JA_SPRDL1-20-R-0271_Redacted.pdf

Justification and Approval SPRDL1-20-R-0271 (JA-00312) Previous J&A: SPRDL1-17-R-0564

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

SPRDL-1-20-R-0271

1. Contracting Agency: Defense Logistics Agency (DLA) - Land Warren (WRN).

2. Description of Action: DLA-WRN proposes to award a new Firm-Fixed-Price contract to Compass Instruments, Inc., Commercial And Government Entity (CAGE) 43AS7, for National Stock Number (NSN) 6630-01-564-5517, Tester, Thermal Oxidation, using Army Working Capital Funds (AWCF).

3. Description of Supplies/Services: The NSN 6630-01-564-5517, part number 400- 001-001, is a Tester, Thermal Oxidation, and used to test aviation fuel. This part is categorized as Petroleum, Oils, and Liquids (POL) Test Equipment item under the Weapons System Code. This is an Indefinite Delivery Indefinite Quantity (IDIQ) Long Term Contract (LTC) for a minimum quantity of six each and maximum five-year quantity of 150 each. The total maximum estimated value of this contract is

Acquisition Method Code (AMC):

3 - Acquire, for the second or subsequent time, directly from the actual manufacturer.

Acquisition Method Suffix Code (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 for this effort is 10 United States Code (U.S.C.) 2304(c)(1) as implemented by Federal Acquisition Regulation (FAR) 6.302-1, “Only One Responsible Source and No Other Can Satisfy Agency Requirements.”

5. Reason for Authority Cited: Compass Instruments, Inc. is uniquely qualified to fulfill the requirement of this proposed contract based on the following:

a. The Thermal Oxidation Tester is a laboratory instrument for testing the thermal stability of jet fuels. This particular instrument is unique in its physical size, which allows two instruments to be mounted side by side on the counter of the Petroleum Quality Analysis System-Enhanced (PQAS-E). Additionally, this machine is unique in that it has a special operating system that was developed solely for military use that minimizes the chances of conducting the test incorrectly. This instrument also uses a Programmable Logic Controller (PLC) to run the program, as opposed to other machines that use

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Controlled by: DLA Land and Maritime Controlled by: DLA Land Warren CUI Category: Source Selection Distribution/Dissemination Control: FEDONLY POC: Drake.Martinez@dla.mil

Windows-based computers that create a network inside the PQAS-E. Networks are subject to much greater security protocols that would add additional man hours to the program to maintain its Authority to Operate (ATO).

b. The Thermal Oxidation Tester (part number 400-001-001) was extensively tested by Tank Automotive Research, Development and Engineering Center (TARDEC) (now Ground Vehicle Systems Center (GVSC)) in their labs for reliability, accuracy, and precision. Moreover, TARDEC conducted Production Verification Testing on the PQAS- E prototype to ensure operational compatibility. The ruggedness of the instrument is vital due to the unique operational environments for laboratory equipment such as cold storage, hot storage, high humidity, and high vibration. Special anti-shock trays were developed for each instrument in the PQAS-E to help achieve reliability and mitigate the effects of shock and vibration from the movement of the PQAS-E, whether mounted on its trailer or on a Palletized Load System (PLS). A different model instrument would require new trays to be designed, manufactured, and tested to ensure suitability for use in the PQAS-E. The instrument would also have to be tested to verify it can withstand the shock and vibration that is caused from the PQAS-E traveling over unimproved roads and other rough terrain.

Moreover, testing identified that procurement by other than Full and Open competition is necessary because the Thermal Oxidation Tester is needed to ensure standardization of equipment, test procedures, training, spare parts, and manuals with the PQAS-E.

c. The storage temperature requirements of the PQAS-E dictate that the instruments used must withstand -25 (negative) degrees Fahrenheit (F) up to 140 degrees F.

Laboratory instruments do not normally see temperature extremes such as these. A new instrument would also have to be tested to verify that it can withstand these storage temperatures, as well as perform correctly after quickly being warmed up or cooled down.

d. Maximization of counter space will be available to house additional essential instruments or act as workspace due to the small size of Compass Instruments’ Thermal Oxidation Tester. The instrument size allows for two instruments to be placed in the lab without being a detriment to counter space. This is important because the test lasts three hours and utilizing two instruments allows the laboratory operators to run more samples in one day. The Compass Instruments Thermal Oxidation Tester is the only instrument on the market that has proven reliability in the field environment of the PQAS-E and is small enough to fit in the space allocated on the counter top.

e. Cost:

The PQAS-E utilizes custom computer software to implement a Laboratory Information Management System (LIMS) in the lab. The GVSC custom made this software to interface directly with the instruments in the lab using a multiplexor to communicate via RS 232 cables. The LIMS must have specific code written for the information to be successfully collected due to each instrument’s unique software and data outputs. A

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new version of LIMS software would have to be developed and tested by the GVSC to ensure operational capability because a different instrument would not initially communicate with the LIMS. It is estimated to cost around $50,000 to test and evaluate, write new software, retest and evaluate to ensure it works, and create new hard drives to send to the field to give them the new capability.

The Integrated Logistics Support Center (ILSC) and GVSC developed the PQAS-E Technical Manual (TM) specifically for Compass Instruments’ part and includes detailed work packages with diagrams on how to operate, maintain, calibrate, and troubleshoot the instrument. A new instrument would necessitate a revision to the TM, to include all new work packages. Furthermore, the ILSC Petroleum and Water Systems team provisioned all the spare parts at the beginning of the PQAS-E program and NSNs have been assigned. A different instrument would require new provisioning and a new NSN.

New NSNs for instruments and spare parts would induce costs in man hours to do all the necessary provisioning as well as new costs to update the TMs. It is estimated to cost around $100,000 to work through all of the provisioning needed and to document and write all of the new procedures for the TMs, including the efforts to set up a contract to actually produce the new TMs.

The GVSC has estimated that Reverse Engineering the Thermal Oxidation Tester would cost an estimated minimum of $2,750,000.00 with a lead time of 24 months for design, development, production, and technical data development. In addition, it would have to undergo qualification and integration testing. Qualification testing on laboratory equipment installed in the PQAS-E would have an additional lead time of 12 months and cost an estimated minimum of $3,000,000.00. Reverse Engineering and qualification testing to include accuracy test, form, fit, and function test, performance test, and durability testing would require at least 36 months and a total estimated minimum of $5,750,000.00. This expense could not be recouped through subsequent competition.

Foregoing qualification testing would make this procurement high risk because premature failures of this item in the field could result in a mobility failure jeopardizing the Army’s mission in a potentially adverse operational environment. Funds are not available at this time for procuring the proprietary data, reverse engineering the item to create a competitive Technical Data Package (TDP), or qualification testing for a new source. There is a vital need for procuring the correct, approved components under this Purchase Request Order Number (PRON) to maintain critical operational readiness.

The Government would not be able to recover, through subsequent competition, the additional costs involved in reverse engineering the item to create a new and competitive. The in annual savings would take over years to offset the estimated $5,750,000.00 cost of reverse engineering the item and qualifying another source. This is based on the current average usage rate of 15 units each year, a current unit cost of , and assuming 25% cost savings achieved through competition.

The expected useful service life of a PQAS-E is through FY28, which means the savings would never be realized.

6. Efforts to Obtain Competition:

a. Effective competition: We are not pursuing competition for this item because of the reasons stated in paragraph 5.

b. Subcontracting competition: Unless the contract is awarded to a small business, the solicitation and resulting contract will include FAR clauses 52.219-8, "Utilization of Small Business Concerns"; 52.244-5, "Competition in Subcontracting"; 52.219-16, "Liquidated Damages--Subcontracting Plan";"

and Defense Federal Acquisition Regulation Supplement (DFARS) 252.219- 7003, "Small Business Subcontracting Plan (DoD Contracts)," to maximize small business opportunities and utilization.

7. Actions to Increase Competition: The costs associated with reverse engineering and testing will not be recovered through a competitive procurement. No additional actions will be taken to increase competition. The notices required by FAR 5.201 will be published and any proposals received shall be considered.

There are no contractors currently in the process of being qualified as an alternate source of supply for this item. At this time, there are no current or planned efforts to qualify additional sources since the Government does not possess a fully defined and validated TDP for this item.

8. Market Research: GVSC conducted market research in September 2020 via web searches and found two commercially available testing apparatuses for testing thermal oxidation stability in aviation fuels using ASTM D3241. The results are as follows:

a. https://www.paclp.com/lab-instruments/brand/alcor/product/13/jftot-iv-jet-fuel-thermal-oxidation-tester

b. https://www.falex.com/product/falex-oxidation-stability-tester/

The Petroleum Analyzer Company (PAC) Jet Fuel Thermal Oxidation Tester (JFTOT) IV model does not meet the Army's requirements as it is too large to fit the same trays as the current model. It uses different tubing and spare parts that are not currently provisioned and in the supply chain. It uses glass beakers which cause a safety hazard in a mobile laboratory environment. It also uses a single pumping unit which has been found to cause erratic results in our GVSC laboratory's testing. The Falex 400 uses a dual pumping unit which has been the industry standard for many years. The Falex 400 is the current instrument used in the PQAS-E.

The DLA contract specialist conducted market research in summer 2020 with the following results:

a. WEBFlis searches on 31 July 2020 for NSN and part numbers returned results that showed the Government part number and Compass Instruments, Inc. part number.

b. Google searches for "Thermal Oxidation Tester" on 31 July 2020 returned results showing this item as commercially available from two companies, Compass Instruments, Inc. and Petroleum Analyzer Company LP (PAC). However, Compass Instruments is the only company that provides the item which meets all Government specifications.

c. Bing searches for "Thermal Oxidation Tester" on 31 July 2020 returned results showing this item as commercially available from two companies, Compass Instruments, Inc. and PAC LP. However, Compass Instruments is the only company that provides the item which meets all Government specifications.

d. IHS Haystack searches for item NSN on 31 July 2020 returned results showing this item and part numbers from the Government, Compass Instruments, and PAC.

A Sources Sought Notice was posted to beta.SAM.gov on 31 July 2020 and closed 17 Aug 2020. It was open for 18 days. There were no responses or inquiries received.

The Sources Sought Notice did not identify any additional vendors who can currently provide a Fuel Thermal Oxidation Tester that meets the Government specific needs.

9. Interested Sources: To date no additional sources have expressed interest in this item.

10. Other Facts: Procurement History:

1. Contract Number: SPRDL1-18-C-0218 P00003 Award Date: 22 August 2018/14 each Contractor: Compass Instruments, Inc. part # 400-001-001 Contract Value: Unit Price $74,900.00/Total Price $1,048,600.00 Competitive Status: FAR 6.302-1 only one responsible source

2. Contract Number: SPRDL1-18-C-0218 Award Date: 04 April 2018/14 each Contractor: Compass Instruments, Inc. part # 400-001-001 Contract Value: Unit Price $74,900.00/Total Price $1,048,600.00 Competitive Status: FAR 6.302-1 only one responsible source

3. Contract Number: SPRDL1-17-C-0203 P00001 Award Date: 20 December 2017/five each Contractor: Compass Instruments, Inc. part # 400-001-001 Contract Value: Unit Price $74,900.00/Total Price $374,500.00 Competitive Status: FAR 6.302-1 only one responsible source

4. Contract Number: SPRDL1-17-C-0203 Award Date: 31 May 2017/five each