FY19_P&DSS_J&A_15988_Signed_6.11.18_Redacted_2.pdf

J&A NOsp 15,988

Code: SPN208 option to increase Deployed Systems Support and option items identified in attachment A, such as equivalent unit item hardware, additional re-assemblies and dis-assemblies.

Funding FY18 FY19 Total

RDT&E $1,000,000 $33,000,000 $34,000,000

OPN $2,500,000 $2,800,000 $5,300,000

O&MN $64,200,000 $64,200,000

WPN $64,000,000 $623,000,000 $687,000,000

UK $150,000,000 $150,000,000

Total $67,500,000 $873,000,000 $940,500,000

4. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION

The statutory authority for this effort is 10 U.S.C. 2304 (c)(1). There is only one responsible source and no other supplies or services will satisfy agency requirements.

5. RATIONALE JUSTIFYING USE OF CITED STATUTORY AUTHORITY

SSP’s requirements for the missile system and program capabilities as well as flight test data support are available from only one responsible source. Only LMS has the capabilities, facilities, and expertise required for the P&DSS effort. Therefore, SSP intends to contract with

LMS in accordance with FAR 6.302-1 and l0 U.S.C. 2304(c)(1). The following provides the rationale for contracting with LMS using other than full and open competition, including the cost and schedule impacts of contracting with an alternative source.

Requirement for TRIDENT Missile System and Program Capabilities

The P&DSS contracts require a contractor capable of assuming true cradle to grave responsibility for the TRIDENT II (D5) missile system. The contractor must provide design and development services for rentry and missile components, long-term production of missile and reentry components, logistics support, including spares and repairs, training, operation of the missile assembly facilities, engineering support for fleet and field problems, flight and surveillance test programs, and ultimate retirement and disposal of assets. The program relies on a “factory in the field” concept wherein all operations, including missile assembly at the

Government facilities, are under the control of the Contractor until the assembled missile is delivered to the Navy. This cradle to grave responsibility is part of SSP’s overall strategy to ensure comprehensive risk management, quality, and an exceptional track record for program success.

Only LMS has the unique facilities, tooling, and equipment necessary for production and ongoing engineering and logistics support of the program. It is the only contractor possessing the depth and breadth of expertise and capabilities relative to the range of tasks required of the

P&DSS contract. Additionally, LMS possesses personnel with the engineering and technical proficiencies uniquely required to successfully perform the scope of this contract.

LMS has gained and honed its capabilities over its long history with the TRIDENT program. The contractor developed and produced the TRIDENT I (C4) missile system and continues to serve as the primary contractor providing logistical support for ongoing disposition and disposal of TRIDENT I (C4) program assets. LMS developed the TRIDENT II (D5) missile system in the 1980s and continues to produce it today. As the TRIDENT II missile system prime contractor, LMS has been intimately involved with the program from its inception, and has developed a technology base and manufacturing capability uniquely suited for the support of

TRIDENT program. The contractor has gained the necessary "know-how" needed to provide continuing program technical support, as well as the infrastructure to produce and support the

Missile System. This ingrained programmatic history is unique and has afforded LMS with the capabilities and experience required for performance of this contract.

Therefore, LMS is the only source qualified to furnish the TRIDENT hardware without critically delaying and jeopardizing the missile program and the Navy’s part of the Strategic

Deterrent. Beginning in Fiscal Year 1984, the Navy spent $680 million over six years to establish TRIDENT II facilities, capabilities, and technical expertise. Given this experience, an alternate source would require at least six years to establish a sufficient level of technical expertise and the production, repair, and maintenance capabilities required to support the

TRIDENT II systems. Escalating Fiscal Year 1984 actual costs by two percent annually, an investment in excess of $1.3 billion would be required by the Government to replicate at other sources the missile system support capabilities required for this contract.

Requirement for Flight Test Data Capabilities

The P&DSS contract requires Flight Test Data Acquisition System Support for both the Air

Force test and the Missile Defense Agency’s (MDA’s) Broad Ocean Area (BOA) tests to provide critical back-up sensors support on an as-needed basis. This effort supports the Air Force

Minuteman Program’s objective of accomplishing its extended range flight test requirement, and

MDA’s need to maintain its missile defense development milestones.

LMS is the only contractor that has existing hardware, software, and experts readily available to support this effort. The contractor has developed Navy-unique instrumentation for the mobile application. It has experienced experts who can provide immediate support to minimize schedule delays. Utilizing the Navy’s capability with LMS’s support is considered the vital and most cost effective option to support Air Force and MDA flight test data acquisition system support needs.

In the late 1990s, the actual time and cost to develop and deploy Navy-unique instrumentation was five years and $30 million. Given this data, development of this capability

(hardware, software, and operational expertise) at an alternate source would require at least five years and an additional cost in excess of $45 million. This would result in a significant cost increase to the Government, a severe extended schedule delay to the Air Force and the MDA, and unexpected programmatic impacts.

Requirement for SSGN Processing Capabilities

The P&DSS contract requires the receipt, handling, inspection, test, maintenance, storage and loading of Tomahawk Land Attack Missiles (TLAMs) at SWFLANT. Kings Bay is the home port of SSGNs, and therefore conventional TLAM activities occur at the SWF. LMS is currently the prime, sole source contractor for SWF operations and the only contractor that can cost efficiently perform this SSGN work. Existing facilities, systems, personnel, and equipment at the SWF are cross utilized between TRIDENT and SSGN conventional TLAM programs, rendering the SSGN work impractical and inefficient to compete.

The actual time and cost for LMS to establish SSGN capabilities in mid-2000 was about three years and $20 million. Given this data, development of an alternate source with SSGN capabilities would cost the Government an additional $26 million and a delay of up to three years. In addition, the use of an alternate source would create accountability and responsibility conflicts. In some instances, it would be impossible to determine responsibility for problems encountered during this effort due to the necessary interaction between the Contractors.

Benefit to the Government of Contracting with LMS

In summary, the above information shows that it is in the best interest of the Government to contract with LMS for the FY19 P&DSS contract. The cost, delay, and risk associated with obtaining competition through qualification of an alternative source far outweigh any price or quality benefits that can be reasonably anticipated from a competitive contracting strategy.

6. DESCRIPTION OF EFFORTS MADE TO SOLICIT OFFERS FROM AS MANY

OFFERORS AS PRACTICABLE

SSP posted a sources sought notice in accordance with the Federal Acquisition Regulation to Federal Business Opportunities (FedBizOps) on 22 October 2017. SSP did not receive any inquiries of interest. SSP also posted a pre-award synopsis on FedBizOps on 22 October 2017 and did not receive any inquiries of interest. Other market research is strategic in nature. Our technical branch engineers and contract specialists visit prime and subcontractor facilities to better understand work scope and the capabilities of our supply chain. SSP staff read trade journals and attend events such as the Sea-Air-Space Expo to get a broader sense of capabilities in the marketplace. Our engineers interact with independent experts in their fields and talk directly with subcontractors at an annual SSP supplier conference. Such market research confirms that it is not practicable, for the reasons discussed in paragraph 5 above, for any company other than LMS to provide the required supplies and services in the P&DSS contract.

7. DETERMINATION OF FAIR AND REASONABLE COST

The FY19 TRIDENT II (D5) P&DSS contract will be a combination Fixed Price Incentive

(FPI) and cost reimbursable incentive contract with incentives on cost and performance. The mature production effort will be negotiated as a FPI contract with a cost share and ceiling price that accurately reflect confidence in cost estimates and the level of risk assumed by the contractor. We believe this contracting approach will motivate the contractor to find year-to-year price improvements, while limiting the Government’s cost risk in an overrun situation.

Additionally, the Contracting Officer will utilize various methods and analyses to determine that the cost to the Government for the supplies and services covered by this J&A will be fair and reasonable. These include but are not limited to thorough technical analysis of hours by Government subject matter experts, Defense Contract Audit Agency (DCAA) audits of the proposal, the use of Defense Contract Management Agency (DCMA) negotiated or recommended Forward Pricing Rates, and cost and price analyses.

Additionally, cost analyses, including DCAA assist audits or DCMA field pricing support, are performed for all major subcontractors over the certified cost or pricing data threshold. For subcontractors under the certified cost or pricing data threshold, various methods including but not limited to competitive pricing, commercial pricing comparisons, historical pricing reviews, and price analyses are utilized to determine fair and reasonable costs.

Based on the above, the Contracting Officer has determined that the anticipated cost to the

Government of the supplies and services covered by this Class J&A will be fair and reasonable.

8. ACTIONS TO REMOVE BARRIERS TO FUTURE COMPETITION

SSP will continue to monitor the market in an attempt to identify potential sources of these supplies and services for future requirements, while analyzing any potential impact to cost, schedule, and program risk. Additionally, the prime contractor for this effort will continue to utilize competition and commercial item procurement when possible for component parts.