JA_SPRDL121R0091_Redacted.pdf

SPRDL1-21-R-0091 (J&A 0450)

Prior J&A not available: No prior history

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

SPRDL1-21-R-0091

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

2. Description of Action: DLA-WRN proposes to award a new Firm-Fixed-Price contract with a 100% option to JCB, Inc., Commercial and Government Entity Code (CAGE),0JKF0, for spares that support the Light Capability Rough Terrain Forklift (LCRTF). These items and National Stock Numbers (NSNs) are Cylinder Assembly /Side Shift Cylinder (NSN 3040-01-779-9811), Cylinder Assembly/ Fork Positioner Cylinder. 54 millimeter (mm) (NSN 3040-01-678-0780), Cylinder Assembly/ YAW Cylinder (NSN 3040-01-678-2296), Cylinder Assembly/ Cylinder Actuating, Liner (NSN 3040-01-669-1420).

3. Description of Supplies/Services:

The proposed contractor for this action is JCB Inc., CAGE 0JKF0.

The approved contractor is also the Original Equipment Manufacturer (OEM) of the Light Capability Rough Terrain Forklift (LCRTF). The contractor passed the unique testing of the Production Qualification and Verification tests for the LCRTF, including the demonstration of supplying components that fully met the LCRTF performance requirements. 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 LCRTF, and therefore the components, were ready for fielding and incorporation into the Army’s supply distribution mission.

The contractor has other capabilities in that they have full knowledge and understanding of the critical relationships between the components and the end item. The LCRTF components have interfaces with the machine structure providing the needed safety factors that ensure mission effectiveness and protect the safety of the soldier. This knowledge assures the Government that replacement components will be easily incorporated into the machine reducing time for other adjustments and troubleshooting.

Using a contractor without the unique qualification listed here introduces risks to the Government. A component 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 enter, load and unload International Standards Organization (ISO) shipping containers along with loading and unloading tactical vehicles containers as part of its supply distribution mission. Associated with this lack of capability would be a shortage of supplies that are to be delivered to soldiers deployed in the field.

In the case of the Cylinder assembly, we are procuring this item from JCB. The product

Army’s 5K Light Capability Rough Terrain Forklift (LCRTF). The four components are:

“Cylinder Assembly- Side Shift Cylinder” (NSN 3040-01-779-9811), “Cylinder- Fork Positioner Cylinder 54mm” (NSN 3040-01-678-0780), “Cylinder Assembly- YAW Cylinder” (NSN 3040-01-678-2296, and “Cylinder Assembly-Cylinder Actuating, Liner” (NSN 3040-01-669-1420). An award to any other source would result in substantial duplication of cost to the Government that is not expected to be recovered through competition and would cause unacceptable delays in fulfilling the agency’s requirements. The detailed reasons for citing this authority are as follows:

JCB Inc. has amassed a substantial, unique knowledge base under prior contract W56HZV-17-D-0003. In that contract, Engineering Data for Provisioning (EDFP) was submitted by JCB Inc. and approved by the Government. EDFP consists of data such as specifications, standards, drawings, descriptions, necessary assembly and general arrangement drawings, schematic drawings, schematic diagrams, and diagrams containing wiring and cabling. These are necessary to indicate the physical characteristics, location, and function of the item. JCB delivered prototypes that were tested by the Army on the actual end item LCRTF. This contract action will ensure the Army can meet replenishment needs for these NSNs.

Substantial Duplication of Costs and Unacceptable Delays: JCB Inc. is the only company that can manufacture these components since they are the developers of these parts. Contracting with a source other than JCB Inc. would delay the availability of replacement spare parts since another supplier would have to replicate the work of reverse engineering and validating the performance of the resulting four components.

Based on the market research performed to date, we know of no other source having the equivalent accumulated knowledge and experience that JCB Inc. has amassed for these components.

6. Efforts to Obtain Competition:

This action is limited to JCB Inc. JCB Inc. is the owner of the Technical Data Package (TDP) for this item. There are no known funding efforts in progress at this time to qualify other suppliers of this item nor will there be prior to the contract award due to funding constraints – no funds are available to qualify additional sources given the cost and time involved. At this time, there has not been any expressed interest by any known vendor to become a qualified source to produce this item. Interested contractors can seek qualification through the Source Approval Program with the Tank Automotive Command (TACOM) Competition Management Office.

7. Actions to Increase Competition:

The components covered by this procurement are designed and developed by the component manufacturer. Procuring proprietary data form an OEM is difficult as 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 components and spare parts for many years. Qualifying additional sources is viewed as more of a schedule delay issue for this product type and will be addressed below. 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. The Government estimates 12 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 replacement components to be delivered to field users and would impact the mission as machines would be non-mission capable.

These components are not feasible candidates for reverse engineering at this time. The components are assemblies designed by an established commercial vendor. It is estimated as a high-risk proposition since the components are already in the market and the reverse engineering process would be replicating the effort associated with the original design of the components. The reverse engineering effort would take approximately 12 months or more at a cost of approximately $650K per component. In addition, the reverse engineered component would have to establish reliability comparable to the already existing design. This evaluation process would need another 12 months and an estimated additional $250K per component. Recent experience in our Combat Engineer (CE) / Material Handling Equipment (MHE) Team involved a reverse engineering project for three electronic components in another system. The development cost for this project was nearly $1.2 million. In addition to this cost testing and validation at an Army test facility required over nine months for the three components, the total approximate cost would be $200K. For this procurement, reverse engineering a more complex component like a Cylinder Assembly would likely exceed the cost of the electronic components. These costs would not be recovered by subsequent competition as the Army’s demand for these components is small and variable. 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.

The quantity requirements for the components are too small to justify the cost required to increase competition. This requirement is for replacement (spares) components so developing a competitive effort, procuring proprietary technical data, or reverse engineering are not cost-effective options.

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 package. For example, for the Cylinder Assembly (NSN 3040-01-779- 9811), assuming an average usage rate of 10 units each year, a current unit cost of and assuming the 25% savings achieved through competition, the in annual savings would take over years to offset the estimated $650K cost of reverse engineering that item and qualifying another source.