Redacted_21-00001 GH Sustain Rpr JA_signed.pdf

Justification and Approval (J&A) for Other Than Full and Open Competition

FOR OFFICIAL USE ONLY

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I. Contracting Activity.

This Justification and Approval (J&A) requests authority for Other Than Full and Open Competition to support requirements generated for the Air Force Sustainment Center (AFSC), 638th Supply Chain Management Group (SCMG), 407th Supply Chain Management Squadron (SCMS). The Supply Chain Contracting Division (AFSC/PZABA) is the contracting activity for this requirement. The purchase request number supporting this contract action is FD2060-21-00001.

II. Nature and/or description of the action being processed.

Due to the circumstances described herein, the activity requests authority to acquire the services for the RQ-4B Global Hawk (GH) and Navy MQ-4C Triton using Other Than Full and Open Competition as prescribed by FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements. This action will result in the award of a new Requirements-type contract which will include Fixed-Price Incentive Fee (FPIF) (Firm Target), Firm Fixed Price (FFP), Cost Plus Fixed Fee (CPFF), and Cost Reimbursable No Fee (CRNF) contract line item numbers (CLINs). The contract will include FPIF (Firm Target) due to limited repair history. CLINs that are priced FPIF will be converted to FFP after sufficient pricing repair data history is available for evaluation and negotiation. The contract will have a one-year basic, six (6) one-year options, and an optional six-month extension under the terms of FAR 52.217-8, Option to Extend Services. The validity period of the Requirements contract is projected to be 01 July 2021 - 31 December 2028 if the optional six-month extension is exercised.

This sole source requirement will be purchased from the following company:

Northrop Grumman Aerospace Systems (NGAS) 17066 Goldentop Road San Diego, 92127-2412

CAGE 78022

Large Business

III. Description of supplies/services required to meet agency needs.

This requirement is for the repair and sustainment of the RQ-4B GH and MQ-4C Triton systems. This requirement supports the repair of “common items” for both the RQ-4B GH and MQ-4C Triton. Since its entry into the acquisition process, the GH support strategy had been Contractor Logistics Support (CLS) for life until 2014. In May 2014, a policy letter directed Air Force (AF) platforms common to another military department be managed by an organic AF activity (DODM 4140.68 Enclosure 4, September 2016). NGAS is the Original Equipment Manufacturer (OEM) for both the RQ-4B GH and MQ-4C Triton. This contract action will only support Triton items which are common to the RQ-4 GH platform. The Command/Control Intelligence, Surveillance, Reconnaissance (C2ISR) Flight was established within the 638 SCMG, 407 SCMS in FY2016 to coordinate the transition from CLS to AF controlled supply chain management. The transition is estimated to be completed 1 October 2020, at which time the 407 SCMS will take over inventory control point functions to include stock (buy and repairs of assets), storage, and issue of assets. While inventory control point functions will reside with the 407 SCMS, this effort will ensure repair capability is in place for all transferred items.

This effort is for repair of the GH platform when it transitions to the 407 SCMS from the Air Force

March 2018 FOR OFFICIAL USE ONLY Page 6 of 10 precluded from open competition but work may be possible by the specific OEM. There are some items that may fall outside of proprietary or data rights from a hardware procurement or repair perspective but would still require Northrop Grumman coordination for software or hardware integration.” “…Configuration control is a key issue with the Global Hawk fleet and maintaining a common configuration management office with Northrop Grumman prevents mismatched retrofits from impacting warfighter readiness. No third party has the experience to take over Global Hawk fleet management without a detrimental impact to the warfighter.”

“…With respect to the idea of selling proprietary data rights to third parties, Northrop Grumman does not sell these rights or offer them as incentive for support. Furthermore, we have no information from suppliers/subcontractors that they would be willing to sell their proprietary rights as an investment or incentive.”

The 407 SCMS engaged with AFLCMC/WIG at Wright-Patterson AFB to confirm NGAS's data rights assertions. Preliminary discussions have determined that the Government did not procure any data rights in the DARPA and subsequent Air Force and/or Navy contracts. Most of the sensor packages were developed at contractor's expense and marketed to the AF for use on the GH.

In February 2012, a Business Case Analysis (BCA) determined that the best value, long-term depot support strategy, based on Source of Repair Assignment Process compliance, AF goals to improve 50/50 posture, and core requirements would be that all major GH systems should be repaired organically. The FY2013 President's Budget (PB) terminated depot activation funds, however funds were reinstated in the FY2015 PB. In December 2015, the System Program Office initiated organic sustainment support from the 448 SCMW. The transition to organic sustainment is estimated to be completed 1 October 2020, but NGAS sustainment support is required to continue to ensure continued repair coverage during depot activation activities.

The prior GH sustainment contract was the Expanded Program Indefinite Delivery/Indefinite Quantity Contract (EPIC), FA8620-15-D-3009. This contract was sole source to NGCS, CAGE 78022 (i.e., NGAS). EPIC was awarded to support all GH efforts to include program, business, and technical management; systems engineering; studies and analysis; design development, integration, test, and evaluation; contract/production line closeout/shutdown; training; sparing; integrated logistics support to include repairs; quality assurance; and fielding. The validity period of EPIC expires 30 September 2020. Task order FA8528-18-F-0007 was awarded under EPIC on 28 June 2018 for CLS sustainment and it expires 30 June 2020. The System Program Office, AFLCMC/WIG, is planning to award a follow-on CLS task order to cover GH support activities, to include repair. The task order will provide sustainment through 30 June 2021. At that point, this new Requirements contract will take over repair requirements and delegated engineering services from the CLS contract.

The GH program is categorized as a DoD S-CAT I, concurrently supporting development, production, and sustainment acquisition phases. To date, the prime contracting role has been sole-sourced to

NGAS.

Award to any other source would result in substantial duplication of cost to the Government that is not expected to be recovered through competition. A reverse engineering effort could develop detailed production level technical data; however completion of a reverse engineering effort of this scope (e.g.

highly specialized end-items found on a major weapon system) is estimated to take a minimum of five

March 2018 FOR OFFICIAL USE ONLY Page 7 of 10 years. This timeframe includes the budget request period, purchase request processing, contract negotiation, and award, period of performance, qualification testing, and source qualification. A reverse engineering effort to develop Technical Data Packages (TDPs) would require an estimated $1.6B investment and take an estimated eight years to complete. This is based upon reverse engineering estimates completed for a similar program, the MQ-9 Reaper. The GH platform is more complex than the Reaper, therefore actual costs may be higher. A reverse engineering effort is considered a high-risk endeavor due to the highly-specialized and complex nature of the GH.

Assuming a 20% savings due to competition, it would take over 100 years to recover the costs of the reverse engineer effort. The GH fleet is expected to retire in FY2050, therefore these costs could not be recouped prior to retirement of the GH fleet. Additionally, changes to the program due to new requirements, replacements due to modifications, and obsolescence will erode any investments and savings over the years.

Accordingly, NGAS is the only firm capable of providing the repair and sustainment services described in Section III above without the Air Force experiencing substantial duplication of cost that could not be expected to be recovered through competition.

VI. Description of efforts made to ensure that offers are solicited from as many potential sources as practicable.

A Sources Sought (SS) synopsis, Solicitation # FM17-RQ-4B-Repairable-NSN-Sustainment was posted on the Federal Business Opportunity (FedBizOpps) website on 8 December 2016 with responses due by 31 January 2017. Respondents were requested to submit a capabilities document as well as a completed capabilities matrix that were provided as attachments to the SS. Three companies indicated they were “Interested Vendors.” None of the interested vendors submitted the requested information, however the vendors were evaluated and determined not capable as they do not possess the hardware, software, or technical data rights required to support this effort.

The requirement will be synopsized in accordance with FAR 5.201. It is anticipated that sources having an interest in subcontracting may be identified through synopsis. Any source who responds to the Government as a result of this synopsis will be identified to the prime contractor as a potential subcontracting possibility.

VII. Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

In accordance with FAR 15.403-4, the contractor will be required to provide certified cost or pricing data to be used to support the Government's evaluation of the proposed cost. The proposed skill mix of labor, labor hours, types and quantities of material and other direct costs, and direct and indirect rates will be negotiated by the Government based on recommendations from the Defense Contract Management Agency (DCMA) and expert technical personnel supporting the program. The contract price will be negotiated in accordance with the procedures in FAR Part 15 ensuring the ultimate cost to the Government is fair and reasonable.

VIII. Description of the market research conducted and the results, or a statement of the reasons market research was not conducted.

Market research was conducted in accordance with FAR 10.001 and 10.002. The market research was completed on 14 November 2018. Market research techniques used are as follows:

Internet search method using Google (http://www.google.com - search phrase “Contractor Repair of

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RQ-4). Results did not identify any additional vendors beyond NGAS and their associated sub-vendors.

Small Business Administration (SBA) Quick Market Search (http://dsbs.sba.gov/dsbs/search/ dsp_quicksearch.cfm) using North American Industry Classification System (NAICS) code 811219 (Other Electronic and Precision Equipment Repair and Maintenance). The Small Business search yielded 30 results. The vendors were evaluated and determined not capable because they do not possess the ability to provide this service and do not have access to the hardware, software, and technical data required.

A SS synopsis was posted FedBizOpps website on 8 December 2016, with responses due by 31 January 2017. Three companies responded indicating they were “interested vendors,” however none provided the information requested in the SS to support their capabilities. The vendors were evaluated and determined not capable because they do not possess the hardware, software, and technical data rights required to support this effort.

As part of market research activities, the 407 SCMS submitted a written request for information to Northrop Grumman Corporation (NGC) on 20 July 2017. NGAS responded on 26 August 2017. The response is detailed in J&A, Section V.

For items provided directly by sub-vendors, NGAS asserted that those items would be proprietary to the OEM and NGAS did not have any information to support that those sub-vendors would be willing to sell their proprietary rights as an investment or incentive. However, NGAS did assert a broad integration role of their subcontractors for configuration and quality control of all NSNs. NGAS has an established configuration control process which includes specific tooling, handling, and specialized test equipment. In some cases, this special equipment may inject additional proprietary rights or data rights beyond the specific NSN being repaired. The 407 SCMS team has engaged with AFLCMC/ WIG at Wright-Patterson AFB to determine the actual level of integration required by Northrop Grumman for the NSNs. As the level of integration is realized, built in off ramps will be utilized to those sub-vendors where no integration is required.

The market research confirmed the Government did not procure the technical data of the GH NSNs, with the exception to 27 NSNs specific to CAGE 8X691 (Sierra Nevada). The Government has been unable to locate the technical data, therefore is unable to determine the adequacy of the data and/or determine if integration services would be required by NGAS for those NSNs.

Additional market research efforts were expended by reaching out to individual sub-vendors. The 407 SCMS requested information from the 69 individual sub-vendors that make-up the GH platform via phone and/or email. With exception to one, other sub-vendors that responded to the Government's inquiry estimated the value of their technical data to be between $1M-$30M. None of those vendors were willing to sell their technical data rights to the Government. Harris Corp (CAGE 91417) informed the Government they might be interested in selling their technical data, but any repair would require specialized test equipment valued at and custom parts available only from Harris.

Harris also asserted that even if the Government owned the test equipment, the design knowledge and debugging logic to determine the failing part is proprietary to Harris.

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After analysis of all search results the conclusion was that NGAS is the only company fully capable of providing repair support services for the GH and MQ-4C Triton NSNs.

IX. Any other facts supporting the use of Other Than Full and Open Competition.

None.

X. List of any sources that expressed, in writing, an interest in the acquisition.

See Section VI above.

XI. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before making subsequent acquisitions for the supplies or services required.

The Government does not possess the data rights for the GH NSNs to support full and open competition. NGAS stated they would not sell the technical data rights to the Government in their response to the Government's 20 July 2017. Government inquiries to individual sub-vendors on whether they were willing to sell their data resulted in vendors stating they were unwilling to sell and/ or planned to retain proprietary rights to the design and debugging logic to test equipment.

A reverse engineering effort is estimated to cost $1.6B and take five years to complete. It would take over 100 years to recover the investment costs which is well beyond the expected GH fleet retirement in FY2050.

The Government's plan to break barriers to competition is continued follow-up with the OEM and individual sub-vendors on an annual basis, prior to the exercise of each option period, regarding their data rights and willingness to sell the data to the Government. If the contractors respond with a proposal for the data, the Program Manager will seek to budget for funds to procure the technical data where it makes economic sense to do so.

NGAS has asserted its role as Prime Integrator for the GH system. While NGAS will sub-contract repairs to sub-vendors, they assert that items will still require NGAS coordination for software or hardware integration as well as for configuration control. The 407 SCMS will continue to engage the AFLCMC/WIG to determine the amount of integration required by NGAS. In the event that repair can be accomplished by individual sub-vendors without NGAS integration, those NSNs will be removed from the contract and action taken to establish a separate repair contract with the individual sub-vendor.

The plan to break barriers to competition identified in the previous GH Class J&A (AFLCMC/ WIG-15-J&A-01) approved by Lieutenant General Ellen M. Pawlikowski (SAF/AQ) on 24 Apr 2015 was two-fold:

First, assess the past and current data assertions made by the OEM through reviewing and negotiating Government rights, incorporating priced options for technical data into future modifications, evaluate sustainment drivers, leverage deferred ordering/delivery clauses to obtain data, and expand use of open architectures and standardized interfaces. There has been little progress on this plan, as the