MSES Ceiling Increase JA PWS 23-3A0_REDACTED.pdf

For Official Use Only DMEA # 26-02

For Official Use Only

Justification for Other than Full and Open Competition Increase to Contract Ceiling

Contract: Manufacturing Sustainment & Engineering Support (MSES) IDIQ

Contractor: Blackwatch International Corporation (BWI) Contract No./Type: HQ072723D0002/CPFF Ceiling Increase: by $117.3M from $96.9 to $214.2M

I. Agency and Contracting Activity:

Defense Microelectronics Activity (DMEA) Contracting Division/MEC 4234 54th Street McClellan, CA 95652

II. Nature and/or Description of the Action Being Approved:

The approval of this Justification and Approval (J&A), will provide the required ceiling increase necessary to accommodate additional ordering capacity for the manufacturing sustainment and engineering support IDIQ contract. The MSES IDIQ contract provides engineering support for wafer processing and microelectronics-based activities of the DoD’s only semiconductor foundry, DMEA’s Advanced Reconfigurable Manufacturing for Semiconductors (ARMS) Foundry, and activities of the DMEA’s Integrated Circuits Manufacturing Support Labs (ICM-SL) mission requirements.

Currently, DMEA holds an IDIQ contract with BWI to provide manufacturing sustainment and engineering support. The contract ceiling is $96.9M with an ordering period of 23 August 2023 to 22 August 2028. DMEA is on track to use most, if not all, of the remaining $48M ceiling, prior to this ceiling increase. The remaining $48M ceiling will be used for the MSES task orders previously anticipated. The $117.3M ceiling increase will be used for reconciliation initiatives (Project SHIELD, Nucleus, and Pathfinder) and for the Building 2 QRE/PCBA tooling and installation.

The purpose of the ceiling increase is to add ordering capacity to execute the reconciliation initiatives; however, it may not be fully utilized, or it could be used to fulfill other unanticipated task orders. This J&A is not requesting approval to extend the ordering period, only an increase to the ceiling amount to allow performance under the existing period of performance (including options exercised). The proposed J&A modification is to increase the contract ceiling by $117.3M from $96.9M to $214.2M on the MSES IDIQ contract.

III. Description of the Supplies/Services Required To Meet the Agency’s Needs (including the total estimated value, including options, if any):

The MSES IDIQ provides manufacturing sustainment and engineering support for DMEA’s ARMS and ICM-SL laboratories. The ARMS Foundry utilizes advanced semiconductor solutions to resolve obsolescence issues, add capability, improve performance, improve reliability, improve maintainability, and improve availability of microelectronics-based weapons systems.

In 2022, DMEA’s mission evolved to include X which focuses on X for the DoD. This J&A is for increased capacity to expand the X capability within DMEA’s campus, which will include the procurement of an estimated X tools, engineering services and installation support, valued at X.

A portion of these tools, engineering services and installation support were considered at time of initial award of the IDIQ, and a subsequent task order; however, funding was not available in this capacity to execute the desired tasks in their entirety. Therefore, based on mission priorities, only some tools and engineering services were included with a smaller-scale configuration. The added ceiling will enable DMEA to do far more in pursuit of the foundry manufacturing mission capability within the five-year ordering period of the MSES IDIQ than was originally projected.

The incumbent contractor, BWI, already performs foundry upgrades and foundry sustainment within the existing awarded task orders. Additional tool procurement, installation, vendor coordination, tool specification interchange, and technical support within the same space and technical scope is required, just for a much greater number of tools and spaces.

IV. Authority Cited:

FAR 6.302-1, only one responsible source and no other supplies or services will satisfy agency requirements under the authority of 10 U.S.C. § 3204(a)(1)

V. Reason for authority cited:

The manufacturing and engineering support services have been acquired under the current contract with seven task orders awarded to date within the scope of the MSES IDIQ. The incumbent contractor, BWI, is already performing the required services within the same spaces, technical scope, tool and system interoperability, and logistical coordination. Thus, the overall functional capability responsibility for the outcome should remain with one party (contractor).

Maintaining the sustainment and engineering support services with BWI, as the sole performing contractor, will ensure there is no further increase in risks or disruption to these critical services by the addition of another party. The inclusion of another party to perform and be responsible for interrelated systems, would vastly increase the potential for conflicts and obscures technical responsibility of the contract performance. That said, when the MSES IDIQ scope was originally solicited, BWI was the only contractor to propose. There are no other known sources capable of satisfying this Government need.

VI. Efforts to Obtain Competition:

Historically, DMEA’s ARMS foundry and ICM-SL sustainment was supported through an ATSP task order with General Dynamics (GD) until 2021. In 2021, DMEA issued a Full and Open Request for Proposal (RFP) which resulted in an award to BWI for a period of performance from 2021 to 2023. In January 2023, the current MSES IDIQ scope was posted to RFID, market research tool, to acquire interested sources. Four firms (BWI, Booz Allen Hamilton, IntelliBridge, and Advetco) responded to the posting. Of the four firms that responded, two of them (BWI and Advetco) were small businesses, therefore the rule of two applied and the requirement was solicited as a small business set aside. The solicitation resulted in only one offer from the incumbent, BWI.

Based on the acquisition history, there is no reasonable expectation that a new solicitation would yield a new responsible offeror, nor would it produce a better price or more advantageous offer than utilizing the existing MSES IDIQ contract. That said, should the Government still require manufacturing sustainment and engineering support when the IDIQ ordering period is complete, the requirement will be recompeted and the Contracting Officer will consider quotations submitted by responsible sources in accordance with FAR 5.207(c)(16)(ii).

In accordance with 10 USC 3204 (f)(1)(A), this approved justification will be posted on SAM.gov within 14 days after award of the contract modification.

VII. Fair and Reasonable Cost Determination

Actions to ensure fair and reasonableness will be accomplished on each task order negotiation and will be based on the Independent Government Estimate (IGE), historical pricing, and the procedures and criteria contained in FAR Subpart 15.4. Detailed documentation and justification for fair and reasonable determinations will be included in the price negotiation memorandums.

As a result, I hereby determine that the anticipated price to the Government for this contract will be fair and reasonable.

Contracting Officer, Operational Contracting Branch

VIII. Additional Facts Supporting this Justification:

DMEA is due to receive an estimated X in FY26/27 funding for reconciliation initiatives (Project SHIELD, Nucleus, and Pathfinder) and for the Building 2 QRE/PCBA tooling and installation. The MSES IDIQ ceiling increase will allow for the obligation of a substantial portion of these funds in support of the execution of these projects. The projects, through the modernization of Building 1 and Building 2 and the lab build out of Building 2, will significantly enhance DMEA’s ability to meet the microelectronics needs of the warfighter.

IX. Market Research:

Manufacturing Sustainment does not meet the definition of a commercially available service.

Typically foundries and manufacturing support services are facilitated by the facilities themselves.

The activity is a combination of multiple services in highly specialized fields. DMEA is unique in that our microelectronics manufacturing capability supports lagging edge technology that are no longer supported by industry. Even considering DMEA’s evolvement to X, there are few commercial foundries and even fewer support contractors. This IDIQ is less than halfway through its ordering period. To date, DMEA has not been approached by any other firms to express their interest in this requirement. Additionally, while $117.3M is a large increase in contract ceiling, if firms were not interested in submitting a proposal for a $96.9M IDIQ, DMEA does not estimate that there would have been any additional participation or legitimate interest in a $214.2M IDIQ.

X. Contracting Officer Certification:

I certify that this justification is accurate and complete to the best of the Contracting Officer’s knowledge and belief.

Contracting Officer, Operational Contracting Branch

XI. Technical / Requirements Certification:

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

Senior Engineer, Device Circuit & System Test Branch

Branch Chief, Manufacturing & Operations Branch

XII. REVIEWS:

Chief, Operational Contracting Branch

Chief, Acquisition Policy and Analysis Branch

Assistant General Counsel

XIII. APPROVALS

Chief, Contracting Division and Competition Advocate

Director, DMEA Head of Contracting Activity