JA_To_Increase_Ceiling_Redacted_12.1.15.pdf

J&A Number: 15025 Code: 02

Distribution Statement A. Approved for public release.

SMALL BUSINESS INNOVATION RESEARCH (SBIR) PHASE III

JUSTIFICATION AND APPROVAL

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

1. Agency and Contracting Activity.

Department of the Navy, Naval Sea (NAVSEA) Systems Command, Naval Undersea Warfare Center Division, Keyport (NUWC Keyport) Contracts Department, Code 02, in support of Code 235, Test and Analysis Systems Readiness Branch.

2. Description of the Action Being Approved.

This is a justification to increase the ceiling on Small Business Innovation Research (SBIR) Phase III contract N00253- 13-D-0001 by $1.284M. The contract was awarded to Teledyne Instruments, Inc. on 25 April 2013 with a base year and four one year option periods.

It is noted that Teledyne Instruments, Inc., a large business, purchased Benthos, a small business. Benthos is the entity that received Phase I and Phase II contracts associated with this Phase III effort. Since Teledyne Instruments, Inc. owns Benthos, it is able to receive the associated Phase III awards.

Benthos was competitively selected for SBIR Phase I and Phase II contracts under Topic No. N02-082, entitled Directional Acoustic Transponder. The objective of this topic was to develop an Autonomous Underwater Vehicle (AUV)-based, AUV localization system which would inform multiple vehicles of their range and bearing from a central controller. This would be done by using a commercial off-the-shelf modem, installed on the vehicle without modification, to communicate with a central controller aboard a separate AUV, itself built around a standard modem.

Under the Phase I contract N00014-02-M-0135, awarded on 24 April 2002, Benthos focused on research of the algorithms required for non-coherent acoustic telemetry in underwater channels. Under the Phase II contract N00014-03-C-0369, awarded 2 July 2003, Benthos furthered this development and implemented the resulting algorithms and procedures into the Acoustic Telemetry Modem 885 underwater modem.

Benthos was subsequently awarded two Phase III contracts, N00253-06-D-0005, and the current contract, N00253-13-D-0001, for work that derives from, extends, and logically concludes effort on SBIR Topic N02-082. Contracts N00253-06-D-0005 and N00253-13-D-0001 focus on the development of algorithms, firmware and hardware whereby a submarine and/or Unmanned Underwater Vehicle (UUV) will be enabled to range and/or navigate with a high degree of accuracy, on a real-time basis, while maneuvering in the vicinity of a system using Telesonar subsea modems or underwater sensor systems.

3. Description of Supplies/Services

N00253-13-D-0001 is an indefinite delivery, indefinite quantity, Cost-Plus Fixed-Fee (CPFF)/Cost/Firm-Fixed Price (FFP) type contract for Submarine and UUV Navigation using Telesonar Subsea Modems. This includes, but is not limited to, production of Telesonar Subsea Modems and underwater sensor systems, and ancillary engineering services in support of NUWC Keyport Code 235 Test and Analysis Systems Readiness Branch. The basic contract contains four contract line item numbers (CLINs). CLIN 0001 is a CPFF CLIN for labor, CLIN 0002 is a Cost CLIN for other direct costs including travel, boat rental, and miscellaneous material expenses (not fee bearing), CLIN 0003 is for FFP equipment (modems, etc.), and CLIN 0004 is for the Contract Data Requirements Lists and is not separately priced .

Table 1 reflects the contract award ceiling per CLIN for the base year and each option year.

Table 1: Contract Award Ceiling by CLIN

Cost/Price Fee Total

CLIN 0001 (CPFF) $1,338,886.00 $93,722.00 $1,432,608.00

CLIN 0002 (COST) $851,505.00 - $851,505.00

CLIN 0003 (FFP) $1,405,821.00 - $1,405,821.00

CLIN 0004 NSP - -

$3,596,212.00 $93,722.00 $3,689,934.00

The contract is currently in Option Year Two. To date, seven

(7) Procuring Contracting Officer modifications and six (6) delivery/task orders have been issued under this contract.

During execution of the contract, it became necessary to add and remove equipment from the FFP list associated with CLIN 0003.

As a result of these changes, the ceiling for CLIN 0003 was decreased slightly by $9.00 from $1,405,821 to $1,405,812, which resulted in an overall decrease of the contract ceiling from $3,689,934 to $3,689,925. Table 2 reflects the current contract ceiling for each CLIN, the ceiling used to date, and the remaining ceiling.

Table 2: Ceiling and Obligations

Item

CLIN 0001

Labor Cost

CLIN 0001

Labor -

Fixed Fee

CLIN 0002

Other Direct

Costs

CLIN 0003

Firm-Fixed

Price Total

Ceiling $1,338,886.00 $93,722.00 $851,505.00 $1,405,812.00 $3,689,925.00 Task/ Delivery Order Obligations $1,230,142.93 $86,110.38 $326,119.69 $700,401.00 $2,351,439.00 Available Ceiling $108,743.07 $7,611.62 $525,385.31 $705,411.00 $1,338,486.00

As shown in Table 2, a total of $1,316,253.31 (labor and fee) has been obligated on CLIN 0001, which is approximately 92% of the CLIN’s ceiling of $1,432,608. The Government is using ceiling for CLIN 0001, Labor, at a faster pace than anticipated at time of award.

The ceiling for CLIN 0001 was established by analyzing historical usage under Contract N00253-05-D-0006 in terms of number of hours and skill mix. The parties estimated a total of 8,805 hours at an agreed upon skill mix, which yielded an average burdened rate of approximately $152.06 per hour, without fee. The task orders that have been issued to date have varied in terms of skill mix from the estimates that were used to establish the contract ceiling at time of award. The task orders have been far more complex and labor intensive than the previous contract. Under the previous five-year contract, just over 4,100 hours were awarded via task order to support the Phase III efforts. Under the current contract, the Government has awarded a total of 6,244 in 2.5 years. In addition, the task orders have demanded a higher skill mix based on the technical complexity of the work. Most notably, the Chief Scientist and Sr. Software Engineer categories have been used significantly more than anticipated. Another driver contributing to the labor ceiling issue is the Chief Scientist labor rate. The rate is significantly higher than negotiated at the time the basic contract was negotiated. The primary reason is that prior to contract award, the Chief Scientist was paid in part through a bonus program and his rate has converted to straight salary.

As a result of the above, the Government has utilized a total of 6,244 hours at an average hourly rate of approximately $197.01 for a total cost, without fee of $1,230,142.93. In order to complete the anticipated task orders for Option Year 2, additional ceiling is required for CLIN 0001. Table 3 depicts the projects that are pending Request for Proposal, due to the ceiling limitations on the contract.

Table 3: Planned Task Orders Task Order Description IGE Labor

Amount Type of Funding

Modem Code Security $215,000 RDT&E Multi-mode Communications $180,552 RDT&E Simulation of UUV Homing $86,021 RDT&E / OPN Demonstration of UUV Homing $289,343 RDT&E / OPN Totals $770,916

The total depicted is based on the Independent Government Estimates (IGEs). The ceiling is requested to be increased by $1.284M to account for the projects in Table 3 and additional ceiling to adequately address any new requirements that may arise during Option Year Two. This figure also includes a 7.0% fixed fee applied to the increase, which is the fee percent that was negotiated at time of award.

4. Identification of Statutory Authority

10 U.S.C 2304(c)(5) as implemented by FAR 6.302-5, Authorized or required by statute.

15 U.S.C. 638(r)(1) states: “In the case of a small business concern that is awarded a funding agreement for Phase II of an SBIR or Small Business Technology Transfer (STTR) program, a Federal agency may enter into a Phase III agreement with that business concern for additional work to be performed during or after the Phase II period.”

Furthermore, 15 U.S.C. 638(r)(4) states: “To the greatest extent practicable, Federal agencies and Federal prime contractors shall issue Phase III awards relating to technology, including sole source awards, to the SBIR and STTR award recipients that developed the technology.”

5. Demonstration that Proposed Contractor’s Unique Qualifications or Nature of Acquisition Requires Use of Authority Cited.

The nature of the acquisition requires the use of the authority cited. The SBIR/STTR Programs are structured in three phases.

Phase I (project feasibility) determines the scientific, technical and commercial merit and feasibility of the ideas submitted. Phase II (project development to prototype) is the major research and development effort, funding the prototyping and demonstration of the most promising Phase I projects. Phase

III (commercialization) is the ultimate goal of the SBIR/STTR Programs. Because the Phase III work derives from, extends, or completes efforts performed under Phase I and Phase II, use of the authority cited is required.

6. Description of Efforts Made to Ensure Offerors Were Solicited From as Many Potential Sources as Practicable/ Public Notification through Government Point of Entry (GPE)

As described above, only Teledyne Instruments, Inc. was considered for the Phase III award due to the nature of the acquisition. In accordance with FAR 5.202(a)(7), this proposed contract action does not require public notification to the GPE.

7. Determination of Fair and Reasonable Costs

The Contracting Officer will determine prior to award of any task/delivery order that the negotiated cost/price of the task order executed under this justification is fair and reasonable pursuant to FAR Subpart 15.4. This determination will be documented in the negotiation memorandum for each task order issued, which will be included in the contract file.

8. Description of Market Research or Statement of the Reason Market Research was not conducted.

FAR 10.001(a)(2) indicates that market research appropriate to the circumstances must be conducted. SBIR Phase III procurements are such that traditional market research to identify alternative sources is generally unnecessary. As described above, the Phase III work derives from, extends, or logically concludes efforts performed under Phase I and Phase II.

9. Any Other Supporting Facts.

Not applicable.

10. Listing of Interested Sources.

Not applicable.

11. Actions to Remove Barriers to Competition.

The Contracting Officer is not aware of any specific actions that would further remove barriers to competition.

12. Period of Performance.

Base Year: 25 April 2013 to 24 April 2014 Option Year 1: 25 April 2014 to 24 April 2015 Option Year 2: 25 April 2015 to 24 April 2016 Option Year 3: 25 April 2016 to 24 April 2017 Option Year 4: 25 April 2017 to 24 April 2018

Due to the ceiling constraints encountered on this contract, the Government is planning a new contract for Phase III work. As a result, it is anticipated that Option Years 3 and 4 will not be exercised under Contract N00253-13-D-0001.

13. Total Estimated Dollar Value of the Acquisition Covered by this J&A, with Funding Specified by Year and Appropriation.

The total estimated value of the ceiling increase is $1.284M.

This figure includes the planned projects identified in Table 3, plus ceiling to adequately address any new requirements that may arise during Option Year Two. The task orders are anticipated to be funded with RDT&E and OPN dollars.

14. Actions Attempted to Make Immediate Acquisition Competitive and Cost/Benefit Analysis

No actions were attempted to make the immediate acquisition competitive; no cost/benefit analysis was performed. As described above, only Teledyne Instruments, Inc. is being considered for Phase III award due to nature of the acquisition.

TECHNICAL AND REQUIREMENTS CERTIFICATION REQUIRED BY

FAR 6.303-2(C):

I certify that the facts and representations under my cognizance, which are included in this Justification and its supporting acquisition planning documents, except as noted herein, are complete and accurate to the best of my knowledge and belief.

TECHNICAL AND REQUIREMENTS COGNIZANCE:

Signature Name (Print) and Title (Code) Phone No. Date

LEGAL SUFFICIENCY REVIEW:

I have determined this justification is legally sufficient.

CONTRACTING OFFICER’S CERTIFICATION REQUIRED BY FAR 6.303-

2(b)(12):

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

COMPETITION ADVOCATE APPROVAL REQUIRED BY FAR 6.304(a)(2):

Upon the basis of the above justification, I hereby approve, as Procuring Activity Competition Advocate for Naval Undersea Warfare Center Division, Keyport, the use of other than full and open competition for the proposed procurement described herein, pursuant to the authority of 10 U.S.C. 2304(c)(5).

All questions regarding this justification are to be referred to Dave Walz, NUWC Keyport Code 024, (360) 315-8465, david.e.walz@navy.mil.