JA_SPRDL120R0055_Redacted Final.pdf

Justification & Approval: SPRDL1-20-R-0055 (Previous J&A SPRDL1-18-C-0381 is available)

DEFENSE LOGISTICS AGENCY

JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

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

2. Description of Action: The proposed action is to award a new contract for the purchase of a Diesel Engine, utilized on the Material Handling Equipment (MHE) 270/271 Entwistle 4,000 pound (lb) Rough Terrain Forklift system. This four wheel drive rough terrain diesel powered forklift is 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 procurement will be restricted to Cummins, Inc. (CAGE 0B8S3). This is the only responsible source for this item, and no other supplies will satisfy agency requirements.

This action will be funded using Army Working Capital Funds (AWCF).

3. Description of Supplies/Services:

The contractor shall provide the Diesel Engine, NSN of 2815-01-356-4012 for the Entwistle 4,000 lb Rough Terrain Forklift, end item NSN of 3930-01-330-8907/6, per the part number listed in Table 1. The estimated unit value is and quantity for this contract is 48 each with an option quantity of 48 each. The total value of this contract is .

Table 1 – Part Number and Supplier NSN Nomenclature Part Number CAGE 2815-01-356-4012 Engine, Diesel DR6390RX 0B8S3

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.

PRON Number: EH9C1450EH

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: The Government does not own the Technical Data Package (TDP) for the Diesel Engine, nor the vehicle that uses it. This vehicle was procured by the Government through a performance specification, and the Diesel Engine was part of the Entwistle Original Equipment Manufacturer’s (OEM) internal design effort. This item is not suitable for full and open competition because the Government does not have a TDP for this Diesel Engine. Ownership and control of the technical data remains with the OEM, Cummins Inc.

The Government’s identification data for the Diesel Engine is limited to NSN, part number and supplier (CAGE) code as listed in FEDLOG and in Technical Manual (TM) 10-3930-664-24P. The acquisition data for the Diesel Engine is not fully defined. This Diesel Engine is used in the Army’s Entwistle MHE270 and MHE271 4,000 lb Rough Terrain Forklift. 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 TDPs are not procured for material handling equipment and why there is no TDP 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.

Demonstration of Approved Contractor's Unique Qualifications:

a. The Entwistle Company passed the original unique testing of the Production Qualification and Verification tests for these vehicles. 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 MHE 270 and MHE 271, and therefore the Cummins’ Diesel Engine, was ready for fielding and incorporation into the Army’s supply distribution mission.

b. Cummins, Inc. has sole access to the relevant drawings and technical data rights.

The Government did not buy the proprietary rights to produce a competitive 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 Diesel Engine and the end item. This knowledge assures the Government that the Diesel Engine will be easily incorporated into the machine, reducing time for other adjustments and troubleshooting.

c. Using a contractor without the unique qualification listed here introduces risks to the Government. A Diesel Engine not ready to perform would prevent the end item from returning to full mission capable status. This would seriously impact the Army’s capability to move pallets in and out of shipping containers and other loads as part of its supply distribution mission. Associated with this lack of capability would be a shortage of supplies like food, water, and spare parts that are to be delivered to soldiers deployed in the field.

6. Efforts to Obtain Competition: There are no current plans to acquire a competitive TDP because funds are not available to acquire the data necessary to support a competitive acquisition.

Estimate of Cost and Schedule Delay if Award of Contract is Delayed:

a. The Diesel Engine was designed and developed by the end item manufacturer and the component supplier. Procuring proprietary data is estimated to be in the many hundreds of thousands of dollars. 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 Diesel Engine 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 these Diesel Engine units are driven by field demands, and can be in varying quantities depending on field usage and expected remaining service life. This estimate 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 18 to 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 Diesel Engine units to be delivered to field users, and RESET Programs, and would impact the mission as vehicles would be non-mission capable.

b. This Diesel Engine 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 Diesel Engine is already in the market and the reverse engineering process would be replicating the effort associated with the original design of the Diesel Engine. The estimated cost to reverse engineer and detail this part could be as much as $2.0M, and would result in an estimated delay of at least 48 months. Added to this 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 forklift. The estimated time delay for testing is up to 24 months at an estimated cost of $400K (Fiscal Year 2019 dollars).

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 Diesel Engine units is variable. The demand can be affected by location and 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 of 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.

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

7. Actions to Increase Competition: There are no known funding efforts in progress at this time to develop the competitive technical data required needed to make the Diesel Engine fully competitive.

No contractors are in the process of being qualified at this time, nor will be prior to the contract award due to funding constraints. Currently, there has not been any expressed interest by any known vendor(s) to become qualified source(s) to produce this item.

Any new vendor who decides to pursue the qualification process will be directed to the Competition Advocate’s Source Approval Program (SAP). The Competition Management Office (CMO) would encourage interested parties to submit a Source Approval Request (SAR) at this time for future buys.

8. Market Research: Internet based market research was completed by on 16 September 2019. There are other sources likely capable of developing this component for Government needs. Although these companies have no identifiable replacement for this hardware, they do make similar ones for the commercial and military market. Government databases queried resulted in no equivalent Government owned part numbers nor any conforming drawings and specifications. The market research results are attached below. Separate internet based searches by part number, NSN and end item/subcomponent nomenclatures resulted in no sources found other than those listed in Table 1 above.

A sources sought synopsis was posted on Fed Biz Opps as Sources Sought Notice # 2019-573 on 20 September 2019. To date, no source has responded with interest in producing this item.

Sources Sought Notice#: 2019-573 Item Name: Engine, Diesel

NSN: 2815-01-356-4012

Part No: DR6390RX End Item: Entwistle, 4,000 lb Forklift (MHE)

Sources Sought Market Research (see below attachments)

Sources_Sought_Po sting_2019-573.pdf

SSN POSTING

CONFIRMATION (201

Solicitation 2019-573.pdf

Market Research

NSN 2815-01-356-40

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. The notices required by FAR 5.201 will also be published, and any bids or proposals received will be referred to the applicable engineering office for analysis and will be considered. Interested sources will be referred to the Source Approval Program though the competition advocate’s office for information on becoming a qualified source of supply.

10. Other Facts: Other facts supporting the use of other than full and open competition are as follows:

a. Procurement History:

(1) a. Contract: SPRDL1-18-C-0381, awarded on 07 September 2018 to Cummins Power Systems, LLC. for a total quantity of (25) each Diesel Engine units with a total dollar value of $207,375.00.

(1) b. Contract: SPRDL1-12-C-0041, awarded on 28 November 2011 to Cummins Power Systems, LLC. for a total quantity of (17) each Diesel Engine units with a total dollar value of $128,605.00.

(1) c. Contract: SPRDL1-11-C-0006, awarded on 03 November 2010 to Cummins Power Systems, LLC. for a total quantity of (15) each Diesel Engine units with a total dollar value of $113,850.00.

(1) d. Contract: W56HZV-07-C-0598, awarded on 06 August 2007 to Cummins Power Systems, LLC. for a total quantity of (16) each Diesel Engine units with a total dollar value of $126,264.00.

(2) The above procurements were solicited and awarded under Other Than Full and Open Competition.

(3) FAR part 6.302-1, Only One Responsible Source was utilized.

(4) Acquisition Data Availability: The Government does not own or have rights to the technical data for the Diesel Engine NSN for this procurement.

(5) Unusual and Compelling Urgency: N/A

13. Fair and Reasonable Cost Determination: The required item will be solicited on Request for Proposal (RFP) SPRDL1-20-R-0055. It is proposed to negotiate a Firm- Fixed-Price definitive contract with Cummins, Inc. for part number DR6390RX. This is the only responsible source and no other supplies or services will satisfy requirements.

The rationale for restricting competition is explained above.

I hereby determine that the anticipated cost for this contract action will be fair and reasonable. Normal acquisition procedures will be followed to determine that the contract price is fair and reasonable. The appropriate forms of cost and/or price analysis will be utilized, and negotiations will be conducted if necessary.

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

Typed Name: Timothy A. Nichols Date: _11 Dec 2019_______ Title: Signature: //TAN//

14. Legal Concurrence:

Concur:

Date: 12/13/2019

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: Diesel Engine

b. NSN: 2815-01-356-4012

c. Basic Quantity: 48 each

d. Option Quantity: 48 each

e. Estimated Basic Value:

f. Estimated Total 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:

DLA Land and Maritime Competition Advocate

SHEARER.MARY.E.125

0702449

Digitally signed by

SHEARER.MARY.E.1250702449

Date: 2019.12.17 08:24:43 -05'00'