Redacted Final JA New LM COI.pdf

DEFENSE LOGISTICS AGENCY

HEADQUARTERS

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6221

Source Selection Information – See FAR 2.101 & 3.104

CLASS JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

I. CONTRACTING ACTIVITY

This Class Justification and Approval (J&A) is submitted to request authority for Other Than Full and Open Competition to support requirements generated by multiple customers, including but not limited to the United States Air Force (USAF), the Defense Logistics Agency (DLA), and Foreign Military Sales (FMS) and any/all DoD customers worldwide via a Captains of Industry (COI) DLA formal solicitation. The contracting authority for this requirement is DLA Aviation, Strategic Acquisition and Programs Directorate in Richmond, VA.

II. NATURE AND/OR DESCRIPTION OF THE ACTION BEING PROCESSED

Due to the circumstances described herein, this activity requests authority for the negotiation and award of multiple contracts on a sole-source basis with Lockheed Martin Corporation (LM) for performance-based supply chain management and logistics support of aircraft and systems manufactured by LM including, but not limited to, the F16, C-5, C-130, F35, MH-60, P-3, F-22, Patriot Guidance Enhanced Missile, CHAPARRAL Guided Missile Equipment Carrier, Sniper Advanced Targeting Pod, Electro-Optics Targeting System, Distributed Aperture System Window Panel, Q-70 Radar, MK41 Vertical Launch System, Aegis Cruiser, Sonar Buoys, MEADS Radar, Sea Bass Torpedo and Stinger Missile. In addition to parts, the support may include holistic support and logistics management services, including but not limited to wholesale supply and logistics support, inventory management, maintenance planning, configuration management, repair development, repair of repairables for Service customers, and sustainment engineering associated with a LM aircraft, system, and/or end item. It may also include additive manufacturing solutions, depot maintenance, depot-level support, material management, engineering support and sustainment elements, packaging, storage, transportation, reliability improvements, and field engineering support. The all-encompassing goal will be to improve material and services availability for supported platforms. The acquisition will be conducted 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.

The intent of the acquisition team is to award overarching terms and conditions that will remain valid for 20 years. This duration of terms and conditions will enable the Strategic Contract Division of DLA Aviation to award a variety of long-term subsumable contracts under those terms and conditions. Such contracts will consist of one five (5) year base period and one five

(5) year option period. In accordance with FAR Part 10, additional market research will be conducted prior to the exercise of the five-year options. However, in no case will any of those subsumable contracts exceed the ten-year period authorized by 10 U.S.C. 2304a(f), unless appropriate approval is obtained.

This sole source requirement will be negotiated with the following company:

Lockheed Martin Corporation 100 Global Innovation Circle Orlando, FL 32825-5002

The Government anticipates purchasing material and services under these contracts from, but not limited to, the following LM CAGE codes:

02769 52088 1FUD6 64059 4A3W7 23892

16331 77609 06JJ5 11530 23917 8X044

38597 0WWN8 26629 94271 563J1

067V1 04939 56232 04WF2 74703

98897 25500 90536 08PL1 6U917

03640 55316 036W7 1NM30 02GJ5

0A489 24900 81755 1WL60 0L1E5

03538 54274 029K9 2AAC2 1G2P4

16848 80070 13030 3CUQ0 4A3W7

The length of the overarching terms and conditions contract period, as well as each base period and term of the subsumable contracts, are considered optimal for the following reasons:

• It affords the Government flexibility and latitude to enter a variety of contracts for present and projected needs while reducing the need for clause negotiation for repetitive similar type efforts.

• It facilitates agility for the Government and supplier to adapt to unforeseen requirements that may arise within the contract period.

• It affords the contractor sufficient time to recoup initial investments associated with facilities, parts, obsolescence issues, and reliability management.

• It affords the contractor opportunities to enter long term commitments with subcontractors (including organic depots) in order to provide sustained efficiencies/economies of scale to the military service user.

• It enables the contractor to implement logistical and technical changes required to realize reliability improvements.

• It allows for the elimination of duplicative contract and program administration costs for like and similar items.

• It affords the supplier opportunity to leverage investment in support processes across similar items, thereby saving additional costs.

• Performance Based support will consist of logistics management, which includes wholesale supply planning and support, depot-level consumable support, depot-level repairable support, material management, engineering support and sustainment elements, packaging, storage, transportation, reliability improvements, and field engineering support for a to-be-determined population of items with frequent or recurring demand.

LM will be required to meet supply chain performance-based metrics for material availability and backorder age for this population likely in a similar format to the current Supplier Initiated Orders (SIO) construct. The performance metrics are expected to be based on the level of demand for the individual NSN and will be measured against DLA’s current performance baseline. Examples of potential contract metrics include but are not limited to the following: improvement in production lead time (PLT), production capacity, forecasting and material availability (MA), reduction of administrative lead time (ALT), unfilled orders (UFOs), on time delivery (OTD), and backorder age.

• Stock support may include items that are unit priced and ordered at lead time like current long-term contracts.

• Transactional support may include items that are priced on an ad-hoc basis using an expedited pricing methodology to be negotiated. Such NSNs have been previously identified and will be recertified as LM sole source items prior to being procured.

IV. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION

Use of Other than Full and Open Competition is authorized by 10 U.S.C. 2304(c)(1) and FAR 6.302-1, as there is only one responsible source and no other supplies or services will satisfy agency requirements.

V. DEMONSTRATION THAT THE CONTRACTOR’S UNIQUE QUALIFICATIONS

OR NATURE OF THE ACQUISITION REQUIRES THE USE OF THE AUTHORITY

CITED ABOVE

The acquisition is restricted to the only source of supply known to have the capability of furnishing the required support – Lockheed Martin Corporation. In addition to spares support, this Class J&A covers performance-based support, forecasting, supply chain management, and related efforts for LM aviation systems. Only LM can provide the necessary expertise, capacity, capability, and proficiency to perform this overall effort. LM is the only company which possesses the requisite engineering expertise, configuration management, tooling, and management knowledge to ensure that items conform to the proper form, fit and function, thus keeping complex platforms reliable and safe. LM is the only source that possesses the full range of technical data (some of which is proprietary) required to manufacture the full range of items that are covered by this Class J&A. LM is the only contractor that can leverage the production capability and has an in-depth knowledge of the diverse and diminishing vendor base capable of supporting these platforms at the required level of support. For the sole source material provided for direct platform support, it has been determined the Government does not have complete, unrestricted data packages available. Additionally, LM has established internal production processes and qualified various industrial support contractors as suppliers. Regarding the material support for the repair of components at DoD repair depots, LM’s overall systems engineering knowledge and technical expertise in the various platforms make it singularly capable of performing the full scope of the depot support requirement. No contractor other than LM, the sole manufacturer and integrator of the various platforms to be supported, has the capability to perform all the requirements of the comprehensive performance-based supply chain management program. LM is the only entity with the full data rights to provide all the sole source material as well as the OEM-based data and systems engineering expertise to fully support the complete range of depot maintenance requirements across the full spectrum of the LM provided weapon systems.

The key overarching objective of these contracts is to maximize the availability/use of the various weapon systems by providing timely material support through initiatives such as incentivizing reliability improvements, streamlining supply chain management, and improving maintenance processes and procedures. In order to meet this overarching objective, the provider must have the ability to drive changes into the platform configurations and, more importantly, understand, analyze, and assess the implications—both in terms of weapon system performance and operational usage—of any potential configuration change. To do so, this effort may require engineering and logistics support personnel with an unfettered ability to reach back to the OEM, LM, to support engineering investigations, fault detection and isolation, repair development, modification development, supportability analysis, and the associated technical documentation development and support. LM is the only source that can provide this comprehensive capability.

Only LM has personnel with the requisite breadth and depth of experience and understanding of the totality of technical data necessary to fulfill this requirement and ensure the currency, accuracy, and completeness of the technical data and associated databases. Finally, once modifications or process changes are made by the Government, only LM has the existing infrastructure to ensure timely execution of such changes, including the ability to efficiently execute changes simultaneously into production and fielded systems.

Furthermore, by having only one contractor responsible for the bulk of supply chain management, the Government has a single focal point with management accountability and contractual responsibility. No other source has the long-standing business relationships with the supplier base that LM has developed relative to this requirement. No other source can leverage this supplier base as well as LM can to assure the continued effective, reliable, and safe sustainment of the supply chain. Any other contractor would introduce an unacceptable degree of risk into the supply chain effort and, ultimately, into the LM weapon systems.

While the market includes many supply chain service providers that would be capable of performing a portion of the logistics management required (such as forecasting and warehousing), LM, as the OEM of the specified systems, is the single source with integration ability at multiple levels with the military services and the engineering, obsolescence management, modeling, and simulation capabilities to provide the system availability and end-to-end support the customers require.

In summary, no contractor other than LM has the requisite data and detailed systems engineering and integration knowledge to execute the highly integrated and complex performance-based supply chain management and Depot maintenance support requirements successfully as detailed herein. Additionally, by leveraging LM’s robust capabilities DLA believes it is likely to see improvements in material availability to greater than 90% and savings of 5% or greater.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE

Due to the uniqueness of this initiative, the requirements for each possible support strategy as described herein are in the process of being developed and have not been finalized. Accordingly, a Sources Sought/Request for Information (RFI) waiver was granted by the Head of the Contracting Activity (HCA) pursuant to DFARS PGI 206.302-1(d). However, this requirement will be synopsized in the BETA.SAM.GOV web page (which replaced FedBizOps) as required by FAR 5.201. It is anticipated that sources having an interest in subcontracting may be identified through synopsis. Although the Government does not own data to support acquisition of these items from any other source, any source who responds to the Government as a result of the synopsis will be identified to the prime contractor as a potential for subcontracting possibilities. Future interest from additional sources is not anticipated at this time, but future requirements will nevertheless be advertised via BETA.SAM.GOV as well to ensure that potential alternate sources are aware of the requirement and can identify interest in support for the applicable items.

For all traditional sole source requirements fulfilled by subsumable contracts under this umbrella, DLA will utilize Lockheed Martin’s comprehensive subcontracting plan approved annually by the Defense Contract Management Agency (DCMA).

As applicable, all other subsumable parts contracts or holistic weapon system contracts awarded under this umbrella will require an approved 2579 to address any small business concerns including but not limited to bundling or consolidation.

VII. DETERMINATION BY THE CONTRACTING OFFICER THAT THE

ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND REASONABLE

LM will be required to provide certified cost or pricing data in accordance with FAR Part 15 whenever applicable on subsumable contracts. A review of the proposed prices will be conducted where the Government will review LM’s cost data, to include but not limited to proposed labor hours, types and quantities of material, historical material prices, and other direct costs. A Forward Pricing Rate Agreement (FPRA) or Forward Pricing Rate Recommendation (FPRR) for direct and indirect rates may be provided by the Defense Contract Management Agency (DCMA). For LM facilities that do not have a FPRA or FPRR, direct and indirect rates will be negotiated and established in a rate agreement. Profit will be negotiated using the Weighted Guidelines Method.

LM will not be required to provide certified cost or pricing data for commercial items procured using FAR Part 12 procedures. To evaluate the proposed price of commercial items, price analysis will be performed in accordance with FAR Subpart 15.4. Should data other than certified cost or pricing data be utilized, the Government’s negotiation objective will be developed using local technical analysis, negotiated direct and indirect rates, and profit.

A fully compliant audit will be performed and Defense Contract Management Agency (DCMA)/Defense Contract Audit Agency (DCAA) assistance will be requested as necessary.

Detailed documentation and justification of price reasonableness will be disclosed in the official price negotiation memoranda for each subsumable contract, as required, to be prepared upon completion of negotiations. Bringing all LM requirements together increases government leverage with the contractor. DLA believes this leverage will result in significant savings over existing disparate support strategies. A business case analysis (BCA) will be conducted for each subsumable contract under the COI umbrella to ensure all applicable and regulatory savings targets are met prior to award of the subsumable contract.

The twenty-year term of the overarching terms and conditions as well as the structure of the ten-year term of each subsumable contract (5-year base period plus one 5-year option period) is expected to incentivize LM’s continued investments in reliability improvements, obsolescence management, process improvements and more efficient depot operations over the contract period. These contracts will be negotiated assuming decreased costs associated with improved reliability and availability through the potential ten-year performance period of the contract.

Based on the foregoing, the Contracting Officer hereby determines the anticipated cost to the Government will be fair and reasonable.

VIII. DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AND THE

RESULTS, OR STATEMENT OF THE REASONS MARKET RESEARCH WAS NOT

CONDUCTED

A BETA.SAM.GOV synopsis will be issued to advise industry of the pending procurement and solicit inquiries from interested parties. It is anticipated that no other source other than LM, the only known source capable of comprehensively providing the total scope of these parts and services, will be interested in this procurement.

As indicated at Section VI above, a waiver to Sources Sought and RFI requirements was approved by the HCA. Sources Sought and RFIs are market research tools used by the Government to obtain information regarding industry's ability to provide products and services.

Customarily, once the Government defines its requirements, the procuring activity conducts market research in the form of Sources Sought or RFI to determine if commercial items or non-developmental items are available or could be modified to fulfill the Government's requirements.

Since the requirements of this program are being developed, a Sources Sought or RFI would not be a beneficial market research tool at this point in the procurement process. Market research will, however, be ongoing as the finalized requirement and any future requirements will be synopsized BETA.SAM.GOV, which is anticipated to result in sources having an interest in subcontracting opportunities being identified.

IX. ANY OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL AND

OPEN COMPETITION

None.

X. LIST OF SOURCES, IF ANY, THAT EXPRESSED INTEREST IN THE

ACQUISITION

As indicated in Section VI above, this requirement will be synopsized on the BETA.SAM.GOV website as required by FAR 5.201. If sources other than LM express interest, they will be directed to a copy of the solicitation.

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

Due to the complex nature of this work, it is difficult to remove barriers to competition at the prime contractor level. However, the Government intends to take several steps to make this effort as expansive as possible. The Government will include FAR 52.219-16, Liquidated Damages-Subcontracting Plan, and FAR 52.219-10, Incentive Subcontracting Program, in the contract. The Government will work in close coordination with both the DLA Small Business Office and LM to encourage the selection of subcontractors on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract and sound business case analyses. DLAD Procurement Note M06, Evaluation of Offers for Part Numbered Items, will be included in the solicitation and provide guidance for potential suppliers.

Additionally, LM may be required to obtain common consumables required for this effort from DLA and all applicable competitive processes will continue to be utilized for acquisitions of these common consumables. The Contracting Officer will continue to synopsize items that may be added to this contract in order to investigate the possibility of competition. The Competition Advocate will review the requirements of subsumable contracts to verify that all requirements are sole source. In the event it is in the best interest of the Government to include competitive items in the comprehensive support solution, proper vetting with the Small Business Office and the COMPAD will occur in accordance with applicable policies and procedures and the proper approvals will be requested. As stated above, LM is the only known source with the capability of furnishing the required full scope of logistics support.

Future requirements will nevertheless be advertised in the BETA.SAM.GOV website in order to ensure that potential alternate sources are aware of the requirement and can identify interest in support for these items. Any items which become competitive after award of a Performance- Based, Stock, or Transactional support contract will be removed from the contract in accordance with the inclusion of Procurement Note L27 Addition and Deletion of Items (AUG 2017) IAW DLAD 16.590(a).

XII. CONTRACTING OFFICER’S CERTIFICATION

The contracting officer’s signature on the Coordination and Approval Document evidences that she has determined this document to be both accurate and complete to the best of her knowledge and belief.

Lockheed Martin Captains of Industry (COI)

DATE CHRISTOPHER T. DAVIS

Chief of the Contracting Office

DATE CATHERINE L. CONTRERAS

Head of the Contracting Activity

DATE ROXANNE J. BANKS

DLA Competition Advocate

DATE SAMUEL T. STEVENSON

DLA Office of General Counsel

I have reviewed and hereby approve this justification.

DATE MATTHEW R. BEEBE

DLA Senior Procurement Executive

DAVIS.CHRISTOPHER.T

HOMAS

Dig tally signed by

DAVIS CHRISTOPHER THOMAS

Date: 2021 03 25 10:04:45 04 00

CONTRERAS.CATHE

RINE.L.

Digitally signed by

CONTRERAS.CATHERINE.L

Date: 2021.04.02 15:05:26 -04 00

BANKS.ROXANNE.JARA

MILLO.1

Digitally signed by

BANKS.ROXANNE.JARAMILLO

Date: 2021.04.16 13:29:23 -04'00'

STEVENSON.SAMUEL.THO

MSON.

Digitally signed by

STEVENSON.SAMUEL.THOMSON 7

Date: 2021.04.13 10:08:12 -04'00'

BEEBE.MATTHEW.RIC

HARD

Digitally signed by

BEEBE.MATTHEW.RICHARD

Date: 2021.04.16 16:49:54 -04'00'