Redacted_J A_51 502_Aegis_Ashore_HN-2_PTC_Testing__Redacted.pdf

DEPARTMENT OF THE NAVY

NAVAL SEA SYSTEMS COMMAND

1333 ISSAC HULL AVENUE SE

WASHINGTON NAVY YARD DC 20376-0001

IN REPLY REFER TO

=J&A No. 51,502 Code: 0251

PR No.: N00024-15-NR-41001

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

NAVSEA will utilize other than full and open competition to award a contract modification to the existing AEGIS Weapon System (AWS) multi-year procurement production contract (N00024-14-C- 5114) to Lockheed Martin Mission Systems and Training (LM MST) in Moorestown, NJ, for the integration and testing of the AEGIS Ashore Missile Defense System (AAMDS) Host Nation #2 (HN-2) equipment set at the Production Test Center (PTC) in Moorestown, NJ. This procurement also includes the required preparation of the AAMDS HN-2 equipment set for overseas shipment and physical modifications to the PTC to accommodate the procurement and installation of AEGIS Ashore Removable Equipment Units (REUs) and skid accessories, which are unique to the AAMDS.

3. Description of Supplies/Services

The anticipated contract action will provide for the system-level integration and test of the complete AAMDS HN-2 equipment set, which is currently in production under the N00024-14-C-5114 contract. PTC testing for AAMDS HN-2 will be incorporated into the existing contract as a separately priced option in FY 2015. LM MST will be responsible for development of the HN-2 Acceptance Test Plan and system level test procedures from FY 2015 to FY 2017, as well as execution of the testing at PTC in FYs 2016 and 2017. Due to differences between the DDG and HN-2 AWS configurations and testing requirements, LM MST will also be required to accomplish certain upgrades to the PTC facility in advance of test execution. Specifically, LM MST will procure and install Removable Equipment Units (REUs) and skid accessories at PTC to accommodate the unique, deckhouse-like configuration of the HN-2 equipment. LM MST will also be responsible for ancillary technical services to support system testing and equipment set packing and delivery to the point of embarkation.

The Government’s minimum needs have been verified by the certifying technical and requirements personnel.

J&A No. 51,502

NCH 53.6-2 (MAR 2013) 2

The estimated total value of the action covered under this J&A is $22.5M and will be funded with FY 2015 Defense-Wide Procurement (DWP) funds provided by the Missile Defense Agency (MDA).

The funding profile is shown below:

Estimated Dollar Value ($M)

Funding Sources FY15 Total

DWP (MDA)

PE 0208866C

22.5 22.5

Total 22.5 22.5

4. Statutory Authority Permitting Other Than Full and Open Competition

10 U.S.C. 2304(c)(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 MST is the only responsible source capable of satisfying the Government’s requirements for the complete system level integration and test of the AAMDS HN-2 equipment set and its preparation for overseas shipment. Previous AAMDS equipment had been tested at the Lockheed Martin facility in Moorestown, NJ using the HN-2 relocatable deckhouse, but that course of action is not available in this instance because the deckhouse is being prepared for shipment overseas in advance of the AAMDS equipment set. The AEGIS Ballistic Missile Defense Office at the Missile Defense Agency has determined that not testing the HN-2 equipment set prior to shipping it overseas would pose an unacceptable technical risk. The PTC, a unique and time-tested Government-owned facility operated by LM MST, is the only viable option remaining for a comprehensive test of the HN-2 equipment set prior to overseas shipment. LM MST possesses unique experience in AWS design, development, production, assembly, and testing, and currently provides the necessary services to deliver an integrated and tested AWS, of which the AAMDS represents a subset. All previous AWS production contracts for ship sets and AAMDS sites equipment have been awarded on a sole-source basis to LM MST (or its antecedents). LM MST has also been responsible for testing of the AEGIS Ashore Missile Defense Test Complex equipment at Kauai, HI, and HN-1 AAMDS equipment sets under previous contracts. LM MST has developed an extensive infrastructure at its Moorestown, NJ, facility to support AWS production and system test. This infrastructure (production facilities, qualified supplier base, special test equipment, data networks, system test environments, producibility engineering workstations, etc.) also supports the separate LM MST contractual responsibilities for AEGIS development, FMS AWS production, U.S. Navy and FMS in-service engineering, and other depot operations. Because this production infrastructure, of which the PTC is a part, supports other ongoing contractual responsibilities, the Navy cannot transfer it to another contractor for performance of the AAMDS HN-2 PTC testing requirements described herein. Recreating a PTC capability at another contractor through a competitive acquisition process would cause an unacceptable delay in the delivery of the HN-2 equipment set overseas and would result in additional risk to the MDA program schedule.

NCH 53.6-2 (MAR 2013) 3

The latest AAMDS schedule requires delivery of the HN-2 equipment set to its OCONUS location in August 2017 (FY 2018). This will allow MDA to complete the site installation and activation prior to initial operating capability (IOC). The production lead time for the HN-2 equipment set is twenty-seven (27) months, with eight (8) months to test the equipment set at PTC, and four (4) months to pack the equipment in preparation for overseas shipment. Commencement of HN-2 PTC testing in August 2016 as is currently scheduled will ensure the HN-2 equipment set is ready for shipment OCONUS by August 2017 in time to meet the in-country delivery date milestone. Once HN-2 equipment is delivered to the OCONUS location, MDA will have thirteen (13) months to set up the HN-2 site and certify its operational readiness prior to IOC. Subjecting the HN-2 testing at PTC to a competitive procurement would incur a delay of 18 months in the delivery of the equipment set overseas in the event another offeror is awarded the contract. NAVSEA estimates that the earliest date that a competitive solicitation could be developed and released is June 2015. Allotting fifteen

(15) months to receive proposals and conduct a competitive source selection projects the contract award to occur in September 2016. An additional fifteen (15) months would be required to build, equip, and certify a PTC-like facility in which to conduct the system-level testing of the AAMDS at another contractor location. Given the eight-month requirement for the equipment set testing and the four months required to pack the equipment, the HN-2 equipment set would not be ready for shipment until December 2018. MDA would then have less than one month to prepare for IOC, which falls significantly short of the thirteen months required to accomplish pre-IOC setup and certification activities.

LM MST is the only existing source with the in-depth technical expertise, knowledge, resources, and infrastructure to produce, integrate, and test the HN-2 equipment set without adverse impact to the HN-2 Initial Operability Capability date of 31 December 2018. A delay of eighteen (18) months resulting from full and open competition for the HN-2 equipment set integration, testing, and PTC modifications is unacceptable for HN-2, a strategically important Ballistic Missile Defense system that maintains the intense interest of our allies and potential adversaries.

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

NAVSEA synopsized the proposed contract action on the Federal Business Opportunities (FEDBIZOPS) website on 30 January 2015, and no other potential sources expressed an interest in this requirement. NAVSEA concluded that additional market research was not necessary given the lack of response by Industry and the unique expertise, prior experience, and production infrastructure resident at LM MST.

7. Determination of Fair and Reasonable Costs

The Contracting Officer has determined the anticipated cost to the Government of the supplies/services covered by this J&A will be fair and reasonable. NAVSEA will use cost and price analysis to determine a fair and reasonable price. The Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA) will be requested provide assistance in analyzing the contractor’s proposal. Upon the conclusion of negotiations, LM MST will be required to execute a certificate of current cost or pricing data to support the fair and reasonable cost determination. Furthermore, LM MST has conducted over ninety (90) individual AWS PTC test

NCH 53.6-2 (MAR 2013) 4

events for the AEGIS fleet in the past thirty-five years, which will provide a history of actual cost data that will aid in the negotiation of a fair and reasonable cost for this procurement.

8. Actions to Remove Barriers to Future Competition

For the reasons set forth in Paragraph 5, NAVSEA has no plans at this time to compete future contracts for the AAMDS HN-2 PTC testing requirements described herein. If another potential source emerges, NAVSEA will assess whether competition for future requirements is feasible.

Name: James G. Lofgren Date: 11 March 2015