JOFOC_FAR 6.3_2031ZA24R00031_Quicksilver III_Redact.pdf

Version No.: 3 Version Date: March 2025

Approved by: Chief, Office of the Chief Procurement Officer

DEPARTMENT OF THE TREASURY

BUREAU OF ENGRAVING AND PRINTING

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

(Justification for FAR subpart 6.3)

A. NATURE/DESCRIPTION OF THE ACTION BEING APPROVED.

1. Name of contracting activity:

U.S. Department of the Treasury Bureau of Engraving and Printing (BEP) Office of the Chief Procurement Officer (OCPO) 14th and C Streets, SW Washington, DC 20228

2. Name of Proposed Source:

3. Requisition No.: 160790 4. Cost Estimate: $59,567,972

5. New Contract or Modification 6. Bridge Yes No

7. Brand Name Yes No 8. Individual or Class Justification

9. Contract Type: IDIQ 10. Attachments Yes No

11. Policy Tracking no. JOFOC-25-0002

12. Additional details:

The BEP, Office of Technology Development (OTD) has a requirement for continued research and development (R&D) and integration into Catalyst family banknotes of an overt security feature; this effort will be referred to as . The scope of the current effort is to further the technology with U.S.-exclusive optical effects and motion with unique physical properties

Consequently, BEP/OTD would like to accomplish as a continuation of Phase 2, Feasibility ongoing studies in Phase 2, Feasibility and Phase 3, Test and Optimization, as well as Phase 4 Technology Integration. The ultimate project goal is the technology development of a fully functional, printed overt security feature; for the Contractor to achieve proof of technology manufacturability on full industrial scale; and for the Contractor to support the complete integration of the feature technology into the BEP�s final product of a U.S. Federal Reserve Note (FRN).

Therefore, BEP, Office of the Chief Procurement Officer, Production Contracting Division, R&D and Materials Section proposes to award a sole-source acquisition to SICPA Securink Corp. for the continuous development of overt security features unique to USCP and retain exclusivity rights for the

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Approved by: Chief, Office of the Chief Procurement Officer proprietary technologies relating to overt surface-applied security features with unique optical effects that is exclusive for the next generation of United States (U.S.) currency. In this instance the proposed source shall furnish all facilities, labor, materials, and equipment to produce an overt counterfeit deterrent system in accordance with the Statement of Objectives at the task order level.

The BEP anticipates a sole-source Firm-Fixed Price (FFP) Indefinite Delivery Indefinite Quantity (IDIQ) contract with a five (5) year ordering period to SICPA Securink Corp. estimated at $59.5M total contract value. The cost reflects supporting Catalyst notes testing with material supply, possible press process research and possible future increase in material supply related to future banknote denominations. The Government will provide a firm fixed price not to exceed amount for travel and consumables and will only pay for actual cost incurred cost for travel and consumables items.

Vendor�s Information:

SICPA Securink Corp.

8000 Research Way Springfield, VA 22153 Tel. 703 440 2157

The required technology is proprietary to SICPA Securink Corp. and only available from one responsible source. The BEP anticipates sourcing this requirement from the current development contractor in order to retain the investment in a technology that has been developed exclusively for use by the BEP and unavailable from any other source.

B. DESCRIPTION OF THE SUPPLIES OR SERVICES REQUIRED TO MEET AGENCY NEEDS.

This requirement is for continued development of new overt features suitable for use in protecting the next generation of U.S. currency from counterfeiting threats and to provide the general public with a user-friendly feature with which to quickly and confidently validate notes passed in common, everyday transactions. Specifically for this requirement, this work is to continue the Phase 1 and 2 technology development effort, concept and feasibility, initiated in BEP Contract TEPS15-02317, to complete the technology development effort of selected technologies through Phase 3, Test and Optimize, and Phase 4, Technology Integration supported by BEP Contract 2031ZA19D0017, and to supply inks for testing of selected Catalyst family banknotes until a material supply contract is established by MTCD. The main focus of is to further the technology that resulted from the aforementioned work done within

Phase 1 - 4 of the BEP�s Technology Development Process (TDP), to continually incorporate new concepts as necessary, and to supply testing inks for Catalyst family banknotes.

The periodic project goals are for the Contractor to present to the BEP and its stakeholders regular progress updates and functioning feature exemplars and to support the integration of the security feature into a functional banknote environment. The ultimate project goal is the full lifecycle technology development of U.S.-exclusive overt security features with novel and unique optical effects and to integrate the developed security features on U.S. distinctive currency paper substrate as part of the BEP production process.

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Approved by: Chief, Office of the Chief Procurement Officer

The independent government cost estimate (IGCE) for the full five-year research and development services effort is $59.5M. The purpose of this procurement is to advance potential features through to the end of the Technology Development Process (TDP) and to supply contracts for Catalyst family banknotes.

C. IDENTIFICATION OF THE STATUTORY AUTHORITY PERMITTING OTHER THAN FULL

AND OPEN COMPETITION. (Check only one)

41 U.S.C. 3304(a)(1), FAR 6.302-1 Only one responsible source and no other supplies or services will satisfy agency requirements 41 U.S.C. 3304(a)(2), FAR 6.302-2 Unusual and compelling urgency 41 U.S.C. 3304(a)(3), FAR 6.302-3 Industrial mobilization; engineering, developmental, or research capability; or expert services 41 U.S.C. 3304(a)(4), FAR 6.302-4 International agreement 41 U.S.C. 3304(a)(5), FAR 6.302-5 Authorized or required by statute 41 U.S.C. 3304(a)(6), FAR 6.302-6 National security 41 U.S.C. 3304(a)(7), FAR 6.302-7 Public interest

D. DEMONSTRATION THAT THE PROPOSED CONTRACTOR�S UNIQUE QUALIFICATIONS

OR THE NATURE OF THE ACQUISITION REQUIRES USE OF THE AUTHORITY CITED.

As provided by 41 U.S.C. 3304 (a)(1), and as implemented by FAR 6.302-1(a)(2), the proposed Contractor is the �Only one responsible source and no other supplies or services will satisfy the agency requirements.� This requirement is deemed to be available only from the original intellectual property owner of the optical effects of the overt security features, SICPA Securink Corp. This is a follow-on for the continued development of a highly specialized service;

In accordance with FAR subpart 6.302-1, this justification for other than full and open competition (JOFOC) is issued under the authority of 41 U.S.C. § 3304(a)(1); only one responsible source and no other supplies or services will satisfy agency requirements. The nature of the acquisition and the proposed source's unique qualifications require the use of the authority cited.

The following supports the reason for use of this authority.

BEP completed an evaluation of the proposed source�s unique and innovative technologies and has determined, based on the completion of this evaluation, that there are sufficient demonstrations of the unique technology potentials that it would be most advantageous and beneficial for the Government to continue the R&D process for the technologies developed under the . As a result, a follow-on contract needs to be established with SICPA in order to advance the R&D process regarding the SICPA unique technology. The R&D effort for this requirement has resulted in selection of features to be incorporated into upcoming Catalyst family banknotes and are anticipated to result in further achieving security feature exemplar advancement within the scope of the following phases of the approved Technology Development Process (TDP):

Feasibility (Phase 2), Test and Optimize (Phase 3), and Technology Integration (Phase 4) for one or more overt counterfeit deterrent security features for potential application in U.S. currency (see the Statement of Objectives for specific details).

The USCP has identified the technology as unique and technologically advanced in terms of its visual effects and physical construction and has a desire to give it further consideration as a potential overt

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Approved by: Chief, Office of the Chief Procurement Officer security feature for future generations of U.S. Federal Reserve notes. The basis of BEP pursuing this proprietary technology as principally a follow-on contract to the initial competitive contract are the technical merit that has been demonstrated to-date and the importance of the BEP's counterfeit deterrence strategic goals to continually develop and implement new security features within the U.S.

currency. The following table identifies the previous contracts under which this technology has been developed to this point:

Contract Number

Contractor Awarded Contract Price

TEPS16-034760 SICPA Securink Corp. 08-01-2016 $3,614,516.00 2031ZA19D0017 SICPA Securink Corp. 09-30-2019 $40,338,993.00

This procurement is for (1) supporting incorporation of selected features into upcoming Catalyst

(2) R&D services for the continued development of new technology, the outcome of which carries an inherent risk of uncertainty and will be determined whether it will be selected for remaining Catalyst family denominations or not.

Proposed Source�s unique qualifications:

The proposed source has been determined to be the only source, current or potential, of the security feature suitable to the needs of the BEP and the

USCP.

The proposed source is exclusively capable of providing the required R&D services including the supply of physical exemplars of new features and has the manufacturing capacity and/or potential manufacturing capacity, know-how including trained personnel, and experience with developing security features for banknotes. There are no other known sources that have the capability to produce a feature that meets the required physical characteristics and functionality which the proposed source has demonstrated. The proposed source has the rights to all intellectual property associated with the

No other source has this intellectual property.

The use of an alternate vendor to further develop the proposed source�s unique technology is not a viable option. The BEP cannot pursue the development of this unique technology that has been initially developed by the proposed source under the above-mentioned contract(s) with another vendor due to the existing proprietary information and unique technology developed by the proposed source without directly infringing upon the Intellectual Property and Non-Disclosure Agreement (NDA) signed by both parties. As a result, the use of any alternate vendor�s unique technology inhibits the BEP�s ability to advance the current progress of development activity within the existing project. In order to maintain the current security feature development, the proposed source is the only responsible source.

Overall, the nature of this acquisition demonstrates that the proposed source is the only responsible

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Approved by: Chief, Office of the Chief Procurement Officer and qualified source that has access to the Intellectual Property of the materials as well as the specialized technical expertise, knowledge and capability to develop, design, manufacture, supply, deliver and thereby perform the required R&D effort to further develop the overt characteristics of these unique technologies as a potential security feature for incorporation into U.S. currency. As a result, the USCP is interested in the further investigation of the overt security feature and the proposed source has agreed to reserve the specific feature effects exclusively for the USCP.

E. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE SOLICITED FROM

AS MANY POTENTIAL SOURCES AS IS PRACTICABLE, INCLUDING WHETHER A

NOTICE WAS OR WILL BE PUBLICIZED AS REQUIRED BY FAR SUBPART 5.2 AND, IF

NOT, WHICH EXCEPTION UNDER FAR 5.202 APPLIES.

The BEP maintains continuous sources-sought announcements online on the GPE (Government Point of Entry) for Federal Government procurement. These announcements are revisited annually and specifically request industry to submit their unique technologies for consideration as a potential U.S. currency security feature. These RFIs specifically seek to identify information and sources for technologies and/or materials with potential application as an overt feature on future generations of U.S. currency. Interested parties are encouraged to respond to these notices with information for technologies that provide effective counterfeit deterrence against all types of threats including traditional printing as well as digital reproduction. BEP continues to receive responses via various RFIs, Request for Proposals (RFPs), and Broad Agency Announcement (BAA) notices associated with the BEP security features development program, as well as to identify other potential sources via other market research avenues, as mentioned above. BEP posted three Requests for Information (RFI) on hidden machine-readable security features (Notice ID: 2031ZA23N00016), overt security features (Notice ID: 2031ZA23N00015) and device assisted security features (Notice ID:

2031ZA23N00017) on SAM.gov on November 14, 2024.

The BEP will continue to review and evaluate responses received from the RFI to determine as warranted the possibility of establishing a competitive R&D procurement with the intent to evaluate potential new security features in U.S. currency.

Listed below are additional details regarding the various market research techniques utilized by the OTD and the Office of the Chief Procurement Officer:

Applied personal knowledge/Contacted Knowledgeable Individuals � The PM and direct project team have industry experience in the area of counterfeit currency deterrence features.

The market area of overt security feature technologies based SICPA�s concept is non-existent.

Market Research � The PMs recently completed market research by searching patents and publicly-available information on the Internet related to this technology and the report is attached to this package. None of the technologies shown in the query possess the unique, technical expertise, inherent knowledge, and capabilities (with respect to proprietary manufacturing processes, facilities, equipment and resources) necessary to perform the services required for this requirement.

The state of the market was judged against the type of feature that is the desired outcome of the

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Approved by: Chief, Office of the Chief Procurement Officer current project. No known overt security features with novel and unique optical effects based on the company�s proprietary color-shifting, pigments and alignment technologies, effect exist that displays the level of technical complexity or perceived effect uniqueness with a comparable activity that would make for a sufficient competition to the current effort. Only SICPA Securink Corp. was identified that could produce overt security features with novel and unique optical effects based on the company�s proprietary color-shifting, magnetic pigments and alignment technologies effect-based security feature that fulfills the BEP requirements for ease of interpretation due to strong and reliable visual effect, difficulty of simulation, and high barrier to reverse-engineering due to the precision manufacturing technique.

Overall, the advancement of specific new SICPA Securink Corp. technology under BEP contract has increased the differentiation from the market, and it would be even more difficult to find another suitable source now, compared to the outset of the project. This is even more so since features have been selected to be incorporated into the Catalyst family banknotes

BEP is and will continue to promote competition for the development of unique technologies for the express purpose of their use as a security feature on U.S. currency. In this instance, BEP has and is currently conducting multiple standalone R&D efforts regarding various unique and novel technologies for possible use as a security feature on U.S. currency. The actions BEP will continue to take to promote competition and identify such potential sources include but are not limited to: holding vendor conferences, attending conferences and other similar forums regarding emerging trends and leading technologies within and outside of the banknote industry, and posting RFIs and Sources Sought Notices.

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F. DETERMINATION BY THE CONTRACTING OFFICER THAT THE ANTICIPATED COST TO

THE GOVERNMENT WILL BE FAIR AND REASONABLE.

The BEP Contracting Officer will determine the price to be fair and reasonable in accordance with FAR Part 15. The Contracting Officer shall make a determination of fair and reasonable price by using FAR 15.404-1, Proposal analysis techniques. Proposed prices will be compared with historical prices paid which were found fair and reasonable on previous purchases for similar requirement, specifically:

a) 2031ZA19D0017, Under this requirement, the Government will utilize this historical data as one of its bases in making a fair and reasonable determination. Overall, the Government will use various cost and price analysis techniques and procedures to arrive at a fair and reasonable price determination, including but not limited to comparison of proposed prices to historical prices paid, comparison with competitive published prices, published market prices, similar indexes, Certified Cost or Pricing Data, if applicable, data other than Certified Cost or Pricing Data, and comparison of proposed prices with the

IGCE.

G. DESCRIPTION OF THE MARKET RESEARCH CONDUCTED (SEE FAR PART 10) AND

THE RESULTS OR A STATEMENT OF THE REASON MARKET RESEARCH WAS NOT

CONDUCTED.

The Office of the Chief Procurement Officer Contract Specialist conducted market research of Treasury mandatory sources, AbilityOne, and the Federal Procurement Data System (FPDS-NG).

The market research under these websites did not identify sources that are able to meet this requirement. Extensive market research efforts have been on-going for this requirement since 2009 to ensure that no known optical effect exists that displays the level of technical complexity or perceived effect uniqueness with a comparable activity that would make for a sufficient competition to the current effort. Please see attached SF 1010, Market Research for full details.

In conclusion, based on the above analysis, and the follow-on nature of this action no other vendors were found to be capable of providing a security feature with the unique effect that this feature provides, besides the proposed vendor. The BEP will continue searching for other possible vendors.

Based on the results of this market research, the proposed vendor is the only possible vendor with the intellectual property and technical capacity to produce this unique effect.

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H. ANY OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL AND OPEN

COMPETITION.

The BEP and other members of the USCP have a strategic goal of developing security features for future generations of U.S. currency. In order to achieve that goal, BEP must continuously identify, evaluate and source new technologies to stay ahead of counterfeiting and to maintain the trust and confidence that the world has in the U.S. currency. In identifying sources, BEP often looks for sources that have technologies that are inherently unique or exclusive so as to maintain a limited distribution to only BEP for use only on U.S. currency.

The objective of the BEP is to identify, develop, and recommend new and emerging security feature technologies and sources for potential U.S. currency application. As part of the program, the BEP receives and evaluates relevant technologies and sources for potential contracts using various market research techniques. A technical recommendation, combined with BEP management, determines whether to pursue further investigation of the information submitted by the vendor or otherwise obtained by BEP.

I. LISTING OF THE SOURCES, IF ANY, THAT EXPRESSED, IN WRITING, AN INTEREST IN

THE ACQUISITION.

SICPA Securink Corp. is the only known source available and qualified in fulfilling this Government�s requirement.

J. STATEMENT OF THE ACTIONS, IF ANY, THE AGENCY MAY TAKE TO REMOVE OR

OVERCOME ANY BARRIERS TO COMPETITION BEFORE ANY SUBSEQUENT

ACQUISITION FOR THE SUPPLIES OR SERVICES REQUIRED.

The Bureau, in conjunction with the Federal Reserve, continues to focus on identifying new counterfeit deterrents to improve the security of U.S. currency. To support the BEP mission, the BEP has a continued effort of seeking sources for counterfeit deterrence. Vendors who believe they have the technologies or materials with potential application as a counterfeit deterrent feature in United States currency are continuously invited to provide their unique capabilities for the Bureau�s consideration. Further, the BEP also holds yearly industry days with the goal to introduce our mission to new vendors.