REDACTED Justification and Approval (JA)_ZF Gear.pdf

70Z080-20-Q-14006B00

ZF Reduction Gears Overhaul

SOLE SOURCE JUSTIFICATION

For Certain Commercial Items for Procurements Exceeding the Simplified Acquisition

Threshold pursuant to FAR Subpart 13.5, including brand name

Solicitation Number: 70Z08020Q14006B00

Pursuant to the authority of 41 U.S.C. 1901 as implemented by Federal Acquisition Regulation

(FAR) Subpart 13.501 and consistent with the content requirements of FAR 6.303-2, the following facts and rationale support this justification.

1. Agency and Contracting Activity. The Department of Homeland Security, United States

Coast Guard (USCG), Surface Forces Logistics Center (SFLC), Contracting and Procurement

Division (CPD), Branch 1 in support of Patrol Boat Product Line (PBPL), 2401 Hawkins Point

Road, Baltimore, Maryland 21226.

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

(a) The USCG proposes to enter into a requirements type contract, on a brand name basis, to overhaul, purchase new gears in the event of an overhauled gear found beyond economical repair, and provide technical representative services as required to

Zahnradfabrik Friedrichshafen Marine Propulsion Systems Miramar, LLC, hereafter ZF, the Original Equipment Manufacturer (OEM). This requirement is to support Fast

Response Cutters (FRC) and 87’ WPBs (Patrol Boats) with ZF Marine Reduction Gears installed onboard.

(b) Name and address of the contractor:

ZF Marine Propulsion Systems Miramar, LLC (North American subsidiary of the OEM)

15351 SW 29th Street, Miramar, FL 33027

(c) Type of action: The USCG intends to award a requirements type contract with firm, fixed-priced delivery orders.

(d) Estimated total value: $XXXX

DESCRIPTION UNIT OF

ISSUE

QTY

110’ WPC-

Condition Found Report BW1500

JOB

1 ea

154’ WPC-

Condition Found

Report

ZF23560C

2 ea

87’ WPC-

Condition Found Report BW255

8 ea

Prepare Gear for

Shipment/not repaired

110’ WPC-

Complete

Overhaul

BW1500

154’ WPC-

Complete

JOB 2

ZF23560C

DESCRIPTION UNIT OF

ISSUE

QTY

87’ WPC-

Complete

BW255

Failure Analysis

JOB 1

Purchase new gear

JOB 1

Tech Rep

Support

JOB 6

The estimate is derived from market research of current labor rates and practices, material pricing and historical pricing found in NESSS. A 3% escalation rate is applied to this estimate which includes mandatory parts, inspection, failure analysis, shipping, packaging, and bar coding.

(e) Type of funding: Delivery orders issued against the contract may use annual Operations and Support funds.

(f) Year of funding: Delivery orders will use appropriate fiscal year funds.

(g) Solicitation number: 70Z08020Q14006B00

(h) Background information about the requirement: The overhaul and technical service requirements have been developed and captured in SFLC Specification D-233-0421. It is estimated the purchase of new gears and overhaul of gears will comprise of 80% of this acquisition, and the remaining 20% will be onsite technical support.

3. Description of Supplies/Services. The USCG anticipates an award to ZF for the overhaul of

ZF gears with option to buy a new gear and technical representative services in accordance with specification D-233-0421. This requirement is designated as a supply because the primary purpose of the requirement is to furnish an end item to the USCG. The overhauled gears will be shipped to the SFLC Warehouse for storage for ready issue to the fleet or will be direct shipped to various USCG cutters and units when required.

ZF BW1500 Reduction Gear, NSN 3010-99-741-9566, Item Number 3052012031, R:1.839ok

ZF ZF23560C Reduction Gear, NSN 3010-12-389-2758, Item Number 3084011161, R:4.39

ZF BW255 Reduction Gear, NSN 2010-12-347-4887, Item Number 3082011123, R:2.462.1

There are two (2) reduction gears installed on each of the 152 cutters. There are three types of cutters that are designated by their hull length. The cutters range from 87’ WPBS, 110’ WPCs and154’ FRCs. There are different gears for each cutter. The variation of the gear model is dependent upon the Patrol Boat type. The 87’ WPBS cutter has the ZF BW255 gears, 110’ has the ZF BW1500 gears and the 154’ has the ZF23560C gears. Quantities in the IGE denote one

(1) gear. A total of 55 gears will be overhauled over the 5 year period.

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 13.5, Simplified Procedures for Certain Commercial

Items.

5. Identification of Exception to the Buy American Statute. The OEM is a German company with local U.S. authorized dealers. Germany is listed as a TAA Designated Country according to

FAR 52.225-5. Therefore, FAR 52.225-1 Buy American – Supplies (May 2014) will not apply to this requirement.

6. Demonstration that the Proposed Contractor’s Unique Qualifications or the Nature of the Acquisition Requires the Use of the Authority Cited. ZF is the only known source that possesses the required capabilities, drawings, specifications, engineering control procedures, proprietary data, and methods to ensure the latest design configuration, manufacturing, and quality control. Although there are ZF authorized dealers located in the United States that service some models of ZF gears, only the subsidiary, ZF, has the authority to access proprietary data to overhaul the required gears. The previous contract HSCG40-15-D-11002 was competed among authorized ZF dealers on brand name basis which resulted in an unsatisfactory rating for the other offeror based on their lack of factory special tooling and training required to overhaul either the gears. In an email dated October 30, 2019 ZF’s technical representative confirmed that none of their authorized dealers have requested the technical information, tooling and training required to perform this work, however there is no restriction in place for them not to request access.

Using other than OEM vendor for the repair and overhaul will cause a high risk of engine failure.

A malfunction or failure of engine would cause loss of maneuverability and the mission would be severely impacted. The cutters operate independently, in remote areas of the world, on missions of homeland security, search and rescue, Alien Immigration Migration Operations

(AIMO), drug interdiction and fisheries patrol.

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

Sources as Practicable. In accordance with FAR Subpart 5.203, in an effort to solicit as many potential sources as practicable, a Sources Sought Notice was posted on the Federal Business

Opportunities (FBO) website from August 15, 2019 to August 23, 2019 informing the industry that it is the Government’s intent to solicit for the overhaul, purchase and technical support for

ZF reduction gears installed onboard 87’ WPBS, 110’ WPCs & 154’ FRCs. Potential sources were asked to verify their capabilities to overhaul/manufacture ZF reduction gears, the ability to overhaul gears utilizing genuine OEM parts and technical representative services by a certified

ZF technician. Any responsible vendor may submit a quote and any responsible offers will be considered. ZF was the only source that responded to the notice.

The requirement was published in the Acquisition Planning Forecast System (APFS) on August

7, 2019, December 18, 2019, and updated on March 16, 2020. The APFS number is

F2019047238.

8. Determination by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable. The Contracting Officer determines that the anticipated price will be fair and reasonable based on a price analysis comparison with the Independent Government

Estimate and comparison to historical prices paid, including similar repair and technical support services with other USCG Cutters. Additionally, in accordance with DHS policy, the offeror may be required to submit Data Other than Certified Cost or pricing Data to support price negotiations.

9. Description of Market Research. Extensive market research was conducted by the

Contracting Officer’s Representative (COR) and Contract Specialist (KS), in an effort to identify companies that can provide the overhaul and technical representative services. Research of

Federal Supply Schedules revealed no companies that can provide OEM reduction gears overhaul or purchase. Market research was also conducted by searching General Services

Administration (GSA) Advantage and Department of Homeland Security’s Strategic Sourcing

Vehicles. Information was also obtained from NESSS/NE-TIMS, Fedlog, FLS, and

HAYSTACK.

Market research has shown that no other acquisition alternatives are available. No vendors outside of the authorized OEM have been identified who possess the proprietary data, drawings, or specifications to fully support and maintain the gears. ZF is the North American authorized supplier for Zahnradfabrik Friedrichshafen ZF AG Marine reduction gears; propulsion systems.

10. Any Other Facts Supporting the Use of Other Than Full and Open Competition. None

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

Acquisition.

ZF Marine Propulsion Systems Miramar, LLC (North American subsidiary of the OEM)

15351 SW 29th Street

Miramar, FL 33027

ZF followed up on 10/29/19 stating “the DIOM (description, installation, operation and maintenance) manuals, factory workshop (i.e.; repair) manuals and test requirements for the

BW255, BW1500 and ZF 23560C transmissions are available and are supplied to the US Coast

Guard. However, the manufacturing processes and related information such as technical drawings and material data are proprietary to the OEM, Zahnradfabrik Friedrichshafen AG and are not for sale or distribution to anyone.

12. A Statement of 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 made several attempts to acquire data rights with the most recent request on September 11, 2019. ZF responded stating “ZF is the North American division of the OEM and there are no authorized ZF service dealers in North America that currently have either the training or tooling to overhaul either the ZF BW1500 or the ZF 23560C reduction gears; only the

OEM subsidiary, ZF has the capability to perform these overhauls. In the event that an OEM authorized dealer obtains the necessary proprietary information in time to submit a quote as a result of the solicitation, the file will be documented accordingly and the requirement competed among all eligible offerors.