JA_KAF SH Rhinestahl FINAL redacted.docx

J&A Number: 19_0278

DEPARTMENT OF THE NAVY

NAVAL AIR WARFARE CENTER AIRCRAFT DIVISION

JUSTIFICATION AND APPROVAL

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Activity.

Naval Air Warfare Center Aircraft Division (NAWC-AD) Lakehurst, NJ 08733.

2. Description of the Action Being Approved.

This Justification and Approval (J&A) authorizes and approves the establishment of a sole source contract with Rhinestahl Customer Tooling Solutions (Rhinestahl) of 7687 Innovation Way, Mason, OH 45040 (CAGE: 5QE71) for the procurement of F414 Engine Peculiar Support Equipment (PSE) to support the Kuwait Air Force (KAF) Super Hornet program Foreign Military Sales (FMS) case KUP-SBG, Letter of Offer and Acceptance dated 08 February 2018. The resultant contract will be a Firm Fixed Price delivery order issued against Defense Logistics Agency’s Basic Ordering Agreement (BOA) SPE4A1-18-G-0011.

3. Description of Supplies/Services.

This requirement is for the procurement of one-hundred and fifty-two (152) different types of F414 Engine PSE items to be procured at varying quantities for a total of five-hundred and forty-six (546) items. The PSE is required to perform Organizational (O-Level) and Intermediate Level (I Level) Maintenance on the F414 Engine which is installed in the KAF F/A-18 E/F aircraft. The itemized list identifying the individual PSE items is documented in Enclosure 1 attached to this J&A.

4. Statutory Authority Permitting Other Than Full and Open Competition.

41 U.S.C. 1901, Simplified Procedures for Certain Commercial Items

5. Rationale Justifying Use of Cited Statutory Authority.

General Electric Company (GE) is the original designer, developer, and original equipment manufacturer (OEM) of the F414 engine. The data rights for the F414 Engine remain proprietary to GE and have not been transitioned to the Navy to support a competitive acquisition. As the OEM, GE has designated Rhinestahl as the only approved vendor to provide F414 Engine support equipment, and as such, Rhinestahl is the only company other than GE that possesses the requisite knowledge, sufficient technical data, drawings, software, and trained technical personnel to provide the required PSE. The reseller agreement established between GE and Rhinestahl includes ensuring that the parts are built to print per specifications and drawings are fully updated. Rhinestahl (as part of the agreement) assumes all risks or other issues on the deliverables. Purchasing parts that have been reverse-engineered by another company would result in additional (non-recurring) costs for testing estimated at around $3M that are not expected to be recouped through competition. The additional testing would also cause an estimated 6 to 12 months delay in delivery of the equipment, which would adversely affect the site stand up and will impair the mission readiness of the KAF F/A-18 E/F Squadrons. With firm standup dates within Kuwait, and the pending pilot training program starting in 2020, the only means to obtain the necessary F414 Engine PSE to avoid unacceptable delays in meeting the Government’s commitment to the Kuwait Air Force F/A-18 E/F program is to source the equipment identified in the attached equipment list to the Rhinestahl Company.

Rhinestahl is the only source that can provide the specific F414 engine PSE the Navy requires to maintain the operational readiness of the KAF F/A-18E/F aircraft.

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

In accordance with FAR Part 10, market research was conducted by performing a web search on the items by part number and nomenclature, which resulted in no other vendors being identified that can provide these items. A Request for Information (RFI) and Synopsis of this procurement were released to Federal Business Opportunities in accordance with DFARS 206.302-1(d) and FAR 5.201 on 8 April 2019 and 14 May 2019, respectively, to assist the NAVAIR Lakehurst team in identifying other potential companies. One response to the RFI was received by TESSEC Manufacturing (CAGE: 64HT6), an 8(a) Small Disadvantaged business located in Dayton, OH. The technical team reviewed TESSEC's capabilities statement and determined that while they currently manufacture other types of support equipment for the US Navy, they did not provide any relevant information demonstrating that they can manufacture the F414 Engine PSE. The Government responded to TESSEC on 7 May 2019. Following the Government’s response, TESSEC sent a request for the technical data. In the Government’s second response, TESSEC was informed that the technical data could not be distributed as it remains proprietary to GE. No further correspondence has been exchanged with the company following the Government’s second response.

One challenge to the Synopsis was received from Lasting Success Company (CAGE: SBNB5), a large business located in Baghdad, Iraq. The company’s submission included their company profile, past performance information, images of products they offer, and a letter of recommendation. The technical team reviewed the company’s submission and based on the information provided, was unable to determine whether or not they have the ability to manufacture the said PSE items. Lasting Success Company’s brochure did not include anything that remotely resembled F414 Engine PSE. While additional information was requested, Lasting Success Company was unable to provide anything further but asserted that they could meet our requirement.

This procurement involves the acquisition of Hand and Measuring Tools (FSC categories 51 and 52), is estimated to be over the Simplified Acquisition Threshold of $250,000, and is subject to the Berry Amendment. In accordance with DFARS 225.7002-1, Hand and Measuring Tools are restricted items, and can only be purchased if produced in the United States or its outlying areas. Product Service Codes (PSC) 5120, 5130, 5133, 5180, 5210, and 5220 for Hand and Measuring Tools have been assigned to a large percentage of the required items. Procurement from a foreign entity such as Lasting Success Company located outside the United States or its outlying areas directly violates the Berry Amendment.

In accordance with DFARS 225.401-70, this procurement also involves many items that are subject to Trade Agreements. The total value of the acquisition of items designated with PSCs 2995, 3940, 4733, 4930 and 4940 is above the applicable Trade Agreement threshold and no exception applies. Therefore, NAVAIR Lakehurst must acquire only U.S.-made, qualifying country, or designated country end products. Last Success Company is not offering U.S.-made end items, nor are they a qualifying or designated country as defined in DFARS 225. Lasting Success Company was notified of the Government’s decision on 20 May 2019. No further correspondence has been exchanged with the company following the Government’s decision.

Based on the responses described above, a determination was made by the Government not to open the requirement to competition. However, any future responses will be evaluated by the Procuring Contracting Officer prior to award.

7. Determination of Fair and Reasonable Cost.

In accordance with FAR 15.402, the Contracting Officer shall ensure that all supplies provided under this contract are procured at a fair and reasonable price. FAR 15.404-1(2) states that price analysis shall be used when certified cost or pricing data are not required. Since this effort is for commercial items, certified cost or pricing data is not required and price reasonableness shall be determined through price analysis. At a minimum, the Contracting Officer will obtain appropriate data, without certification, on the prices at which the same or similar items have previously been sold and determine if the data is adequate for evaluating the reasonableness of the price. The Contracting Officer will evaluate data other than certified cost or pricing data obtained from the offeror when there is no other means for determining a fair and reasonable price.

8. Actions to Remove Barriers to Future Competition.

For the reasons set forth in Paragraph 5, at this time, only Rhinestahl can meet the Navy’s requirement. NAVAIR has no plans at this time to compete future contacts for F414 Engine PSE. Should the Government acquire rights to the technical data, NAVAIR will assess whether competition for future requirements is feasible. Because this is a follow-on effort for supplies previously awarded on a non-competitive basis, in accordance with DFARS PGI 206.304(a)(i), the prior justification (J&A 18-0347) is provided to the approval authority for review. Approval of this J&A signifies the approval authority has made the determination required by DFARS PGI 206.304(a)(ii).

ENCLOSURE 1

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