Justification and Approval 20D0081.pdf

DEPARTMENT OF THE ARMY

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Agency: The U.S. Army Contracting Command- Detroit Arsenal (ACC- DTA), Detroit Arsenal, Michigan, 6501 East 11 Mile Road, 48397-5000, is the contracting activity for this procurement.

2. Description of Action: ACC-DTA proposes to award a new five year, Firm-Fixed Price Requirements contract to Knight’s Armament Company (KAC), for the procurement of upper receiver assembly and suppressor assembly kits, using Army Working Capital Funds (AWCF).

3. Description of Supplies/Services: This requirement is for upper receiver assembly and suppressor assembly kits, NSN 1005-01-674-9971, for the M110 Semi-Automatic Sniper System (SASS), with a manufacturer part number 111825. The M110 SASS is determined to be commercial. The Kit is comprised of the M110 upper receiver assembly, a suppressor assembly, and a 30” x 6” x 6” box. The annual estimated quantity is 125 each, for a total estimated five year quantity of 625 each. The total estimated value of this contract is XXXXXXXXX.

4. Authority Cited: The statutory authority permitting other than full and open competition is 41 United States Code (U.S.C). 1901 as authorized and implemented by Federal Acquisition Regulation (FAR) 13.501 (a), “Sole source (including brand name) acquisitions”.

5. Reason for Authority Cited: The Army has a XXXXXXXXXXXXXXX Semi- Automatic Sniper System (SASS) suppressor and upper receiver assembly kits. KAC is the weapon designer and Original Equipment Manufacturer (OEM) for the M110 SASS.

Since first purchasing the M110 SASS in 2005, the Army has only purchased M110s and the repairs from KAC on a sole source basis. This is because KAC developed the weapon at private expense and owns the rights to the Technical Data Package (TDP).

The Government does not have the rights to technical data for manufacturing the spare parts. On 23 October 2019 the Government requested a response from KAC on whether it would sell the technical data for the M110 SASS. KAC responded on 23 October 2019 stating “At this time KAC is not interested in selling the TDP for the M110 SASS with the upper receiver assembly and suppressor assembly NSN 1005-01-674- 9971.”

In order for the Government to manufacture or hold a competitive procurement, one of two things would have to occur: (1) the upper receiver assembly and suppressor assembly would need to be reversed engineered and source qualified; or (2) a new upper receiver and suppressor would need to be purchased and undergo and pass the required field testing before the Army could use them.

The M110 upper receiver and suppressor are complex XXXXXXXXXXXXXXXXX. The upper receiver integrated with the XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. Reverse engineering of the upper receiver and suppressor would require the following tasks:

(1) Reverse Engineer the upper receiver assembly and suppressor assembly;

(2) Identify qualified sources for the material;

(3) Identify manufactures that could make the assemblies;

(4) Undergo and pass the required field testing before use.

The total reverse engineering cost for the upper receiver assembly and suppressor assembly kit will require an estimated $3,652,636 as outlined in Table 2 below.

Reverse engineering of the upper receiver assembly and suppressor assembly would require specialized expertise in determining material, forging/milling, heat treatment, and identifying the rifling process associated with development of technical data, machining, manufacturing, testing, and certifying both upper receiver assembly and suppressor assembly.

Table 2

Develop Material & Drawings requires a specialized engineering expert to conduct the study on materials, heat treating and to develop drawings, at an estimated cost of $245,440. This cost is based on the current DB-03 Engineer pay rate of $118/hr at approximately 2,080 hours.

Prototype manufacturing process is the integration of the upper receiver assembly to the suppressor assembly with precise accuracy. Combat Capabilities Development Command (CCDC), Rock Island Arsenal Engineering Subject Matter Experts (SME) determined that prototype tooling, forging/milling, and manufacturing for three upper receiver assemblies and three suppressor assemblies would cost $50,000.

The Physical Configuration Audit cost estimate of $18,800 is based on Engineering SME past experience of the time required to perform the audit of the XXXXXXX XXXXXXXXXXX in 2018. The audit estimate for this action is 152 hours at a DB- 03 Engineer pay rate of $118/hr.

REVERSE ENGINEER DESCRIPTION COST

Develop Material & Drawings $245,440 Prototype Manufacturing (6 units) $50,000 Perform Physical Configuration Audit $18,800 Prototype Performance Testing $55,400 Certification Performance Testing $55,400 Planning the Reliability Test $5,900 Reliability Testing $38,500 Data Reduction / Reporting $11,000 TDP/NMWR Development $500,000 Certification for upper receiver assembly and suppressor assembly

$2,672,196

TOTAL Cost to Reverse Engineer $3,652,636

Prototype performance testing with dimensional verification is estimated to cost $55,400. In addition, performance testing would need to be certified at an additional $55,400. These cost estimates were provided by Aberdeen Proving Ground to conduct reliability, accuracy and dispersion testing in accordance with the M110 performance specification.

The Reliability Testing cost estimate of $38,500 was provided by Engineering SMEs, which includes additional costs of $5,900 for planning and $11,000 for Data Reduction/Reporting.

The estimated cost for National Maintenance Work Requirements (NMWR) for technical manuals (including updates to Engineering Data for Provisioning (EDFP), provisioning parts list (PPL), and validation events/report) is $500K. These estimated costs were derived from contract W911QY-11-D-0044 which included similar scope for NMWRS, EDFP and PPL.

The certification testing for one part was based off a detailed cost estimate from the M240 Machine Gun barrel, dated 25 Jan 2018, with a cost of $1,336,098.

Since this action is for two assemblies, the certification cost would be twice as much as the M240 Machine Gun barrel at an estimated cost of $2,672,196.

Based on the information provided above, since KAC owns the TDP for the M110

SASS, the Government would have to reverse engineer or qualify a new source of the upper receiver assembly and suppressor assembly. Reverse engineering would result in an additional cost of approximately $3,652,636. Since this is a XXXXXXXXXXXXof the M110 SASS, the lack of these component parts would cause M110 SASS rifles to be out of commission, XXXXXXXXXXXXXXXXXXXXXXXXX.

6. Efforts to Obtain Competition:

a. Effective competition: At this time, the Government does not plan to pursue competition for this action for the reasons stated in Paragraph 5 above. In accordance with FAR 5.201, this action will be synopsized and any resulting proposal will be considered.

b. Subcontracting competition: A small business subcontracting plan is not required as KAC is a veteran-owned small business.

7. Actions to Increase Competition: There are no current efforts to increase competition, as the TDP for the kit is unique to KAC for the reasons stated in paragraph 5 and the Government does not intend to purchase the TDP or reverse engineer it. The Government will continue to conduct market research to assess the feasibility of other contractor’s ability to meet similar future Government requirements. Any additional information received will be considered to determine if a competitive acquisition should be conducted or to determine potential future requirements.

8. Market Research: The ACC-DTA Contract Specialist conducted market research by issuing a Sources Sought Notice (SSN) on FedBizOpps from 31 October 2019 – 7 November 2019. The SSN requested industry’s capability to provide NSN 1005-01- 674-9971. Only one response was received, from XXXXXXXXXXXXXXXXXXX The vendor provided a capability statement which stated XXXXXX provides consulting services. The response did not substantiate the vendor’s capability to provide NSN 1005-01-674-9971.

Additional market research was conducted on 13 November 2019 by searching IHS Haystack Gold, the Interagency Contract Directory (ICD), GSA Advantage, NSN Now, KAC’s website, and Google. IHS Haystack Gold revealed that the items are source controlled to KAC. The ICD revealed no existing long-term contracts. GSA Advantage revealed no information. NSN Now revealed that the items are source controlled to KAC. The upper receiver is only available from KAC. KAC’s catalog revealed that the suppressor is available in its catalog. Google searches revealed that the M110 SASS kit is not available from distributors.

As a result, the market research revealed that no other sources can provide NSN 1005- 01-674-9971.

9. Interested Sources: To date, other than the response to the SSN, no other sources have written to express an interest, nor has the Government identified any other source possessing an interest in being an alternate source for this item.

10. Other Facts:

a. Procurement History: The following procurements were awarded to KAC using other than full and open competition:

1. Contract: W56HZV-19-C-0049

Contractor: Knight’s Armament Company Requirement: Provide repair services, parts, installation, functional testing, and precision firing testing for the M110 SASS Award Date: 19 January 2019 Total Amount: $715,199.40 Competitive Status: Sole Source Authority: 41USC 1901, as implemented by FAR 13.501(a) “Sole Source (including brand name) acquisitions.”

2. Contract: W56HZV-14-C-0307 Contractor: Knight’s Armament Company Requirement: Provide repair services, parts, installation, functional testing, and precision firing testing for the M110 SASS.

Award Date: 26 September 2014 Total Amount: $4,019,433.11 Competitive Status: Sole Source Authority: 10 USC 2304 (c)(1), as implemented by FAR 6.302-1(a)(2)(iii), “Only One Responsible Source”

b. Other facts. None

11. Technical Certification:

I certify that the supporting data under my cognizance, which are included in the justification, are accurate and complete to the best of my knowledge and belief.

Typed Name: Jeff Windham Date: 02-MAR-2020 Title: Chief, Small Caliber Systems Branch Signature: /signed/

12. Requirements Certification:

I certify that the supporting data under my cognizance, which are included in the justification, are accurate and complete to the best of my knowledge and belief.

Typed Name: Jeff Windham Date: 02-MAR-2020 Title: Chief, Small Caliber Systems Branch Signature: /signed

13. Fair and Reasonable Cost Determination:

I hereby determine that the anticipated price to the Government for this contract action will be fair and reasonable through a combination of Price Analysis, to thoroughly analyze the proposed price of each item to ensure it is consistent with the Independent Government Cost Estimate (IGCE) developed by the requiring activity, which is based on actual historical pricing of the upper receiver assembly and suppressor assembly kit. ACC-DTA has a dedicated Cost and Pricing Division with trained Cost/Price Analysts and Industrial Specialists who will assist the PCO by performing the Price analysis. The contractor will not be required to submit Certified Cost or Pricing Data in accordance with FAR 15.403- 1(b)(3). The results of negotiations, and the detailed Fair and Reasonable determination from the Contracting Officer, will be documented in a Post Negotiation Memorandum (PNM) that will be reviewed and concurred upon by senior Contracting personnel within the Pricing Division.

Typed Name: Lee Tappy Date: 23 MAR 2020

Title: Contracting Officer Signature: //s//Lee Tappy

14. Contracting Officer Certification:

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

Typed Name: Lee Tappy Date: 23 MAR 2020

Title: Contracting Officer Signature: //s//Lee Tappy

Approval

Based on the foregoing justification, I hereby approve the procurement of M110 Semi- Automatic Sniper System upper receiver assembly and suppressor assembly kits on an other than full and open competition basis pursuant to the authority of 41 United States Code (U.S.C). 1901 as authorized and implemented by Federal Acquisition Regulation (FAR) 13.501 (a), “Sole source (including brand name) acquisitions”. The estimated total value of this acquisition is XXXXXXXXX subject to the availability of funds, and provided that the property described herein has otherwise been authorized for acquisition.

X LaRuth Shepherd Competition Advocate