IH_CJA_FY16-082-44_MK_45_Mod_4_BAE_(Redacted)_Redacted.pdf

DEPARTMENT OF THE NAVY

NAVAL SURFACE WARFARE CENTER

INDIAN HEAD EXPLOSIVE ORDNANCE DISPOSAL TECHNOLOGY DIVISION

3767 STRAUSS AVENUE

SUITE 201

INDIAN HEAD, MD 20640-515

CJ&A Number: FY16-082-44 Code: 022

CLASS JUSTIFICATION AND APPROVAL

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

JUSTIFICATION

1. Contracting Activity

The Naval Sea Systems Command (NAVSEA), Naval Surface Warfare Center Indian Head Explosive Ordnance Disposal Technology Division (NSWC IHEODTD), Contracts Department (Code 02).

2. Description of the Action Being Approved

Award of an Indefinite-Delivery Indefinite-Quantity (IDIQ) contract to conduct MK 45 Mod 4 Configuration Gun Mount System overhauls and upgrades for U.S . Navy ships. Orders issued under the contract are anticipated to be Cost-Plus-Fixed-Fee (CPFF) and Firm-Fixed-Price (FFP)

The proposed awardee is:

BAE Systems Land & Armaments L.P. (BAE Systems L&A) 163 Rochester Drive, Suite 1 Louisville, KY 40214-2600 Cage Code: 064S4

It is anticipated that only one contract will be awarded to support FY17 through FY21 requirements (one base year and four option years). However, if agreement cannot be reached on a multiple year contract, the Government reserves the right to award additional contracts for the FY18 through FY21 requirements under the authority of this Class Justification and Approval (CJ&A) _

Authority to act under this CJ&A expires on 30 September 2021.

3. Description of Supplies/Services

The 5- inch MK 45 Light Weight Gun Mount System provides an effective weapon for anti-surface, Naval Surface Fire Support, and anti-air warfare missions, and i s installed aboard DDG 51 and CG 47 class ships. The proposed IDIQ contract will include planned MK 45 Mod 4 Configuration Gun overhauls and upgrades for

CJ&A Number: FY16-082-44 Code 022 both classes of ships, along with associated manufacturing, technical and engineering services.

The contract will include a base year (FY17) and four option year periods of performance (FY18 through FY21), to be funded with SCN and WPN funding. The estimated value of orders to be placed is $337.4M as set forth below.

Estimated Dollar Value {in millions) and Quantities:

FY17 FY18 FY19 FY20 FY21

SCN

WPN

Total 7

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

Total

$337.4

4. Statutory Authority Permitting Other Than Full and Open Competition

10 U.S.C. 2304(c) (1), as implemented by 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 MK 45 gun was originally designed and built by the former United Defenses Industries, Inc., which was acquired by BAE Systems, Inc. in June 2005. BAE Systems L&A was created following this acquisition and is the only responsible source with the required manufacturing capability and expertise to provide the MK 45 Mod 4 Configuration Gun Mount System overhauls and upgrades required under the proposed contract in support of the Navy's DDG and CG shipbuilding requirements. The current MK 45 Gun Mount System requirement was awarded on a sole source basis to BAE Systems L&A under Contract N00174-15-C-0009 and BAE Systems L&A also previously successfully conducted MK 45 Gun Mount System low quantity system and subsystem level overhauls and upgrades for U.S. Navy ships on a sole source basis under Basic Ordering Agreement (BOA) N00024-07-G-5438.

The MK 45 Gun Mount System is not currently in production. The Navy owns the Technical Data Package for the MK 45 Gun Mount;

however it is not maintained in a format that will allow for competition. Approximately would have to be invested to update the Level III TDP in order to implement a build to print solicitation. Based on recent contracts, the Government estimates that award to another source would require acquisition in excess of for machines, special test equipment, special tooling, and upgrades to facilities and manufacturing processes, which results in a total cost of at least .

Prior to full rate production, the vendor Manufacturing Readiness Level (MRL) of 10 must also be verified. Following the fabrication of a first article, a Physical Configuration Audit (PCA) would be required to validate the product baseline which would also increase the cost to the Government. Based on past experience with similar procurements, it is estimated that it would take approximately 4 months to modify the existing production contract to increase the ceiling for engineering services and to add sufficient funding for updating the TDP.

It's estimated that BAE Systems L&A would require approximately 8-12 months to develop the drawings and NAVSEA would need approximately 3 months to review and certify that the TDP is acceptable for competitive procurement. Following acceptance and approval, a competitive procurement process is expected to take an additional 12 months for contract award. The total estimated additional costs associated with procuring the TDP from BAE Systems L&A and soliciting a competitive contract are .

If a contract solicited under competitive procedures was then awarded to a source other than BAE Systems L&A, the production lead time (PLT) anticipated for the first delivery from contract award is 29 Months (six months longer than the current 23 month PLT) as an alternate source would require additional time to acquire specialized tooling, train personnel, and establish a vendor/supplier base for unique components. The total cumulative timeline for procurement of an updated TDP, solicitation/award of a competitive contract, and first delivery is 56-60 months, with the estimated earliest delivery from an alternate source in July of 2022 as compared to first delivery under the proposed contract to BAE Systems L&A of November 2019. This timeline would result in unacceptable delays for delivery of MK 45 Mod 4 Configuration Gun Mount Systems and negatively impacts operational capability for scheduled ship deployments. Based on recent contracts, the Government estimates that award to another source would require acquisition in excess of for special machines ( ), test equipment ( ), and tooling ). For a vendor new to guns manufacturing, facilities upgrades and manufacturing process establishment could account for an additional cost of for a total cost in excess of . Competition of the MK 45 Gun Mount using a performance specification opens the possibility of new MK 45 baselines introduced to the fleet. The Navy, in this case, would have to develop a new logistics support infrastructure to support a new baseline as well as a new schoolhouse training curriculum. This will increase lifecycle support costs. Awarding this contract to any other company will result in duplication of costs to the Government that is not expected to be recovered through competition.

Based on the above timelines and additional cost which is not expected to be recouped through competition, the FY 2017 through FY 2021 requirements cannot be procured using full and open competition and still support DDG shipbuilding and CG modernization programs. The first ships to receive MK 45 Gun Mounts from the proposed contract are USS ANZIO (CG 68) and USS PORT ROYAL (CG 73), with gun production deliveries beginning May 2019 to meet the in-yard need date of 4 November 2019.

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

A sources sought for this procurement was released in December 2014 and 25 May 2016. It was synopsized in FedBizOpps in accordance with FAR 5.201 on 6 November 2015. Additionally, for the past 7 years, every MK 45 Delivery Order that was issued under BOA N00024-07-G-5438 was synopsized. Contract N00174-15- C-0009 was also synopsized. No responses from industry have been received from these synopses or from the sources sought notices.

7. Determination of Fair and Reasonable Costs

Cost and price analysis will be used to determine that the final price is fair and reasonable. Assistance from DCAA and DCMA will be requested to analyze, evaluate, and negotiate based upon detailed cost or pricing data, which will be certified by BAE Systems L&A at conclusion of negotiations. BAE Systems L&A has overhauled and upgraded a significant number of MK 45 Gun Mounts, which will provide actual cost data in this future proposal that will allow the Navy to negotiate a fair and reasonable contract value for this procurement.

8. Actions to Remove Barriers to Competition

For the reasons set forth in Section 5, only BAE Systems L&A has the specialized technical data, knowledge, experience and processes currently in place for conducting MK 45 Gun Mount overhauls and upgrades. Moreover, based on a survey of industry, which is performed periodically by the MK 45 Technical Team evaluating several gun and weapon system manufacturers to include General Dynamics, L-3 Technologies, McNally Industries, Raytheon, Northrop Grumman, and Lockheed Martin, no domestic companies have the current capabilities (facility, equipment, machines, special tools, trained/certified personnel} readily available to support MK 45 Major Caliber Gun System requirements. Due to high non-recurring costs to tool up to overhaul/upgrade MK45 Gun Mounts and the low yearly demand, no additional manufacturers of MK45 Gun Mounts are expected. Any other company is expected to require investment in excess of to compete for this effort.

In addition to the above, the Level III TDP would need to be updated to allow for competition. It is estimated that the update would cost an additional . The low quantity of gun mounts being procured across the FYDP does not justify the additional costs associated with supporting a new manufacturer build up and learning curve costs associated with the overhaul/upgrade and new gun part manufacture.

If another potential source emerges, NAVSEA will assess whether competition for future requirements is feasible.

CERTIFICATIONS AND APPROVAL

CJ&A Number: FYlG-082-44 Code 022

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 Acquisition Plan No. 15-024, except as noted herein, are complete and accurate to the best of my knowledge and belief.

TECHNICAL COGNIZANCE:

Date

REQUIREMENTS COGNIZANCE:

LEGAL SUFFICIENCY REVIEW (NMCARS 5206.303(90}}:

Associate Counsel, NSWC IHEODTD OOL

I have determined this justification is legally sufficient.

CONTRACTING OFFICER CERTIFICATION (FAR 6 . 303-2(b) (12)): R.

Adams, NSWC IHEODTD 022

I certify that this justification is accurate and complete to the best of my knowledge and belief.

SENIOR PROCUREMENT EXECUTIVE APPROVAL

Code 022

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 the authority of 10 u.s.c.

2304 (c) (1) .

ASSISTANT SECRETARY OF THE NAVY (RESEARCH, DEVELOPMENT AND

ACQUISITION)

M/i.i~ 2 2 2017

Signature Sean J. Stackley Date frank.caponiti Sticky Note Rejected set by frank.caponiti frank.caponiti Sticky Note None set by frank.caponiti