JA_HMEE-I 8-Yr Follow-on (CMO 2018-019)_Redaction R1_Redacted.pdf

CMO Control Number: 2018-019

DEPARTMENT OF THE ARMY

JUSTIFICATION AND APPROVAL FOR OTHER THAN

FULL AND OPEN COMPETITION

1. Contracting Activity: Army Contracting Command – Warren (ACC-WRN), is the contracting activity for this action.

2. Description of Action: ACC-WRN proposes to award a new eight-year Firm Fixed Price (FFP) single award requirements contract to JC Bamford (JCB) Inc. to fulfill the Army and United States Marine Corps’ (USMC) requirement for High Mobility Engineer Excavator Type I (HMEE-I) Vehicles, Related Hardware, and Ancillary Services (as defined under section 3). ACC-WRN chose a requirements type contract over an indefinite-delivery indefinite-quantity (IDIQ) type because the availability of funds to procure an IDIQ minimum quantity annually beyond Fiscal Year 2022 (FY22) is uncertain based on the current budget. This contract will establish five 12-month ordering periods and an additional three 12-month ordering periods as options, for a total potential contract length of eight years. This effort will utilize FY19-26 Other Procurement, Army (OPA); National Guard Reserve Equipment Appropriation (NGREA); OPA Overseas Contingency Operations (OCO); and, Procurement, Marine Corps (PMC) funds.

3. Description of Supplies and Services: The HMEE-I is a self-deployable backhoe loader/excavator system meeting the capability specifications in Army Automotive Tank Purchase Description (ATPD) 2301. The HMEE-I program requirements are comprised of three aspects: 1) the “HMEE-I Vehicle” in armored or unarmored configuration; 2) Related Hardware including the uninstalled armor Crew Protection Kit (CPK), Special Purpose Kit (SPK), multi-functional attachments, and Special Tools and Test Equipment (STTE; NSN 5180-01-629-6824); and, 3) Ancillary Services including Operator and Field-Level Maintenance New Equipment Training (OPNET and FLMNET), Total Package Fielding (TPF), and vehicle maintenance support by Field Service Representatives (FSRs), as well as updates to existing logistical data products to incorporate impacts from emerging Engineering Change Proposals (ECPs). SPKs include items such as the HMEE-I forklift, auger, sweeper, arctic kit, large jack hammer, stake driver, rock ripping bucket, and pneumatic hammer attachments. Estimated remaining Army requirements to meet the Army Acquisition Objective (AAO) through FY26 total 193 unarmored and 70 armored HMEE-I Vehicles. The USMC requires 60 unarmored and 129 armored HMEE-I Vehicles. The Army is the lead service for the HMEE-I program and the USMC is a participant service levering the fully tested and logistically supported Army HMEE-I, which obtained materiel release in October of 2008. Combining Army and USMC requirements affords the opportunity to secure more economical production pricing through the life of the contract, and to engage the

6.302-1(a)(2)(ii), which states, “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 – (B) Unacceptable delays in fulfilling the agency’s requirements;” and (iii) “For DoD, NASA, and the Coast Guard, services may be deemed to be available only from the original source in the case of follow-on contracts for the continued provision of highly specialized services when it is likely that award to any other source would result in-- (B) Unacceptable delays in fulfilling the agency’s requirements.”

5. Reason for Authority Cited:

a. Background: JCB is the Original Equipment Manufacturer (OEM) of the HMEE-I program. JCB owns the Technical Data Package (TDP) and computer software package. Initial HMEE-I production contract W56HZV-05-D-0414 was awarded to JCB, Inc., on 23 September 2005, as the result of competitive sourcing to meet the capability specifications under ATPD 2301. A subsequent, follow-on production contract (W56HZV-14-D-0066) was awarded to JCB on 30 April 2014 under FAR 6.302-1 to fill a shortfall against the HMEE-I AAO quantity. Since the award of contract W56HZV-14-D- 0066, the HMEE-I AAO increased by 276 HMEE Vehicles from 805 to 1,081. The AAO subsequently increased to 1,308 HMEE Vehicles (final approval pending). To fulfill these requirements, ACC-WRN awarded two extensions to the contract; one on 4 April 2017 and another on 20 April 2018. The extended ordering period for W56HZV-14-D- 0066 will expire on 28 April 2019 and the AAO has yet to be fulfilled. Meanwhile, USMC requirements emerged for an additional 189 HMEE-I Vehicles. This is the first instance where the USMC will be procuring HMEE-I Vehicles under an Army contract. The proposed subject follow-on contract award will provide ordering capacity to fully meet the current Army and USMC program AAO quantities. Award of the proposed sole source follow-on contract is projected to occur in September 2019.

b. Unacceptable Delay: Award to any source other than JCB would result in undue delay to the Government. The Government does not own rights to the HMEE-I TDP and computer software package. Timely supply of the HMEE-I Vehicles, Related Hardware, and Ancillary Services depends on access to the TDP. The Government has issued several requests to JCB to procure the rights to the TDP, most recently in March 2018.

By letter dated 23 March 2018, JCB declined to sell the TDP for the HMEE-I.

Engaging an alternate source to supply a new system capable of meeting the HMEE-I program requirements specified in ATPD 2301, would necessitate a lengthy competitive procurement, additional contractor non-recurring engineering, Government testing, and the development of a new logistical support package in order to obtain materiel release for a newly configured Army system. Based on historical data from previous Combat Engineer/Material Handling Equipment (CE/MHE) acquisitions of comparable include statement of work development and reviews, evaluation criteria development and reviews, and Source Selection Plan development and associated briefings and approvals. The estimated time it takes to conduct a SSEB to award a contract based on historical averages from the ACC-WRN Source Selection Support Center of Excellence (S3COE) is six to twelve months.

The Government is utilizing an average of nine months for the SSEB, composed of staffing and convening an SSEB and conducting all Source Selection activities, including briefings and debriefings through contract award.

First Article Test (FAT) Asset Build: During this phase the contractor would be required to build test HMEE-I assets to support Government testing and for logistics development. Historical data shows a total of six to nine months for FAT production. The Government is utilizing an average of six months for FAT HMEE- I builds, which includes three months for contractor manufacturing, quality, and material purchasing processes and procedure development, and three months for material and production lead time.

Test and Evaluation: Upon completion, the FAT vehicles are required to be sent to a Government test facility where key events, including inspection, reliability, availability, maintainability, transportability, and performance testing, shall be performed to obtain materiel release. Due to the military specific requirements including high-speed, water fording, and air-drop capability, the testing and evaluation phase is expected to take approximately 12 months based on historical averages of similar vehicle systems annotated by Product Manager (PdM) CE/MHE test personnel.

Logistics Development: In parallel with the testing and evaluation phase, the contractor would be required to start logistics development, which includes key items such as initial work package development, initial provisioning, training development, and preliminary technical manual reviews. At the conclusion of testing and evaluation phase, the PdM CE/MHE Logistics Specialist annotated that an additional 12 months are required to finalize the logistics development.

The finalization of logistics development includes updates to technical manuals, technical manual verification, logistic demonstrations, instructor and key personnel training, and authenticating the technical manual after Government acceptance. In total, the Logistics Development effort takes an estimated 24 months to complete on a competitive basis. In accordance with AR 700-142, Type Classification and Materiel Release, this Logistics Development effort is required in order to meet requirements for a Type Classification (TC) designation of Standard as well as Full Materiel Release (FMR). TC-Standard designation means the materiel solution meets Army requirements and is required prior to a Full Rate Production (FRP) decision. FMR approval means the materiel solution is safe, suitable, and supportable and is required prior to fielding any new system to Army units.

b. Conclusion: Based on the information provided above, JCB is the only qualified source with the necessary engineering data and expertise capable of meeting HMEE-I program requirements in a timely and economical manner without imposing an unacceptable delay. Obtaining competition is impracticable because the Government does not own or have technical data for competition. Competing the performance specifications to obtain an alternate system would delay the HMEE-I program by up to 24 months in comparison to a new sole source contract with JCB.

6. Efforts to Obtain Competition:

a. Effective competition: The Government does not plan to pursue competition for this action for reasons stated in paragraph five above. In accordance with FAR 5.201, this action will be synopsized and any resulting proposals will be considered.

b. Subcontracting competition: In accordance with FAR 19.702(a)(1), a subcontracting plan will be required for this action. As such, FAR clauses 52.219-9, Small Business Subcontracting Plan; 52.219-16, and Liquidated Damages – Subcontracting Plan will be included in the solicitation. The proposed subcontracting plan will be reviewed and if acceptable, incorporated by reference into the contract.

7. Actions to Increase Competition: A competitive action is only possible if the Government procures the HMEE-I TDP from JCB or solicits sources of an alternate system to meet the performance specifications under ATPD 2301. However, the Government does not plan to pursue either of those actions for this procurement because JCB refuses to offer the TDP for sale, and qualification of an alternate system would incur unacceptable delays in meeting requirements for the HMEE-I program. The Government intends to procure the remaining quantities of the Army AAO and the emerging USMC requirements with the proposed long-term follow-on contract with JCB.

8. Market Research: Pursuant to FAR 10.002(b)(2), ACC-WRN posted a sources sought notice to Federal Business Opportunities (FedBizOpps) on 13 June 2018 and closed on 29 June 2018 to investigate the ability of existing contractors to support HMEE-I program requirements. ACC-WRN received two responses:

(a) JCB, Inc., is the OEM for the HMEE-I Vehicles, Related Hardware, and Ancillary Services. JCB also previously provided Interim Contractor Logistics Support (ICLS) for the HMEE Type I, and developed the Operator’s and Field Level Maintenance New Equipment Training courses. JCB addressed every question in the Manufacturer Surveillance Questionnaire, and no deficiencies were noted. JCB has provided HMEE-I

• Contract W56HZV-14-D-0066 was awarded on 30 April 2014 and was extended twice, once on 19 September 2017 and again on 24 September 2018.

(2) Competitive Status: Contract W56HZV-05-D-0414 was awarded as the result of a limited competition based on an assessment of demonstration testing under an initial R&D effort established under open competition. Contracts W56HZV-08-D-0028 and W56HZV-14-D-0066 were awarded on a sole-source basis to JCB Inc. of Pooler, GA.

(3) Authority previously cited if less than full and open competition was used: FAR

6.302-1, “Only One Responsible Sources and No Other Supplies or Services Will Satisfy Agency Requirements” was the authority used in all previous J&A’s.

(4) Summary of Paragraph 7 of the previous J&A: The Government intends to procure the remaining quantities of the AAO with a long-term follow-on production contract with JCB. Additional market research will be conducted prior to this subsequent procurement to assess whether market conditions have changed and increased competition can be achieved without incurring substantial duplication of costs or unacceptable delays to the program.

(5) Explanation of the changed circumstances causing this action to now limit the sources: Only the initial R&D effort was full and open competition with a down-select for production. The remaining prior awards for the HMEE-I program were sole source to JCB.

(6) Unusual Patterns: ACC-WRN extended Contract W56HZV-14-D-0066 twice due to increases in the AAO. The extended ordering period for W56HZV-14-D-0066 will expire on 28 April 2019 and the AAO will not be fulfilled. This subject award is a follow on contract to satisfy the increased AAO and USMC requirements.

(7) The previous extension of Contract W56HZV-14-D-0066 was sole source to JCB in accordance with FAR 6.302-1, “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.” Specifically, FAR 6.302- 1(a)(2)(ii) states, “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 though competition, or (B) Unacceptable delays in fulfilling agency’s requirements.” Since award of contract W56HZV-14-D-0066, the Army G-8 has increased the AAO by 276 vehicles, from 805 to 1,081. A further increase to 1,308 vehicles is pending final approval.

11. Technical Certification: I certify that the supporting data under my cognizance, which are included in the justification are accurate and complete to the best of my knowledge ell

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12. R eg u jr em en ts Certification: I certify that the supporting data under my e justification, are accurate and complete to the

DATE:

13. Fair and Reas on a_ble Cost/Price Oetermlnatioo: The negotiated price will be determined fair and reasonabel through a combination of cost analysis, which will thoroughly analyze each of the proposed Individual cost elements, In addition to conducting a price analysis to ensure that the price agreement Is consistent with the Independent Government Cost Estimate (IGCE). ACC-WRN has a dedicated Pricing Division with trained CosUPrlce Analysts and Industrial Specialists who will assist the Contracting Officer by performing the Cost and Price analysis. PdM CE/MHE will also support this analysis with a technical evaluation. The Contracting Offlcer will request that engineers or similar personnel familiar with the end item review labor types and quantities as well as material kinds and quantities to ensure that what is proposed Is fair and reasonable. ACC-WRN will request Defense Contract Audit Agency (DCAA) and Defense Contract Management Agency (DCMA) expertise and audit support for input.

The ACC-WRN CosUPrlce Analyst will use the recommendations contained in the DCAA Audit, DCMA Technical report, and PdM CE/MHE engineering technical evaluation to develop a recommended negotiating position. The Government's recommended negotiation position will be detailed in the Business Clearance Review document, which will be reviewed and approved by both ACC-WRN senior leadership prior to the start of negotiations. Certified Cost or Pricing Data will be required and will form the basis for this analysis. ACC-WRN will document the results of negotiations, and the detailed Price Fair and Reasonable determination from the Contracting Officer, In a Price Negotiation Memorandum (PNM) that ACC-WRN senior Contracting personnel within the Pricing Division will review and concur upon.

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