Reasonable Cost.

The Contracting Officer has determined the anticipated cost to the Government of parts and services covered by this J&A will be fair and reasonable.

8. Actions to Remove Barriers to Future Competition.

For reasons set forth above, MSC does not have plans to compete this requirement licensing agreement. MSC will continue market surveillance and discussions with

MAN/FMD to broaden the number of available providers. As this is a follow-on for supplies and services previously awarded on a non-competitive basis, in accordance with DFARS PGI 206.304(a)(S-70)(i), the prior J&A was provided to the approval authority for review. Approval of this J&A signifies the approval authority has made the determination required by DFARS PGI 206.304(a)(S-70)(ii).