REDACTED JA23R0099 Final SCO signed.docx

CMO Control Number:2024-042 Department of the Army Justification and Approval For Other Than Full and Open Competition

1. Contracting Activity: The Army Contracting Command- Detroit Arsenal (ACC-DTA) is the procuring activity for this action.

2. Description of Action: ACC-DTA proposes to award a new follow-on “C-type” contract with a base and four option years for the Abrams Family of Vehicles (FoV) Obsolescence Management Services and Hardware. The services will be on Cost Plus Fixed Fee (CPFF) level-of-effort term Contract Line Item Numbers (CLINs); the hardware procurements will be on Firm Fixed Price (FFP) CLINs. The proposed award will be sole source to General Dynamics Land Systems (GDLS) in Sterling Heights, MI. This contract will be funded with Army Working Capital Funds (AWCF), Procurement Appropriations, Army (PAA) funding, and Pseudo Foreign Military Sales (FMS) funding, with award projected for the third quarter of Fiscal Year (FY) 2024. This contract will allow for continued obsolescence management support to the U.S. Army Tank-automotive and Armaments Command (TACOM) Integrated Logistics Support Center (ILSC), Project Manager–Main Battle Tank Systems (PM MBTS) and Abrams FMS customers.

3. Description of Supply/Services:

a. This action supports the last-chance acquisition and inventory management of Abrams Tank systems' electronic components that are becoming obsolete. Purchases of these components will bridge the gap until a new component can be designed, validated and produced to meet the technical data and production fabrication specifications of the Abrams vehicle system. Obsolete components that may be procured under the proposed contract are Abrams electro-mechanical devices and subcomponents, circuits and subcomponents, video display glass, electrical power supplies and subcomponents and connectors. Obsolescence support will include M1 based components for the M1A1, M1A2, M1A2 System Enhancement Program (SEP) V2, M1A2 SEP V3 variants of the Abrams tank; as well as M1-based common components of the Joint Assault Bridge (JAB), and Assault Breacher Vehicle (ABV).

b. This action includes a requirement for the contractor to manage Abrams tank system obsolete component inventory.The acquisition of obsolete inventory will occur by subsequent modifications as GDLS receives notice from its suppliers that a particular qualified component or subcomponent is going out of production or will otherwise no longer be available. While a replacement component begins design and first article testing procedures under the Abrams Systems Technical Support contract, GDLS (in coordination with the Government) transfers items from the obsolete inventory to fulfill spares and production needs on an as-needed basis.

c. The total estimated dollar value of this action, as shown in the table below, is XXXXXXX for a five-year period of performance. The estimated total was derived from an Independent Government Cost Estimate (IGCE) dated 15 Nov 2023 created by the Cost Analysis branch of PM MBTS. This estimate was based on historical data for the same services accumulated during the previous contracts, hardware, and future known requirements. Warehouse Management Services will be awarded as a base with four one year options. Hardware will be awarded as they are identified throughout the five years. Below are only estimated value.

TOTAL ESTIMATED DOLLAR VALUE

Total

XXXXXX

4. Authority Cited: The statutory authority permitting other than full and open competition for this action is 10 United States Code (U.S.C.) Section 3204(a)(1) as implemented by Federal Acquisition Regulation (FAR) 6.302-1(a)(2) which states, “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements”. Specifically, FAR 6.302-1(a)(2)(ii)(A) states, “Supplies 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 (A) Substantial duplication of cost to the Government that is not expected to be recovered through competition.”

5. Reason for Authority Cited:

a. Background/History: Many electronic components of the Abrams tank system are high-tech, low volume, source controlled, or unique components that require a specialty vendor base. These vendors have proven their product meets strict requirements and quality standards of the Government and the Original Equipment Manufacturer (OEM) by completing qualification tests such as product fabrication tests and vehicle tests which ensure the products meet technical specifications. This process may take several months to several years to complete as it requires coordination and approval of the OEM and the Government's Product Manager's office. On occasion, vendors that have completed this quality process notify GDLS of their intention to discontinue the manufacture of electronic components. In this instance, the electronic component is becoming obsolete, or going out of production. Because the components have been carefully designed to integrate with the Abrams Tank system, it is often in the Government's best interest to purchase part or all of the supplier's inventory to ensure these items are available for continued, uninterrupted Abrams production capability and spare parts replacement. Typically, the hardware will only be available for acquisition from the supplier for a limited time and a contract mechanism must be in place to quickly acquire the item. Once the Government is notified of a component becoming obsolete, a redesign effort is initiated under the Abrams Systems Technical Support (STS) contract. As the design and test of replacement components can often take years, securing the obsolete inventory via this effort will mitigate lapse in supply until an alternative component is produced.

b. GDLS is the OEM and sole producer of the Abrams Tank System since 1979 and is the only source with the experience, corporate knowledge, and the engineering and logistical expertise required to support tank production and fielded Abrams tanks. GDLS is the only source capable of acquiring and managing obsolete components in the correct configuration for future spare parts needs and production of Abrams vehicles without substantial duplication of cost.

c. Only GDLS has existing/established supply chain relationships with suppliers whose electronic components have been qualified to meet the strict requirements and quality standards to support the production of Abrams vehicle. It is the knowledge of, and relationships with, these suppliers that is the most integral to procuring obsolete components in a timely and efficient manner. A new vendor would not possess the strategic supplier relationships to identify the needed lower-level components that may not have provisioning data. Award to any other source would likely result in the inability to procure the obsolete material or procurement of incorrect configurations. A new vendor would lack the established supply chain relationships necessary to easily identify and manage the needed components.

d. In order to successfully perform the management and procurement of the obsolete material, a new contractor would be required to establish a supply chain with qualified vendors that is redundant to what GDLS already has in place as the OEM, resuting in a substantial duplication of cost that is not recoverable through competition. There are multiple configurations of the Abrams Tank System (e.g.. M1A1, M1A2, M1A2SEPv2, M1A2SEPv3) where obsolescence procurement is required to support production and field maintenance. On the SEPv3 configuration alone, there are over 144 Line Replaceable Units (LRUs) which are currently produced by over 25 suppliers. A new vendor would have to become knowledgeable about the technical configurations of each LRU in order to identify lower level components within each LRU and how to procure them. Qualifying a new supplier would entail conducting First Article Testing to verify that the alternative components can meet the existing strict requirements and quality standards of the current LRU suppliers. Government subject matter experts in Abrams Quality estimated it would take 633,600 hours in total to qualify 144 LRUs on the SEPv3 configuration, resulting in an estimated XXXXX of non-recurring engineering costs, as detailed below:

No. of Documents per LRU Total Hours (144 LRUs)

N/A

N/A

Total Cost to Qualify 144 LRUs

(i) Test Execution includes conducting performance tests to make sure the component performs as designed. The component is placed onto a test stand and run through endurance testing, start/stop testing, fast /slow testing and similar tests. Each test may be performed multiple times depending on the quality and performance requirements of the component. Test Execution also entails environmental testing, such as heat testing, cold testing, shake testing, and salt spray and submergence if applicable to the component.

(ii) Test plan review, inspections and approvals are to review and approve test plans. Abrams Quality subject matter experts estimate most LRUs have about 20 documents which take approximately 60 hours per document to review and approve.

(iii) Test hardware design and development is the time needed to design new test stands, fixtures and cables to support testing. This takes about 1,600 hours per part tested. The costs to procure the actual test stands, fixtures and cables are not included in this cost since we are examining only the labor involved here. If test hardware were included, the cost would increase.

e. The hours per LRU and cost per hour noted in the chart is actual cost history of similar quality testing performed on an FY16 contract which conducted pre-production qualification activities to prepare for the first full production of the M1A2 SEPv3 Abrams vehicle. This contract conducted testing as described above for 22 LRUs and Line Replaceable Modules (LRMs) for SEPv3 unique components.

f. The cost of XXXXX exceeds the total estimated value of this action, therefore it is not in the Government’s best interest to try and pursue competition. This cost does not include similar non-recurring engineering costs for the other Abrams Tank configurations; therefore, the duplication of cost could substantially increase when considering all configurations.

g. In addition to the above costs, award to a new source would likely result in the interruption of future spares availability or force the Government to implement costly work-arounds to meet production schedules or to provide sustainment support in a timely manner. This interruption would XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.

6. Efforts to Obtain Competition:

a. Effective Competition: There is no plan to obtain competition for this contractual action on the prime contractor level for the reasons stated above in Section 5. The Contracting Officer will publish notices required by FAR 5.201 and consider any proposals received.

b. Subcontracting Competition: GDLS is required to submit a subcontracting plan in accordance with FAR 19.704 in order to achieve small business subcontracting opportunities. To ensure that GDLS competitively subcontracts to the maximum extent possible, this contact will contain all of the required FAR and Defense Federal Acquisition Regulation Supplement (DFARS) subcontracting clauses.

7. Actions to Increase Competition: There are no anticipated actions to increase competition for subsequent procurements because competition would create a duplication of cost not expected to be recovered in a competitive action. As the Abrams vehicle is modernized, the Army’s goal is to mitigate obsolescence issues in the future, which will reduce the need for this requirement. However, if new requirements for obsolescence management are identified in the future, market research will be conducted at that time.

8. Market Research: A Market Survey questionnaire was posted to SAM.gov on 18 April 2023 for a total of 34 days to assess the current market’s ability and experience to provide obsolescence services for multiple Abrams electronic components. Respondents were required to answer all the questions in the Market Survey, such as company experience, Government licensing agreement, storage facilities, “Out-of-Production” management, packaging and shipping, handling, hazardous materials, and Electrostatic Discharge (ESD).

One response was received from GDLS. The Government team conducted an analysis of the GDLS response and determined that GDLS has procured, managed, stored, packaged, and shipped “Out of Production” material for the USG and FMS customers to include electro-mechanical devices and subcomponents, circuits, circuit cards and subcomponents, video display glass, electrical power supplies and subcomponents, and electronic connectors. The Abrams “Out-of-Production” material storage facility is located at the GDLS Tallahassee facility in Florida. This GDLS facility is the electronics manufacturing center for Abrams and the entire facility is ESD compliant. The storage area is secured and controlled with restricted personnel access. GDLS has packaged and shipped ESD material to repair facilities for more than 20 years, including shipping to the XXXXXXXXXXXXXXXXXXXXXX. As a result of the Government’s technical analysis, it was determined that GDLS would meet the requirement.

In addition to the Markey Survey, strategic market research activities have been used to obtain an understanding of the latest technologies, developments, and capabilities in the marketplace. Formal and informal (in-house) market research by ILSC and the PEO will be continually conducted to identify alternative sources or alternative solutions for certain vehicle enhancements. In-house research includes information obtained from product/trade journals, press releases, internet searches, and and attendance at industry conferences. As a result of the market research conducted, the Government concluded that no other sources could provide the proposed requirements for the acquisitions.

9. Interested Sources: To date, no other sources have written to express interest.

10. Other Facts:

a. Procurement History: Procurement history for the Abrams Obsolescence contracts is as follows:

(1) Contract: W56HZV-19-C-0062 Contractor: GDLS Requirement: Abrams Obsolescence Management – Last Chance Buy (LCB) Basic Award Date: 5 March 2019 Total amount: $51.7M (Obligated as of October 2023)

Contract: W56HZV-12-C-0105 Contractor: GDLS Requirement: Abrams Obsolescence Management – LCB Basic Award Date: 27 January 2012 Total amount: $22.8M

Contract: W56HZV-07-D-0062 Contractor: GDLS Requirement: Abrams Obsolescence Management - LCB Basic Award Date: 1 December 2006 Total amount: $31M

Contract: DAAE07-01-G-N001 Contractor: GDLS Requirement: Abrams Obsolescence Management - LCB Basic Award Date: 7 March 2001 Total amount: $44M

(2) The previous procurements were sole source to GDLS.

(3) The Justification and Approvals for the previous procurements were based on 10 U.S.C. Section 2304(c)(1), “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements,” as authorized by FAR 6.302-1(a)(2)(ii)(A).

(4) The previous justification stated that the Government is not contemplating further competition because GDLS is the only source capable of providing the required services without an unacceptable delay. There are no plans to increase competition as only GDLS has the prerequisite experience and knowledge to perform this effort.

(5) Prior contracts for this requirement were not accomplished using full and open competition.

(6) No unusual patterns were revealed in the procurement history.

(7) The previous justification was issued under the authority of FAR 6.302-1. That justification stated that GDLS is the only source capable of providing the required services without a substantial duplication of cost. That justification has not changed.

b. Other Facts: None

11./12. Technical/ 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.

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. For the Cost Plus-Fixed Fee (CPFF) portions of the contract, negotiated price shall be determined fair and reasonable through a cost analysis to thoroughly analyze each of the proposed individual cost elements in addition to conducting a pricing analysis to ensure that the price agreement is consistent with the Independent Government Cost Estimate (IGCE) and/or historical pricing for similar items. The Firm Fixed Price (FFP) portion of the contract will be evaluated against historical data and/or continuous market research of a similar item. ACC-DTA has a dedicated Pricing Division with trained Cost/Price Analysts who will assist the Contracting Officer by performing the Cost and Price analysis. ACC-DTA will request Defense Contract Management Agency (DCMA) expertise and audit support for input. This detailed Government negotiation position will be approved in a comprehensive Business Clearance Review consisting of reviews from senior contracting officials. Certified Cost or Pricing Data will be required in accordance with FAR 15.403-14(a)(1) and will form the basis for this analysis. ACC-DTA will document the results of negotiations, and the detailed Price Fair and Reasonable determination from the Contracting Officer, in a Post Negotiation Memorandum that ACC-DTA senior Contracting personnel within the Pricing Division will review and concur upon.

I hereby determine that the anticipated cost to the Government for this contract action will be fair and reasonable. Certified cost or price data will be required in accordance with FAR 15.403-4.

14. Contracting Officer Certification:

//LKS// 25 March 2024 Laura K. Stoyanovich Contracting Officer

I certify that this justification is accurate and complete to the best of my knowledge and belief.

//LKS// 25 March 2024 Laura K. Stoyanovich

APPROVAL

Based on the foregoing justification, and as Senior Contracting Official pursuant to Army Materiel Command Head of the Contracting Activity Delegation of Authority #24-04, I hereby approve the procurement of Obsolescence Management Services and Hardware in support of the Abrams Family of Vehicles on an other than full and open competition basis pursuant to the authority of 10 U.S.C. Section 3204(a)(1) as implemented by Federal Acquisition Regulation 6.302-1(a)(2)(ii)(A) “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.” Approval is subject to availability of funds and provide that the services and property herein described have otherwise been authorized for acquisition. The total estimated dollar value of this action is XXXXXXX for a five-year period of performance.

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