N00024_51103.pdf

DEPARTMENT OF THE NAVY

NAVAL SEA SYSTEMS COMMAND

1333 ISSAC HULL AVENUE SE

WASHINGTON NAVY YARD DC 20376-2040

IN REPLY REFER TO

NCH 53.6-2

CJ&A No.: 51,103

Code: SEA 0251

P.R. No.: N00024-19-NR-41242

CLASS JUSTIFICATION AND APPROVAL

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

JUSTIFICATION

1. Contracting Activity

The Naval Sea Systems Command (NAVSEA), Surface Systems

Contracts Division (SEA 025).

2. Description of the Action Being Approved

Award of a Basic Ordering Agreement (BOA) and orders on a sole source basis to Lockheed Martin Rotary and Mission

Systems (LM RMS) for the procurement of supplies and services in support of the AEGIS Weapon Systems (AWS) MK7 and MK8 production program. Authority to act under this

Class Justification and Approval (CJ&A) expires on 30

September 2024.

3. Description of Supplies/Services

This BOA will provide supplies and services as may be required to support United States Navy (USN), United States

Coast Guard (USCG), Missile Defense Agency (MDA) and

Foreign Military Sales (FMS) requirements as part of the production of AWS MK7 and MK8 elements, including the evaluation, implementation and proofing of equipment changes; engineering services and repairs, including modifications/alterations to AEGIS legacy equipment and AWS element overhauls and refurbishments; Diminishing

Manufacturing Sources (DMS) assessments and life-of-type procurement of parts and assemblies to support DMS case resolution; and maintenance associated with ancillary equipment. Orders may also be issued for studies, analyses, evaluation and testing, training, and preparation and/or update of documentation (e.g., drawings, manuals, and instructions) related to the AWS. This BOA may also support

AWS depot requirements, to include installation and checkout spares (INCO), repair parts, accessories, tools, replenishment of spares and repair parts, and necessary

CJ&A Number: 51,103

NCH 53.6-2 2

packaging and marking. The Government’s minimum needs have been verified by the certifying technical and requirements personnel. The ordering period for the BOA will cover requirements through FY 2024. The maximum cumulative value of orders to be placed under this BOA is $92,900,000. As shown in the following table, the funding used to place orders may be RDT&E, SCN, DWP, O&MN, OPN or FMS. As authorized by CJ&A 51,520 and subsequently revised in

51,520.1 to extend the ordering period, the ordering period for the current LM RMS BOA (N00024-17-G-5100), which this

BOA will succeed, expires on 30 September 2021; as such this CJ&A contemplates an ordering period that covers FY

2022 through 2024 requirements. Delivery dates for specific requirements will be established in each individual order under the BOA.

4. Statutory Authority Permitting Other Than Full and Open

Competition

10 U.S.C. 2304(c)(1) as implemented by Federal Acquisition

Regulation (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

Pursuant to 10 U.S.C. 2304(c)(1), LM RMS is the only

Estimated Dollar Value (Millions of $)

Funding Sources FY 22 FY 23 FY 24 Total

SCN

PE 0204222N

10.5 10.0 11.2 31.7

O&MN

PE 0708017N

1.0 1.0 1.0 3.0

OPN

PE 0204228N

12.0 12.3 12.5 36.8

RDT&E

PE0604307N

1.5 1.3 1.4 4.2

DWP – MDA

PE 0208866C

1.0 1.4 1.0 3.4

SCN (FFG(X))

PE (TBD)

0.7 0.7 1.4 2.8

OPN

COAST GUARD

PE 0208017N

0.4 0.3 0.3 1.0

FMS

Cases TBD

3.0 4.0 3.0 10.0

Total 30.1 31.0 31.8 92.9

NCH 53.6-2 3

responsible source that has the specific production engineering background, extensive integration and test facilities, prior AWS MK7 and MK8 experience, and in-depth technical expertise to provide the requirements to be procured under this BOA. LM RMS is the current and only qualified source for AEGIS combat system engineering agent efforts, as well as the manufacturer, integrator, and test agent for the AWS.

LM RMS possesses extensive infrastructure at its

Moorestown, NJ, facility to support AWS production efforts, including the types of efforts contemplated under the instant BOA. This infrastructure is jointly owned in part by the Government and LM RMS, and includes production and testing facilities, a qualified supplier base, special test equipment, data networks, system test environments, and producibility engineering workstations. Because this infrastructure is required to support separate ongoing LM

RMS contractual responsibilities for AEGIS development, AWS production for FMS customers, USN, USCG and FMS in-service engineering, and other depot operations, this infrastructure cannot be transferred to another firm for performance of the work under this BOA.

Currently, LM RMS is the only qualified vendor that can fulfill the requirements to be procured under this BOA.

Award to another company other than LM RMS would result in unacceptable schedule delays to the SCN shipbuilding schedules and FMS programs. Following award to another vendor, estimated to occur in Q1 FY 2022, there would be a qualification period for the new supplier that would take a minimum of twenty-four (24) months. The time required to qualify a new supplier is driven by production documentation review, First Article Unit (FAU) production lead time, production infrastructure process review, quality assurance plan review, infrastructure set-up, pilot production, first article testing, vendor base qualification, Functional Configuration Audit (FCA), Physical Configuration Audit (PCA) and environmental qualification. Based on the current SCN profile, the estimated In-Yard-Need-Date (IYND) for the Electronic

Equipment Fluid Cooler (EEFC) for DDG 140 is Q2 FY 2025.

The EEFC is an element of the AWS MK7 and MK8 and is one of the longest production lead time items, and is illustrative of the schedule delay that could be experienced other than awarding to LM RMS. Once qualification is complete, the

NCH 53.6-2 4

Government would conduct a Production Readiness Review

(PRR) in or around February 2024 to make the final determination whether to transition to production. The production lead time for the EEFC system at a new vendor is estimated to be twenty-four (24) months. This is based on the initial system build times experienced by LM RMS. Given the timeline described above, the earliest the new vendor could deliver EEFC to the shipyard for the DDG 140 is forty-eight (48) months after award of the contract, in Q1

FY 2026, six (6) months past the required IYND. Due to the production lead time and extensive qualification requirements for unproven vendors, award of this BOA to LM

RMS in October 2021 is the only way to ensure that the DDG

140 IYND is met. The EEFCs are critical to the shipbuilder’s schedule due to their physical location in the ship’s hull. The extent and scope of this delay would have an adverse impact on SCN shipyard schedules, leading to stop-work costs and ultimately delays in delivering new ships to the fleets and ship deployment schedules for operational use.

The lapse of BOA coverage would also compromise the Navy’s ability to fulfill its obligations to FMS customers under the terms of international agreements. The extent and scope of these delays are unacceptable, and would result in significant adverse impact to operational readiness for the

USN, USCG, MDA, and FMS customers.

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

Offerors as Practicable

NAVSEA posted a sources sought notice to the beta.SAM.gov website on 26 October 2020, as required by DFARS PGI

206.302-1(d). LM RMS submitted the only response to the sources sought. NAVSEA concluded that additional market research was not necessary given the lack of interest from industry and the unique expertise possessed by LM RMS, as discussed in paragraph (5) above. Individual orders or classes of orders to be issued under this BOA will be published on the beta.SAM.gov website. Any responses received will be considered.

7. Determination of Fair and Reasonable Costs

The Contracting Officer has determined that the anticipated cost to the Government for the supplies or services covered by this CJ&A will be fair and reasonable. The NAVSEA

NCH 53.6-2 5

contracting office will conduct cost and price analysis to determine a fair and reasonable price for each order placed under the BOA. DCMA pricing assistance and/or DCAA audits will be requested to aid in the aforementioned cost and price analysis. The Contracting Officer will require the contractor to execute a certificate of current cost or pricing data to support the determination of fair and reasonable costs at the conclusion of each negotiation for orders meeting the FAR threshold.

8. Actions to Remove Barriers to Competition

LM RMS is the sole source for AWS production, integration, and test through the completion of the shipbuilding process for the Flight IIA/AWS MK7 and Flight III/AWS MK8 ships.

Based on the rationale contained in Paragraph 5 above, there are no plans to establish competition for future

Basic Ordering Agreements for the types of supplies or services covered by this document. The circumstances surrounding the need to obtain the required supplies or services without providing for full and open competition will be reviewed annually by the Procuring Contracting

Officer.