Redacted JA.pdf

JUSTIFICATION

FOR OTHER THAN FULL AND OPEN COMPETITION (OTFAOC)

Federal Acquisition Regulation (FAR) Part 6 Justification & Approval (J&A) Supporting Procurements under FAR Part 12 and FAR Part 15

Purchase Request Number: MPLSLEI2224001 Contract Number: To be determined (TBD) Task/Delivery Order Number: TBD Procurement Title: Warehouse Management Operating System (WMOS) Follow-On Estimated Value:

Statutory Authority: 10 U.S.C.§2304(c)(1) and FAR 6.302-1

Justification for OTFAOC Number: JA20-183

Upon the basis of the following justification, I, as the Procuring Activity Competition Advocate (PACA), hereby approve the use of other than full and open competition of the proposed contractual action, pursuant to the statutory authority of 10 U.S.C§2304(c)(1) and the regulatory authority of FAR Part 6.302-1, only one responsible source and no other supplies or services will satisfy Agency requirements.

1. REQUIRING AGENCY AND CONTRACTING OFFICE:

Requiring Agency:

Defense Commissary Agency (DeCA) Headquarters 1300 East Avenue Fort Lee, Virginia 23801

Contracting Office:

Defense Information Systems Agency (DISA) Defense Information Technology Contracting Organization (DITCO)/PL8413 2300 East Drive, Building 3600 Scott AFB, Illinois 62225

2. NATURE/DESCRIPTION OF ACTION(S):

a. The nature of this action is to procure continued support of the DeCA Warehouse Management System (WMS) for the two central distribution centers (CDCs) located in Europe. This procurement will be awarded as a firm fixed-price (FFP) contract to the sole source provider and original equipment manufacturer (OEM), Manhattan Associates, Inc., for continued operational support of WMS, to include processes associated with receiving inventory into the distribution center, tracking, and shipping to the overseas commissary locations. This requirement will perpetuate the existing support under contract HC1028-15-C-0006 which expires on September 30, 2020. Manhattan has made

WMOS Follow On-JA20-183

Page 2 of 8 Pages over 40 customizations to their commercial off-the-shelf (COTS) WMOS package to accommodate DeCA’s unique warehouse processes and interface seamlessly with legacy systems. The current contract deployed this customized solution to two CDCs - Kaiserslautern Cold Storage and Germersheim, in Germany. Under this follow-on contract, Manhattan will provide continued operational support of the customized solution at the two original CDCs.

b. The period of performance will consist of a 6-month base period, beginning September

30, 2020 and two 3-month option periods. The estimated lifecycle cost of this requirement is . Fiscal year (FY) 20 surcharge funds will be used under Military Interdepartmental Purchase Request MPLSLEI2224001. The applicable North American Industry Classification System code is 511210, Software Publishers, with sales size standard of $38,500,000.

3. DESCRIPTION OF SUPPLIES/SERVICES:

a. To date, DeCA has deployed Manhattan’s COTS WMOS in two CDCs. DeCA is in the middle of upgrading the commissary shopping experience by deploying a 21st century commercial package, Enterprise Business Solution (EBS). The agency was scheduled to deploy the last increment to replace the WMOS system in March 2020. Teams were on-site to begin deployment and installation until the mandatory orders were given for the individuals to return to the United States due to the announcement of the COVID-19 pandemic. To continue to achieve DeCA’s goal to provide a 21st century shopping experience, its CDCs must operate similar to its commercial counterparts, which includes the use of a Manhattan’s COTS warehouse management solution.

b. WMOS currently processes all incoming shipments, verifies order accuracy, manages warehouse operations, optimizes picking, and provides pallet size, weight, and cube routing information. Also included in the system are software licenses, software configuration, development, and delivery; system and data conversion; documentation;

installation, de-installation, and disposal of old equipment; testing; training; disaster preparedness and business continuity; hardware and software maintenance; system administration; 24x7 help desk (excluding Tier 1); consulting services; and program management. WMOS directly affects every commissary that relies on a CDC to keep its shelves stocked. It incorporates grocery industry best practices in reading and processing European article numbers and Japanese article numbers and voice picking technology.

DeCA’s WMOS solution performs five primary business functions, described below, within the CDC:

(1) Inbound Management

a) Receiving - CDC workers use radio frequency (RF) handhelds to inventory inbound shipments.

b) Put away - CDC workers store palletized products, input product location, and manage the internal operations of the CDC, using RF handhelds.

(2) Inventory Management

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a) Physical and Cyclic Inventory - CDC workers physically count all of the products in each warehouse location. Cyclic inventories are performed under normal warehouse operations without freezing locations. CDC workers cycle count inventory by checking product locations to identify and correct discrepancies between current inventory in the WMOS and actual physical inventory.

b) Quality Control - CDC workers inspect merchandise being received or shipped to ensure that it is of adequate quality and that the license plate number content specification is accurate.

(3) Task Management – Warehouse management solution generates warehouse worker tasks and enables management to prioritize the sequence of CDC activities in English, German, Japanese, or Korean to optimize workload efficiency.

(4) Outbound Distribution

a) Replenishment - CDC workers move item inventory from a reserve storage location to the primary picking location or to another mode of storage from which picking is performed.

b) Picking & Shipping – Voice picking directs CDC workers in English, German, Japanese, or Korean to identify product locations in the warehouse, pick inventory against store orders, and ship the picked inventory to requesting stores.

(5) Supply Chain Intelligence - Equips warehouse managers and supervisors with analytic reporting tool in a set of pre-configured reports; the tool allows managers and supervisors to create their own reports and queries.

c. Manhattan’s 2015 WMOS is a multi-platform, multi-tier software solution that integrates with VoCollect (voice picking software and hardware) to enable voice picking, supply chain intelligence to generate customized reports, utilizes application-specific licenses International Business Machines message queuing, and Manhattan integration framework to process data and interface with other applications and functions within WMOS. This solution interfaces with DeCA’s supply chain to provide accurate inbound and outbound shipping requirements and inventory management.

d. To achieve the agency’s goal and to leverage industry best practices, DeCA requires the continued operational support of the COTS WMOS solution, customized to interface with DeCA’s business systems at the two CDCs in Germany.

4. IDENTIFICATION OF STATUTORY AUTHORITY:

This acquisition is conducted under the statutory authority of 10 U.S.C§2304(c)(1) and the regulatory authority of FAR 6.302-1/Defense FAR Supplement 206.302-1, only one responsible source and no other supplies or services will satisfy Agency requirements. The software and support are peculiar to a specific brand name, WMS.

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5. DEMONSTRATION OF CONTRACTOR’S UNIQUE QUALIFICATIONS:

a. Description of events. DeCA CDCs used DeCA’s Interactive Business System to manage commissary backroom warehouse operations. Realizing that this legacy system was not capable of optimizing warehouse operations or leveraging commercial best practices in 2015, DeCA awarded a contract to Manhattan Associates, Inc. to customize its proprietary WMOS solution and deploy it to two CDCs. The Manhattan WMOS was customized to interface with DeCA’s business systems and was successfully deployed at two CDCs. Manhattan also developed a propriety interface to VoCollect software that allows DeCA to utilize an automated voice picking system. Recently, the announcement of the COVID-19 pandemic has set and held strict overseas travel restrictions for both Government and contractor employees. DeCA had a team in Germany at the beginning of March 2020 to deploy the new replacement system for WMOS.

The teams were mandated to return to the United States before deploying the new system. Other options to have those teams return to Germany have been explored but were denied.

Justification.

a. Minimum Government requirements. The minimum Government requirement is for the renewal of support for WMOS software that is currently in use at two CDCs.

b. Proposed sole source contractor. Manhattan Associates, Inc. is the proposed sole source contractor. Manhattan Associates, Inc. is the developer of the WMOS solution that was customized to interface with DeCA’s legacy systems and is currently operational at two CDCs. Manhattan Associates, Inc. does not authorize other entities to support or resell their solutions. A sole source contract allows the Government to continue to use existing full solution, to include voice picking software and supporting hardware (e.g., RF handhelds) interfaces. DeCA has already procured a replacement system; however, due to the COVID-19 pandemic, DeCA has been unable to deploy the replacement system.

Sustaining the current WMOS software and hardware solution allows for the continued support of the CDCs to perform operations in supporting the European Theater.

Warehouse Management is mission critical to DeCA; therefore, the current system is required to be maintained until the new replacement system, EBS, is deployed. In addition to the cost savings, an estimated 24 months required to deploy a new system will be saved. Therefore, as described in FAR 6.302-1(a)(2)(ii)(A), replacement of the software and equipment would result in substantial duplication of costs to the Government that are not expected to be recovered through competition.

c. Discussion regarding cause of the sole source situation. The original 2010 contract was awarded to Manhattan through full and open competition. Under this contract, DeCA deployed Manhattan’s 2010 proprietary COTS solution with DeCA-unique customizations to interface with legacy systems. In 2015, a new contract was sole sourced to Manhattan to upgrade the 2010 software version to their most updated software package. This software has been deployed to two DeCA CDCs through the current contract. Initial customization, interface development, software configuration, and testing were required prior to deployment to the two CDCs in Europe. Manhattan Associates, Inc. is the only entity that provides its 2015 proprietary COTS WMOS software solution. Procuring for Manhattan’s WMOS solution and continued operational

Page 5 of 8 Pages support allows DeCA to have stability in their CDC’s services until the implementation of the EBS in FY21 that will replace the existing warehouse management solution.

d. Impact. This follow-on contract will allow for continued operational support of the current customized COTS warehouse management solution that has been deployed to two DeCA CDCs in Germany. The two CDCs using WMOS are utilizing the current system which is scheduled to be sunset in FY21. The warehouse distribution function of WMOS is critical to DeCA’s mission to deliver groceries to military members in an environment outside the continental United States (OCONUS). A lapse in this function would result in mission failure. Procurement of a new COTS warehouse management solution increases the risk of mission failure to deliver a vital benefit of the military pay system that sells grocery items at cost while enhancing quality of life and readiness for our OCONUS patrons. The current COTS WMOS has been highly specialized for DeCA;

acquisition of a follow-on contract ensures continuity of operational support services through sunset of the current system until implementation of the replacement system of EBS. If other than an exception to full and open competition were pursued, it would result in substantial duplication of costs and effort to the Government that are not likely to be recovered through competition.

6. BETA.SAM.GOV ANNOUNCEMENT/POTENTIAL SOURCES:

A sources sought announcement was published by DITCO to beta.sam.gov on August 27, 2020.

A notice of the proposed contract action will be synopsized on beta.sam.gov website, as required by FAR 5.2, with the intention to award a sole source contract to Manhattan Associates, Inc.

7. DETERMINATION OF FAIR AND REASONABLE COST:

A determination will be made by the contracting officer that the contract represents the best value to the Government, as defined in FAR 2.101, and results in the lowest overall cost alternative (considering price, special features, and administrative costs) to meet the Government’s needs. The contracting officer will also determine the pricing information valid for comparative purposes. Certified cost and price data is not required for this commercial item acquisition, in accordance with FAR 15.403-1(b)(3). The contracting officer will determine whether the price is fair and reasonable, based on comparison of the proposed prices to historical prices paid, the commercial price list, and the independent Government cost estimate.

8. MARKET RESEARCH:

a. Market research was conducted in July 2020. Market research included discussions with knowledgeable individuals in Government/industry (to include the OEM), reviewing historically similar acquisitions, and reviewing existing Government-wide acquisition contracts. In addition, a sources sought announcement was issued. One response was received, but it did not meet the Government’s minimum requirements. Based on current

Page 6 of 8 Pages market research, it has been determined that only the aforementioned brand name software and support can fully meet the Government’s needs.

b. The first step in conducting market research was to determine if another brand name solution could meet the Government’s requirements. Market research confirmed that while there are similar products available on the market, the WMOS software and support are the only products that can provide the performance, scalability, and support necessary to function for the two CDCs at DeCA. Based on the market research, it has been confirmed that there are no competitor functional replacement products in the market capable of fully meeting the Government’s requirements.

c. The second step in conducting market research was to determine a method of procurement. Market research concluded that the software and support are not available on existing Government contract vehicles, to include Enterprise Software Initiative, General Services Administration, and National Aeronautics and Space Administration Solutions for Enterprise-Wide Procurement. Based on the results of market research, a notice of the Government’s intent to issue a sole source award will be published to FBO, and a solicitation will be issued directly to Manhattan Associates, Inc., a large business, and the sole provider of the WMOS software and support.

9. ANY OTHER SUPPORTING FACTS: None.

10. LISTING OF INTERESTED SOURCES:

When market research was conducted, only Manhattan Associates, Inc. was found with capabilities to provide this requirement. In response to the sources sought, only one vendor expressed interest, but the vendor did not provide capabilities to meet the requirements, as the current software is proprietary to Manhattan Associates (current contractor) and cannot be supported by any other vendors, as Manhattan does not have authorized resellers.

11. ACTIONS THE AGENCY MAY TAKE TO REMOVE OR OVERCOME BARRIERS

THAT LED TO THE EXCEPTION TO FULL AND OPEN COMPETITION:

a. Procurement History.

Contract Number: W91RUS-06-F-0038 Contractor: Manhattan Associates, Inc.

Contract Period: February 28, 2006 – February 27, 2011 Total Contract Value: $4,047,559.78 Contract Type: FFP

Contract Number: HC1028-12-P-0056 Contractor: Manhattan Associates, Inc.

Contract Period: April 5, 2012 – March 21, 2015

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Total Contract Value: $45,278.34 Contract Type: FFP

Contract Number: HC1028-10-C-2008 Contractor: Manhattan Associates, Inc.

Contract Period: March 22, 2010 – March 21, 2015 Total Contract Value: $6,752,058.49 Contract Type: FFP

Contract Number: HC1028-15-C-0006 Contractor: Manhattan Associates, Inc.

Contract Period: April 1, 2015 – September 30, 2020 Total Contract Value: $9,102,508.23 Contract Type: FFP

b. Current market research indicates that neither large nor small businesses resell or support

Manhattan Associate’s solution other than Manhattan Associates. DeCA plans to deploy the replacement warehouse solution by the end of the second quarter of FY21.