LSJ Addendum - WMS SAP Hosting_Redacted.pdf

CUI

Source Selection Information – See FAR 2.102 & 3.104

DEFENSE LOGISTICS AGENCY

CONTRACTING SERVICES OFFICE - PHILADELPHIA

700 ROBBINS AVENUE

PHILADELPHIA, PENNSYLVANIA 19111-5092

BRAND NAME LIMITED SOURCE JUSTIFICATION (LSJ)

(For Acquisition Conducted Under the Authority of the Multiple Award Schedule Program)

ADDENDUM

1. IDENTIFICATION OF THE AGENCY AND CONTRACTING ACTIVITY.

2. NATURE AND/OR DESCRIPTION OF THE ACTION BEING APPROVED.

In accordance with Federal Acquisition Regulation (FAR) 8.405-6, this Limited Sources Justification authorizes and approves the procurement of brand name SAP software licenses, maintenance, and cloud hosting services to support the Government's existing SAP software for: Extended Warehouse Management (EWM), Transportation Management (TM), Global Trade Services (GTS), and Event Management (EM). SAP is a brand name item peculiar to one manufacturer. The resultant order will be placed against a Federal Supply Schedule (FSS) Multiple Award Schedule contract with the General Services Administration (GSA) and/or Department of Defense Enterprise Software Initiative (ESI) agreements.

Controlled by: DLA DCSO Philadelphia CUI Category: General Procurement and Acquisition/ Source Selection Information see FAR 2.101 & 3.104

Distribution/Dissemination Controls: FEDCON POC: anthony.2.amendolia@dla.mil / (215)737-2570

Source Selection Information – See FAR 2.102 & 3.104 procurement in the early 2000’s. At that juncture, SAP was selected as the DLA ERP provider, where FLIS and Warehouse Management is simply a module of that platform.

The SAP software licenses currently in use by DLA must seamlessly interact with any new software licenses acquired for use in EBS. SAP owns the proprietary data of the software licenses currently in use as well as the proprietary data of the software licenses to be maintained under this acquisition. Only SAP software is capable of operating fully within the current ERP infrastructure due to the current implementation of SAP software throughout the system, which cannot seamlessly interact with any other company's software. An alternate company's software cannot be modified by the Government or another offeror to operate acceptably in the current ERP infrastructure since SAP owns the proprietary data needed to modify any other company's software for functional use within the ERP environment. In order to use another company's software in this environment, a complete revamp of the EBS infrastructure would be required, where DLA is deeply integrated and is developing 96 specific interfaces. This would result in multiple issues including the need for extensive retraining and recertification of the administrative staff, extensive recoding of software by the application staff, and extensive application and database downtime to implement the new database solution.

Non-SAP software licenses cannot be modified to enable integration into the existing SAP ERP operation; therefore, it has been concluded that SAP software licenses, maintenance, cloud hosting are the only currently compatible products. Moving to SAP subscription-based software and hosting integrates hosting and software licensing into one SAP offering.

In addition, cloud hosting services and maintenance provided by any other manufacturer would not meet the Government's service requirement and not be authorized by SAP as it is a proprietary platform. SAP Public Services Inc. and its authorized service providers are the only companies that are certified and have the required training and expertise to provide the specialized information technology required for cloud hosting and maintenance.

ADDENDUM

The authority permitting other than full and open competition is FAR 8.405-6(a)(1)(i)(B), only one source is capable of providing the required services, and FAR 8.405-6(b)(1), items peculiar to one manufacturer. The SAP brand name is essential to the Government's requirements, and market research indicates that other companies' similar products, or products lacking the particular feature, do not meet, or cannot be modified to meet, the agency's needs. SAP is a proprietary software developed by SAP and thus can only have approved SAP maintenance and SAP architectural knowledge base support applied. DLA is moving to SAP subscription-based software and hosting which integrates hosting, SAP support and maintenance, and software licensing into one SAP offering.

FLIS is a fundamental component for many DLA and DoD wide systems and solutions.

FLIS data enables over 8,000 procurement actions and 100,000 orders each day for

Source Selection Information – See FAR 2.102 & 3.104 annual sales in excess of $42 billion. Failure to procure these services increases the risk of failing to successfully complete the Cataloging Data Model which is a fundamental pre-requisite for a successful and future-proof implementation of DLA ERP.

Cloud hosting services and SAP Data Architect support and maintenance provided by any other manufacturer would not meet the Government's service requirement and not be authorized by SAP as it is a proprietary platform. SAP Public Services Inc. and its authorized service providers are the only companies that are certified and have the required training and expertise to provide the specialized information technology required for cloud hosting and maintenance.

Furthermore, if FLIS does not acquire the Data Architect labor category, the Catalog Transformation team would not have the required SAP/S4 HANA Architect on the project to ensure a properly integrated FLIS/WMS joint data model as the foundation for our S4 HANA environment. The WMS Enterprise Core Component data model, which was created on the current contract, is going to be leveraged to create the joint S4 HANA data architecture. This FLIS requirement needs to be added to this existing contract because a separate contract would produce overlapping requirements with separate vendors. The final deliverable needs to be a joint WMS/FLIS data model and architecture that will be used by the entirety of the DLA S4 HANA ERP. The current vendor has specific knowledge and experience with both FLIS and WMS enabling data model work to continue with no ramp-up time or break in service. Additionally, this resource will serve to help with the data conversion strategy from legacy to our new modernized solution. Only one source, ASI, is capable of providing the required services with items peculiar to one manufacturer, SAP.

5. A DETERMINATION BY THE ORDERING ACTIVITY CONTRACTING OFFICER

THAT THE ORDER REPRESENTS THE BEST VALUE CONSISTENT WITH 8.404(d).

The SAP licensing and hosting/support is available under established ESI agreements with Advantaged Solutions Inc, (N66001-19-A-0008); Carahsoft (N66001-19-A-0010);

and Oakland Consulting Group (N66001-19-A-0011). These agreements were issued against GSA FSSs and the terms and usage of these agreements are in accordance with DFARS 208.74. Pricing under the ESI agreements includes negotiated discounts to GSA FSS pricing.

The Government will attempt to obtain offers from as many vendors as practicable, including from the ESI holders noted above, in order to encourage competition. A Request for Quotation (RFQ) will be posted to GSA’s e-Buy website and authorized resellers of SAP licensing/maintenance and hosting services will be provided an opportunity to submit offers for this requirement. The Contracting Officer will evaluate all quotes received, determine that the pricing for the effort is fair and reasonable, and make an award to the firm whose proposal represents the best value to the Government consistent with FAR 8.404(d).

Source Selection Information – See FAR 2.102 & 3.104

The Contracting Officer will determine that the acquisition represents the best value to the Government consistent with FAR 8.404(d). In making this best value determination, the Contracting Officer will perform a price reasonableness analysis utilizing the techniques found at FAR 15.404-1, including: (1) Comparison of proposed prices to historical prices paid, whether by the Government or other than the Government, for the same or similar items (FAR 15.404- 1(b)(2)(ii)); (2) Comparison with competitive published price lists, published market prices of commodities, similar indexes, and discount or rebate arrangements (FAR 15.404-1(b)(2)(iv)); and/or (3) Comparison of proposed prices with the Independent Government Cost Estimate (FAR 15.404-1(b)(2)(v)).

6. A DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AMONG

SCHEDULE HOLDERS AND THE RESULTS OR A STATEMENT OF THE REASON

MARKET RESEARCH WAS NOT CONDUCTED.

Market research was conducted by reviewing previous contract history and the current ESI agreements. On October 10, 2023, a Request for Information (RFI) was sent to the current ESI agreement holders and posted on General Services Administration (GSA) eBuy, System for Award Management (SAM), and J6 Enterprise Technology Services (JETS). Multiple RFI responses were received and reviewed. It was confirmed through the RFI that multiple vendors are capable of providing the required services from both large and small businesses. It is anticipated that by soliciting this requirement on GSA e- Buy, multiple offers will be received; however, the ESI agreements historically provide the most favorable discounts to the Government.

In accordance with DFARS 208.7402, departments and agencies shall fulfill requirements for commercial software and related services in accordance with the DoD ESI. ESI promotes the use of enterprise software agreements with contractors that allow DoD to obtain the most favorable terms and pricing for software and information technology support services. In accordance with DFARS 208.7402, PGI 208.7403, DLAD 39.9001 (h), the DoD ESI service agreements were reviewed, and it was determined that there are three ESI BPA holders for SAP Public Services Inc. (Advantaged Solutions Inc., Carahsoft Technology Corp., and Oakland Consulting Group, Inc.) who offer SAP services on their ESI BPAs against their General Services Administration (GSA) Schedules.

7. ANY OTHER FACTS SUPPORTING THE JUSTIFICATION.

DLA has utilized SAP products over 10 years and has invested over $1 billion dollars in SAP software, maintenance, and training. In order to re-compete this requirement with other vendors, DLA would have to be willing to invest another +$1B to accomplish the current requirements set. Also, DLA has already expended $11M developing the current WMS capabilities in the SAP ERP module and would spend far more in any attempt to recreate the development path elsewhere. Finally, delays to this program are monetized at $30M per year, due to the maintenance expense of the antiquated components of the FLIS and DSS systems.

These antiquated components are anticipated to be significantly reduced on the current path.

Source Selection Information – See FAR 2.102 & 3.104