JA-912-FRCincrease Final Signed 3.21.2024CPOsigned - redacted 250129.pdf

Note: It is planned to use the pre-established (evaluated at award of the Phase II contract awarded 04 May 2016) pricing in current option period six of the Phase II contract, as the pricing and contractual means to satisfy this requirement.

(e) Type of funding: Procurement, Construction & Improvements (PC&I).

(f) Year of funding: Fiscal Year 2024.

(g)Solicitation number: HSCG2316CAFR625 / MOD4FRCS

(h) Background information about the requirement: On 26 September 2008, the USCG competitively awarded contract HSCG23-08-C-2FR125 for the design and construction of 32 FRCs. On May 4, 2016, USCG competitively awarded contract HSCG23-16-C-AFR625 for Phase 2 of this program for construction of 26 additional FRCs for a total Program of Record (POR) of 58 FRCs. The Program has since been increased to acquire a total of 65 FRCs. As of January 2024, 55 FRCs have been built and are in service around the world. On March 13, 2023, the Commandant of the Coast Guard submitted the FY 2024 Unfunded Priorities List to Congress to request four additional FRCs that would increase the POR from 65 to 69 FRCs. This increase was necessary to further the Info-Pacific Strategy of the United States through expanded presence and engagement to promote a free and open Indo-Pacific.

3. Description of Supplies/Services.

The USCG intends to increase the contract ceiling from thirty-three (33) FRCs to thirty-seven (37) FRCs on the Phase II Contract. The requirement supports the President’s National Drug Control Strategy goals and Ports, Waterways, and Coastal and Global Maritime Security missions. By leveraging the existing contractual vehicle, the new ships will be Firm-Fixed Price subject to the contract’s Economic Price Adjustment clause. The USCG plans to use the pre-established (evaluated at award of the Phase II contract) pricing in current option period six of the Phase II contract.

4. Identification of Statutory Authority Permitting Other Than Full and Open

Competition.

10 U.S.C. § 3204(a)(1), as implemented by FAR Subsection 6.302-1(a)(2)(ii); “Only one responsible source and no other supplies or services will satisfy agency requirements.” 10 U.S.C. § 3204(b)(B)(i)(ii) “Supplies may be deemed to be available only from the original source in the case of a follow-on contract for the continued development or production of a major system or highly specialized equipment, including major components thereof, when it is likely that award to any other source would result in: (A) Substantial duplication of cost to the Government that is not expected to be recovered through competition; or (B) Unacceptable delays in fulfilling the agency’s requirements.”

5. Identification of Exception to the Buy American Act.

N/A

6. Demonstration that the Proposed Contractor’s Unique Qualifications or the Nature of the Acquisition Require Use of the Authority Cited.

As the designer, developer, and producer of the FRC, Bollinger is the only contractor with the requisite knowledge, experience, capability, and licensing rights, needed to meet the Government’s requirements, without incurring a substantial duplication of cost.

The USCG considered various factors in the decision to proceed without full and open competition: 1) the Government does not possess or otherwise hold title to, the licensing and exclusive data rights needed to duplicate, and re-compete the current FRC design; 2) Any vendor other than the incumbent would have a ramp up time of approximately three (03) years, even if provided with the FRC design, due to the significant production learning curve already attained by the incumbent contractor; 3) The increased labor costs due to either a break in production if Bollinger was selected or due to start-up of a new production line at a second source; 4) Increased costs associated with escalation of labor and material costs due to the delay in construction; 5) the administrative time and cost to procure and/or develop the special tooling required to construct the FRC; and 6) it is highly unlikely that another shipyard would choose to compete, given the relatively small number of hulls over which to allocate its initial non-recurring start-up costs and the higher costs/risks associated with the lack of established learning curve.

The current FRC contract is structured with seven (07) option periods that were previously competitively awarded and determined to be fair and reasonable. The use of the existing contract is a feasible and relatively low cost and timely solution to meet the Government’s needs, particularly if the option is exercised in time to allow the contractor to revise the delivery schedule to level load the yard for maximum efficiency.

The estimate of cost duplication is if the specifications were able to be changed and the need recompeted. The calculations were derived using detailed historical labor hours, labor costs and material costs of the first four FRCs produced under the FRC Phase I contract, escalated to the expected period of performance.

7. Description of Efforts Made to Ensure that Offers are Solicited from as Many Potential

Sources as is Practicable.

As required by FAR 5.201, the proposed requirements and procurement intent was synopsized in the System for Award Management (SAM) on 19 January 2024. The results are described in paragraph 11 below.

8. Determination by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable.

The Contracting Officer has determined that the anticipated price to the Government for the supplies/services covered by this J&A is fair and reasonable based upon the following information.

The existing FRC Phase II contract was competitively awarded in May 2016. In order to determine if the 2016 pricing is fair and reasonable, the 2016 Firm-Fixed pricing components were escalated to planned Period of Performance for the four additional FRCs.

Through market comparisons for a similar vessel type, it was determined that the price of 4 FRCs similar to that being produced under the current contract, would result in a significant higher cost exceeding

9. Description of Market Research.

In anticipation of this possible increase of ships, additional market research was conducted in December of 2023 to determine the ability of a U.S. shipbuilder (other than the incumbent

– Bollinger Shipyards, LLC) to construct the additional required FRCs or equivalent. The research indicated that no other shipbuilders have the ability to construct an FRC or equivalent, without substantial duplication of cost and unacceptable delays in delivery.

While other vendors could potentially provide a vessel remotely similar to that of the FRC, the cost of doing so would be prohibitive. Bollinger is the only vendor that has an existing production facility for the FRC and possesses the exclusive licensing agreements, needed to produce the FRCs at a fair and reasonable price and without an unacceptable gap to the current FRC production schedule.

10. Any Other Facts Supporting the Use of Other Than Full and Open Competition.

The Project Resident Office (PRO) site and internal support would also have to be factored into the cost and time associated with re-competing this effort. The PRO facilities, furniture and building supplies are provided by the contractor. In the situation of a re-compete, the time to prepare a facility for the PRO and set up a working shipyard would be detrimental to the FRC Program. The personnel and facilities cost duplication of creating a second PRO throughout the Period would

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

A synopsis was issued on SAM.GOV on 19 January 2024 requesting that parties express their interest in writing to the Contracting Officer. One response was received inquiring as to the potential homeports of the additional FRCs; no other responses were received.