JA_240226_signed.pdf

JUSTIFICATION & APPROVAL FOR FEDERAL ACQUISITION

REGULATION SUBPART 16.5 ACQUISITIONS

EXCEPTION TO FAIR OPPORTUNITY

Multiple Award Contract

Orders under Fair Opportunity Federal Acquisition Regulation (FAR) 16.505, Defense FAR Supplement 216.505-70, Procedures, Guidance, and Information 216.505-70

Purchase Request Number: TBD Joint Warfighting Cloud Capability (JWCC) Contract Number: HC105023D0003 Task/Delivery Order Number: TBD Procurement Title: NExT1 Program Estimated Value: $11,350,000 Statutory and Regulatory Authority: 10 United States Code (U.S.C.) 2304c(b) and FAR 16.505(b)(2)(i)(B)

EXCEPTION TO FAIR OPPORTUNITY

Upon the basis of the following justification, I, as the Contracting Officer, hereby approve this exception to fair opportunity pursuant to the Statutory Authority of 10 U.S.C. 2304c(b) and Regulatory Authority of FAR 16.505(b)(2)(i)(B).

1. REQUESTING AGENCY AND CONTRACTING OFFICE:

Requesting Agency:

United States Space Force (USSF)/Space Development Agency 1670 Air Force Pentagon Washington, DC 20330 United States of America

Contracting Activity:

David Sharp Contracting Officer 1670 Air Force Pentagon Washington, DC 20330 United States of America

2. NATURE/DESCRIPTION OF ACTION(S):

This action is to issue a firm-fixed-price task order (TO) against the JWCC Indefinite Delivery/Indefinite Quantity Contract for NExT1 Program. This TO will be issued directly to Microsoft Corporation. The anticipated period of performance (PoP) is for a 1-year base period, plus two 1-year option periods and two 6-month option periods. The total estimated value is $11,350,000 of FY24 Research, Development, Test & Evaluation funds.

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3. DESCRIPTION OF SUPPLIES/SERVICES:

Obtain a Government tenant within Microsoft Azure IL6 secret cloud network region to load/operate the flight software to manage/operate a constellation of 10 networked space vehicles (SVs) to demonstrate emerging warfighter mission payloads.

4. SUPPORTING RATIONALE, INCLUDING A DEMONSTRATION THAT THE

PROPOSED CONTRACTOR’S UNIQUE QUALIFICATIONS OR THE NATURE OF THE

ACQUISITION REQUIRES USE OF AN EXCEPTION TO FAIR OPPORTUNITY:

(a) Exception to Fair Opportunity.

FAR 16.505(b)(2)(i)(B) - Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized.

(b) Description of the Justification.

A full and open competition was held in July 2022 for the NExT Program which included requirements for cloud services that were ultimately awarded to Microsoft through a subcontract from the prime contractor Ball Aerospace and Technologies Corp via an SDA Other Transactions Agreement (OTA) (Contract: HQ08502290012). The contract was being executed to schedule. The requirement to purchase cloud services from JWCC was highlighted by the Defense Counterintelligence and Security Agency (DCSA) that provides accreditations for contractor facility space. During the initial DCSA walk through of the proposed Satellite Operations Center (SOC) in late December 2023, DCSA indicated that the current contract acquisition of cloud services is considered a Contractor Owned/Contractor Operated (COCO) environment. They would not allow the ‘to be accredited SOC space’ the Authority to Connect (ATC) necessary to allow the program to move forward. DCSA is requiring the Space Development Agency (SDA) purchase cloud services via a government contract. JWCC was highlighted as a contract that has access to Microsoft and their Azure™ cloud service offering.

There are three reasons why Microsoft is uniquely qualified to full the order:

1. Non-Recurring Engineering: Under the current contact Microsoft stood up the

Azure™ IL2 cloud environment for the SDA NExT program and has created the template for the requiredIL2, IL4 and IL6 Secure Cloud Networks (SCN). Eight months of engineering has already been accomplished.

2. Schedule: All IL6 SCN integration must be complete by August 15, 2024, to support ground system assembly, integration, and test (AI&T), and Space-to-Ground Integration Test on September 25, 2024. The program needs to maintain its current schedule to be able to make the last mid inclination launch scheduled for May 2025.

3. Access to and integration with the Azure Orbital Ground Station (AOGS) environment which includes the Ground Entry Points (GEPs) or antennas. The contractor provided solution makes use of the AOGS.

(c) Justification.

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(1) Minimum Government requirements.

The NExT program provides military utility verification for the SDA Proliferated Warfighter Space Architecture (PWSA). These capabilities inform the follow-on Tranches. Eight (8) months of non-recurring engineering (NRE) have been accomplished within an already contracted Microsoft IL2 environment and in preparation of the IL4 and IL6 environments. The program requires access to the Front-End Processor (FEP) components provided by Loft Federal along with required virtual networking to transpose space packets coming in from ground station to Internet Protocol (IP) packets and forward to Cockpit software in Azure Secret (IL6). Also required, the approved Cross Domain Solution (CDS) to move the pointing information for the Microsoft GEPs (antennas). Switching to a new CSP would impose a schedule slip and additional costs to re-accomplish the NRE. The ground system must be fully implemented and ready for the ground AI&T test scheduled to begin August 15, 2024, and Space-to-Ground Integration Test on September 25, 2024. Using any other vendor would force redesign by the prime contractor (Ball Aerospace & Technologies Corp) for the entire technical solution.

(2) Proposed sole source contractor.

Microsoft Corporation

(3) Discussion regarding the cause of the sole source situation.

There are two factors driving this sole source situation:

1. DCSA’s direction to obtain a GOCO in January 2024, this leaves no time in the current program schedule to switch CSPs.

2. The need to have a ground system fully ready to test by August 15, 2024, to continue to support program timelines, and Space-to-Ground Integration Test on September 25, 2024.

The only source capable of performing the NExT1 Program at the level of quality required is the incumbent contractor, Microsoft Azure. The re-engineering of the current environment from Microsoft Azure to another CSP would result in additional cost and time. Migration from one platform to another platform would cost $24,900,500.00 and delay the project eight (8) months. In addition, there would be a duplication of costs of having to keep the solution running on one platform while refactoring it on another platform while trying to maintain program schedule. Change at this point would result in significant program delay and cost. Other similar features do not meet, nor can be modified to meet, the Government’s requirements due to spectrum licensing differences and the approval timeframes needed with the National Telecommunications and Information Administration (NTIA). Similar features offered by other CPSs cannot be deployed to meet program timelines.

(4) Demonstration of unique source.

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Microsoft possesses the knowledge, skills, capabilities, certification, clearance, and experience required to continue the program without a break or degradation in critical mission services. These services include the vendor Loft Federals Cockpit software which was developed to work within the Azure environment and knowledge of and access to the Azure Orbital Ground Station (AOGS) which contains the GEPs necessary to conduct C2 of the satellite constellation. Both are a vital part of the success for the program. Given these critical mission requirements, Microsoft is the only contractor that can perform the necessary services for the DoD within the current required timeline which supports the May 2025 launch to a mid-inclination orbit.

The current contract was awarded in August 2022 to the prime contractor Ball Aerospace and Technologies Corp. They partnered with Microsoft to provide Azure environments, access to the AOGS, and the Express Routes to support connectivity between locations.

Significant time would be spent reengineering the entire technical solution that makes use of the Microsoft provided capabilities.

There is a contractual requirement for the entire ground segment of the system to be ready to test by August 15, 2024, and Space-to-Ground Integration Test on September 25, 2024.

(5) Procurement discussion.

a. Schedule risk: First program space vehicle launch in May 2025 on Bandwagon-4, the

NExT1 ground system needs to be fully operational and ready to test by August 15, 2024, and Space-to-Ground Integration Test on September 25, 2024.

Technical/Schedule risk: Spacecraft flight software (Loft Federal Cockpit) is proprietary and developed to interface with the Azure Orbital Ground Station software to access the Microsoft Ground Entry Points (GEPs), this software has been deployed to an already contracted IL2 and scheduled to deploy IL4 and then to IL6 in the next three (3) months.

Cockpit software API already exists to perform the following functions:

• Reservations: query, request and cancel AOGS reservations

• Monitoring: query past and current AOGS state

• Streaming: send and/or receive real-time traffic to/from a given satellite

• File Access: query recorded data

Technical/Schedule risk: Express Route direct connect circuits (long lead item) have already been contracted and in the process of being installed. To recreate this work would take between five and six months. This would also require additional NRE due to recreate what has already been accomplished.

Cost: Rework/re-engineering will cost the program an estimated $24,900,500.00 to get back to the same point the program is at currently.

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b. Since there is already an existing Azure environment, the CSP is immediately able to shift to supporting the resultant award associated with this contract action, it would minimize any associated transition costs for the Government. In addition, another contractor would not be positioned to leverage investments made to date to most efficiently meet the objectives of the task order for the anticipated Period of Performance.

Deployment has already begun in a separately contracted Microsoft Azure IL2 tenant.

The next step is to deploy into Microsoft IL4 and then IL6 that is already on contract.

The entire IL2, IL4 and IL6 environments can be copied and placed into the JWCC awarded environment with little to no impact on schedule or technical implementations.

(6) Impact.

If exception to fair use was not met, redeployment timelines would cause the ground segment to miss its AI&T start date of August 15, 2024, thereby creating a ripple effect for every milestone on the project. This would causing multiple satellites to miss their launch windows into the necessary inclinations required to perform their mission demonstrations. Contracted mid-inclination launches are no longer available after May 1, 2025. Four out of ten satellite mission demonstrations would fail. This would negatively impact future capabilities for the SDA Tranches that are in development.

5. COST/PRICE FAIR AND REASONABLE DETERMINATION:

A determination that the price is fair and reasonable will be based on a comparison of the contractor’s proposal to the independent government cost estimate and the JWCC Catalog pricing, including any discounts, which was previously found to be fair and reasonable and based on the contractor’s commercial pricing.

6. MARKET RESEARCH:

Market research for the basic JWCC Contracts was conducted and resulted in a signed market research report on November 9, 2021. After a survey of the market, it was concluded that the JWCC Contract is in the Government’s best interest due to technical feasibility and cost to the Government.

For the NExT program, (HQ08502290012), additional research was conducted from January 24, 2024 to February 5, 2024 by reviewing the specific capabilities in the JWCC Contracts and it was determined that Microsoft is the only source capable of fulfilling the Government’s minimum needs in the manner and time frame required.

A review of the AWS CSP was conducted, the infrastructure was comparable. The DD1494 (Application for Equipment Frequency Allocation) required by NTIA have already been submitted that are tied to the Azure Orbital Ground Station antenna frequencies. NRE would have to be re-accomplished to get the program back to where it is today. To ensure the program

Page 6 of 8 Pages stays on track to meet the schedule, this vendor does not meet the program requirements.

A review of Google CSP was conducted, the infrastructure was comparable. Google does not have Ground Entry Points (GEPs) that are available to use for the necessary Command and Control (C2) of the satellites. By not having access to the necessary GEPs, this vendor does not meet the program requirements.

A review of Oracle CSP was conducted, the infrastructure is NOT comparable. Oracle does not have an accredited IL6 environment to host within. Oracle does not have Ground Entry Points (GEPs) that are available to use for the necessary Command and Control (C2) of the satellites.

By not having an accredited IL6 environment and the necessary GEPs, this vendor does not meet the program requirements.

A review of Microsoft CSP was conducted, the infrastructure is an exact mirror of what exists today and been architected for theIL2, IL4 and IL6 environments. The contractor provided technical solution requires the use of the Azure Orbital Ground Station (AOGS). By keeping the environment hosted in Microsoft Azure, this reduces complexity for the contractor, the CSP and the Government. This vendor is the only vendor that can meet the current schedule and enable program success.

7. ANY OTHER SUPPORTING FACTS: None.

8. ACTIONS THE AGENCY MAY TAKE TO REMOVE OR OVERCOME BARRIERS

THAT LED TO THE EXCEPTION TO FAIR OPPORTUNITY:

(a) Procurement History:

Contract Number: HQ08502290012 Task Order Number: Not applicable Period of Performance: September 25, 2022 - February 27, 2028 Competitive Status: Full and open competition Business Size: Large business

(b) A full and open competition held in July 2022 for the NExT Program. The contract was awarded to Ball Aerospace and Technologies Corp via an SDA Other Transactions Agreement (OTA) (HQ08502290012). Microsoft was awarded a subcontract for the contractually required cloud services from the prime contractor.

For future efforts, this will be competed in a full and open competition among CSP vendors in parallel with space vehicle acquisition activities.

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TECHNICAL CERTIFICATION: I certify that the supporting data under my cognizance which are included in the J&A are accurate and complete to the best of my knowledge and belief.

NAME: Dr. Jeremy Palmer SIGNATURE:

TITLE/ORGANIZATION: Program Manager, SDA

PHONE: +1 (571) 372-4679

DATE:

REQUIREMENTS CERTIFICATION: I certify that the supporting data under my cognizance which are included in the J&A are accurate and complete to the best of my knowledge and belief.

NAME: Dr. Jeremy Palmer SIGNATURE:

TITLE/ORGANIZATION: Program Manager, SDA

PHONE: +1 (571) 372-4679

CONTRACTING OFFICER CERTIFICATION: I certify that this justification is accurate and complete to the best of my knowledge and belief.

NAME: David Sharp

SIGNATURE:

TITLE/ORGANIZATION: Contracting Officer, SDA

PHONE: +1 (562) 607-4258

PROCURING ACTIVITY COMPETITION ADVOCATE APPROVAL: I have reviewed this justification and find it to be accurate and complete to the best of my knowledge and belief.

Since this justification does not exceed $15M, this review serves as approval and my written determination that the aforementioned FAR circumstances apply.

NAME: Christopher Glista

TITLE/ORGANIZATION: Chief, Contracts Cell, SDA

PHONE: +1 (703) 695-1607

PROCURING ACTIVITY LEGAL REVIEW AND APPROVAL: I have reviewed this justification and find it to be legally sufficient. The Justification and Approval satisfies the requirements of FAR 16.505(b)(2)(i)(B).

NAME: Col. Justin Silverman, USAF

TITLE/ORGANIZATION: General Counsel, SDA

PHONE: +1 (703) 693-1708

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ALL QUESTIONS REGARDING THIS JUSTIFICATION ARE TO BE REFERRED TO

DAVID SHARP, CONTRACTING OFFICER, SDA, +1 (562) 607-4258,

david.l.sharp42.civ@mail.mil.

Date10_af_date: 3/13/24