REDACTED JandA 70Z08023Q17001B00 Octans Gyrocompass.pdf

70Z08023Q17001B00

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

41 U.S.C. § 1901

In compliance with Federal Acquisition Regulation (FAR) 13.501(a)(ii), this justification uses the format at FAR 6.303-2 and is modified to state that the procedures in FAR subpart 13.5 are used.

1. Agency and Contracting Activity.

The Department of Homeland Security, United States Coast Guard (USCG), Surface

Forces Logistics Center (SFLC), Patrol Boat Product Line (PBPL) prepared this justification for other than full and open competition.

2. Nature and/or Description of the Action being Approved.

(a) Nature of the action: USCG intends to procure the overhaul of approximately fifteen (15) and purchase one (1) new Octans Fiber Optic

Gyrocompass installed onboard the 87’ and 110’ US Coast Guard Patrol

Boats (WPB). This contract will include option to purchase new if a unit is determined beyond economical repair (BER) as a result of the open and inspect report. This acquisition will be achieved in accordance with FAR

Part 12, Acquisition of Commercial Items, utilizing the procedures established under FAR Part 13.5 Simplified Procedures for Certain

Commercial Items at an estimated cost of $XXXXX. The NAICS code is

334511 and the PCS Code is J020.

(b) Name and address of the contractor: iXblue Defense Systems, Inc.

27 Wellington Road, Lincoln, RI 02865

(c) Type of action: Firm Fixed-Price Contract with Economic Price

Adjustment for five (5), one (1) year ordering periods

(d) Estimated total value (includes 12-month ordering periods):

(e) Type of funding: AFC 45 Naval Engineering funds to award contract and current fiscal year funding for delivery orders.

(f) Year of funding: Fiscal Year 2023

(g) Solicitation number: 70Z08023Q17001B00

(h) Background information about the requirement: This is a follow on to contract

70Z08018D11001B00 with a period of performance of 8/16/2018 – 8/15/2023. In each of the prior contracts, the USCG utilized this technology, as originally specified on the 87’ & 110’ cutters.

3. Description of Supplies/Services. This action involves a mission requirement associated with maintaining USCG Patrol Boat availability in support of various Homeland Security missions. The requirement is for the purchase and overhaul of the following Octans gyrocompass to support 87’ and 110’ WPB Patrol Boat Fleet:

Part

Number

NSN DESCRIPTION

KAA00052 6605-01-558-7250 Octans Gyrocompass

All parts to overhaul or purchase new must be provided by the Original Equipment

Manufacturer (OEM) in accordance with specification # R-426-0632, entitled U.S. Coast

Guard 87WPB and 110WPB Octans Fiber Optic Gyrocompass Overhaul. The intention of this contract is for each part to be evaluated to determine the need of repair, upgrade, or total replacement.

4. Identification of Statutory Authority Permitting Other Than Full and Open

Competition. The statutory authority permitting other than full and open competition is 41

U.S.C. § 1901 implemented by FAR Subpart 13.501(a) sole source (including brand name) acquisitions as defined in FAR 2.101.

5. Identification of Exception to the Buy American Act. No exception to the Buy

American Act has been identified.

6. Demonstration that the Proposed Contractor’s Unique Qualifications or the Nature of the Acquisition Require Use of the Authority Cited. It is imperative the Coast

Guard work in partnership with the OEM, iXblue Defense Systems, Inc (known as iXblue) in procuring or overhauling the Octans gyrocompasses on the 87' and 110’ WPB's. The gyrocompasses are highly complex commercial systems comprised of hundreds of interrelated parts, designed, and manufactured by iXblue. The original procurement of the gyrocompasses was for a commercial item, not based on Government technical data, and the Government did not procure the technical data associated with the gyrocompasses. The

Government cannot purchase that technical data from iXblue. The 87’ and 110' WPBs are the only vessels that use this equipment in this configuration. There are many other

Gyrocompasses in the commercial marketplace, but they are all configured to their particular application. Other than basic part/component descriptions provided by iXblue, the Government does not possess technical data descriptions adequate for competitively soliciting for overhaul of the WPB configured Octans Gyrocompasses.

The use of a non-OEM overhaul source would be a huge risk as this gyrocompass is a very sensitive, technically complex, and expensive piece of equipment, which provides the cutter with vital navigational information. The results of a third party attempting to perform overhauls on this equipment, without access to the OEM’s proprietary technical data, could result in failure of the gyrocompass to provide accurate navigational information while cutter is underway and could result in a catastrophic navigational accident. The required technical data to manufacture or overhaul this equipment is proprietary to the OEM. iXblue Inc. is the only vendor that possesses the proprietary information and technical data required to manufacture the items and perform overhauls.

Any gyrocompasses determined beyond economical repair can only be replaced with an identical, new iXblue OCTANS gyrocompass because the navigation system on the patrol boats is uniquely configured to use this equipment. The navigation systems on the WPB

87’ and 110’s is both comprised of multiple pieces of equipment that function together.

These gyrocompasses were originally procured by PBPL for these systems. They went through first article testing, prototype evaluation, and were subsequently integrated onto all

WPB-87’ and 110’ navigation systems. Procurement of any other brand of gyrocompass would require another solicitation for design and prototype manufacturing, 1st article test, installation of the system on a cutter, and prototype evaluation period onboard the cutter.

Upon acceptance of the prototype, a Time Compliant Technical Order (TCTO), an engineering change required to switch equipment, would have to be drafted and implemented to begin installing another brand of gyrocompass. This would result in unacceptable delays to the fleet as failing navigational equipment could place the vessels and crew at risk.

7. Description of Efforts Made to Ensure that Offers are Solicited from as Many

Potential Sources as is Practicable. Pursuant to FAR Subpart 5.2, in an effort to solicit as many potential sources as practicable, a sources sought notice was published on the System of Award Management (SAM) website October 4, 2022-October 17, 2022 under

70Z08023S17001B00 informing the industry that it is intended to award the contract to iXblue Inc., unless other sources could provide verification of their capabilities to provide these parts. iXblue responded via email, expressing their interest, and stated they are the only overhaul source, owning proprietary data rights to overhaul and manufacture the equipment.

8. Determination by the Contracting Officer that the Anticipated Cost to the

Government will be Fair and Reasonable. The contracting officer will determine that the anticipated price will be fair and reasonable based on previous prices paid on the current contract 70Z08018D1711001B00 along with comparison to the Independent

Government Estimate (IGE). The IGE’s base year and subsequent option years was derived by applying a 10% escalation to actual prices under the last option year of the current contract to account for the recent dramatic rise in the inflation rate. On the 2nd thru

5th ordering periods, a 3% escalation rate is used to account for inflation as well as the fluctuating prices of materials used to manufacture the parts to perform the repairs. FAR

52.216-2 Economic Price Adjustment-Standard Supplies will be included in the contract to account for any volatile price changes that could occur during this unstable market. If necessary, the Contracting Officer will request data other than certified cost or pricing data to support negotiations. Catalog pricing does not exist for repair or purchase of these items.

9. Description of Market Research. Market research was conducted between February

2022 and November 2022. Research included searches of the internet and trade publications. Acquisition Planning Forecast System (APFS) F2022057355 was published on February 8, 2022. Sources Sought Notice, 70Z08023S17001B00, was posted on

SAM.gov from October 4, 2022-October 17, 2022. The market research concludes that the OEM is iXblue who owns the rights to their product and is the sole producer with no authorized distributers.

10. Any Other Facts Supporting the Use of Other Than Full and Open Competition.

None.

11. A Listing of Sources, if Any, that Expressed, in Writing, an Interest in the

Acquisition. The sources sought synopsis was issued on SAM.gov on 4 October 2022 requesting that parties express their interest in writing to the Contracting Officer. The vendors were asked to respond with a positive statement of their intent to submit a quote while documenting their ability to overhaul or manufacture the Gyrocompass. The only response to the synopsis was from the OEM, iXblue. iXblue stated they are the only overhaul and manufacture source for the Octans Gyrocompass in accordance with specification #R-426-0632, entitled U.S. Coast Guard 87WPB and 110WPB Octans Fiber

Optic Gyrocompass Overhaul. iXBlue also outlined their proprietary data rights, as well as

OEM proprietary rights to the manufacturing.

12. A Statement of the Actions, if Any, the Agency May Take to Remove or Overcome

Any Barriers to Competition Before Any Subsequent Acquisition for Supplies or

Services Required. The USCG does not own the required drawings, specifications, or technical data to evaluate non-OEM distributors. iXblue has declined to sell their technical data rights upon repeated requests over the years from the USCG. The USCG will continue its attempt to obtain the applicable drawings, specifications, etc. from the

OEM and will conduct follow-up market research to identify companies that provide this equipment. The Contract Specialist contacted iXBlue to investigate the possibility of the

Government purchasing their proprietary data rights. On January 13, 2023, iXblue responded with a letter stating that they do not wish to sell or license their proprietary information.