N00164_170047_FBO.pdf

DEPARTMENT OF THE NAVY

NAVAL SURFACE WARFARE CENTER

CRANE DIVISION

300 HIGHWAY 361

CRANE INDIANA 47522-5001

IIN REPLY REFER TO·

J&A Number: CR-170047

Code: 0231

P.R. Number: N00164-18-R-JQ40

JUSTIFICATION AND APPROVAL

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

JUSTIFICATION

1. Contracting Activity

The Naval Sea Systems Command, Naval Surface Warfare Center (NSWC), Crane Contracts

Department, (Code 02)

2. Description of the Action Being Approved

Award of a Firm-Fixed-Price contract on a sole source basis to Raytheon Company (hereinafter referred to as Raytheon), 2501 W. University Drive, McKinney, TX 75071 for the production and delivery of twenty-one Common Sensor Payload (CSP) High Definition (HD) Electro-Optic sensor

Systems with an option of ten additional systems, spares and associated support to include

Engineering Technical Services and Logistic support, required for production requirements. The

CSP HD is a variant of the Multi-spectral Targeting System (MTS) Family of Systems (hereinafter known as MTS).

3. Description of Supplies and/or Services

The CSP HD is a high definition multi-sensor day/night imaging payload. It is capable of providing imagery to increase the warfighter’s situational awareness and capable of acquiring, ranging, identifying, and laser designating targets for precision guided munitions. The CSP HD incorporates an Eye-safe Laser Rangefinder (ELRF), Laser Target Marker (LTM), and Laser Spot Tracker (LST).

The Electro-Optic (EO) sensor provides either color or monochrome imagery during daytime conditions as selected by the operator. The Infra-Red (IR) sensor provides imagery during various environmental conditions, day and night, to include some battlefield obscurants. The ELRF provides accurate target location and allows a first round fire for effect. The LTM provides a capability to quickly cue or conduct target handover to personnel equipped with Image Intensifier devices. The

LST provides the ability to acquire and track coded laser energy and provides another means for target handover. The CSP HD system consists of a Turret Unit (TU) and an Electronics Unit (EU).

The TU is an imaging optical sensor of advanced multispectral capability. The EU controls the TU and receives commands from a data bus. The CSP HD includes no hardware to perform operator control, indicator, or display functions. When the CSP HD is integrated into a system providing

CR-170047

suitable controls and video display (i.e., Ground Control Station, the CSP HD can be operated using commands to detect, observe, identify, and engage surface targets. These sensors provide critical early detection and tracking data.

CSP provides the warfighter with the latest state-of the-art EO/IR and Laser Multi-Sensor systems.

MTS has been deployed on the U.S. Army Gray Eagle Unmanned Aircraft System through two previous contracts W1597T-08-D-8602 (competitive) and W56KGY-15-D-0005 (sole source) being the latest.

The estimated value of this action is $49,900,000.

Table 1: Estimated Dollar Value

FY18 FY18 Option Total

Aircraft Procurement, Army $29,400,000 $14,000,000 $43,400,000

Operations and Maintenance, Army $6,500,000 $6,500,000

Totals $29,400,000 $20,500,000 $49,900,000

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

This is a follow-on contract to a highly competitive contract number W1597T-08-D-8602 for the continued production of highly specialized equipment when award to any other source would result in a substantial duplication of cost which would not be recouped through competition, or would result in unacceptable delays in fulfilling the agency’s requirement. The development of the complex CSP

HD has progressed over several years with some elements being funded by the Government, some with mixed funding, and some exclusively with Raytheon funding. The Government has not been able to obtain or otherwise produce on its own, a Level-III Technical Data Package (TDP) with sufficient technical data rights relating to the critical hardware and software components required to produce, upgrade or test the CSP HD for qualification and/or sustainment. Raytheon has asserted restrictions for data including key software, third party supplier components, and manufacturing processes.

A full TDP suitable to allow for full and open competition does not exist. NSWC, Crane requested pricing from Raytheon for the technical data and drawings to the EO/IR systems suitable for full and open competition. On 06 December 2016, Raytheon replied by stating in an email the following:

“Raytheon considers the data rights associated with the MTS suite of systems to be a critical component of our business and is not willing to sell them or provide a Level 3 TDP at this time.” On

11 December 2017, Raytheon replied by stating in an email the following: “Raytheon considers the

CSP IP, various MTS systems IP and associated data rights to be critical to on-going and future business plans; therefore, Raytheon does not envision selling data rights for a level 3 TDP.”

Due to the unique and highly technical nature of the product and the unique processes required for the precision optics, alignments, and hardware/software integration, only Raytheon is capable of providing CSP HD within the required time frame and without substantial duplicative costs, given their ownership of the data rights to the existing TDP and drawings.

For NSWC, Crane to develop and sustain another source would result in excessive duplication of cost to the Government as shown in Table 2. The costs to compete this procurement could not be recouped through the competitive procurement process. The integration and test costs alone are estimated at a minimum of $39,100,000 with a schedule to complete at best case 36 months and worse case 54 months.

Table 2 provides a breakdown of the Duplication of Cost to the Government.

Table 2: Duplication of Cost

Tasks Cost for CSP

Formal Software Release to incorporate new laser functionality. $2,000,000

System integration, weapons qualification, flight test and certification on multiple platforms $500,000

Redundant Government depot infrastructure and training of Government Artisans $25,000,000

New Source Productionisation $10,000,000

Maintenance Manual Updates (Operator, TDP, Intermediate, & Depot Level

Manuals) $600,000

Weapons Testing $1,000,000

Total Duplication of Costs $39,100,000

This delay would result from the time to develop a competitive TDP, non-recurring engineering by a new vendor, production startup, system integration and operational test verification on multiple platforms. These delays would occur in fulfilling the Government requirements, the ability to meet aircraft upgrade schedules and cause fielded systems to be unsupportable.

Table 3 provides a breakdown of the Schedule Impact.

Table 3: Schedule Impact

Tasks Duration

Non-Recurring Engineering Development including software 9-12 months

System integration, weapons qualification, flight test and certification on

Gray Eagle platform 6-12 months

New Source Production 9-12 months

Develop, Validate and Verify; TDP, Maintenance and Depot Manuals 12-18 months

Total Time 36-54 months

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

NSWC, Crane - Special Warfare and Expeditionary Systems Department, Code JXQL representatives maintain a close working relationship with the Electro-Optics industry throughout the world. This consistent interaction with industry facilitates continuous knowledge of the available technologies and manufacturing capabilities throughout the industry.

Over the 15 plus years of procuring MTS, including CSP systems and supplies along with support services from Raytheon, multiple synopses have been posted at the Government point of entry

Federal Business Opportunities and no other firms have voiced interest in competing with Raytheon for the CSP/MTS requirements.

A formal market survey was conducted for the specific program requirements via a Request for

Information (RFI) N0016417SNC23 dated 28 August 2017, for the procurement of CSP HD systems spares and associated support line items. The RFI provided a technical description of the

Government’s requirements and requested that potential Offerors provide a white paper describing their systems technical requirements. No responses have been received in response to the RFI.

No additional market research was conducted because it is not practicable, for the reasons discussed above, for any company other than Raytheon to provide the required supplies and services. To date no responses have been received in response to the pre-solicitation synopsis issued 19 September

2017.

Based upon the lack of responses to the RFI and synopsis, and the other facts included in this justification document, there are no known sources other than Raytheon capable of performing the requirements described in this document without substantial duplication of cost to the Government.

The costs to compete this procurement and the unacceptable delays in fulfilling agency requirements are not expected to be recovered through competition.

7. Determination of Fair and Reasonable Costs

The Contracting Officer has determined that the anticipated cost to the Government for the CSP HD’s covered by the Justification & Approval will be fair and reasonable. In accordance with FAR 15.402, the Contracting Officer will ensure that all orders issued under this contract are procured at fair and reasonable prices/cost. Raytheon will submit formal proposals with sufficient information, including certified cost or pricing data, as required, supporting the accuracy and reliability of the proposed cost/prices.

8. Actions to Remove Barriers to Competition

For the reasons set forth in Paragraphs 5 and 6, NSWC, Crane has no plans at this time to compete future contracts for the CSP HD’s covered by this document. If another potential source emerges, NSWC, Crane will assess whether competition for future requirements is feasible.

However, the technical data currently owned by the Government is suitable for engineering analyses and organic sustainment support and limited subcomponents direct source procurements. NSWC, Crane has been and will continue to establish contracts directly with Raytheon subcontractors. An organic

Navy Depot repair facility has been established at Fleet Readiness Center Southeast, Jacksonville, FL.

The circumstances surrounding the need to obtain the required supplies without providing for full and open competition will be reviewed by the Procuring Contracting Officer prior to the exercise of any option.

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 planning data, including the Common Sensor Payload AN/AAS-53A(V)

Acquisition Plan No. AQP/16/JXQL/115 dated 15 FEB 2018, except as noted herein, are complete and accurate to the best of my knowledge and belief.

TECHNICAL COGNIZANCE:

812-854-1422

Signature Nova Carden, Division Manager (JXQ) Phone No. Date

REQUIREMENTS COGNIZANCE:

812-854-5393

Signature Patricia Herndon, Department Director (JX) Phone No. Date

LEGAL SUFFICIENCY REVIEW (NMCARS 5206.303(90))

I have determined this justification is legally sufficient.

812-854-1353

Signature Kevin E. Bolin Office of Counsel (00L) Phone No. 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.

812-854-5198

Signature John C. Pfender (023) Phone No. Date

APPROVAL BLOCK (FAR 6.304 for Approving Official)

Upon the basis of the above justification, I hereby approve, as Senior Executive of the STRL, the solicitation of the proposed procurement(s) described herein using other than full and open competition, pursuant to the authority of 10 U.S.C. 2304(c)(1).

812-854-3539

Signature Brett Seidle, Technical Director (TD) Phone No. Date