JA-Redacted-SPE7LX19R0125.pdf

FOUO – Source Selection Information – See FAR 2.101 & 3.104 and technology evolution in raw production materials. As a result, DLA developed the AME program to solve obsolescence issues as a result of an identified need to support and emulate smaller, faster, and more complicated microcircuits no longer available from industry.

The purpose of AME research and development (R&D) efforts is to develop, validate, qualify and transition the capability to produce microcircuits which are no longer available from industry. This includes reverse-engineering, design, fabrication, manufacture and testing of microcircuits, as well as projects which develop capabilities to produce specific types of microcircuits.

The AME mission is to provide L&M with the manufacturing capability to re-establish continuing sourcing for unprocurable microcircuit NSNs. Once a capability is ready for production, it is transitioned to the Generalized Emulation of Microcircuits (GEM) for continued DLA L&M management. Technologies developed include Advanced Digital Devices, Microprocessors and Microcontrollers, Memory, Hybrid Devices, Linear/Analog Devices, and other assemblies. Once a capability is developed, it is transferred to the Generalized Emulation of Microcircuit (GEM) program via contract modification for design library maintenance and limited production. The GEM program, Contract SPE7MX-19-D-0025, physically puts the capabilities developed under AME into limited production status for DoD customers. To date, the AME and GEM have completed more than 2,200 successful insertion tests that ultimately support 375+ weapons systems across all four branches of the military, maintaining warfighter readiness across land and sea applications.

On 14 November 2014 contract SPE7MX-15-D-0008 was awarded to SRI International, Inc. (SRI) (CAGE: 03652) using FAR Part 15 acquisition procedures. Solicitation SPM7MX-12-R-0033 utilized Full and Open Competition; however, SRI (or its predecessor organizations) is the only offeror for all previous AME contracts SPM7MX-08-D-4002, SP0700-02-D-1301, and SP0700- 97-C-0051. The resultant SPE7MX-15-D-0008 contract was awarded on a three (3) year base with two (2) one-year options, and expired on 13 November 2019. The procurement was for research and development services providing the capability to maintain, enhance, and demonstrate Federal Stock Class (FSC) 5962 microcircuit emulation technology for end customers including DLA L&M and the broader Department of Defense (DoD) community. The requirement calls for rapid, economical, reproducible and high quality Form, Fit, Function and Interface (F3I) emulation in requested device categories and engineering services directly related to implementation and utilization on electronic assemblies.

On 7 November 2019 DLA awarded AME Bridge Contract SPE7MX-20-D-0013 to SRI under the authority of 10 U.S.C. 2304(c)(1), as implemented by FAR 6.302-1. As of the date of this document, the Bridge Contract is set to expire on 13 May 2020. There is one option period available, which will extend the contract through 31 January 2021.

Under the contemplated successor contract, SRI will continue to provide services required under the AME program Statement of Work (SOW) (See Attachment 1). The scope of this contract advertises the validation of existing AME F3I reverse engineering and emulation technology to a point suitable for transition to GEM, the development of additional AME technology, including contractor-acquired Government Furnished Equipment (GFE) purchases, and a limited part-on-

The statutory authority permitting other than full and open competition for this action is 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.

Alternatively, this action is justified using the authority of 10 U.S.C. 2304(c)(3), as implemented by FAR 6.302-3, Engineering, Developmental, or Research Capability.

V. DEMONSTRATION THAT CONTRACTOR’S UNIQUE QUALIFICATIONS OR

NATURE OF THE ACQUISITION REQURIES THE USE OF THE AUTHORITY

CITED ABOVE (APPLICABILITY OF AUTHORITY)

In accordance with 10 U.S.C. 2304(c)(1) as implemented by FAR 6.302-1, the services required for the AME program have been found to be available from only one responsible source. SRI International, Inc. (SRI) is the only known source with the ability to provide the requirements in the short-term without causing unacceptable delays or to a substantial duplication of cost to the Government that will not be recovered in competition. Justification to provide for other than full and open competition in awarding this contract is as follows:

A. SRI (or its predecessors Sarnoff Corporation and David Sarnoff Research Contract) has been successfully providing the research and development services discussed herein under the previous contract, SPE7MX-15-D-0008, since 2014, and held DLA LTCs for these items continuously since 1998. The original AME program contract was SP0700-98-C- 0051, and continued with follow-on contracts SP0700-02-D-1381 and SPM7MX-08-D- 4002. SRI is the only responsible source known with the ability to seamlessly provide these supplies in the short-term without causing unacceptable delays and impact to the warfighter. Continuous support from SRI will ensure Government flexibility and security in knowing critical programmatic support is maintained for the Warfighter.

B. An attempt to award the AME program to any other source will result in unacceptable delays in fulfilling the Government’s requirements. DLA has ongoing, near-term demands for the engineering services described herein. A potential lack of support will impact Warfighter readiness for various weapons systems as individual weapons system units become irreparable. The most likely alternative to emulation is to redesign and entire circuit card, of which the microcircuit is a part. Notwithstanding that developing a circuit card redesign would require its own contractual vehicle, circuit card redesign estimates are significantly higher than the current AME program goals. According to the acquisition plan for the previous AME contract (SPE7MX-15-D-0008), the current estimate for a circuit card redesign is an average of $310,000.00, not inclusive of attendance follow-on costs associated with changes required to technical manuals or other affected drawings and assemblies. As of 2013, redesign cost avoidance to date under the AME Program totaled well over $350,000,000.

C. Any award to a contractor other than SRI to compete an interim RTC would result in a break in service and shutdown of AME activities in the SRI Microcircuit Emulation Center (MEC), leading to potential staffing departures from the company and significant negative effects on the companion GEM program. Many SRI employees perform work for both the AME and GEM programs. Both programs share employees and depend on the high level of education and skill to provide technical advice to both programs. In 2018 the costs totaled approximately $5.6M, with $2.6M being allocated to AME and $3.0M being allocated to GEM. Nearly all the costs are fixed so no R&D activities at SRI would immediately result in GEM costing an additional $2.6M per year to operate. If AME is awarded elsewhere, a loss of personnel will result in GEM programmatic failures and a noticeable degradation in GEM output.

D. Over the past twenty years, the Government has invested a substantial amount in the development of microcircuit emulation technology. An AME award to another contractor requires a lengthy ramp-up period required to transition equipment, technology, training, etc. to a new provider. The Government estimates that transferring GFE/GFP to a new location would have both cost and schedule impacts, with at least a six month ramp-up period, costs to decommission, disassemble, rig, ship, install and perform any infrastructure improvements. Finally, moving GFE/GFP out of the MEC would result in a large piece of GEM processes being non-serviceable, in effect shutting down the GEM program.

Although the Government retains any intellectual property rights to data developed under the AME program, the data owned by the Government is compatible to various proprietary processes developed and utilized by SRI. The transfer of these processes will take a minimum of one year, at a substantial cost to the Government to facilitate the technical process transfers from SRI.

E. Any data housed in SRI’s design library (maintained under the GEM program) is only currently performance-ready at SRI’s fabrication facility located in Princeton, NJ. If the AME contract were awarded to another vendor, the development of transferable final data would require significant Government involvement along with an additional Government expense of equipment purchases required to verify the data. Any transfer of capabilities and data under the AME program would require modification of the design library, the emulation process or both and almost certainly not feasible for the reasons stated above without a substantial duplication of costs to the Government.

F. Any competitive benefit to pursuing a contract with another provider is negated by the negative impact to a program that has continuously operated for twenty (20) years. The GEM contract is currently the Government’s only known source of supply for otherwise non-procurable microcircuits. There are two major impacts of microcircuit non-availability: (1) support of malfunctioning assemblies needed for repair, overhaul or refurbishment of fielded weapons systems; and (2) continued production of microcircuits for current weapon systems. Those impacts result in systems that are mission incapability and readiness deficiencies for valuable DoD weapons systems.

Any delay in AME performance in developing capabilities for transfer to the GEM production contract as a delay of any kind could result in entire weapon systems becoming temporarily unusable. Due to item criticality and a degradation in service that will occur if support is delayed for any number of weeks or months for each order, SRI is both the only responsible source and the only firm capable of providing the supplies described in Section III above in the short-term without causing DLA to experience unacceptable delays in fulfilling Warfighter needs or a substantial duplication of cost to the Government that would not be recovered in competition

Alternatively, in accordance with 10 U.S.C. 2304(c)(1) as implemented by 6.302-3, this action is necessary to maintain an essential engineering, research, or development capability by an educational or other nonprofit institution.

a. SRI is a nonprofit institution, operating both the AME and GEM program out of its Microcircuit Emulation Center (MEC) facility in Princeton, NJ.

b. As discussed above in Section III and above in this Section, through the AME program, SRI has developed engineering, research, and/or development capabilities that are not available in the commercial marketplace and/or cannot be duplicated without significant cost. The work performed under the AME Program shall provide capability to maintain, enhance, and demonstrate emulation technology for end Customers including DLA Land and Maritime (the Federal Stock Class (FSC) 5962 Inventory Control Point (ICP)) and the broader DoD Community. AME developed capabilities in the following categories:

Advanced Digital Devices, Microprocessors and Microcontrollers, Memory, Hybrid Devices, Linear/Analog Devices, and Assemblies (Engineering Services employing AME technology). The additional developed capability shall be demonstrated, proven, and implemented through high quality F3I Emulations of appropriate devices. The contractor shall deliver all product produced under this contract, wafers (final metalized or not), parts of wafers, die, prototype parts, qualified parts, packages, etcetera. The design library and fabrication processes are also deliverable under this contract.

This program and SRI’s capabilities are essential to success of the corresponding GEM program and, overall, to ensure operability of critical weapon systems. SRI currently offers 735+ microcircuit types, which all meet the highest microcircuit reliability level. Devices developed under the AME & GEM program are used in more than 2,000 next higher Circuit Card Assemblies (CCAs), used in 375+ Department of Defense unique weapons systems, including but not limited to the F-15 Eagle, F-16 Fighting Falcon, JointSTARS, Phalanx, AM/UKK44, PATRIOT, F/A-22, MLRS, Bradley Fighting Vehicle, F/A-18 Hornet, B1-B Bomber, AEGIS, MOPMS (modular Pack Mine System, AV-8 Harrier, and the AIM-9G Sidewinder Missile Weapon System. Over the past twenty years, over 110,000 microcircuits have been designed and delivered for production and sustainment of DoD weapon systems.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE OFFERS ARE SOLICITED

FROM AS MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE

In accordance with FAR Part 5, Publicizing Contract Actions, both a synopsis of the proposed contract action, as required by FAR 5.201(b)(1)(i), was published via the beta.sam.gov Federal Business Opportunities (FBO) website on 25 November 2019. A copy of this justification, as required by FAR 6.305(a), will be published via the FBO website upon approval.

When this acquisition was initially developed in April 2019, a sole source solicitation was expected for the AME follow-on contract for three reasons: (1) since programmatic inception in 1998, SRI (or its previous corporate iterations) has been the sole offeror and received the award for every

AME contract; (2) AME contract SPE7MX-15-D-0008, while solicited using Full and Open Competition, received no offers from a provider other than SRI; and (3) in early 2019, the Government awarded a new GEM contract, SPE7MX-19-D-0025 on an Other Than Full and Open Competition basis in accordance with 10 U.S.C. 2304(c)(1), available from one or a limited number of sources.

On 3 April 2019, DLA L&M posted a 15-day Special Notice of its intent to complete a modification of extension to AME contract SPE7MX-15-D-0008, published via the FedBizOpps (FBO) website. Other than SRI, the Government received no responses to this Special Notice, indicating a lack of interest from any other party in performance of the AME effort for this period.

The Government intended to move forward with the extension and the AME follow-on effort.

Then, on 30 April 2019, DLA L&M issued a 15-day Sources Sought Notice on FBO to gauge contractor interest and ability to provide the requirements for the successor effort. The purpose of the Sources Sought announcement was to gain knowledge of potential qualified sources with the ability to provide R&D services meeting DoD and DoD contractors’ needs for readiness and logistical support. Contrary to the original belief that SRI would be the only interested party to the AME successor, the Government received a response from one potential provider, Honeywell, on 14 May 2019. At least one other company, Deltek, Inc., inquired about the AME program after the Sources Sought closed. Consideration was given to the capability statement provided by Honeywell, but Deltek never responded to the Contracting Specialist’s request for a statement of interest or capability statement. Additional details are provided below in Section VIII.

The Government contracting team posted a new Sources Sought on 25 November 2019, with a closing date of 10 December 2019. Along with being posted on to the new FBO website beta.sam.gov, Contract Specialist Charles Underwood specifically sent via e-mail the 25 November 2019 Sources Sought to SRI, Honeywell, and Deltek, which were all the parties who responded with interest for the original Sources Sought posted on 30 April 2019. The Contract Specialist also attempted to make phone calls to those parties. The only communication received in response to the 25 November 2019 Sources Sought came from SRI, who sent their capability statement in on 6 December 2019. The Government Contracting team received no response to multiple communications requesting an interest in providing services for the AME program.

VII. DETERMINATION BY THE CONTRACTING OFFICER THAT ANTICIPATED

COST TO GOVERNMENT WILL BE FAIR AND REASONABLE

The anticipated cost to the Government will be fair and reasonable based on the following considerations:

A. The Government has 10+ years of cost and price history for these requirements, going all the way back to the earliest days of AME contract SPM7MX-08-D-4002. These serve as solid benchmarks for comparing to the AME follow-on contract proposal. Additionally, since late 2016, the Government contracting team possesses detailed history of all costs associated with the AME program, including Direct Labor rates and labor hours incurred for all SRI employees working on the contract.

B. SRI will submit certified cost or pricing data for the AME effort as the contract maximum exceeds the Truth In Negotiations Act (TINA) threshold. Subsequent negotiations will determine that the final negotiated prices will be similar to pricing received under the current AME contract SPE7MX-15-D-0008.

C. Each delivery order issued for equipment under CLINs 0002, 0005, 0008, 0011, and 0014 will be subject to individual negotiations as necessary for each requirement under the of the follow-on contract.

The Government contracting team will rely on support from valuable partners in the evaluation and negotiation process for both the Basic Contract and individual delivery orders, including but not limited to the following:

a. DLA Land & Maritime Pricing Office

b. Defense Contract Management Agency (DCMA) Stockton, contract administration office

c. Administrative Contracting Officer (ACO), DCMA Stockton

d. Defense Contracting Audit Agency (DCAA)

D. The contract submits a standard 1034, Public Voucher for Purchase of Services Other Than

Personal, every four weeks (one full billing cycle), 13 times per year. During a 2016 AME/GEM Program Management Review (PMR), DLA L&M instituted a process in which cost reports are subject to detailed analysis on a monthly basis by the COR, PM, and KO.

This includes but is not limited to: Direct Labor (labor rates and labor hours), any invoices for equipment or services with a value of over $10,000.00 USD, and monthly cost schedule status reports.

To complete its assessment, the AME program team completes a Public Voucher Assessment Tool to assess the validity of submitted incurred costs. Upon satisfactory review and written approval by the Contracting Officer’s Representative (COR), the Program Management, and the Contracting Officer, the Contracting Officer signs and returns the Public Voucher to the Contractor for processing.

VIII. DESCRIPTION OF MARKET RESEARCH CONDUCTED AND RESULTS, OR

A STATEMENT OF REASONS MARKET RESEARCH WAS NOT

CONDUCTED

SAPD has recently performed market research in accordance with FAR 7.102 and 10.001 pertaining to the AME program while planning for the long-term follow-on effort and in preparing this Justification and Approval (J&A). All market research conducted, as discussed in Section VI and below, provides support that the proposed path will provide the best value to DLA.

In response to a Sources Sought Notice posted in April 2019, DLA L&M received a response from one potential provider, Honeywell, on 14 May 2019. And Deltek inquired about the AME program after the Sources Sought closed. Consideration was given to the capability statement provided by Honeywell, but Deltek never responded to the Contracting Specialist’s request for a statement of interest or capability statement. On 26 June, 22 July, and 23 October 2019, Deltek requested an estimated timeframe for Solicitation issuance. On all three instances, the Contracting Specialist asked Deltek for an interest and/or capability statement. The Contracting Specialist never received a response, and Deltek never explicitly stated an interest in performing the responsibilities of the AME Program.

The Contracting Specialist sent a request to the AME Program Manager (PM) for an assessment of Honeywell’s capability to perform AME Contract requirements. On 11 September 2019, the AME PM stated “I don’t think we can presume a sole source situation given Honeywell’s interest.

All things considered, I think our first course of action is to … give all interested parties time to respond and give us time to evaluate, fact-find etc.” As a result of the above, the Government contracting team instituted a Bridge Contract to allow for the possibility of competition for the AME follow-on effort. On 20 September 2019, the Government contracting team received Service Requirements Review Board (SRRB) approval from , DLA Vice Director to move forward with the follow-on AME acquisition.

On 16 October 2019, the AME PM sent to the Government contracting team two documents: (1) an AME Acquisition White Paper (See Attachment 2); (2) a statement from the Contracting Officer’s Representative (COR) (See Attachment 3) regarding the effects of an award of AME to another vendor. While many points in those documents were addressed in Section V above, in summation the PM’s conclusion was that “Selecting a new AME contractor would have significant cost ramifications and would likely cause a several year gap in the process of providing Land and Maritime with the additional capability to re-establish continuing sourcing for unprocurable microcircuit NSNs.” After a thorough review of Honeywell’s technical documentation and capability statement, the PM determined that while Honeywell has the general capability to emulate FSC 5962 microcircuits, the documentation provided does not indicate an ability to complete the intricate R&D services required to fulfill duties as defined in the AME SOW at a reasonable cost to the Warfighter. The infrastructure required by both the AME and GEM programs consists of physical manufacturing equipment and specific manufacturing processes.

The Government’s primary criterion in developing a permanent solution to the microcircuit obsolescence problem was to select a contractor who can control the means of microcircuit emulation while avoiding duplicating costs. With the current set up, the Government maintains complete control over the fabrication schedule – that would not be the case with a company like Honeywell, as their commercial foundry would be more likely to fulfill other, more lucrative contractual requirements. Honeywell has a commercial foundry with a multitude of additional clients and requirements at any one time. The PM asserts Honeywell can in fact manufacture a number of devices required under the GEM contract, and should focus its efforts on directly targeting future solicitation requirements for FSC 5962 devices.

Another Sources Sought Notice/Request for Information (RFI) was posted to FBO specifically for the AME follow-on effort on 25 November 2019, with all responses due no later than 10 December 2019. The notice requested responses from interested parties and focused on whether a company currently possesses the equipment and capability to provide the services requested. The posting included a copy of the current AME SOW. Additionally, specific notice was also sent to

Honeywell and Deltek as they responded to the original Sources Sought notice posted in April 2019. Only SRI responded; SRI sent a capability statement on 6 December 2019.

IX. ANY OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL AND

OPEN COMPETITION

The essential facts of this justification for other than full and open competition are detailed in the sections above. This action ensures that the Warfighters will remain fully supported without experiencing unacceptable delays in the interim.

X. LIST OF SOURCES, IF ANY, THAT EXPRESSED INTEREST IN THE

ACQUISITION

SRI International, Inc.; Honeywell International, Inc.; Deltek, Inc.

XI. A STATEMENT OF ACTIONS, IF ANY, THE AGENCY MAY TAKE TO

REMOVE OR OVERCOME BARRIERS TO COMPETITION BEFORE

MAKING SUBSEQUENT ACQUISITIONS FOR THE SUPPLIES OR SERVICES

REQUIRED

The investment of time and funding required to develop another source is substantial, which is not expected to be recouped through increased competition and would not guarantee the same level of performance and support of the AME program currently provided by SRI. Alternate personnel with appropriate technical backgrounds will need an extended ramp-up period to become proficient in the specialized skills required to keep the AME capabilities viable. The risk of failure of developing a second viable source is high, and the funding required to develop another source would be substantial. Another source would be subject to a verification and validation period before beginning specific performance. The capability to transition technologies developed under the AME program to the GEM Production effort would be greatly affected. Furthermore, any break in service could jeopardize the existing industrial base by awarding the contract to any other entity other than SRI International.

All requirements for the long-term effort will also be, or have already been, publicized, from initial market research through award, to ensure potential sources are identified and that any prospective barriers to competition can be appropriately addressed. SAPD is moving forward with the most appropriate acquisition strategy feasible for the follow-on LTC.

XII. CONTRACTING OFFICER’S CERTIFICATION

In accordance with FAR 6.303-2(b)(12), the Contracting Officer’s signature on the Coordination and Approval Document evidences that he/she has determined this document to be both accurate and complete to the best of his/her knowledge and belief.

XIII. TECHNICAL/REQUIREMENTS PERSONNEL CERTIFICATION

In accordance with FAR 6.303-2(c), and as documented in the contract file, the technical and/or requirements personnel has certified that any supporting data contained herein, which is their responsibility, is both accurate and complete.

CERTIFICATION/APPROVAL:

CHARLES D. UNDERWOOD Date Contracting Specialist DLA Land & Maritime, SAPD/ZBB

THOMAS J. MAUL Date Contracting Officer DLA Land & Maritime, SAPD/ZBD

COMPETITION ADVOCATE Date DLA Land & Maritime, BPP

MARK A. BROWN, SES Date Head of the Contracting Activity (HCA) DLA Land & Maritime

APPROVAL REQUIREMENTS

(x) Up to $700,000.00 Contracting Officer

(x) $700,000.00 to $13,500,000.00 Competition Advocate

(x) $13,500,000.00 - $93,000,000.00 Head of the Contracting Activity (HCA)

( ) over $93,000,000.00 Senior Procurement Executive (AQ)

Attachment 1: AME Statement of Work Attachment 2: AME Acquisition White Paper Attachment 3: COTR Evaluation *To access attachment, click the paper clip icon to the left.

UNDERWOOD.CH

ARLES.D.10165953

Digitally signed by

UNDERWOOD.CHARLES.D.101

6595353 Date: 2020.02.13 13:56:09 -05'00'

MAUL.THOMAS

.J.1249712724

Digitally signed by

MAUL.THOMAS.J.1249712724

Date: 2020.02.13 14:34:46 -05'00'

SHEARER.MAR

Y.E.1250702449

Digitally signed by

SHEARER.MARY.E.1250702449

Date: 2020.02.21 14:53:17 -05'00'

BROWN.MARK.AL

BERT.1041175032

Digitally signed by

BROWN.MARK.ALBERT.104117

Date: 2020.02.21 15:43:10 -05'00'