N64498_02322228500.1.pdf

J&A Number: 0232-22-285-00.1 Code: 0232 P.R. Number: 22-J L-003

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, Philadelphia Division (NSWCPD), Code 0232.

2. Description of Action Being Approved

Award of a Cost-Plus-Fixed-Fee (CPFF) Indefinite-Delivery Indefinite-Quantity (IDIQ) contract on a sole source basis to Treadwell Corporation for the furnishing of services in support of the Model 6L16 Electrolytic Oxygen Generator (EOG), Automated Electrolytic Oxygen Generator (AEOG), Low Pressure Electrolyzer (LPE) and their respective simulators used to support training installed aboard various classes of submarine and training facilities.

3. Description of the Supplies or Services

The services to be furnished will consist of the removal, installation, inspection, troubleshooting, testing, repair, adjustment, disassembly, and assembly of EOG/AEOG/LPE and their respective simulators.

The proposed contract is based upon an estimated level of effort of 17,244 hours for a total estimated dollar value of $10,168,509 over a three-year ordering period.

The Government's minimum needs have been verified by the certifying technical and requirements personnel. This acquisition is to satisfy the requirements of the Naval Surface Warfare Center Philadelphia Division requirements. This Justification does not authorize acquisitions for other requirements.

The total estimated dollar value of this procurement is $10,168,509 as indicated below.

DEPARTMENT OF THE NAVY

NAVAL SURFACE WARFARE CENTER

PHILADELPHIA DIVISION

5001 SOUTH BROAD STREET

PHILADELPHIA PA 19112-1403

IN REPLY REFER TO:

19866 MKA, MKB, and MKC are the primary oxygen producer used on SSN-688 SSBN-726, and SSN-21 Class Submarines. The EOG/AEOG produce oxygen through electrolysis, which is the chemical breakup of distilled water caused by the passage of electric current through an electrolyte solution in sixteen high-pressure cells that are connected in series. The LPE produces oxygen through electrolysis in one cell stack. LPE models MKA and MKC contain 46 cells and model MKB contains 36 cells. The EOG/AEOG/LPE supply breathing oxygen to sustain human life and is considered mission essential equipment. Any problems with the operation of the EOG/AEOG/LPE could impair the mission of a SSN or SSBN Class Submarine, and an equipment failure would pose a serious safety hazard to shipboard personnel.

The Model 6L16 EOG was originally designed and developed by the Treadwell Corporation in the 1960’s. Recognizing the Model 6L16 EOG was nearing obsolescence, Treadwell developed a modification to significantly improve the unit’s performance, safety, reliability and maintainability. The modified EOG has been designated as the Automated Electrolytic Oxygen Generator (AEOG). The modification of the EOG to an AEOG involves replacement of the Analog Control Cubicle with a Microprocessor Controller and the installation of newly redesigned Number 1 and Number 2 Auxiliary Cubicles. The modification of existing EOGs to AEOGs aboard SSBN and SSN Class Submarines began in 1997 and is still ongoing under several Navy contracts.

LPE Model 21-19886 was recently designed and developed by Treadwell Corporation between 2009 and 2010. The MKA and MKC both produce 225 SCFH of oxygen, while the MKB produces 170 SCFH of oxygen. These models contain three modules: the LPE, Interface, and Rectifier. The LPE was designed to improve safety, reliability, maintainability, and performance of the current oxygen generators and made to be more cost effective to the Navy.

The Government does not currently have the required Technical Data in order to be able to repair and maintain the EOG/AEOG/LPE. The Government attempted to purchase the technical data on 30 November 2021. Treadwell response was, “Treadwell’s Technical Data Rights are not available for purchase.” Furthermore, since the Government does not possess the technical data to the systems, it has been unable to develop a suitable statement of work to obtain the required services from other sources. No other sources can perform the work because a license to Treadwell‘s data rights are essential and Treadwell has not made the data rights available to third parties.

The required need date 30 January 2023 is derived from the expiration date of the current contract if the pending period of performance extension is executed. A lapse in coverage could pose a risk to a boat’s ability to accomplish its mission. If the Navy does not have EOG, AEOG, and LPE Treadwell OEM support, the Navy’s mission that requires submarines to remain submerged for extended periods of time will be substantially diminished without a functional oxygen generator on board.

The technical data for this requirement is the Treadwell Corporation’s main source of business, which makes procuring the data not advantageous to Treadwell. Since Treadwell has not been willing to sell the data rights to the Government, Tables 2 and 3 are provided to show the estimated schedule and cost impact to establish an alternate generator where the Government would own unlimited data rights. The information provided in the two tables shows that a substantial amount of time and costs would need to be invested by the government to develop, produce, and install a new generator.

Table 2 – Schedule Impact of Establishing an Alternate Vendor Task Duration Qualification New Design 30 Months (2.5 Years) Production of new generators 68 Months (15 months + 1 per month thereafter) Ship Alteration and ILS Development 72 Months (6 Years) Installation Throughout Fleet (41 Ships) 246 Months (20.5 Years) Total Time 34.7 Years (23 Years if Tasks Completed Concurrently)

Table 3 – Cost Impact of Establishing an Alternate Vendor Task Estimated Costs Qualification New Design $7.7 million Production of new generators $118.8 million Ship Alteration and ILS Development $6 million Installation Throughout Fleet (41 Ships) $61.5 million Total Cost $194 million

The estimated schedule and costs (adjusted for inflation) for the qualification of a new design is based on the recent procurement and qualification of the LPE-H (N64498-16-D-0006).

Additionally, contractual delivery of LPE-H Production units was 15 months for the first unit and one per month for every other unit procured at the same time. Production of new generators is based on the current population of Treadwell oxygen generators within the fleet that would require replacement, which is any submarine that has more than 5 years of operational life remaining. Based on this, there are currently eight (8) EOG’s, 21 AEOG’s and 23 LPE-T’s, totaling 54 Treadwell oxygen generators that would need to be replaced. The production unit cost is based on the recent LPE-H contract (N64498-16-D-0006). With an adjustment for inflation, this would bringing the per unit cost up to $2.2M if they were all procured in 2022.

Replacement of Treadwell oxygen generators on each of the affected ship classes would result in the need for the development of three (3) additional ship alterations: 688 (LPE replaces AEOG), 21 (LPE replaces LPE-T) and 726 (LPE replaces LPE-T). Based on the development of TRID- 0615, it is estimated that it would cost approximately $2M/ship alteration and take approximately 2 years in series. Due to the complexity of ship availability it is assumed that a submarine would always be available for an installation. The estimate for installation is based on 180 days per installation with the installations being completed in series with some submarines receiving a quantity of two 726 and some receiving a quantity of one 688 and 21. Regardless of the quantity installed, the installation would be estimated at 180 days to allow for all other impacts and variations within a ship’s availability. In order to optimize and reduce the total time, the ship installations could commence after the completion of the qualification of the new design. This could happen concurrently with production and the development of new Ships Alterations.

As a result, Treadwell Corporation, the original designer and sole manufacturer of the EOG/AEOG/LPE, is the only responsible source available capable of providing the required services for the duration of the 36 month ordering period, as award to any other source would result in substantial costs to the Government associated with designing and fielding new equipment. This cost is not expected to be recovered through competition.

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

In accordance with DFARS PGI 206.302-1, a Request for Information/Source Sought was posted to SAM on 18 October 2021. Additionally, a synopsis of this procurement was published on the SAM web page on 18 October 2021 and closed on 1 November 2021. Treadwell Corporation was the only potential offeror to respond to both postings. No additional market research was conducted because it is not practicable for the reasons discussed in paragraph 5 above for any company other than Treadwell Corporation to provide the required supplies and services.

7. Determination of Fair and Reasonable Costs

The Contracting Officer has determined that the anticipated cost to the Government for services covered by this J&A are fair & reasonable. The contractor will submit a formal price proposal with certified cost or pricing data and sufficient information to support the accuracy and reliability of the estimate. The contractor’s proposal will be reviewed by experienced technical analysts and contract specialists with the aid of necessary field pricing support. The PCO will use cost and pricing analysis as the basis for negotiating a fair and reasonable price.

8. Actions to Remove Barriers to Competition

The circumstances surrounding the need to obtain the required supplies/services without providing full and open competition will be reviewed annually by the Procuring Contracting Officer (PCO).

Orders will only be placed to support submarine life support tasking by Treadwell Corporation for NSWCPD. NSWCPD will continue to monitor the marketplace and identify potential sources of the supplies identified in this Justification. Any sources discovered that can potentially satisfy this specific procurement will be taken into account for any future requirements.

TECHNICAL AND REQUIREMENTS CERTIFICATION - (FAR 6.303-2(c))

I certify that the facts and representations under my cognizance, that are included in this justification and its supporting data, including AP/MOPAS No. 0232-22-285-00, except as noted herein, are complete and accurate to the best of my knowledge and belief.

COMBINED TECHNICAL AND REQUIREMENTS COGNIZANCE:

Signature Phone No. Date Technical Division Head ( )

LEGAL SUFFICIENCY REVIEW (NMCAR 5206.303-90)

I have determined that this justification is legally sufficient.

Office of Counsel ( )

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.

Contracting Officer ( )

APPROVAL BLOCK (FAR 6.304 for Approving Official):

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

CHIEF OF THE CONTRACTING OFFICE

Signature Karen Gutmaker Date Chief of the Contracting Office (Code 02)