J-and-A for New Helicopter Hulls MH-60T (Public Release Copy).pdf

Commandant, US Coast Guard (CG-9127)

2703 Martin Luther King Jr. Ave SE, Stop 7828 Washington, DC 20593-7828

JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND OPEN

COMPETITION

UNDER 10 U.S.C.2304(c)(1)

ONLY ONE RESPONSIBLE SOURCE AND NO OTHER SUPPLIES OR SERVICES

WILL SATISFY AGENCY REQUIREMENTS

NEW MH-60T HULLS AND RELATED SUPPLIES AND SERVICES

Pursuant to the requirements of the Competition in Contracting Act (CICA) as implemented by the Federal Acquisition Regulation (FAR) Subpart 6.3, and in accordance with the requirements of FAR 6.303-1, the use of the statutory authority under FAR Subpart 6.3 is justified by the following facts and rationale as required by FAR 6.303-2:

1. Agency and Contracting Activity. The Department of Homeland Security (DHS), United States Coast Guard (USCG) Headquarters, Office of Contract Operations – Formal Contracts Division VII (CG-9127), Washington, D.C., proposes to enter into a contract on the basis of other than full and open competition.

2. Nature and/or Description of the Action being Approved. The USCG intends to procure up to forty-five (45) new MH-60T helicopter hulls from Sikorsky Aircraft Corporation (LM/SAC), 6900 Main Street, Stratford, CT 06614 on a sole source basis.

USCG will acquire these hulls utilizing a non-commercial, single-award, indefinite-delivery, indefinite-quantity (IDIQ) contract. The IDIQ will have cost-plus-fixed-fee (CPFF) and firm-fixed-price (FFP) pricing estimated as follows:

Period Estimated Dates for Orders Pricing Description Estimated Quantity

Unit Price Estimated

Total

Base

30 September 2020 - 31 March 2022 CPFF Non-Recurring Engineering

(NRE)

1 $XXXXXXXX $XXXXXXXX

30 September 2020 - 31 March 2022 CPFF MH-60T Hulls #1 to #3 3 $XXXXXXXX $XXXXXXXX

Estimated IDIQ Minimum $88,200,000.00

01 April 2022 - 31 March 2023 FFP MH-60T Hulls #4 to #15 12 $XXXXXXXX $XXXXXXXX 01 April 2023 - 31 March 2024 FFP MH-60T Hulls #16 to #27 12 $XXXXXXXX $XXXXXXXX

01 April 2024 - 31 March 2025 FFP MH-60T Hulls #28 to #39 12 $XXXXXXXX $XXXXXXXX 01 April 2025 - 29 September 2025 FFP MH-60T Hulls #40 to #45 6 $XXXXXXXX $XXXXXXXX

Estimated Total $849,660,000.00

Total Estimated Value of the Contract / Justification & Approval $850,000,000.00

The contract’s $88,200,000.00 minimum will be obligated at the time of contract award utilizing Fiscal Year 2019 USCG Procurement, Construction, and Improvement (PC&I) funding available for obligation for up to five (5) years after appropriation.

If additional PC&I funding becomes available, USCG will execute additional orders up to the contract’s $850,000,000.00 maximum, which anticipates the procurement of all forty-five (45) MH-60T helicopter hulls.

The solicitation number will be 70Z02320RAMH00300. This justification and approval applies to the initial contract award and to all orders placed thereunder.

3. Description of Supplies/Services. The USCG currently operates its congressionally maximum authorized fleet of forty-five (45) MH-60T helicopters as a program of record. These helicopters are essential to USCG’s successful performance of search-and-rescue, law enforcement, migrant

Justification and Approval (J&A) New MH-60T Helicopter Hulls interdiction, port and waterways security, and marine environmental protection missions. To ensure USCG can continue to meet its missions, it has concluded that hull replacement is required. The 2019 Consolidated Appropriations Act supported USCG’s conclusion, as the Act provided USCG with $95 million specifically for this end.

Therefore, the instant requirement is for an IDIQ contract with both CPFF and FFP contract types. First, USCG will place an initial CPFF order for Non-Recurring Engineering (NRE) to re-start the dormant production line and to complete the engineering work required for the new MH- 60T hull configuration, along with manufacturing an initial three (3) new MH-60T hulls (one prototype, one proof-of-concept, and one final production version). The CPFF environment provides the flexibility needed to complete this new work at a reasonable price, as no vendor has ever built the new hull configuration, but it is required to ensure USCG can meet its missions hereafter. As the CPFF process is concluding (with the design complete and the production line established), USCG will place FFP orders to order up to forty-two (42) additional hulls as additional funding becomes available.

The new hulls will be integrated into the USCG’s fleet during each helicopter’s normal four-year Programmed Depot Maintenance when it is comprehensively disassembled, inspected, repaired and re-assembled, thereby providing each MH-60T with a new hull an additional 20,000 flight hours of service life.

20,000 hours of service life;

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), as implemented by the FAR Subpart 6.302-1, entitled “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.”

5. Identification of Exception to the Buy American Statue. This section is not applicable.

USCG anticipates that the Buy American statute will apply to this acquisition.

6. Demonstration that the proposed contractor’s unique qualifications, or the nature of the acquisition requires use of the authority cited. SAC is the original designer and manufacturer of the H-60 helicopter platform and its many variants. SAC holds all proprietary data rights to the hulls’ structure, raw materials composition, manufacturing processes, tooling, construction alignment jigs, and the specifications/design drawings for many of the thousands of individual parts that comprise the hulls.

In order to compete this requirement, USCG would have to hire a third party to “reverse engineer” the new hull materials, manufacturing process, tooling, etc., and then develop and perform extensive verification of a technical package suitable for a competitive procurement of the hulls, which would itself require extensive testing to ensure its compliance with USCG airworthiness and safety requirements.

Such a reverse-engineering effort would take several years to perform and would be prohibitively expensive to complete, even before USCG could competitively contract for and received delivery of new hulls. Such delay and expense would jeopardize USCG’s ability to fulfill its missions, especially as the existing MH-60T fleet continues to age into mandatory retirement beginning in 2023 and continuing through the complete retirement of all existing MH-60T capability in 2028.

Based on the foregoing, SAC is the only company capable of performing the instant requirement.

7. Description of Efforts Made to Ensure that Offers are Solicited from as Many Potential Sources as is Practicable. On 12 July 2019, USCG posted notice # F2018043005 in the Acquisition Planning Forecast System (APFS), describing this requirement and seeking potential sources.

Only Erickson Incorporated (Erickson) responded by asking if the USCG’s requirement was for the production and delivery of new hulls to the USCG for modification and if the effort would include programmed depot maintenance (PDM), or if USCG would do its own PDM.

The USCG responded to Erickson’s questions by reiterating its intention to procure MH-60T hulls vice buying non-MH-60T hulls and attempting to configure them into the MH-60T itself because of the significant anticipated time delay and expense well in excess of the dollar amount discussed herein that would be required to configure non-MH-60T hulls.

USCG also noted that the procurement would not include any contractor performed PDM since USCG expects the USCG Aviation Logistics Center in Elizabeth City, North Carolina, to complete that effort.

The USCG has received no further communication from Erickson, nor has the company shown any further interest in this procurement.

On 17 July 2019, USCG also posted a sources sought notice on FedBizOpps describing its requirements and seeking interested vendors.

To date, only SAC has responded to this notice.

8. Determination by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable. The USCG Contracting Officer has determined that the anticipated price to the USCG for the supplies and services covered by this J&A will be fair and reasonable based on USCG’s Independent Government Cost Estimate and favorable cost comparisons to similar items, including a comparison of the estimated pricing for the non-recurring engineering work anticipated to other similar engineering efforts.

USCG anticipates that the solicitation will include a requirement for SAC to propose pricing that considers potential savings associated with production economies of scale based on the number of hulls ordered and the application of efficiencies identified during the non-recurring engineering portion of performance. USCG will also require SAC to submit certified cost or pricing data for analysis by USCG. USCG will also obtain SAC’s forward pricing rate recommendations from the Defense Contract Management Agency (DCMA), along with DCMA’s assistance in determining the fairness and reasonableness of SAC’s direct and indirect rates.

Moreover, the USCG Contracting Officer will utilize other various cost and price analysis techniques to determine fair and reasonable pricing.

Over time and as more orders are placed against this IDIQ contract, USCG will gather historical pricing data and will be able to use it for comparison purposes in analyzing the pricing of later orders.

9. Description of Market Research and Results. From October 2016 to August 2019, the MH- 60T Sustainment Program Integrated Product Team (IPT) conducted comprehensive market research (including an Alternatives Analysis) and provided multiple public opportunities for companies to express their interest and demonstrate their capabilities to meet this requirement.

These opportunities include the actions noted in Section (7) above, such as the posting of an APFS notice in the APFS database and the publishing of a sources sought notice on FedBizOpps.

The results of this market research indicate that the only cost-effective and timely approach to meeting the USCG’s requirement is the placement of a contract directly with SAC to produce new MH-60T hulls.

10. Any Other Facts Supporting the Use of Other Than Full and Open Competition. This section is not applicable.

11. A Listing of the Sources, if Any, That Expressed, in Writing, an Interest in the Acquisition.

As indicated elsewhere herein, both Erickson and SAC expressed written interest in this acquisition. After USCG answered Erickson’s initial questions, Erickson has not expressed any further interest in this acquisition.

12. 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. Successful award and administration of this contract and its orders will extend the service life of the MH-60T into the 2040s. While the contract is ongoing, USCG will continue to explore options to make parts of the work available for competition (including further discussions with SAC on the acquisition of its data rights) and the use of an IDIQ type further ensures maximum flexibility.

Additionally, USCG will remain up-to-date on technological innovations and information that may prompt its migration to an entirely new airframe in the coming decades.

Otherwise, the USCG has no plans at this time to compete future contracts for MH-60T helicopter hulls. If another potential source for the hulls emerges, USCG will assess whether competition for future requirements is feasible.

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.

XXXXXXXXX Date Contracting Officer

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

Technical Representative

15. Legal Counsel Review. I reviewed this Justification and Approval for Other Than Full and Open Competition in accordance with HSAM 3006.304-70 and find it legally sufficient.

Legal Counsel

Chief Procurement Law Counsel and Chief Trial Attorney

APPROVAL:

Procuring Activity Advocate for Competition

Head of Contracting Activity

Chief Procurement Officer