JA_SPRDL120R0103_Redacted.pdf

J&A SPRDL1-20-R-0103

Previous J&A SPRDL1-17-D-0072 is available

DEFENSE LOGISTICS AGENCY

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

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

2. Description of Action: This proposed contract action is to award a new, firm-fixed-price, long-term (5 year) indefinite delivery, indefinite quantity contract to purchase a minimum of 123 and a maximum of 7,380 each new diesel head cylinders (National Stock Number (NSN) 2815-01-435-1707) for use on the High Mobility Multipurpose Wheeled Vehicle (HMMWV) Family of Vehicles (FoV). The estimated unit price is each. The estimated minimum value of the contract is and the estimated maximum value is . This action will be funded using Army Working Capital Funds (AWCF).

3. Description of Supplies/Services: This action will procure diesel cylinder heads (NSN 2815-01-435-1707) from the following sources of supply:

AM GENERAL, LLC

408 S. BYRKIT ST.

MISHAWAKA, IN 46544

CAGE: 34623

GENERAL ENGINE PRODUCTS, LLC

408 S. BYRKIT ST.

MISHAWAKA, IN 46544

CAGE: 1RGD4

Both sources of supply for the engine components are affiliated with AM General, LLC (AMG) as they share the same address. CAGE 34623 is the spare parts and supply arm of AMG while 1RGD4 is the manufacturing subsidiary for the engine.

The contractor shall provide the Cylinder Head, Diesel per the part number (P/N) listed in Table 1.

Table 1

NSN NOMENCLATURE P/N Quantity AMC/AMSC 2815-01-435-1707 Cylinder Head, Diesel 1997 and above (noun: cylinder head, diesel)

General Engine Products, LLC (GEP) or AM General, LLC

(AMG) P/N 12570715

123 Min 7380 Max

3/R

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

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.

NSN 2815-01-435-1707 is the cylinder head used on 1997 and above 6.5 Liter (L) internal combustion engine (6.5L Turbo Diesel Engine) used in the HMMWV. The cylinder head is the mechanical device for which fluid is moved into and out of the cylinder and is sometimes referred to as the top of the engine that helps to contain the explosion of combustible fluid and transfer the explosion energy into mechanical force.

The Government does not have data rights for the cylinder head. The 6.5L Turbo Diesel Engine and components described within this document are supplied to the US Army by AMG. In total, this engine is used on seven different configurations of the HMMWV. These variants are for the newer generation of HMMWV. This configuration of the 6.5L engine is turbo charged and represents the most up to date configuration of engine power available on the HMMWV FoV.

This contract action will supply cylinder heads for use during the rebuilding and overhauling process of the HMMWV engine as described in National Maintenance Work Requirement (NMWR) publication 9-2815-274, published April 2012 for 6.5L engine overhaul procedures to Red River Army Depot to fix or correct issues with combustion chambers.

The following is a brief history of this engine. The engine used in the HMMWV was originally designed and developed by Detroit Diesel in 1982 for use in General Motors commercial products as a gasoline engine. At that time, Detroit Diesel was a subsidiary of General Motors. For reasons unknown, this engine was converted from gasoline to diesel and then offered to the Government in the HMMWV. It was originally introduced into the HMMWV fleet as a 6.2L naturally aspirated (non-Turbocharged) power plant and incorporated into the first HMMWV production run. Upgrades followed. In 1992, a 6.5L non-Turbo version was developed as an improvement over the 6.2L in terms of engine performance and power. In 1995, the turbocharged 6.5L variant of the engine was introduced to further increase performance and power output to meet the needs of the HMMWV’s ever-increasing weight. This engine’s basic block has been used in the HMMWV for the past 34 years. Finally, on or around calendar year 2000, General Motors sold the tooling and production rights for the 6.5L engine to AMG and withdrew from the 6.5L business almost entirely. Since that transition, AMG has been building and supplying engines to HMMWV production and fulfilling sustainment requirements.

Both General Motors and AMG have demonstrated the capability to provide this item to the Government, based on past performance. However, AMG is currently the only source of supply capable of providing new engines since they maintain the tooling and assembly line purchased from General Motors.

This procurement is intended to address the following:

1. Allow current backorder for about (300) cylinder heads to be filled. These backorders have been primarily generated by foreign military demands.

2. Allow for the current U.S. military monthly demand for cylinder heads to be met.

The current long-term contract quantities for the cylinder heads has been exhausted.

4. Authority Cited: The statutory authority permitting this action is 10 U.S.C.

2304(c)(1) as implemented by Federal Acquisition Regulation (FAR) 6.302-1 (a)(2), “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.”

5. Reason for Authority Cited:

a. Background:

As stated under paragraph 3 above, the Government purchases the cylinder head from AMG for Expanded Capacity Vehicle (ECV) series HMMWV. This version of a compression ignition engine, otherwise known as a diesel engine, was originally designed and developed by General Motors subsidiary Detroit Diesel for use in the General Motors commercial vehicle line dating back to the early 1980’s. In order to speed up the development and procurement process the Government agreed to the Original Equipment Manufacturers (OEM) request to retain the data rights to the commercial engine and components itself. The Government does own the rights to the accessory drive and hang on items, often referred to as the engine dress, but that is exterior of the engine and does not provide the detailed information for full and open competition of the entire item. AMG and General Motors (GM) co-integrated this engine into the HMMWV during the development stage of the vehicle platform. AMG is the OEM of the HMMWV FOV and GM is the originator of the engine.

In 2010, the Government attempted to obtain pricing for the technical data package (TDP) during the contract rebid. The Government asked for costing on the Armor, Heating, Ventilation and Air Conditioning system and all Rev B components of the HMMWV. AMG’s response at that time was that it was not for sale. During the 2014 M997A3 HMMWV Ambulance program contract negotiations, the Government tried a second time to obtain the full HMMWV TDP from AMG, including the HMMWV chassis.

Again, AMG was unwilling to sell it to the Government. AMG’s position on the TDP remains unchanged.

b. Costs:

There are no known funding efforts in progress at this time to acquire the commercially controlled data needed to make NSN 2815-01-435-1707 fully competitive.

Consequently, there are no current plans to acquire a fully competitive TDP, because funds are not available to acquire the data necessary.

Alternatives:

There are two options for Government investigation in order to obtain the technical data for this item: (i) Reverse Engineer the existing cylinder head (if we are no longer able to procure the item) or (ii) Research and Development of replacement cylinder head.

(i) Reverse Engineering (RE) and Remanufacturing

The primary objective of RE is the development of unrestricted technical data, adequate for competitive procurement, through engineering evaluations of existing hardware, in this case the cylinder head. Advantages in this RE solution include minimized vehicle integration costs, as the reverse engineered product would be a direct replacement for the original cylinder head. The Army would own the resultant technical data including any 3-D models and drawings. This technique could also be applied to any component of the 6.5L engine, enabling competitive pricing. The disadvantages of this process are its relatively high cost and long lead times.

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 $4.0M, with an estimated delay of no less than 36 months. Required funding would include $3.0M for personnel to support RE and validation of the design as well as fund staff to develop the Computer Aided Design (CAD) models and drawings. Add another $1.0M to develop prototypes, test and finalize the product to verify that the newly created item provides equivalent performance when compared against the original. If funding for RE became available, the 36 month process would consist of the following: three months to obtain existing parts, three months to tear down and understand the design, six months to iteratively develop drawings, prototypes and bench test, 12 months to perform system and vehicle level testing, and 12 months to write the TDP and provision the parts. To complete the RE 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 produce the final TDP and associated provisioning documents at a cost of $4.0M. A timeline of the estimated R&D process is shown for clarity.

LTV Engineering estimates the following timeline for RE:

Obtain existing parts 3 Months Tear down and understand the design 3 Months Prototype development 6 Months Component, safety and system level testing 12 Months Write TDP, technical bulletins and provision parts 12 Months

Estimated Time to Reverse Engineer 36 months

(ii) Research and Development (R&D)

To develop a competitive data package through a Research and Development (R&D) effort, procuring proprietary data and qualifying additional sources will entail a significant amount of time, facility resources, man-hours, and funding. 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 42 months. Required funding would include $3.5M for personnel to support research, and redevelopment of an item that would perform the same task as this NSN. That $3.5M would also include funding for staff to develop the CAD models and drawings that would be required for any potential vendor to manufacture from. Add in another $1.5M-$2.0M to develop prototypes to test and validate the Government design that functions identically to the original. If funding for a start of a new research and development effort became available, the 42 month process would consist of the following: 12 months to develop requirements, 6 to 12 months in design and prototyping, 12 months to test compatibility and function, and an additional 12 months to write the TDP and provision the parts. A timeline of the estimated R&D process is shown for clarity.

LTV Engineering estimates the following timeline for R&D:

Requirements development 12 Months Design and prototype development 6 Months Component, safety and system level testing 12 Months Write TDP, technical bulletins and provision parts 12 Months

Estimated Time to research and develop 42 Months

c. Government Engineering Justification Example:

Considering this vehicle configuration is out of production and future vehicle demand is dwindling, the costs cited above appear to exceed any potential savings to be realized through a future competitive procurement process. As an example, assuming the Government spends $4M to reverse engineer our own version of the engine and realize a savings of 5% per unit, the new cost of the Government-owned engine cylinder head would be . That is a savings of between the AMG-owned and the Government-owned versions. Dividing $4M by results in engine cylinder heads required to recover the reverse engineering costs. Using the quantity of 492 engine cylinder heads per year requested in this contract we can calculate that it would take roughly years to recover our costs. Note, in previous J&A’s there is typically a calculated savings of 15% for Government-owned parts version. However, for the engine cylinder head there are large capital tooling costs that need to be accounted for which reduce the associated savings. Due to this, there is an assumed reduction of the 15% parts savings down to 5%. The costs include hard tooling for cylinder head casting die, a manufacturing facility and a source of iron/steel/aluminum from which these parts would be made. These capital expenses will reduce the total savings percentage from what would normally be expected to be realized.

d. Unacceptable Delay:

If the procurement of the HMMWV cylinder head is delayed until the TDP is developed by the Government and made suitable for a competitive procurement, the Government would experience an unacceptable delay of a minimum of three years in fulfilling this requirement. The three-year delay is a result of the time required to develop items of equivalent performance explained previously in this document. Further delay in providing this NSN will negatively impact our force readiness and capability to actively support U.S./Coalition efforts, as without the cylinder head the HMMWV would be unable to perform all of its missions. AMG is currently the only source that can meet the requirements without substantial duplication of cost and without unacceptable delay against this action. The approved source has the requisite technical and engineering expertise to perform all efforts required to provide the NSN identified in this Justification and Approval (J&A). The contractor developed the engine identified on this document without assistance from the Government. Furthermore, if a project to make this item competitive was rushed through without proper testing and validation, there would be an increased risk of a premature failure of this item in the field which could result in an extensive loss of the equipment through destroyed engines.

6. Efforts to Obtain Competition: The Government does not have a complete TDP required to manufacture the engine cylinder head or use for competitive procurement and there are no known funding programs active at this time for qualification of additional sources. Interested contractors can seek qualification through the Source Approval Program with the Competition Management Office. Therefore, only AM General 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 2815-01-435- 1707. AM General 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.

8. Market Research: In November 2019, Engineering conducted an online search of known Engine and engine component suppliers looking for published material on a new built replacement cylinder heads. The results of this search did not produce any new companies that would provide a direct replacement cylinder head for the HMMWV that is 100% new and not rebuilt that could be installed in the HMMWV without considerable time and effort to adapt the new components. Remember 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.

A Sources Sought Synopsis was posted to BETA.SAM.GOV on 11/18/2019 to date.

Item Name: Cylinder Head, Diesel

NSN: 2815-01-435-1707

Part No: 12556822 Quantity: 123 MIN/ 7,380 MAX End Item: HMMWV

Sources Sought Notice.pdf

BETA.SAM.GOV Link:

https://beta.sam.gov/opp/d2d663d8936d4ab68b834164126ae83d/view?keywords=2020 -035&sort=-relevance&index=&is active=true&page=1

9. Interested Sources: To date, no other sources have written to express an interest, nor has the Government identified any other source possessing an interest in being an alternate source in providing the item listed in Table 1.

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: SPRDL1-17-D-0072 Award Date: 4 May 2017 Contractor: AMG Value: $3,579,702.75 (Estimated) Competitive Status: Full and open after exclusion of sources per FAR 6.302-1 - Only one responsible source

Contract: W56HZV-07-D-0079 Award Date: 22 February 2007 Contractor: AMG Value: $1,201,560.36 (Estimated) Competitive Status: Full and open after exclusion of sources per FAR 6.302-1 - Only one responsible source.

b. Acquisition Data Availability: A Level III TDP for the cylinder head is not available.

c. Unusual and Compelling Urgency: N/A

d. Subcontracting Competition: A small business subcontracting plan will be required.

11. Technical Certification: 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.

[ ] $250K to $700K PD-LTV Chief of Engineering [X] $700K to $13.5M Product Director LTV

NAME:

TITLE: Project Engineer

E-MAIL:

DATE: 02 DEC, 2019

SIGNATURE:

NAME:

TITLE: PD-LTV Chief of Engineering

DATE: 02 JAN 2020

SIGNATURE:

NAME:

TITLE: Product Director LTV

DATE: 03 JAN 2020

SIGNATURE:

12. Requirements Certification: 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.

NAME:

TITLE: Item Manager DATE: 03 Jan 2020

SIGNATURE:

NAME:

TITLE: Branch Chief, acting Group Leader in absence DATE: 3 January 2020

SIGNATURE:

13. Fair and Reasonable Cost Determination: I hereby determine that the anticipated cost to the Government for this contract action will be fair and reasonable.

This determination will be based on appropriate forms of cost and/or price analysis.

Negotiations will be conducted as necessary. The contractor will not be required to submit certified cost and pricing data as this has been determined to be a commercial item.

NAME: Leah C. Bourdeau TITLE: Contracting Officer

DATE: 2/19/20

SIGNATURE: //s// LCB

14. Contracting Officer Certification: I certify that this justification is accurate and complete to the best of my knowledge and belief.

NAME: Leah C. Bourdeau TITLE: Contracting Officer

DATE: 2/19/20

SIGNATURE: //s// LCB

15. Legal Concurrence:

Concur:

Date: 02/27/2020

16. Division Approval:

Name: Michael J. Bissig Title: Chief, Acquisition Division B Signature: //MJB// Date: 2/27/20

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: Cylinder Head, Diesel

b. NSN: 2815-01-435-1707

c. Maximum Quantity: 7,380 each

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:

Title: DLA Land and Maritime Competition Advocate

SHEARER.MARY

.E.1250702449

Digitally signed by

SHEARER.MARY.E.1250702449

Date: 2020.03.04 07:55:35 -05'00'