Redacted_-_CMO_2016-081_Concurred_M1A2_SEPv3_(003).pdf

CMO Control Number: 2016-081 Abrams M1A2 SEPv2 Legacy

Components/SEPv3 Program

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Activity: Army Contracting Command-Warren (ACC-WRN), Warren, Michigan 48397-5000 is the contracting activity responsible for this action.

2. Description of Action: ACC-WRN proposes to award a new contract to support the reclamation and refurbishment of up to 45 sets of M1A2 System Enhancement Program (SEP) Version 2 (v2) legacy tank components through the acquisition of services to support the M1A2 SEP “v3” program. This contract for material support will be Firm Fixed Price. The proposed award will be made on a sole source basis to General Dynamics Land Systems (GDLS) in Sterling Heights, MI using Fiscal Year 2016 (FY16) Operation & Maintenance Army (OMA) funding.

3. Description of Supplies/Services: This action is to support the reclamation and refurbishment of legacy components and Line Replaceable Units (LRU) to support the M1A2 SEPv3 program. GDLS is the technical expert, but will work with Anniston Army Depot (ANAD) through a work share process. The total estimated value of this procurement is $27,000,000. Under this Program, the Army is recapitalizing M1A2 SEPv2 vehicles and performing technology insertion under a separate contract resulting in a “v3” configuration. This effort is a follow-on to the M1A2 SEPv3 Pilot Program purchase of 6 vehicles. The Pilot Program vehicles converted M1A2 SEPv2 to M1A2 SEPv3 tanks by incorporating technologies developed under Engineering Change Proposal 1a (ECP 1a).

4. Authority Cited: The statutory authority permitting other than full and open competition for this action is Title 10 United States Code (U.S.C.) 2304(c)(1), as implemented by Federal Acquisition Regulation (FAR) 6.302-1(a)(2)(iii)(B), “Only one responsible source and no other supplies or services will satisfy agency requirements.” Pursuant to FAR 6.302-1(a)(2)(iii)(B), services may be deemed to be available only from the original source in the case of a follow-on contract for the continued development or production of a major system or highly specialized equipment, including major components thereof, when it is likely that award to any other source would result in unacceptable delays in fulfilling the agency’s requirements.

5. Reason for Authority Cited: GDLS has been the sole-source contractor for Abrams tanks since taking ownership from the original equipment manufacturer (OEM) Chrysler Defense in 1982. Since that time, GDLS has been an integral part of the tanks’ development and upgrades having developed numerous modifications, which have aided in increasing the tanks’ capability, reliability, and survivability. One relevant example is GDLS’s experience on the Abrams Integrated Module (AIM) Program which resulted in component kits applied to vehicles. Another example is GDLS’s experience with the Abrams RESET program in which GDLS and ANAD cooperated in a work share arrangement for vehicle induction, inspection, and

Components/SEPv3 Program disassembly. Useable parts were reclaimed with mandatory parts replacement along with new components supplied when necessary due to “Drop Out Factors” (DOF) that have led to established expected repair requirements. GDLS is the only source with the engineering expertise (gained from 30 years of Abrams development, production, and field support) capable of developing timely and accurate responses to issues that arise during manufacturing on the complex electronic software systems and intensive subsystems comprising the heart of the M1A2 SEPv2 Abrams tank. GDLS is the only organization possessing the experienced personnel and capability of managing the application of the armor package, weapons, and communications systems associated with the tank.

a. An award to a source other than GDLS will result in an unacceptable delay in meeting Army requirements. Listed below are the tasks and timeframes associated with the three years required to select, qualify another source to perform the reclamation and refurbishment activities at ANAD described in paragraph 2 above.

The impact of absorbing a three-year delay is a break in the continuous application of v3 unique hardware and software and final assembly at Joint Systems Manufacturing Center in Lima, Ohio (JSMC-L) immediately following the Pilot Program, similar to a break in production. The Abrams M1A2 SEPv2 tank is the seed vehicle for the M1A2 SEPv3 program.

GDLS is the only source with the engineering expertise to develop timely and accurate responses to issues that arise during the reclamation and refurbishment of the SEPv2 legacy components and LRUs with the supporting services to meet the program requirements of the M1A2 SEPv3 program.

The schedule duplication resulting from using a competitive approach to acquire the services from a contractor other than GDLS is described immediately below:

Task Length of Time Requirements Development, RFP, Source Selection Evaluation and Award 12 months* Qualification of New Supplier (Prime Contractor) 7 months* Development of Technical Drawings 18 months* and Logistics Data Validation / Verification of Technical Documents 6 months Design and Fabrication of Test Fixtures 6 months Establish Receiving/Inspection Site 12 months Establish Rail Shipment/Receiving Access 6 months TOTAL ~3 years

Operations Security (OPSEC) Information

Components/SEPv3 Program

*NOTE: The time estimates outlined above and explained below are based on actual durations incurred and experience in the recapitalization of the SEPv2 vehicle. It also ignores the fact that the Government lacks a complete technical data package sufficient for competition of this effort (see paragraph 5b below). That said, some of the activities listed can be accomplished concurrently except for the qualification of the new supplier and development of tech/log data. As such only the activities marked with an asterisk were used to calculate the total.

(i) Requirements Development, Request for Proposal (RFP), Source Selection Evaluation (SSE) and Award (12 months): Based on an aggressive scope development timeline (2 months) and customary RFP development and issuance (90 days), proposal receipt (30-45 days), and SSE board (6 months) planning timelines.

(ii) Qualification of a New Prime Contractor (7 months): During the proposal evaluation phase of a new competition, the Government would perform a pre-award survey to assess whether the new contractor could meet contractual requirements (7 days) including manufacturing processes (for example: machining, fabrication, weld, paint, outsource processes) (4-6 months assuming 2 weeks for each of eight processes), shipping restraints (rail capability)(1 day), qualification of the new contractor’s quality systems (International Standards Organization (ISO) 9001:2008 (Quality Management Systems) compliance) (2 weeks), as well as, be familiar with Government Production Quality Deficiency Reports.

(iii) Technical Drawings and Logistics Data (18 months): Development and delivery of technical drawings and logistics data by a new contractor would require approximately 18 months including all performance requirements and drawings necessary to produce a conforming tank variant.

(iv) Validation and Verification (6 months): It would take approximately 6 months for a new contractor to validate and verify its Technical Data Package (TDP) and logistics documentation against the current tank variant.

(v) Design and Fabrication of Test Fixtures (6 months): This includes designing and building test fixtures for all the power packs. The new contractor would have to verify that the full up power pack (engine and transmission) are meeting all the technical and performance requirements before being added to the TDP. In addition, the turret stand and gun tube stand would need to be designed and fabricated. A new contractor would not be able to use the existing test stands as they are proprietary to GDLS. It is highly unlikely that GDLS would sell proprietary tank information to any competitor for production of a vehicle or performance of technical support, thus creating an obstacle to competition of these efforts.

(vi) Establishing Receiving and Inspection Site (12 months): A new contractor would have to establish its own receiving and inspection site at ANAD for reclaimed parts. GDLS currently uses its own facility. 12 months for a new contractor to establish a site represents a worst case scenario that includes a contractor electing to build a site near ANAD.

Components/SEPv3 Program

(vii) Establishing Rail Shipment/Receiving Capability (6 months): A new contractor would be required to obtain permits to establish direct access to rail capabilities. This process is estimated to take 6 months and includes establishment of a manufacturing capability that necessitates the need for the rail capability due to size/weight of the tank. Tanks, due to gross vehicle weight (GVW), cannot be driven over asphalt road to a load site to be shipped by truck. Without this capability, PM Abrams would be subject to exponential costs due to the amount of fuel needed for truck transport and permit fees for wide load and GVW.

There is no reason to believe that a new contractor would be able to establish the organizational relationships, assemble a pool of technical experts with sufficient experience and knowledge of the SEPv2 tank, and develop the processes necessary to accomplish the tasks listed above without duplicating GDLS’s efforts to date. It is highly unlikely this amount of time would be recovered through competition.

b. For the M1A2 SEPv2 legacy components, the Government has a mix of Unlimited Rights, Government Purpose Rights, and Limited Rights associated with the TDP.

The development of these missing elements added to the approximately three years for another source to qualify as described above exacerbates the unacceptable delay described in paragraph 5a above.

6. Efforts to Obtain Competition:

a. Effective competition. It is not deemed economical for a vendor other than GDLS to support the reclamation, refurbishment and rebuild of legacy hardware and components required for the M1A2 SEPv3 program. No other contractor has the necessary expertise to support the reclamation, to acquire the necessary replacement parts, and refurbish legacy tank parts and components required to recapitalize tanks for the insertion of the new technology developed under the ECP 1a program.

b. Subcontracting competition. The solicitation and contract will contain the following clauses: FAR 52.219-8 “Utilization of Small Business Concerns,” FAR 51.219-9 “Small Business Subcontracting Plan,” and DFARS 252.219-7003 “Small Business Subcontracting Plan (DoD Contracts).” To maximize competition at the subcontracting/vendor level, the Government will also include FAR 52.244-5 “Competition in Subcontracting.” The solicitation will request that the contractors propose positive goals for each of the socioeconomic categories of small businesses and the TACOM LCMC Office of Small Business Programs will review the subcontracting plan. The contractor’s negotiated subcontracting goals will be incorporated into the contract.

OPSEC

7. Actions to Increase Competition: The Government is taking no further action to increase competition at the prime contractor level for this procurement. In the past, the M1A2 SEPv2 program requirements (previous Abrams tank configuration) had been synopsized multiple times on FedBizOpps and no other sources for the Abrams program ever responded.

8. Market Research: A Sources Sought/Market Survey was published by ACC- WRN in FedBizOpps on 27 January 2016 to assess the current market’s manufacturing and production capabilities for an Abrams M1A2 SEPv3 Vehicle Program, legacy components, and LRUs. The Market Survey included questions related to production of tracked ground combat vehicles, and production of Line Replacement Modules (LRMs) capabilities to describe supply chain management system and experience in parts procurement for ground combat tracked vehicles.

The Market Survey closed 12 February 2016 and no responses were received.

Only General Dynamics Land Systems has the experience, technical data, and resources necessary to perform the services required under the proposed contract.

No other firm is currently capable of performing the services required by this agency.

9. Interested Sources: This action will be synopsized in FedBizOpps. To date, no other sources have written to express an interest. However, the Government will administer all notices required by FAR 5.201 for this action, as appropriate, and will consider any proposals it receives.

10. Other Facts:

a. Procurement History: There are no prior contracts that exclusively support the reclamation and refurbishment of legacy parts and components required for the M1A2 SEPv3 program. However, an Undefinitized Contract Action (UCA) W56HZV- 16-C-0010 was awarded on 11 December 2015 for the procurement of six (6) M1A2 SEPv3 pilot vehicles, the initial SEPv3 Program buy, at a Not-To-Exceed price of $92M. The scheduled definitization date of the UCA was subsequently extended from 16 May 2016 to 24 August 2016.

The required effort is a subset of the prior pilot contract with minor work share changes between ANAD and GDLS. Further, there is substantial history for individual down parts and reclamation efforts that support the earlier Upgrade program or recapitalization and tech insertion efforts.

(1) A list of previous contracts for the M1A2 SEPv2 vehicle configuration are as follows:

Contract W56HZV-14-C-0054/Modification PZ0005 Awarded 17 September 2015

Contract W56HZV-14-C-0054 Awarded on 22 September 2014

Contract W56HZV-12-C-0198 Awarded on 19 April 2012

Contract W56HZV-06-G-0006, Delivery Order 0011 Awarded on 11 January 2008

(2) All previous procurements for Abrams vehicles were awarded on a sole-source basis to GDLS.

(3) All previous procurements cited authority 10 U.S.C. 2304(c)(1) and FAR 6.302-1.

(4) The two previous Justification and Approvals (J&As) to support contract W56HZV-14-C-0054 (separate J&A for the procurement of 12 SEPv2s and one for the procurement of 6 SEPv2s) stated in paragraph 7, that due to low volume and no future requirements, there would be no further action taken to increase competition for the M1A2 SEPv2 configuration. However it did state that the Army is currently modernizing the tank into a new configuration (SEPv3) under a development contract and once this is complete, the Army plans to increase competition of the SEPv3 configuration hardware. As of today, this development contract W56HZV-12- C-0322 is still ongoing.

(5) No prior award for the Abrams tank was accomplished by full and open competition.

(6) No unusual patterns have been revealed by a review of the procurement history.

(7) The justification for previous Abrams production buy of 18 M1A2 SEPv2 on contract W56HZV-14-C-0054, was based on only one source pursuant to FAR 6.302-1 and there have been no significant changes to this circumstance.

Other Facts: N/A

11. Technical Certification: I certify that the supporting data under my cognizance, which are included in the justification are accurate and complete to the best of my knowledge and belief.

ROBERT G. CZARNIK Date: 19 Feb 2016 Deputy Product Manager, Abrams Tank Systems Signature: //signed//

12. Requirements Certification: I certify that the supporting data under my cognizance, which are included in the justification are accurate and complete to the best of my knowledge and belief.

CONSTANCE M. TUCKER Date: 19 FEB 2016 Deputy Project Director, Main Battle Tank Systems Signature: //signed//

13. Fair and Reasonable Cost Determination: I hereby determine that the anticipated cost to the Government for this contract action will be fair and reasonable. Certified Cost or Pricing Data, which will be subjected to DCAA audit, will be required and will form the basis for negotiating a fair and reasonable price.

JOSEPH A. NEUMANN Date: 18 April 2016 Procuring Contracting Officer Signature: //Signed//

14. Contracting Officer Certification: I certify that this justification is accurate and complete to the best of my knowledge and belief.

JOSEPH A. NEUMANN Date: 18 April 2016 Procuring Contracting Officer Signature: //Signed//

APPROVAL

Based on the foregoing justification, and as Principal Assistant Responsible for Contracting (PARC), pursuant to Army Materiel Command (AMC) Head of the Contracting Activity (HCA) Delegation of Authority (DOA) #15-19, I hereby approve the procurement of services for the reclamation and refurbishment of up to 45 sets of M1A2 SEPv2 legacy components and LRUs in support of the M1A2 SEPv3 Program on an other than full and open competition basis pursuant to the authority of 10 U.S.C 2304(c)(1), as implemented by FAR 6.302-1(a)(2)(iii), “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.” The approval is subject to the availability of funds, and provided that the services and property herein described have otherwise been authorized for acquisition. The total estimated value for this acquisition is $27,000,000.

9 Jun 2016 //signed// KAM

DATE: ________________ SIGNATURE: _______________________________

KRISTAN A. MENDOZA

Principal Assistant Responsible for Contracting