JA_SPRDL120R0285_Redacted.pdf

Solicitation No. SPRDL1-20-R-0285 (JA-00346) Previous J&A: SPRDL1-19-R-0131 is available

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

SPRDL1-20-R-0285

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

2. Description of Action: The proposed action is to award a new firm-fixed-price contract to Dana Light Axle Manufacturing (Dana), CAGE 63ZH0, or AM General, LLC (AMG), CAGE 34623, for National Stock Number (NSN) 2520-01-574-4828, differential, driving axle.

NSN 2520-01-574-4828, differential, driving axle is used on the High Mobility Multi- Purpose Wheeled Vehicle (HMMWV), models M1151, M1151A1, M1152, M1152A1, M1165, M1165A1, and M1167.

Army Working Capital Funds (AWCF) will be utilized for this procurement.

3. Description of Supplies/Services: Dana / AMG will provide NSN 2520-01-574- 4828, differential, driving axle, Manufacturer Part Number 2011412-1 (CAGE: 63ZH0) or 6048217 (CAGE: 34623).

The deliverables for this contract are for a base quantity of 64 each, with an option quantity of 64 each, for a total potential quantity of 128 each. The unit price is estimated at resulting in an estimated maximum contract value of .

Acquisition Method Code (AMC):

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

Acquisition Method Suffix Code (AMSC):

B - This part must be acquired from a manufacturing source(s) specified on a source control or selected item drawing as defined by the current version of DoD-STD-

100. Suitable technical data, Government data rights, or manufacturing knowledge are not available to permit acquisition from other sources, nor qualification testing of another part, nor use of a second source part in the intended application. Although, by DoD- STD-100 definition, altered and selected items shall have an adequate technical data package, data review discloses that required data or data rights are not in Government possession and cannot be economically obtained. If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources exist, 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 the 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: The rear differential connects to the transfer case or transmission via the driveshaft. This system lets the engine power transfer to the HMMWV's rear wheels. The differential distributes equal amounts of torque to both wheels. This permits the wheels to react to resistance or provide traction for vehicle turns.

NSN 2520-01-574-4828 is for the rear differential used in the HMMWV with a serial number of 300,000 or greater. HMMWVs with a 300,000 or greater serial number are also referred to as a Revision B model (Rev B). This designation is indicative of reliability improvements that were implemented into the HMMWV during production to restore some reliability and performance to the vehicle through automotive improvements. In this case, the Rev B rear differential is cooled by water provided from the engine coolant system whereas older models were cooled with oil or not cooled at all. The reason that this water cooled variant provides an improvement over previous iterations is that the cooling system was tied into the vehicle radiator / fan system which allows for greater heat rejection and prevents thermal soak of the cooling fluid. The improvements realized in this variation of the HMMWV differential have improved the vehicle reliability by lowering the operational temperatures of the differential fluid in the differential, driving axle which has a direct impact on the longevity of the component.

The rear differential technical data was developed by AMG / Dana with Government approval – at vendor expense – for use on the HMMWV. The Government did not acquire any rights to the technical data to enable competition of this item. As such, AMG / Dana are the only approved sources for the rear differential. While there is a TACOM drawing for the rear differential, the drawing is not fully defined and does not include vendor developed components that were considered the intellectual property of the developer. As such, the Government does not have the technical data needed to consider a product by another manufacturer.

This item can only be installed on the most recent HMMWV variants, serial number 300,000 or higher and is not backward compatible with older HMMWV models. The HMMWV rear differential was originally designed and developed by Dana / AMG. The original HMMWV program acquisition strategy incorporated a combination of off-the shelf commercial parts, existing ordinance parts, and contractor developed parts to speed up the acquisition process and allow the Government to own some portions of the HMMWV, but not the full technical data package (TDP) of the vehicle system. This strategy reduced research and development time as well as overall program cost. Thus, while the HMMWV has a TDP, it is not all inclusive of every component of the vehicle system. Further, the TDP does not include vendor-developed components that were considered the intellectual property of the developer. Since this item was developed by Dana / AMG at their expense, the technical information for this item is proprietary to both firms. As such, the use of such descriptions in the acquisition is essential to the Government’s requirement thereby precluding consideration of a product manufactured by another company.

There are no known funding efforts in progress at this time to acquire the commercially owned and controlled data necessary to make NSN 2520-01-574-4828 fully competitive.

Further, because this is a major system component of the HMMWV, the time, cost and schedule impact associated with a competitive action on every single rear differential purchase would result in a full qualification test for each awarded vendor to validate form, fit and function of the rear differential. This would add unnecessary cost and schedule time to the acquisition of each rear differential of the HMMWV, which is a program that is currently in sustainment.

If the Government attempted a fully competitive procurement for the rear differential, the Government would have the three choices to obtain the necessary information to enable full competition: Research and Development of our own rear differential design, Reverse Engineering of the existing system or simply ask the vendors, in this case Dana / AMG, for a price to purchase the full TDP and rights to use the item competitively.

The Government has tried to obtain the TDP for the rear differential, but Dana / AMG’s response was it was Not for Sale. The Government has two remaining methods to acquire the data required and execute a competitive rear differential purchase. The remaining options are:

(i) Research and Development (R&D): To develop a competitive data package through an R&D effort would involve procuring proprietary data for research, generating a requirements document and any associated technical drawings. Qualification of additional sources would be next, which will entail a significant amount of time, facility resources, labor-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 forty-two (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 computer-aided design (CAD) models and drawings that would be required for any potential vendor for manufacturing purposes, with an additional $1.5M-$2.0M required to develop prototypes to test and validate the Government design that functions identically to the original. If funding for a new start research and development effort became available, the forty-two (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 technical data package 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

(ii) Reverse Engineering (RE): To reverse engineer, validate the design, procure prototypes for testing and ultimately 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 exceeds $4.5M, with an estimated delay of no less than thirty-six

(36) months. Required funding would include $3.0M for personnel to support reverse engineering and validation of the design as well as fund staff to develop the CAD models and drawings, with an additional $1.5M-$2.0M 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 reverse engineering became available, the thirty-six (36) month process would consist of the following: 3 months to obtain existing parts, 3 months to tear down and understand the design, 6 months to iteratively develop drawings, prototypes and bench test, 12 months to perform system and vehicle level testing, and 12 months to write the technical data package and provision the parts. 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 produce the final TDP and associated provisioning documents at a cost of $4.5M. 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

In addition to the cost and delay for an R&D action or an RE effort, the Government estimates that it would take approximately one additional year to establish another source and procure these kits on a competitive basis. 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 (estimates based on similar Government projects). These events combined are estimated to take an additional 12 months after development of the item.

The Government would not be able to recover, through subsequent competition, the additional costs involved in an RE effort to create a new and competitive TDP. At the current average usage rate of 132 units each year, a current unit cost of , and assuming 25% cost savings achieved through competition, the in annual savings would take over years to offset the estimated $4,500,000.00 cost of RE the item and qualifying another source.

6. Efforts to Obtain Competition:

a. Effective competition: Due to the reasons cited in section 5 above we are not pursuing competition for this item. The notices required by FAR 5.201 will be posted.

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, and 52.244-5, “Competition in Subcontracting,’ to maximize small business opportunities and utilization.

7. Actions to Increase Competition: There are no plans to increase competition for future procurements due to the reasons cited above. 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 2520-01-574-4828. AMG / Dana hold 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: A Sources Sought Notice was posted to beta.SAM.gov on 8/19/2020, and was open for 15 calendar days.

Notice ID: SPRDL1-20-R-0285 Noun: Driving Axle Differentials

NSN: 2520-01-574-4828

Part Number: AMG (CAGE: 34623) P/N 6048217 or Dana (CAGE: 63ZH0) P/N 2011412-1 Quantity: 64 (with 100% Option) End Item: HMMWV

To date, no responses to the Sources Sought have been received.

Internet searches for suitable competition were performed as described below:

In August 2020 Ground Vehicle Systems Center (GVSC) Engineering conducted a computer-based online search of known rear differential assembly suppliers looking for published material on a new built rear differential assembly specifically for the HMMWV.

Keyword(s): Rear Differential, HMMWV, rear differential assembly.

Links used to conduct market research are listed below:

https://www.eaton.com/Eaton/ProductsbyMarket/Government/Vehicles/MilitaryVehicles/ HMMWV/index.htm https://predatorinc.com/shop/hmmwv-differential-centering-kit/ https://www.jasperengines.com/differentials http://www.g2axle.com/pages/view/core_locker https://www.axletech.com/en/products/components

Findings: The results of this search did not produce any new companies that would provide a direct replacement Rear Differential assembly 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. The HMMWV is in sustainment at this time so massive vehicle system changes to accommodate competition are not funded and are unable to be fielded.

Summary: As a result of the Market Research, it was concluded that the Government does not have enough detailed information consider similar parts for this specific application on the HMMWV. This Rear Differential assembly cannot be identified as a Commercial Off-The-Shelf item.

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

10. Other Facts: Procurement History:

Contract Number: SPRDL1-19-C-0187 Award Date: 13 May 2019 Contractor: AM General, LLC Contract Value: $279,736.02 Competitive Status: FAR 6.302-1 only one responsible source

Contract Number: SPRDL1-18-C-0042 Award Date: 25 October 2017 Contractor: AM General, LLC Contract Value: $312,524.85 Competitive Status: FAR 6.302-1 only one responsible source

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.

Name:

Title: PD-LTV Chief of Engineering, Quality Assurance and Test