N00024_42654_FBO_Redacted.pdf

J&A Number: 42,654 Code: SEA 0242

P.R. Number: N0002420FR62063

JUSTIFICATION AND APPROVAL

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

Justification

Contracting Activity

The Naval Sea Systems Command (NAVSEA), Fleet Support Contracts Division (SEA 024).

Description of the Action Being Approved

The action being approved is a three-year cost plus fixed fee (CPFF) contract with performance incentives to be awarded on a sole source basis to Q.E.D Systems, Inc. 4646 North Witchduck Road, Virginia Beach, VA 23455 for the development of work specifications for ship maintenance, repair, and modernization.

Description of Supplies/Services

The Specification Development and Availability Execution Support (SDAES) Contract, formally known as Third Party Planning (3PP) services, provides specification development support services for ship maintenance, repair and modernization in support of CNO availabilities for DDG, CG, LPD, LSD, LHA, and LHD classes of ships.

The scope of the SDAES contract principally includes:

Development of work specifications and integrated executable work packages Procurement and warehousing of critical path or long lead time material Provision of labor and material estimates to support the government’s Independent Government Estimate (IGE) / Technical Assessment Report (TAR) process Provision of availability execution support

Data analysis for continuous improvement and increased specification standardization/ reuse

The Government’s minimum needs have been verified by the certifying technical and requirements personnel. The table shown below identifies the Government’s estimate to support the SDAES three-year contract.

Table 1: SDAES Contract Estimate

The estimated cost was derived by the Surface Maintenance Engineering & Planning Program (SURFMEPP) on behalf of the Program Office, PMS 407, and is based on a forecast of specification development requirements and future availability requirements as provided in the Navy Data Environment-Navy Modernization (NDE-NM). NDE-NM is the official U.S. Navy authoritative database for ship configuration, maintenance and modernization forecasts, and availability schedules. The required funds to support the requirements are provided in the Program Objective Memorandum (POM) to support the specification development process. The cost estimate derived by SURFMEPP was based upon the execution of the current contracts and the projected labor rates over the course of the next three-years.

The funding estimates are based upon the following ship availabilities starting with their inductions into the specification development process from through as planned by each ship class. An induction represents the beginning of the ship availability process at before the start of an availability as identified in NMD.

Table 3: Availabilities by Induction

The sole source contract to Q.E.D is necessary to accomplish the development of specifications for each work package in an availability. The Government’s minimum needs have been verified by the certifying technical and requirements personnel. This J&A does not authorize acquisitions for other requirements.

4. Statutory Authority Permitting Other Than Full and Open Competition

FAR 6.302-1; Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

5. Rationale Justifying Use of Cited Statutory Authority

The action contemplated herein is a three-year sole source contract with Q.E.D systems for SDAES services to support the development of work specifications for maintenance, modernization and repair of U.S. Navy ships during ship availabilities. The rationale for this sole source results from the fact that Q.E.D is the only known source believed capable of satisfying the Navy’s requirement. The time reasonably anticipated for a contractor other than the incumbent to become apprised of the various ships’ statuses and conditions and be able to fully support future availability planning and accomplishment together with the lead time necessary for planning and specification development to support a competitive ship repair solicitation precludes another contractor from being judged capable of satisfying the Navy’s requirement for the period of this contract. The U.S.

Navy requires specification development support in order to meet the highly integrated ship schedules to be maintained, modernized, and repaired before returning to a mission ready state.

The SDAES services are currently provided by Q.E.D. across three contracts providing specification development support services for ship availabilities at MARMC, SWRMC, PACNORWEST, and surge planning for Pearl Harbor and SERMC. The DDG/CG and the LPD/LSD SDAES contracts were awarded in 2015 and the LHA/LHD contract was awarded in 2016. These contracts were competed resulting in Q.E.D. being the only interested, qualified contractor to propose.

Failure to award this follow-on sole source contract to Q.E.D.

by will result in work stoppages on the specification packages for CNO availabilities (see enclosure 1) that will be in various stages of development.

Additionally, a 30, 60, or 90-day delay would result in 2, 3, or 7 ships respectively, not being inducted into the specification development process. Interrupting specification development in this manner would cause great harm to the scheduled maintenance, modernization, and repair of Navy ships, thus making it virtually impossible to return ships to the fleet on time in support of numerous operational requirements.

Impacts to the U.S. Navy for Delay or Interruption to CNO Availability Requirements:

Development of work specifications and integrated executable work packages: Failure to support timely work package development impacts the identification of work to be accomplished in an availability, thus preventing the U.S. Navy ship from receiving required maintenance and modernization work that will protect the ship while in harm’s way.

Procurement and warehousing of critical path or long lead time material: Failure to support the identification of long lead time material will prevent the execution of work packages and scheduling of CNO Availabilities. Long lead time material is required to be identified and procured in-time to support an availability. Long lead time material for certain requirements may be procured to months in advance. The identification, procurement and warehousing of long lead time material by Q.E.D is essential to support the CNO Availabilities.

Provision of labor and material estimates to support the government’s IGE/TAR process: Failure to provide the unique knowledge required to correctly estimate the work accomplished in a CNO Availability will severely impact U.S. Navy’s development of labor and material estimates.

Cost estimates from Q.E.D support U.S. Navy estimates required to develop procurement packages in support of each CNO Availability.

Provision of availability execution support: Failure to provide an executable work package, long lead time material identification, and labor requirements will prevent the Navy from developing a procurement package to support the execution of each CNO Availability.

Data analysis for continuous improvement and increased specification standardization/ reuse: This new contract will allow for the continuation of mission essential SDAES support, while analysis and preparations to support follow-on CNO availability acquisitions are completed.

6. Description of Efforts Made to Solicit Offers from as Many Offerors as Practicable

This section will identify how the SDAES marketplace has evolved into a sole source marketplace and will discuss the recent attempts to identify competitors.

Market research has consistently shown Q.E.D Systems to be the only capable vendor interested in meeting ship specification development and execution/procurement support requirements.

In 2014, prior to releasing solicitations for the current SDAES contracts, the Navy conducted an Industry Day to promote industry awareness of the SDAES requirements and to identify potential competitors. A draft performance work statement (PWS) was released for industry questions and comments. Several firms attended the Industry Day presentation, which the Navy’s strategy for establishing a third party to support specification development and described the SDAES requirements in detail. Several questions were received and answered for multiple firms.

However, as described below, Q.E.D has been the only capable respondent to every solicitation and every sources sought since the Industry Day was conducted.

In 2014 the current CG 47/DDG 51 and LPD 17/LSD 41/49 contracts were solicited under full and open competition conditions. Q.E.D Systems, Inc. was the only bidder for the CG47/DDG51 and LPD 17/LSD 41/49 contracts.

In 2015, the current LHA/LHD contract was solicited on a full and open competition basis. Two offers were received; however, the competing proposal was determined to be technically unacceptable and therefore Q.E.D Systems, Inc. was the successful awardee.

In 2018 a specification development and execution/ procurement support service requirement was solicited on a full and open basis for the Littoral Combat Ship (LCS) class ships. Q.E.D Systems, Inc. was the only respondent and was awarded the contract.

On 15 March 2019, a notice to award bridge contract modifications to the current three contracts was synopsized via Fed Biz Ops with no respondents.

On 22 November 2019, two (2) Sources Sought Notices, one

(1) for CG/DDG and one (1) for LHA/LHD/LPD/LSD class ship specification development and execution/procurement services, were released to the public via BETA.SAM under North American Industry Classification System (NAICS) code 541330, Professional, Scientific, and Technical Services, with a size standard of $41.5M. The intent of the Sources Sought is to assist in determining if any Small Business set-aside opportunities exist. Companies were required to submit information in the areas of key personnel, past performance information for similar efforts, evidence of financial responsibility to assess capability in performing the scope of work, and program management experience. An estimated number of specifications to be developed and level of effort hours anticipated was included as part of each Sources Sought notice. Q.E.D Systems, Inc. was the only respondent to these Sources Sought notices.

On 30 January 2020 an intent to extend the current contracts on a sole source basis to Q.E.D Systems, Inc.

was synopsized via BETA.SAM on 30 Jan 2020 with no respondents.

On 29 May 2020, the Navy synopsized the intent to contract for the proposed requirement on a sole source basis to Q.E.D. Systems, Inc. No responses or comments were received.

The Navy currently holds planning yard contracts with major shipbuilders that provide the ability to perform specification development. This demonstrates the potential for planning yard contractors to enter as bidders in the SDAES competitive market.

Q.E.D. Systems has consistently been the only interested, responsible offeror to express interest in Specification Development solicitations and sources sought postings.

Further, Q.E.D. was the only respondent to both Sources Sought notices for this requirement. This clearly demonstrates that the market does not provide competition and Q.E.D. Systems is the only interested, responsible source that can satisfy the requirement.

Determination of Fair and Reasonable Costs

The Contracting Officer will determine prior to award that the negotiated estimated cost of the contract executed under this justification is fair and reasonable pursuant to FAR Subpart

15.4. This determination will be documented in a Business

Clearance Memorandum, which will be included in the contract file. A cost analysis will be accomplished to ensure that the negotiated costs are fair and reasonable.

Actions to Remove Barriers to Competition

The Navy intends to foster competition for future SDAES requirements. By reducing the contract period of performance from five years to three years, the SDAES requirements will be competed and the success of these efforts to attract qualified industry participants will be assessed. Therefore, the Navy has developed a detailed plan by fiscal year and quarter, which outlines specific steps that will be taken to remove barriers to competition. These steps include, but are not limited to the following:

Conducting aggressive market outreach to include;

Researching and identifying additional companies who have developed specifications for ship repair and modernization, i.e. planning yards, execution repair contractors, industry associations, and specification

Discussions with firms that have competed for planning yard contracts to determine if they would be willing to grow a blue-collar workforce for specification development at a more competitive rate than the “white collar” engineering rates they currently offer.

2) Based on industry feedback, do a complete review of current requirement including but not be limited to;

a. Reviewing Terms and conditions (Ts and Cs) to determine if there are any that are deemed to be too restrictive and can be adjusted to garner competition, i.e.

Organizational Conflict of Interest Language.

b. Researching alternative ways to group the work differently to increase competition, i.e. by fleet concentration area vice by ship class. This will include an assessment of the current plan to consolidate all SDAES requirements under one contract to determine if this strategy promotes or discourages competition.

c. Reviewing the contract type for adjustments and incentives that may be more attractive to industry.

d. Reviewing the duration of the current contract to assess whether there is an alternative contract duration that might entice others to compete for this requirement.

3) Releasing a draft requirements document and sources sought after industry comments have been addressed to gauge the competitive environment.

Data gathered from these industry engagements will inform development of the new competitive requirements for SDAES and will form the basis of the new competitive strategy.

CERTIFICATIONS AND APPROVAL

TECHNICAL/REQUIREMENTS CERTIFICATION (FAR 6.303-2(c))

I certify that the facts and representations under my cognizance, which are included in this justification and its supporting acquisition specification development data, including the Individual Streamlined Acquisition Plan (ISTRAP) No. AP-20-001, Rev: 0, except as noted herein, are complete and accurate to the best of my knowledge and belief.

TECHNICAL COGNIZANCE:

Date

REQUIREMENTS COGNIZANCE:

Date

LEGAL SUFFICIENCY REVIEW (NMCARS 5206.303(90))

I have determined this justification is legally sufficient.

Date

CONTRACTING OFFICER CERTIFICATION (FAR 6.303-2(b)(12)) I certify that this justification is accurate and complete to the best of my knowledge and belief.

Date

APPROVAL BLOCK (FAR 6.304 for Approving Official)

Upon the basis of the above justification, I hereby approve, as Senior Procurement Executive of the Navy, the solicitation of the proposed procurement described herein using other than full and open competition, pursuant to that authority of 10 U.S.C.

2304(c)(3).

ASSISTANT SECRETARY OF THE NAVY (RESEARCH, DEVELOPMENT AND

ACQUISITION)

Signature James F. Geurts, ASN (RDA) Phone Date