JA21-020 SAP MaxSecure_20201228_final redacted_Redacted_MLS_Redacted012921_Redacted.pdf

JUSTIFICATION FOR OTHER THAN FULL AND

OPEN COMPETITION (OTFAOC)

Federal Acquisition Regulation (FAR) Part 6 Justification & Approval (J&A), Supporting Procurements under FAR Part 12, and FAR Part 15

Purchase Request Number: N0003921MP00141 Contract Number: To be determined Task/Delivery Order Number: Not Applicable Procurement Title: Fiscal Year (FY) 21 Systems, Applications, and Products (SAP) MaxSecure Support Services Estimated Value:

Statutory Authority: 10 U.S.C. § 2304(c)(1). (FAR 6.302-1/DFARS 206.302-1)

Justification for OTFAOC Number: JA21-020

Upon the basis of the following justification, I, as Procuring Activity Competition Advocate, hereby approve the use of other than full and open competition of the proposed contractual action pursuant to the authority of 10 U.S.C. § 2304(c)(1). The regulatory authority is FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

1. REQUIRING AGENCY AND CONTRACTING OFFICE:

a. Requiring Agency:

Navy Enterprise Business Solutions Program Office Washington Navy Yard 1325 10th Street SE Bldg. 196, Suite 400 Washington, D.C. 20374

b. Contracting Office:

Defense Information Systems Agency Defense Information Technology Contracting Organization – Scott, PL8312 2300 East Drive, Bldg. 3600 Scott Air Force Base, IL 62225-5406

2. NATURE/DESCRIPTION OF ACTION(S): The nature of this action is to issue a sole-source firm-fixed price contract for SAP MaxSecure support services to SAP National Security Services (SAP NS2), a large business. The period of performance (PoP) is for a 12-month base period, and will include three, 1-year option periods. FY 21 Operations and Maintenance funds will be used for this procurement. The total estimated cost is . The applicable North American Industry Classification System Code is 541519, other computer related services.

3. DESCRIPTION OF SUPPLIES/SERVICES: This J&A authorizes and approves the issuance of a sole source contract for SAP MaxSecure Support Services. MaxSecure support is an annual COTS maintenance/support subscription service in support of SAP Software. The SAP

FY 21 SAP MaxSecure Support Services – JA21-020

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4. IDENTIFICATION OF STATUTORY AUTHORITY: Only one responsible source and no other supplies or services will satisfy agency requirements, 10 U.S.C. § 2304(c)(1). (FAR 6.302-

1/DFARS 206.302-1)

5. DEMONSTRATION OF CONTRACTOR’S UNIQUE QUALIFICATIONS:

(a) Description of events. In December 1998, the Secretary of the Navy Revolution in Business Affairs Commercial Business Practices Working Group established four ERP pilots as enablers for reengineering Navy ERP business processes. Each Navy pilot program focused on selecting a commercial ERP product that contributes to the Navy’s mission. During these pilot programs, the Navy considered SAP, Oracle and PeopleSoft as candidates for the Navy ERP solution. These four ERP pilot programs each independently selected the commercial-off-the-shelf vendor SAP as the system ERP solution. Since 1998, the Navy’s estimated total investment in these four pilot programs was approximately

. In 2003, the Assistant Secretary of the Navy-Research Development Acquisition directed the convergence of the pilot programs to standardize business processes on a Navy-wide basis and chartered the Navy ERP Program Management Office to oversee the acquisition and fielding of a Navy-wide ERP implementation using the SAP solution. The Navy ERP Program includes and expands upon the functionality implemented in the original pilot projects. SAP provides unified business processes and automated information systems supporting material management, plant maintenance, whole sale supply, financial management, program management and workforce management. In 2004, the Navy began to develop an ERP system that was built using SAP ERP core software products. The only authorized MaxSecure reseller and proposed sole source contractor, SAP National Security Services (NS2), has been providing the required MaxSecure support since 2008. The Navy’s ERP system uses core integrated software products from SAP to support its solution. The specialized support provided by SAP NS2 ensures the sustainment of the Navy ERP’s SAP integrated software products continues to be managed by the highest skilled technicians. To this end, the Navy has relied on the use of SAP MaxSecure in order to effectively execute the Navy ERP mission since 2008. The use of the MaxSecure approach to onsite total quality management has resulted in rapid responses to all Navy SAP product issues including providing exceptional performance improvements to the overall Navy ERP system, both of which have resulted in increased productivity to Navy ERP end users.

(b) Justification.

(1) Minimum Government requirements. In order to prevent a break in service of critical support for the Navy’s SAP-based ERP system, MaxSecure support is required to be in place by January 18, 2021. Because the Navy requires MaxSecure support and SAP NS2 is the only reseller of the MaxSecure support. SAP NS2 remains the sole source provider of the required services.

(2) Proposed sole source contractor. SAP NS2 has been the incumbent contractor and sole authorized reseller providing the required MaxSecure support since 2008 across multiple contracts as discussed in the procurement history (paragraph (a) of section

11) below. SAP NS2 does not authorize any resellers or channel partners to provide

Page 4 of 7 Pages the required services in support of their software, as discussed further below. Failure to award a sole source contract to SAP NS2 for MaxSecure support would result in substantial duplication of costs for the Navy to acquire and/or develop a new ERP system and cause a potential break in current service. Moreover, a switch to a new ERP solution would require redevelopment of the existing SAP software infrastructure, resulting in an unacceptable delay in fulfilling the Navy’s requirement in addition to duplication of cost. A reinvestment into a different software suite would be cost prohibitive. Procuring alternative software would cost at least

, to replace the existing ERP solution and implement similar product support assuming a similar pricing structure (e.g. licensing, support, etc.) as that for SAP software. However, this cost does not include the investment required to transition existing data to a new format, re-developing the solution using the new software;

performing regression testing; and implementing, deploying, and re-training the workforce. Based on the time to initially deploy the Navy ERP system (2004-2007), it would take a minimum of four years to fully deploy an alternate solution. The Navy could also incur a break in service during the four years it would take to transition to a new ERP solution based on an alternate software product, the current system would be unsupported.

(3) Discussion regarding cause of the sole source situation. The Navy’s ERP software is based on SAP integrated software products and the software licenses have been acquired through SAP. As such, the maintenance support required for this software must be SAP-based. This support is provided exclusively by SAP NS2, the only SAP MaxSecure reseller. Moreover, the Agency confirmed that SAP NS2 is still the only organization that is authorized to deliver the MaxSecure service, no other providers are authorized to resell MaxSecure support. As such, SAP NS2 is the sole source for providing the required MaxSecure support. The current service agreement for MaxSecure support expires on January 17, 2021, so the new agreement must be in place by January 18, 2021 to avoid a break in coverage. Thus, this effort is a continuation of the service currently being provided by SAP NS2. As long as the Navy fields a SAP-based ERP system, support for SAP products will be required.

Until SAP NS2 authorizes other resellers or channel partners to provide the required support for their products, this company will remain the sole source provider of MaxSecure support.

(4) Impact. Navy ERP is a mission essential business system currently supporting approximately 71,650 end users across multiple Navy Commands: Naval Air System Command, Naval Supply Systems Command, Naval Sea Systems Command, Space & Naval Warfare Systems Command, Strategic Systems Program Office and Office of Naval Research. Navy ERP is considered the Navy’s financial system of record and responsible for all the Navy’s managed materials. Navy ERP directly supports the war fighter by ensuring the efficient and timely appropriation, tracking and deployment of supplies. Without access to the level of support provided by SAP MaxSecure, the Navy will lack the dedicated support and SAP direct access necessary to resolve problems that may arise with the Navy ERP System in a timely manner. Additionally, the financial posture of the Navy would be jeopardized and its ability to support the

Page 5 of 7 Pages warfighter would be compromised. Given the business critical role of the Navy ERP system and the significant investment and reliance by the US Navy, it is imperative that the availability of the system not be in question. A critical component of the solution to ensuring the continuous delivery of ERP services is the sustainability of the application configuration and the underlying business data. Therefore, failure to provide the required SAP Max Secure support will result in mission failure.

6. SAM.GOV ANNOUNCEMENT/POTENTIAL SOURCES: A synopsis for this action will be published on the SAM.GOV website, as required by FAR 5.201. The synopsis will completely identify the Government’s minimum mandatory requirements.

7. DETERMINATION OF FAIR AND REASONABLE COST: A price analysis will be conducted prior to contract award to ensure the price paid represents a fair and reasonable cost to the Government in accordance with FAR 15.404-1 Proposal Analysis Techniques. The contracting officer will make a determination that the anticipated prices are fair and reasonable.

8. MARKET RESEARCH: In accordance with FAR 10.002, market research was conducted in September/October 2020 to analyze the Government’s need for the support services maintenance requirements. Further market research included reviewing General Services Administration (GSA) and the DoD Enterprise Software Initiative Blanket Purchase Agreement to determine if existing contracting vehicles could be used to procure the services required. SAP MaxSecure support was previously purchased off of the GSA schedules in the past; however, SAP MaxSecure has not been on a GSA schedule for more than seven years; therefore, GSA is not an option to procure these services. Therefore, these services are now only commercially available through SAP NS2 directly.

Moreover, additional market research was conducted September 9, 2020 through October 15, 2020, through a sources sought announcement, internet searches, communication with other information technology companies, and communication with SAP to verify authorized resellers.

As a result of this market research, the Agency determined that SAP NS2 is the only authorized company that can deliver the required MaxSecure Support. No other company who responded to the Sources Sought demonstrated an ability to meet the requirements.

9. ANY OTHER SUPPORTING FACTS: None.

10. LISTING OF INTERESTED SOURCES: Three small businesses expressed interest in this requirement, see table below. Although these small businesses expressed an interest, they are not considered a responsible potential source because these businesses are not authorized resellers of the required Max Secure support.

Contractor Name Cage Code Business Category Capability Reason

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TECHNICAL CERTIFICATION: I certify that the supporting data under my cognizance which are included in the J&A are accurate and complete to the best of my knowledge and belief.

NAME: SIGNATURE: See separate signature page

TITLE/ORGANIZATION: Administrative Specialist, COR/Navy ERP Technical Architecture Sustainment Team

PHONE: DATE:

REQUIREMENTS CERTIFICATION: I certify that the supporting data under my cognizance which are included in the J&A are accurate and complete to the best of my knowledge and belief.

NAME: SIGNATURE: See separate signature page

TITLE/ORGANIZATION: NAWCAD Infrastructure Support/Liaison to Navy ERP

PHONE: DATE:

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

NAME: Tamara J. Norrenberns SIGNATURE: See separate signature page

TITLE/ORGANIZATION: CONTRACTING OFFICER/DISA/DITCO

PHONE: 618-418-6386 DATE:

PROCURING ACTIVITY COMPETITION ADVOCATE APPROVAL: I have reviewed this justification and find it to be accurate and complete to the best of my knowledge and belief.

Since this justification does not exceed $13.5M, this review serves as approval and my written determination that the aforementioned FAR circumstances apply.

NAME: Gay Arnold SIGNATURE: See separate signature page

TITLE/ORGANIZATION: PACA//DISA

PHONE: 618-418-6517 DATE:

ALL QUESTIONS REGARDING THIS JUSTIFICATION ARE TO BE REFERRED TO Holly Sanders, 618-418-6366, holly.e.sanders.civ@mail.mil.