JA_SPRDL119R0324_Redacted.pdf

J&A SPRDL1-19-R-0324

Previous J&A SPRDL1-17-R-0565 is available.

DEFENSE LOGISTICS AGENCY

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

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

2. Description of Action: This proposed contract action will result in a new long term (3 year) firm-fixed-price contract to purchase a minimum of 132, and a maximum of 1,980 each Transfer Transmission Assemblies (NSN: 2520-01-571-5785) used in the High Mobility Multi-Purpose Wheeled Vehicle (HMMWV) Family of Vehicles (FoV). The estimated unit price is each. Army Working Capital Funds estimated at will be used for this action.

3. Description of Supplies/Services:

The contractor shall provide the transfer transmission with container provisioned under NSN 2520-01-571-5785 as Army P/N 57K6202. This item consists of Transfer Transmission (Army P/N 12529102), and Shipping Container (Navy P/N 13414-077).

The major item inside the container is a newly built and fully functional transfer transmission that is available from three suppliers: AM General, Magna Powertrain of America, Inc., and New Venture Gear, Inc.

AM GENERAL LLC

5448 DYLAN DR

SOUTH BEND, IN 46628

CAGE: 34623

P/N 6031727

MAGNA POWERTRAIN OF AMERICA, INC.

DBA MPT MUNCIE EAST DIV MPT MUNCIE EAST

1400 W FUSON RD

MUNCIE, IN 47302-8684

CAGE: 65U15

P/N 54815

NEW VENTURE GEAR, INC

NEW PROCESS GEAR DIV

6600 NEW VENTURE GEAR DR

EAST SYRACUSE, NY 13057

CAGE: 76760

P/N 54815

The transfer transmission, commonly referred to as a transfer case is used in the M1151/A1, M1152/A1, M1165/A1, and M1167 Models of the HMMWV and is the major component of this item. These HMMWV variants are the latest generation of the

HMMWV and incorporate minor improvements over the previous Expanded Capacity Vehicle configuration to further enhance the HMMWV’s performance. These HMMWV Models were subjected to performance and durability testing prior to their production.

The transfer case supplied by the sources identified above is the only known transfer case to have the proper form, fit and function for this application.

This action will supply the transfer case for use during general maintenance and rebuilding of the HMMWV as instructed in the HMMWV Technical Manual Publication TM 9-2320-387-24P, as well as the National Maintenance Work Requirement (NMWR) Publication 9-2520-662, published September 2013 for transfer case overhaul procedures. Both levels of repair keep new replacement costs down by reusing parts or rebuilding complete assemblies where ever possible. However, given the age of some of these parts, full replacement is sometimes required.

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

AMSC C: This part requires engineering source approval by the design control activity in order to maintain the quality of the part. Existing unique design capability, engineering skills, and manufacturing knowledge by the qualified source(s) require acquisition of the part from the approved source(s). The approved source(s) retain data rights, manufacturing knowledge, or technical data that are not economically available to the Government, and the data or knowledge is essential to maintaining the quality of the part. An alternate source must qualify in accordance with the design control activity's procedures, as approved by the cognizant Government engineering activity. The qualification procedures must be approved by the Government engineering activity having jurisdiction over the part in the intended application. If one source is approved, AMCs 3, 4, or 5 are valid. If at least two sources are approved or if data is adequate for an alternate source to qualify in accordance with the design control activity's procedures, AMCs 1 or 2 are valid.

4. Authority Cited: The statutory authority permitting other than full and open competition 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.”

5. Reason for Authority Cited:

a. Background:

As stated in paragraph 3, the Government purchases this transfer case from AM General LLC, Magna Powertrain of America, Inc., and New Venture Gear, Inc., for use in the HMMWV and they are the only approved sources for this item. The Government does not own any rights to the transfer case. Those data rights and manufacturing rights belong solely with AM General, Magna Powertrain of America. Inc. and New Venture Gear Inc. AM General is the Original Equipment Manufacturer (OEM) of the HMMWV Family of Vehicles (FOV) and integrator of the transfer case.

b. Costs:

There are no known funding efforts in progress at this time to acquire the commercially controlled data needed to make NSN 2520-01-571-5785 fully competitive. Further, because this is a major component of the HMMWV, the time, cost and schedule impact associated with a competitive action on every single transfer case purchase would result in a full qualification test for each awarded vendor to validate Form, Fit and Function of the transfer case to assure that the items to be delivered remains the same each time a contract is awarded. This would add unnecessary cost and schedule to the acquisition of each transfer case contract award.

If the Government insisted on fully competitive procurement for the Transfer Case, the Government would have the three choices to obtain the necessary information to enable full competition: Research and Development of our own transfer case design, Reverse Engineering of the existing system and the final option is to simply ask the vendor, in this case AM General, Magna Powertrain of America. Inc. and/or New Venture Gear Inc., for a price to purchase the full Technical Data and rights to procure the item competitively.

AM General, Magna Powertrain of America Inc. and New Venture Gear Inc. core business is to sell product to the market, thus these companies are not willing to sell the technical data to the Government because that would result in a net loss of business.

Without the option to purchase the TDP, the Government has two remaining methods to acquire the data required and execute a competitive transfer case purchase. They are as follows:

(i) Research and Development (R&D): To develop a competitive data package through a Research and Development (R&D) effort would involve a ground up design of a transfer case that doesn’t infringe on any existing patents which would include research, generating requirements and any associated technical drawings. Followed by testing and validation and finally qualifying additional sources for the Government transfer case program. This action would entail a significant amount of time, facility resources, man-hours, and funding to provide a solution that is identical to what we have already. Based on past experience with similar efforts the estimated cost to research and develop a compatible product and qualify additional sources exceeds $5.0M with a setback of forty-eight (48) months. Required funding would include $1.75M for personnel to support research and redevelopment of an item that would perform the same task as this NSN. That $1.75M would also include funding for staff to develop the CAD models and drawings that would be required for any potential vendor to manufacture from. Another $2M would be required for developmental testing and validation of the design and the remaining $1.25M would be used for prototype tooling. If funding for a new start research and development effort became available, the forty-eight (48) month process would consist of the following: 12 months to develop and refine the requirements, 6 to 12 months in design and prototyping, 18 months to test compatibility and function, and an additional 12 months to capture changes from testing, write the technical data package and finally provision the parts. A timeline of the estimated R&D process is shown for clarity.

LTV Engineering estimates the following minimum timeline for R&D:

Requirements development 12 Months Design and prototype development 6 Months Component, safety and system level testing 18 Months Write TDP, maintenance documents, provisioning 12 Months

Estimated Minimum Time to research and develop 48 Months

(ii) Reverse Engineering (RE): To reverse engineer, validate the design, procure prototypes for testing and release a competitive data package would entail a significant amount of time, facility resources, man-hours, and funding. Based on past development experience the estimated cost to develop a reverse engineered competitive product is $5.0M, with an estimated delay of no less than forty-eight (48) months. To complete the reverse engineering process successfully, the Government would have to obtain a sufficient sample size of existing parts to provide a 95% probability and 90% confidence level in the actual size of the existing item to be studied. Once a large enough sample has been collected, the Government would then tear down and understand the design, conduct prototype development and testing, and produce the final TDP and associated provisioning documents at a cost of $5.0M. Required funding would include $30K to purchase 10 samples of the transfer case for detailed study and tear down and part measurement. $2M for personnel to support the reverse engineering and validation effort as well as fund staff to develop the CAD models, drawings and necessary documentation to enable fully competitive procurement of the HMMWV transfer case.

Add another $2M to purchase prototypes, execute testing and finalize the product to verify that the newly created item provides equivalent performance when compared against the original. An additional $1M would be required to finalize the TDP and maintenance documents, and provision repair parts. If funding for reverse engineering became available, the forty-eight (48) month process would consist of the following: 6 months to obtain existing parts, 6 months to tear down and understand the design, 6 months to iteratively develop drawings, prototypes and bench test, 18 months to perform system and vehicle level testing, and 12 months to write the technical data package and provision the parts. A timeline of the estimated R&D process is shown for clarity.

LTV Engineering estimates the following minimum timeline for RE:

Obtain existing parts 6 Months Tear down and understand the design 6 Months Prototype development 6 Months Component and system level testing 18 Months Write TDP, maintenance documents, provisioning 12 Months

Estimated Minimum Time to Reverse Engineer 48 months

In addition to the cost and delay for an R&D action or RE effort, Pd-LTV estimates that it would take approximately one additional year to establish another source and procure this kit on a competitive basis due to First Article Testing and on vehicle verification.

Specific events would include additional market research, solicitation, evaluation and awarding a contract. Finally, any new source of supply would require component, safety and system level testing that is estimated to take 6 months. These estimates are based on similar Government projects. These events combined are estimated to take an additional 12 months after development of the item (grand total is now 60 months minimum).

Considering this vehicle configuration is out of production and future vehicle demand is unknown, the costs cited above appear to exceed any potential savings to be realized through any future competitive procurement process. Assuming that the government spends $5M dollars to obtain its own version of the item and realize a savings of 15%, the new cost of the Government owned transfer case would be . That is a savings of between the Vendor owned and the Government owned versions.

Dividing $5M by results in transfer cases required to recover the development cost. Assuming 1,000 transfer cases every 3 years it can be calculated that it would take around contracts or roughly years to recover the costs and break even on the competitive action which approaches or exceeds the life expectancy of the

HMMWV.

c. Unacceptable Delay:

If the procurement of the HMMWV transfer case is delayed until the TDP is bought by the Government and made suitable for a competitive procurement the Government would experience an unacceptable delay of a minimum of four years in fulfilling this requirement. The minimum four year delay is a result of the time required to develop items of equivalent performance. AM General, Magna Powertrain of America Inc. and New Venture Gear Inc. are currently the only sources that can meet the requirements without substantial duplication of cost and without unacceptable delay against this action. The approved sources have the requisite technical and engineering expertise to perform all efforts required to provide the NSN identified in this Justification and Approval (J&A).

6. Efforts to Obtain Competition: The Government does not have the complete TDP required to manufacture the Transfer Case or use for competitive procurement and there are no known funding programs active at this time for qualification of additional sources. No other Transfer Case manufacturers have a drop in replacement that mounts to the HMMWV without major modifications. If there are vendors that believe they offer a product that requires no modification, costs less and increases power they can submit their offer to the Government CMO office. Those vendors can seek qualification through the Source Approval Program at their own expense. Testing and validation of any claims would have to be realized before any approval is granted. At this time, there are no contractors seeking approval through the CMO. Therefore only AM General, Magna Powertrain of America. Inc. and New Venture Gear Inc. will be solicited for this effort. This effort will be synopsized in accordance with FAR Part 5.201(c).

7. Actions to Increase Competition: There are no vendors in the process of being qualified for this NSN at this time and none prior to contract award. At this time, there are no current or planned efforts to qualify additional sources due to the fact that the Government does not possess a fully defined and validated TDP for NSN 2520-01-571- 5785. AM General, Magna Powertrain of America Inc. and New Venture Gear Inc.

holds the technical data regarding this item. Any vendor that believes they can provide this NSN for a lower cost while meeting the same requirements as the existing item should seek qualification as a secondary source through the Competition Management Office Source Approval Program at their own expense.

A Sources Sought Synopsis was posted to FedBizOps on 9 April 2019; to date, no other sources have expressed interest in providing this item.

Item Name: Transfer Case

NSN: 2520-01-571-5785

Part Number: 57K6202/54815 End Item: HMMWV

Sources_Sought_Noti ce_2019-343.pdf https://www.fbo.gov/index?s=opportunity&mode=form&id=413eb30810f52d99bebfa84c 15581ba3&tab=core& cview=0

8. Market Research: On 5 April 2019 Engineering conducted an online search of known transfer case suppliers looking for published material on new built replacement unit. The results of this search did not produce any new companies that would provide a direct replacement transfer case for the HMMWV that is 100% new (not rebuilt) that could be installed in the HMMWV without considerable time and effort to adapt the new components. Note that the HMMWV is in sustainment at this time so massive vehicle system changes to accommodate competition are not funded and unable to be fielded.

As a result of the research, no new suppliers were identified to produce this item. In addition, even if an alternative source of supply was identified, it would need to be subjected to testing as described above in order to insure that it is compatible with this military specific application.

9. Interested Sources: To date, no other sources have expressed an interest in providing the transfer transmission assembly. However, offerors are always encouraged to seek qualification through TACOM’s Source Approval Program (SAP) with the CMO. The notices required by FAR 5.201 will be published and any proposals received shall be considered.

10. Other Facts:

a. Procurement History

Contract: SPRDL1-18-D-0077 Award Date: 1 May 2018 Contractor: Melton Sales and Service Value: $2,402,168.40 Competitive Status: Full and open after exclusion of sources per FAR 6.302-1 - Only one responsible source

Contract: SPRDL1-17-D-0045 Award Date: 30 March 2017 Contractor: JML Logistics, LLC Value: $1,453,329.54 Competitive Status: Full and open after exclusion of sources per FAR 6.302-1 - Only one responsible source

Contract: SPRDL1-17-P-0124 Award Date: 25 January 2017 Contractor: AM General, LLC Value: $149,661.08 Competitive Status: Full and open after exclusion of sources per FAR 6.302-1 - Only one responsible source

b. Acquisition data availability. The Government does not own or have rights to the technical data for the purchased parts of the transfer case.

c. Unusual and compelling urgency: N/A

d. Subcontracting Competition: The government will require the contractor to submit a subcontracting plan IAW FAR 19.704 during negotiations of the contract in order to

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: Transfer Transmission Assembly

b. NSN: 2520-01-571-5785

c. Maximum Quantity: 1,980

d. Maximum Estimated Value:

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: 2019.08.13 11:06:43 -04'00'