JA HVAC Inverter Kits V.2 (1)4-26 jwb comments Redaction_Redacted.pdf

CMO Control Number: 2021-058

DEPARTMENT OF THE ARMY

Justification and Approval

For Other than Full and Open Competition

1. Contracting Activity: Army Contracting Command-Red River Army Depot (ACC- RRAD), Texarkana, TX 75507-5000 is the procuring activity for this action.

2. Description of Action: ACC-RRAD proposes to negotiate and award a new Firm Fixed Price (FFP) contract to AM General for Heating, Ventilation, and Air Conditioning (HVAC) System Retrofit Upgrade Kits and Alternating Current (AC) Power Inverter Accessory Kits for the M997A3 High Mobility Multi-Purpose Wheeled Vehicle (HMMWV) Ambulance vehicles to support missions. This acquisition is in support of Department for Logistics (DFL) Production Planning Division (PPD) HMMWV program. Funding is anticipated to be Army Working Capital Fund (AWCF).

3. Description of Supplies/Services: The following will be procured and supplied in support of the HMMWV Program performed at RRAD:

a. QTY: Estimated 722 ea. HVAC Kits P/N 57K6238. This item is required for drawing 12598890. Estimated total value $8.6 million

b. QTY: Estimated 722 ea. Power Inverter Kits P/N 57K6242. Estimated total value $2 million.

The estimated total value of this procurement based upon the Independent Government Estimate (IGE) developed by DFL-PPD is $10,653,601.70. The total estimated requirement is broken out in Table 1 below.

RRAD- HVAC Kits Contract

Year WBS-FUNDED Quantity AM General HVAC Kit (57K6238)

Price Total Kit price Base Year EH20MTM018EHI81 140 $11,607.64 $1,625,069.6 Year One 582 $12,060.34 $7,019,117.88

$8,644,187.48 RRAD- Inverter Kits

Contract Year WBS-FUNDED Quantity

AM General Inverter Kit (57K6242) Price Total Kit price

Base Year EH20MTM018EHI81 140 $2,700.03 $378,004.2 Year One 582 $2,803.11 $1,631,410.02

$2,009,414.22

TOTAL FOR ALL

KITS

$10,653,601.70

4. Authority Cited: The statutory authority permitting other than full and open competition is pursuant to 10 U.S.C. 2304 (c)(1), as implemented by Federal Acquisition Regulation (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)(B) 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.

5. Reason for Authority Cited: An award to a source other than AM General will result in an unacceptable delay in meeting Army requirements for equipping HVAC systems and Power Inverters to HMMWVs resulting in reduced Warfighter safety and readiness.

The Government awarded contract W56HZV14C0132, HMMWV Systems Technical Support (STS), to AM General to produce an Engineering Release Record (ERR) for the modernization of the M997A3 Technical Data Package (TDP) with the HVAC system an assembly kit, P/N: 57K6238 was developed. AM General is the only contractor postured to meet the needs of the Government, due to the ownership of the TDP, capable facilities, subcontractors, and working networks already developed.

Scheduled production cut-in of the upgraded HVAC System resulted in 936 M997A3s ambulances being identified as not having these upgrades installed. In addition, these 936 vehicles will also be retrofitted with the new AC Power Inverter to accommodate the Medical Equipment System (MES). RRAD has scheduled production for the M997A3’s to begin in the summer of 2021.

Both the HVAC kit and the Power Inverter Kit have long lead times greater than 205 days. Even for AM General to be the contractor, the long lead times will push production out further than the Government requires.

An award to a source other than AM General would result in an unacceptable delay in meeting the Army’s requirement. If the proposed action for HMMWV HVAC and Inverter Kits solution were competed under full and open competition, a minimum delay of 30-42 months would occur. The schedule impacts of an award to another contractor is described below and includes competitive contract award, design and development, testing, logistics product development, and lead time:

Capabilities Time Reference

Competitive Contract 6 months 5(a) Design and Development – Engineering, Test & Evaluation, and Logistics Products

24-36 months

5(b)

TOTAL 30-42

months

a. Competitive Contract (6 months): Based on ACC-RRAD previous experience with competitive contracts, it will take a total of 6 additional months to conduct a competitive procurement over a sole source procurement. This additional time includes Sources Sought, Request for Proposals (RFP), evaluation criteria development, evaluation of offers, implementing a Source Selection Evaluation Board and criteria, and award.

b. Design and Development (24-36 months). The contractor and the Government would have to conduct extensive design, testing, and evaluation, similar to what was done on the HVAC and Inverter Kits as detailed above, to obtain a safety confirmation to validate a new system for fielding. There would also be a requirement to develop and validate new logistics support products. Currently, under Task Order W56HZV19F0521, AM General has spent over 20 months developing the kits for the HMMWV STS contract. Based on recent experience with developing the AM General HVAC and Inverter Kits solution, testing the solution, and development of technical data and logistics products PD LTV estimates that the subject effort would take approximately 24 months to complete from contract award if a contractor already has a system developed and 36 months if a new system is being developed.

Taking the above facts into consideration, awarding a contract to anyone besides AM General will cause unacceptable delays for the Government and the warfighter. As well, the duplication of cost, time, and effort to the Government to validate another contractor would be very expensive since the Government has already paid AMG to provide this information once.

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. P/N: 57K6238 HVAC Kit and 57K6242 Power Inverter Kit is specific to the M997A3 HMMWV Ambulance, and the requirements necessary to support the M997A3 is exclusive to AM General. AM General is not open to provide data on these items. In accordance with FAR 5.201, this action will be synopsized and any proposals will be considered.

b. Subcontracting competition: The solicitation and contract will contain the following clauses: FAR 52.219-8 “Utilization of Small Business Concerns,” and DFARS 252.219-7003 “Small Business Subcontracting Plan (DoD Contracts)” to maximize competition at the subcontracting/vendor level.

7. Actions to Increase Competition: Actions to increase competition will require RRAD and TACOM to do one of the following:

a. Post Sources Sought in search of more than one source(s) of supply that may provide an equivalent HVAC and Power Inverter kit to the required standards.

b. Work with RRAD to determine whether RRAD has the capability to test/determine Equal products.

The Government will continue to conduct market research to assess the feasibility of multiple sources ability to meet similar future Government requirements. Any additional information received will be considered to determine if a competitive acquisition should be conducted or to determine potential future requirements.

8. Market Research: ACC-RRAD issued a Sources Sought Notice (SSN) on Beta.SAM.Gov on 16 SEP 2020, it closed on 30 SEP 2020. The intent of the SSN was to seek additional providers of the required Retrofit Kit. The SSN identified the requirement described herein. No other sources have written to express any interest.

In addition, internet findings showed that there are other manufacturers that support commercial ambulances, buses, and firetrucks with upgrades to HVAC units and Power Inverters. However, due to the proprietary information that AM General holds on the HMMWV’s, these sources are at a huge disadvantage and would require a duplication of cost, time, and testing which would result in unacceptable delays.

9. Interested Sources: AM General is the Original Equipment Manufacturer for the stated supplies, and they have expressed interest in this acquisition prior to the sources sought. No additional manufactures showed interest via the sources sought and there are no alternate sources of supply.

10. Other Facts:

a. Relevant procurement history HVAC Kit:

i Contract W911RQ19C0006 was awarded to AM General FEB 2019 for 29 each 5718074 HVAC Kits, $7,163.78 per kit, for a total of $207,749.62. This program was conducted by RRAD to upgrade the chassis of the M997. However this kit would not work for the ambulance program.

ii After consulting with TACOM and AM General, it was decided that kit 57K6238 would be used for the retrofit of the Ambulance. AM General specifically designed the kit to upgrade the early models of the M997A3 ambulance. The differences in the kit is that the HVAC will also heat and cool the shelter. An additional 67 parts were needed as well as design changes in order to meet the requirements for the older ambulances.

iii In order to save the Government money, RRAD will be purchasing HVAC kit 57K6238 less the heater unit from AM General. AMG is charging $9,869 for the heater kit. Webasto, the heater manufacturer, has enough units on the self to provide quicker and cheaper than

AMG.

iv AM General developed kit 57K6238, as a result of Task Order W56HZV19F0521, for the HMMWV STS contract in which the

Controlled Unclassified Information contractor was responsible for providing the Technical Data Package (TDP) for the modernization of the M997A3 Ambulance HVAC system.

v AM General has provided a budgetary estimate of $11,607.64 for each kit, P/N: 57K6238.

vi AM General has been selling the HVAC kits to Rock Island Arsenal for production of new HMMWVs.

b. Relevant procurement history Power Inverter Kit:

i DLA contract SPE7L7-20-P-4012 was awarded to AM General on 25 JUN 2020 for 60 units. The kit cost $2,574.19 per unit, or total of $154,451.40.

ii A search for the Power Inverter Kit in LMP has the price at $3,140.21. This is a 16% increase from year one ($2,700.03), most likely due to an added layer of procurement by going through DLA.

iii AM General’s budgetary estimate for year one is for $2,700.03 per unit and $2,803.11 for year two, a 3.8% increase due to inflation.

c. Due to the current production schedule and the lead time of procurement, this action will satisfy the requirements of the United States pertaining to the upgrade and installation of the M997A3 HVAC and Power Inverter Kits.

11/12.Technical/Requirements 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 and belief.

Typed Name: Jamie Bass Date: 4/27/2021

Title: Director of Logistics Signature:

13. Fair and Reasonable Cost Determination:

I hereby determine that the anticipated cost to the Government for this contract action will be fair and reasonable. RRAD will use other-than-certified cost price data to determine that the price is fair and reasonable. Certified cost or pricing data will not be required due to the commercial exemption in FAR Subpart 15.403.

Typed Name: Jeffery W. Edens Date: 4/28/2021

Title: Contracting Officer Signature:

14. Contracting Officer Certification: I certify that this justification is accurate and complete to the best of my knowledge and belief.

Typed Name: Jeffery W. Edens Date: 4/28/2021

Title: Contracting Officer Signature: