JA_SPRDL1-20-R-0036_Redacted.pdf

J&A SPRDL1-20-R-0036

(Prior procurements were noncompetitive below SAT therefore no previous J&A is available)

Justification and Approval for Other Than Full and Open Competition

1. Contracting Activity: The Defense Logistics Agency, Warren (DLA Land Warren) is the procuring activity for this action.

2. Description of Action: This action is for a new contract on a limited source basis to Independent Rough Terrain Center LLC. (IRTC) (CAGE: 1NWY2), formerly Kalmar, for the manufacture of the Engine, Diesel. The contract will be firm fixed price and funded with Army Working Capital Funds (AWCF).

3. Description of Supplies/Services: The Engine, Diesel to be acquired under the proposed contract is used on the Independent Rough Terrain Center LLC. (IRTC) 5,000 Pound Capacity Light Capability Rough Terrain Forklift (LCRTF). The LCRTF is a four wheel drive rough terrain diesel powered forklift employed by engineer battalions, artillery units, transportation support battalion and other ground combat service support units. This forklift will be used for loading and unloading palletized cargo from containers, loading and unloading combat vehicles with supplies, and general material handling. This vehicle was procured by the Government through a performance specification and the Engine, Diesel was part of the Kalmar, the Original Equipment Manufacturer’s, internal design effort.

a. Noun: Engine, Diesel

b. NSN: 2815-01-622-3891

c. Part Number: EP-0011486

d. Quantity: 30 each

e. Option Quantity: 30 each

f. Estimated Unit Price: $14,000.00

g. Estimated Contract Total: $840,000.00

h. Vehicle System: Independent Rough Terrain Center 5,000 Pound Capacity Light

Capability Rough Terrain Forklift (LCRTF)

Acquisition Method Code (AMC): The following AMC applies to this procurement.

AMC 3: Acquire, for the second or subsequent time, directly from the manufacturer.

Acquisition Method Suffix Code: (AMSC): The following AMSC applies to this procurement.

AMSC R: The Government does not own the data or the rights to the data needed to purchase this part from additional sources. It has been determined to be uneconomical to buy the data or rights to the data. It is uneconomical to reverse engineer the part. This code is used when the Government did not initially purchase the data and/or rights. If only one source has the rights or data to manufacture this item, AMCs 3, 4, or 5 are valid. If two or more sources have the rights or data to manufacture this item, AMCs 1 or 2 are valid.

4. Authority Cited: The statutory authority permitting other than full and open competition is 10 USC 2304(c) (1), as implemented by FAR 6.302-1, “Only one responsible source and no other supplies or services will satisfy agency requirements.”

5. Reason for Authority Cited:

a. This Engine, Diesel required for this procurement is not suitable for full and open competition because the Government does not own the technical data rights for this item, nor the vehicle system that uses it. Ownership and control of the technical data rights remain with the vehicle original manufacturer or the component suppliers. The Government’s identification data for the Engine, Diesel is limited to NSN, part number and supplier CAGE code, and in Technical Manual 10-3930-680-23&Parts, Dated 31 March, 2014, Figure 19, DRESSED ENGINE ASSEMBLY, Item 20, ENGINE, DIESEL, Part Number EP-0011486, CAGE 1NWY2. The acquisition data for the Engine, Diesel is not fully defined and is used in the Army’s Independent Rough Terrain Center LLC. LCRTF, NSN 3930-01-599-9978. This end item was procured by the Government through a performance specification. Items procured through a non-developmental approach, which maximize the use of off-the shelf technologies, rely on commercial sources for spare parts. The selection of the subcomponents that make up the end item is left to the end item manufacturer as part of their internal design effort. This is the main reason technical data rights are not procured for materials handling equipment and why there is no technical data rights for the end item or its subcomponents. It is not cost effective to develop and maintain a competitive technical data rights for the Government for such a low density item.

The equipment density is so small that a large portion of the funds allocated for production would go towards the technical data rights rather than hardware.

Independent Rough Terrain Center LLC, is the original equipment manufacturer (OEM) and the supplier of the LCRTF, NSN 3930-01-599-9978. The contractor passed the unique testing of the Production Qualification and Verification tests for the forklift. The tests included reliability demonstrations, operating in cold and other environmental conditions, and performance suitability in an operational scenario. These tests were important and critical in that they demonstrated to the Army that the Engine, Diesel was ready for fielding and incorporation into the Army’s supply distribution mission.

The approved source, mentioned above, has sole access to the relevant drawings and technical data rights. The Government did not buy the proprietary rights to produce a competitive Technical Data Package (TDP). The approved source has demonstrated the ability to establish and maintain the manufacturing processes required to successfully produce a finished and properly functioning item. The approved source has produced and qualified parts of this nature in the past for the Government. The contractor has other capabilities in that they have full knowledge and understanding of the critical relationships between the Engine, Diesel and the end item. This knowledge assures the Government that the Engine, Diesel will be easily incorporated into the machine reducing time for other adjustments and troubleshooting.

b. The Engine, Diesel covered by this procurement was designed and developed by the end item manufacturer and the component supplier. Procuring proprietary data is difficult as the typical business case for a product like this includes the expectation of a revenue stream for the manufacturer that includes worldwide sales of complete Engine, Diesel and other vehicle spare parts for many years. Qualifying additional sources is viewed as more of a schedule delay issue for this type product and will be addressed below. The cost of procuring proprietary information is not expected to be recovered through subsequent competition because TACOM LCMC demands for the Engine, Diesel are driven by field demands and can be in varying quantities depending on field usage and expected remaining service life. This is based on a general knowledge of the materials handling industry. There are funding constraints in that scarce resources are better directed to hardware procurement rather than procuring technical data for commercial products. We estimate 24 months would be associated with attempting to procure the required proprietary data or qualifying additional sources. This delay is unacceptable to meet the Government’s needs as it would prevent needed Engine, Diesel to be delivered to field users, and Equipment Refurbishment Programs. This will impact the mission as machines would not be brought up to the desired level of combat capability, not be serviceable at the unit level, and therefore non-mission capable. The end item is a vital part of the Army’s supply distribution mission.

This Engine, Diesel is not a feasible candidate for reverse engineering and qualifying another source is not feasible. It is an assembly designed by an established commercial vendor. It is estimated as a high risk proposition since the Engine, Diesel is already in the market and the reverse engineering process would be replicating the effort associated with the original design of the item.

Recent experience in our CE/MHE Team involved two reverse engineering projects for three electronic components in a legacy Material Handling system, and a drum brake cylinder for still another legacy Material Handling system. The brake cylinder program was conducted using a known functioning correct configuration cylinder provided by Letterkenny Army Depot.

The estimated cost to reverse engineer and detail this part could be multiple millions of dollars, and would result an estimated delay of at least 24 months. Added to these cost and delays would be the risk, cost and time to procure, test, validate and qualify another source and to prepare the final TDP. The qualification testing would be required since the failure of this part could result in a loss of equipment and down time of the equipment. The estimated time delay for testing is up to 24 months at an estimated cost of $400K. This loss of time is unacceptable to TACOM LCMC. These costs would not be recovered by subsequent competition as the Army’s demand for these Engine, Diesel is variable. The demand can be affected by location, usage of the vehicles, and the rate at which the replacement vehicle is funded and fielded. The risk for the Government is high as there are limited resources to commit to this type effort. For a contractor, there is high risk in that a long detailed effort is required without the assurance that there would be enough demand for the final product.

6. Efforts to Obtain Competition:

a. Per section 7, potential vendors can submit requests to become a source through the Source Approval Process at any time. Per section 8, a Sources Sought Synopsis was posted on FedBizOpps. Based on the detailed rational provided in paragraph 5 above, the Government has no plans to obtain competition for this proposed contractual action. Approving additional vendors will result in minimal additional cost savings in comparison to the additional cost required to qualify those additional sources.

This Engine, Diesel is not a feasible candidate for reverse engineering and qualifying another source is not feasible. It is an assembly designed by an established commercial vendor. It is estimated as a high risk proposition since the Engine, Diesel is already in the market and the reverse engineering process would be replicating the effort associated with the original design of the item. The estimated cost to reverse engineer and detail this part could be in the multiple millions of dollars, and would result in an estimated delay of at least 24 months.

Two recent examples of reverse engineering efforts for other Material Handling Equipment resulted in a reverse engineering cost of approximately 94 times the unit cost of the components.

One example of a replacement engine program is the ATLAS I Engine Repower. Note that since this is not to reverse engineer and produce an exact replacement engine, there will be a difference in costs and scope.

A feasibility study contract was awarded to JLG in March 2008 to investigate potential replacement engines for the ATLAS I engine that would meet EPA Tier 3 off-road emission requirements. This was considered to be a potential option to acquiring an exemption from emission standards with an end-of-life purchase of the original ATLAS I engine, Cummins model number QSB4.5, estimated as becoming obsolete in the near future. The feasibility study's final recommendation was that the ATLAS II John Deere engine model number 4045 HFJ85 was best suited as a replacement for the ATLAS I Cummins engine. Design changes to the ATLAS I would be required, and included, but were not limited to the following: new frame upper cross member; new counterweight hitch; new engine mounts; new engine to transmission driveshaft; new cooling package with air intake/exhaust and rear radiator cover redesigns; new battery; some cab rewiring and component changes; new frame wiring harness; additional 140 pounds of ballast weight with new vehicle stability testing; and transient response testing to determine response to load demand from rest. Additional vehicle testing, to include reliability and endurance testing may also be required, although such costs would need to be acquired from a Government test agency such as the Aberdeen Test Center (ATC). After providing the final feasibility study report, which the Government spent $66,873.48 in 2008 US dollars, JLG also provided costs estimates, at no cost to the government, for the parts necessary to complete the ATLAS I repower effort with the John Deere engine, and the required contractor labor costs associated to remove the original engine and install it with the John Deere engine and corresponding modifications and new parts. Those costs have been inflated from 2008 US dollars to current 2020 US dollars, and are as follows: $82,486.74 for a new feasibility study;

$20,973.22 for new parts; $4,965.21 for disassembly/reassembly; and $134,937.85 for final prototype development (spreadsheet identifying cost data is attached). This brings the total cost to install an ATLAS I repower prototype engine to $243,363.02, and this does not include the cost of the new engine.

The costs for the IRTC 5K repower prototype effort, assuming similar costs as identified above, would include the $243,363.01 to develop the first prototype plus the cost of a new engine which is being estimated at $14,000.00. This estimate assumes soldier labor costs to install the engine kit, so there is no labor costs associated with the installation of the 60 engines in the 5K LCRTF.

Transportation and storage costs are assumed to be the same, but will probably be higher since it is expected that the costs for a kit will be higher than for just an engine. This cost analysis does not include an estimate for this additional cost.

As the Government is planning to procure sixty 5K LCRTF engines per the current J&A, the total contract cost, for Contractor Engineering and Hardware only (not counting Government Salary Costs) now becomes:

Prototype Development $243,363.02

New Parts (60 x $20,973.22) $1,258,393.20

Final Prototype $134,937.85

Engines (60 x $14,000.00) $840,000.00

Total Engineering and Hardware Costs $2,315,817.70

Qualification testing of the replacement engine would be required since the failure of this part could result in a loss of equipment and down time of the equipment. In addition to the time and cost of testing, will be the time required to develop and get approval for a test plan and get more detailed cost estimates from a test facility, such as Aberdeen Test Center. Based on past programs we estimate the cost to perform an engine performance test to be $50,000 dollars, and take no less than 6 months after the final approval of a test plan.

Manuals, and other elements of Logistics Support will also need to be taken into consideration.

Examples of these costs are ongoing logistics costs of supporting two different engines in the field, development of manuals to include the new engine, and other costs associated with maintaining the NSN’s for all the new parts.

Time and cost estimate for Logistics Support were requested on January 9, 2020, but we have not received any response. If cost data from Logistics is required, it will need to be requested by our buyer. Engineering will not be able to provide this cost estimate, but it is expected to be costly and time consuming.

Attempts at getting other cost data, within CCDC Ground Vehicles Systems Center, for other engine replacement programs, were unsuccessful.

This loss of time is unacceptable to TACOM LCMC due to fielding requirements.

This is compared to the estimated $840,000.00 for the original 5K LCRTF engine that is $14,000.00 each.

These costs would not be recovered by subsequent competition as the Army’s demand for these Engine, Diesel is variable. The demand can be affected by location, usage of the vehicles, and the rate at which the replacement vehicle is funded and fielded. The risk for the Government is high as there are limited resources to commit to this type effort. For a contractor, there is high risk in that a long detailed effort is required without the assurance that there would be enough demand for the final product.

The quantity requirements for the Engine, Diesel is uncertain and potentially too small to justify the cost required to increase competition. Due to the fact that there is neither technical data available, nor funding available; TACOM LCMC cannot afford the lost time while the material handling equipment sits non-mission capable, therefore there are no current or planned efforts to qualify additional sources.

b. IAW 19.702(b)(1), a subcontracting plan will not be required for this procurement, as the OEM, IRTC, is considered a small business concern.

7. Actions to Increase Competition: This end item was procured by the Government through a performance specification. Items procured through a non-developmental approach, which maximize the use of off-the shelf technologies, rely on commercial sources for spare parts. The selection of the subcomponents that make up the end item is left to the end item manufacturer as part of their internal design effort. This is the main reason technical data rights are not procured for materials handling equipment and why there is no technical data rights for the end item or its subcomponents. It is not cost effective to develop and maintain a competitive TDP for the Government for such a low density item. The equipment density is so small that a large portion of the funds allocated for production would go towards the TDP rather than hardware.

There are no known funding efforts in progress at this time to acquire the commercially controlled data needed to make the Engine, Diesel competitive. The time and money required to increase competition would not be recouped by the Government due to the complexity of the design and the time it would take to produce the Engine, Diesel in the quantities needed. Any efforts to increase competition would also create unacceptable delays in filling Government requirements.

Potential vendors can submit requests to become a source through the Source Approval Process at any time. Per section 8, a Sources Sought Notice was posted on FedBizOpps. Based on the detailed rational provided in paragraph 5 above, the Government has no current plans to obtain competition for this proposed contractual action. Approving additional vendors will result in minimal additional cost savings in comparison to the additional cost required to qualify those additional sources.

8. Market Research: Internet based market research was completed by the Combat Capabilities Development Command Engineer, on 16 September 2019. There are other sources capable of developing similar components; however, they have never provided it for this military specific application or undergone the testing described above. Government databases were also queried which resulted in no equivalent Government owned part numbers nor any conforming drawings and specifications. Separate Web based searches by part number, NSN and end item/subcomponent nomenclatures resulted in no sources found other than Independent Rough Terrain Center LLC. (CAGE 1NWY2). If a new source were secured, extensive analysis, prototyping, and system testing would still need to be done to ensure that the end item Material Handling Equipment system would properly meet performance specifications with a new supplier component. The cost of such analysis, prototyping, and testing would far exceed any cost savings realized by adding another source.

Sources Sought Synopsis, Notice 2019-572, was posted to Fed Biz Opps on 20 September 2019.

Item Name: Engine, Diesel

NSN: 2815-01-622-3891

Part No: EP-0011486 Quantity: 30 MIN/ 60 MAX End Item: Independent Rough Terrain Center LLC (formerly Kalmar) LCRTF, NSN 3930-01- 599-9978.

Embedded SSN Posting Sources Sought Notification Sources Sought:

Sources_Sought_N otice_2019-572_(UPD

Embedded Market Research Links:

Market Research

NSN 2815-01-622-38

9. Interested Sources: To date, no additional sources have replied to the Sources Sought Notice above, or expressed interest in this item or the ability to provide an alternate product.

10. Other Facts: Discuss any other facts supporting the use of other than full and open competition, such as the following:

a. Procurement history:

Purchase Order, SPRDL1-19-P-0104, was awarded on 11 January 2019 to Independent Rough Terrain Center LLC. for the procurement of ten (10) each Engine, Diesel. The solicitation was solicited as Other Than Full and Open Competition. The action was sole sourced to IRTC. The total value of the purchase order did not exceed the simplified acquisition threshold, therefore a J&A was not required.

Purchase Order, SPRDL1-18-P-0378, was awarded on 06 June 2018 to Independent Rough Terrain Center LLC. for the procurement of six (6) each Engine, Diesel. The solicitation was solicited as Other Than Full and Open Competition. The action was sole

Purchase Order, SPRDL1-15-P-0108, was awarded on 04 March 2015 to Independent Rough Terrain Center LLC. for the procurement of four (4) each Engine, Diesel. The solicitation was solicited as Other Than Full and Open Competition. The action was sole

11. Technical Certification:

The point of contact for this action is Vincent Nestico, 282-7487.

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.

The point of contact for this action is Vincent Nestico, 282-7487.

//signed// 28 January 2020

DOUG HEDBERG

Associate Director Force Projection Technologies CCDC-GVSC Force Projection Technology

12. Requirements Certification: Include the following statement:

Typed Name: Jillian Sergison Date: 28 January 2020 Title: Logistic Management Specialist Signature: //s// Jillian Sergison

Typed Name: Amy Gilley Date: 28 January 2020 Title: MHE Team Leader Signature: //s// Amy Gilley

Typed Name: Dave Apel Date: 28 January 2020 Title: MHE Supervisor Signature: //s// David Apel

Typed Name: James Haggert Date: _28 Jan 2020 Title: MHE/Bridging Group Leader Signature: //S// James A. Haggart_

13. Fair and Reasonable Cost Determination:

Include the following determination:

I hereby determine that the anticipated cost to the Government for this contract action will be fair and reasonable. Normal acquisition procedures and cost and/or price analysis will be used to determine the price fair and reasonable. The appropriate forms of cost and/or price analysis will be utilized and negotiations will be conducted if necessary. Other than Certified Cost or Pricing Data will be used to justify price reasonableness.

Typed Name: Timothy A. Nichols Date: 5 February 2020 Title: Contracting Officer Signature: //TAN//

14. Contracting Officer Certification: This certification shall be made by the contracting officer who will sign the contract resulting from this justification and approval. Include the following statement:

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

Typed Name: Timothy A. Nichols Date: 5 February 2020 Title: Contracting Officer Signature: //TAN//

15. Legal Concurrence:

Concur: // Darin R. Morency //

Date: 02/07/2020

Approval Authority for Acquisitions Equal to or Greater Than $700,000.

APPROVAL OF JUSTIFICATION

FOR OTHER THAN FULL AND OPEN COMPETITION

Based on the foregoing Justification, I hereby approve the procurement of the following:

a. Noun: Engine, Diesel

b. NSN: 2815-01-622-3891

c. Basic Quantity: 30 each

d. Basic Estimated Value: $420,000.00

e. Option Percent: 100%

f. Quantity with Option: 60 each

g. Estimated Value with Option: $840,000.00

This action will be awarded under other than full and open competition pursuant to the authority of 10 USC 2304(c)(1) and subject to the availability of funds. This approval is subject to the provision that the property herein described has otherwise been authorized for acquisition.

Signature:

Date:

SHEARER.MARY.E.125070

Digitally signed by

SHEARER.MARY.E.1250702449

Date: 2020.02.11 08:55:43 -05'00'

Title: DLA Land and Maritime Competition Advocate