JOFOC updated thresholds 1.22.26 revision_erp (003) FE.pdf

PRC-JA-26005

U.S. DEPARTMENT OF JUSTICE

UNICOR, Federal Prison Industries, Inc.

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION:

Authority Cited:

FAR 12.102(b) (DEVIATION): Only one responsible source and no other supplies or services will satisfy agency requirements.

41 U.S.C. 1901- Simplified Acquisition Procedures

1. Identification of the agency and the contracting agency.

Department of Justice UNICOR, Federal Prison Industries, Inc. Central Office 400 First Street N. W.

Washington D. C. 20534

2. Nature and/or description of the action being approved.

This is a request for authorization to purchase an annual SAP S4 HANA maintenance and support service agreement without competition. The maintenance and support services are commercial services which are available to provide technical support to an existing commercial product, SAP, from its developer.

3. A description of the supplies or services required that meet the agency’s needs (including the estimated dollar amount).

DESCRIPTION

Yearly maintenance and support of SAP S4 HANA.

To be invoiced quarterly:

SAP Maintenance 1/1/26 - 3/31/26 $207,519.00 SAP Maintenance 4/1/26 - 6/30/26 $207,519.00 SAP Maintenance 7/1/26 - 9/30/26 $207,519.00 SAP Maintenance 10/1/26 - 12/31/26 $207,519.00

Total estimated cost for 2026 services: $830,076.00

4. An identification of the statutory authority permitting other than full and open competition.

41 U.S.C. 1901

5. A demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires the use of the authority cited.

SAP is the software company which developed the Enterprise Resource Planning (ERP) system that FPI uses. It integrates FPI’s finance, manufacturing, and supply information into a single, centralized platform to allow us to manage operations efficiently. The ERP system S4 HANA is the most recent iteration of that software. Utilization of a third-party support provider presents increased risks for cybersecurity issues. Third-party support may not provide adequate support for applications which have been modified or customized. There may be delays in receiving bug fixes and updates, which can negatively impact system performance and compliance. Issues may require coordination with third-party vendors which can complicate response time and recovery efforts. Additionally, if a third-party vendor is compromised, it may lead to malware infections and security breaches.

6. A description of efforts made to ensure that offers are solicited from as many potential sources as possible, including whether a notice was or will be publicized as required by part 5 and, if not, which exception under part 5 applies.

A benefits analysis was conducted in December 2025, and it was determined the risk was too great to go to third party support, and that FPI should stay with SAP primary support. Utilization of a third-party support provider presents increased risks for cybersecurity issues. Third-party support may not provide adequate support for applications which have been modified or customized. There may be delays in receiving bug fixes and updates, which can negatively impact system performance and compliance. Issues may require coordination with third-party vendors which can complicate response time and recovery efforts. Additionally, if a third-party vendor is compromised, it may lead to malware infections and security breaches. A notice will be publicized as required by part 5.

7. A determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The cost for this year’s calendar support is based off software cost and a percentage from the software costs, and currently we are paying 23%. Per GSA, generally, software maintenance costs are normally 22% of software costs. The total cost for 2026 services reflects a 2.6% increase compared to 2025 services, which totaled $808,252.16.

8. The market research conducted (see part 10) and the results or a statement of the reason market research was not conducted.

FPI conducted market research and a cost benefits analysis of primary versus third party support in December. FPI MISB management decided the risks of third-party support were too great.

Primary support from SAP directly as opposed to third-party support results in more clearly defined reduction of risks for the unique environment FPI has. Utilization of a third-party support provider presents increased risks for cybersecurity issues. Third-party support may not provide adequate support for applications which have been modified or customized. There may be delays in receiving bug fixes and updates, which can negatively impact system performance and compliance. Issues may require coordination with third-party vendors which can complicate response time and recovery efforts. Additionally, if a third-party vendor is compromised, it may lead to malware infections and security breaches.

FPI has recently inquired about the Department of War’s Enterprise Software Initiative (ESI), which includes SAP products and services. It has been determined by the contracting officer that DOW’s ESI would not be applicable for UNICOR’s requirements.

9. Any other facts supporting the use of other than full and open competition.

SAP is the only company that can provide primary support/maintenance to our SAP S4 HANA enterprise software. Federal Prison Industries previously engaged in the use of third-party contractors as functional consultants. At the time, the functional consultants had to request access to the product details purchased directly from SAP through our employees. This rationale used by third-parties which resulted in ineffective resource utilization.

10. A listing of sources, if any, that expressed in writing, an interest in the acquisition

No other vendor Expressed interest.

11. A 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.

If FPI management believes the risks of using third party support are too great to our financial system and that we should only use primary support from SAP, the manufacturer of the software.

Primary support from SAP directly as opposed to third-party support results in more clearly defined reduction of risks for the unique environment FPI has. Utilization of a third-party support provider presents increased risks for cybersecurity issues. Third-party support may not provide adequate support for applications which have been modified or customized. There may be delays in receiving bug fixes and updates, which can negatively impact system performance and compliance. Issues may require coordination with third-party vendors which can complicate response time and recovery efforts. Additionally, if a third-party vendor is compromised, it may lead to malware infections and security breaches.

12. Contracting officer certification that the justification is accurate and complete to the best of the contracting officer's knowledge and belief.

By signing the form, the contracting officer certifies the acceptability of the document.

Contracting Officer Approve/Disapprove & Date (Required on all J&A’s exceeding $500,000 - $900,000)

Chief of ERP Approve/Disapprove & Date (Required on all J&A’s exceeding $500,000 - $900,000)

Supervisory Contracting Officer Approve/Disapprove & Date (Required on all J&A’s exceeding $500,000 - $900,000)

Chief, Procurement Branch Approve/Disapprove & Date (Required on all J&A’s exceeding $500,000 - $900,000)