Redacted SPE7LX20R0001 JA.pdf

FOR OFFICIAL USE ONLY

Source Selection Information

See FAR Part 2.101 and 3.104 Page 2 of 11

Virginia Class 1 x 3512B EDG, Wheeler Dredge 4 x C280-12 Electric Drive, Radar Platform 6 x 3612 Gen Sets, Logistic Support Vessels C4.4 SSDG / C18 Prop, Fast Response Vessel 2 X C9 Prop, RIB 2 x 3126 Prop, DDG 1000 2 X C18 EDG and FFG Repower 4 X 3512B SSDG / EDG.

4. The statutory authority permitting other than full and open competition is:

(X) 10 U.S.C. 2304(c)(1) - Available from only one or a limited number of sources.

5. If restricted to the only source(s) of supply, include source(s) and Commercial and Government Entity (CAGE) code:

Caterpillar, Inc., [(Caterpillar) (Cage: 11083)] is the sole Original Equipment Manufacturer (OEM) and is currently the only producer of all part numbers listed on its Caterpillar, CPL. Only NSNs/Non-NSNs that are both sole source to Caterpillar and on the Caterpillar CPL are within the scope of this justification. DLA has confirmed that 45,327 NSNs are sole sourced to Caterpillar and on the Caterpillar CPL. There are also 953,872 Caterpillar part numbers that are not associated with an NSN that are on the Caterpillar CPL and within the scope of this acquisition. These NSNs/Non-NSNs all go on Caterpillar systems or assemblies where utilizing a non-genuine Caterpillar part would void the customer warranty. The buyer posted a sources sought for both NSNs/Non-NSNs on FBO.gov looking for other manufacturers that could produce these NSNs/Non-NSNs. No additional manufacturers were identified as a result of this posting. Because no responses were received from other manufacturers, the Contracting Officer has determined these 953,872 Non-NSNs are sole sourced to Caterpillar. If another manufacturer expresses a viable interest in response to the solicitation, the Government will remove these Non-NSNs prior to award.

The 45,327 NSNs identified by DLA as sole sourced to Caterpillar were grouped into active or inactive categories. Active NSNs are those determined to be sole sourced to Caterpillar, and have no technical, packaging, or supply issues with the NSN (Active NSNs are listed in Attachment 3). There are currently 39,205 NSNs listed in the active category. Inactive NSNs are those determined to be sole sourced to Caterpillar, but may have technical, packaging, or supply issue(s) with the NSN (Inactive NSNs are listed in Attachment 4). There are currently 6,122 NSNs listed in the inactive category. No inactive NSNs will be awarded on the resulting contract until the issue(s) have been resolved. This will result in phased awards as the issue(s) with inactive NSNs are fixed, and they are added to the active NSN population.

There are 43,273 NSNs that have been assigned an Acquisition Method Code (AMC) and an Acquisition Method Suffix Code (AMSC); these codes are defined below. Each NSN is listed in Attachment 1 along with the corresponding CAGE, Part Number, NSN, and AMC/AMSC demonstrating that the NSN is sole sourced to Caterpillar. There are currently 2,054 NSNs where the field for the AMC/AMSC codes are blank (See Attachment 1 Tab titled “AMC” and “AMSC”). Despite the absence of an AMC/AMSC, the DLA system indicates that these NSNs are sole sourced to Caterpillar. These NSNs will be synopsized and solicited. However, they will not be awarded onto the contract pursuant to this justification until the appropriate AMC/AMSC codes are determined.

See FAR Part 2.101 and 3.104 Page 3 of 11

The use of the authority cited is based on the following AMCs and AMSCs, which are applicable to the NSN population that is within the scope of this justification:

(X) AMC 3. Acquire, for the second or subsequent time, directly from the manufacturer.

(X) AMC 4. Acquire, for the first time, directly from the manufacturer.

(X) AMC 5. Acquire directly from the sole source contractor, who is not the manufacturer.

For NSNs with an AMSC of A* (74 NSNs – See Attachment 1 Tab titled “AMSC”). The Government's right to use data in its possession is questionable. This code is only applicable to parts under immediate buy requirements and for as long thereafter as rights to data are still under review for resolution and appropriate coding. This code is assigned only at the conclusion of limited screening, and it remains assigned until the full screening process resolves the Government's rights to use data and results in assignment of a different AMSC. If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources exist, or if the data is adequate for an alternate source to qualify in accordance with the design control activity's procedures, AMCs 1 or 2 are valid. These NSNs will be synopsized and solicited. However, they will not be awarded until a permanent AMC/AMSC is assigned to each NSN.

For NSNs with an AMSC of B (81 NSNs - See Attachment 1 Tab titled “AMSC”): This part must be acquired from a manufacturing source specified on a source control or selected item drawing as defined by the current version of DoD-STD-100. Suitable technical data, Government data rights, or manufacturing knowledge are not available to permit acquisition from other sources, nor qualification testing of another part, nor use of a second source part in the intended application. Although, by DoD-STD-100 definition, altered and selected items shall have an adequate technical data package, data review discloses that required data or data rights are not in Government possession and cannot be economically obtained. If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources exist, AMCs 1 or 2 are valid. Due to the criticality of the NSN, procurement is restricted to source(s) specified on "Source Control" drawing.

Caterpillar is the only manufacturer listed on the source control drawing.

For NSNs with an AMSC of C (1,251 NSNs – See Attachment 1 Tab titled “AMSC”): This part requires engineering source approval by the design control activity in order to maintain the quality of the part. Existing unique design capability, engineering skills, and manufacturing knowledge by the qualified source(s) require acquisition of the part from the approved source(s).

The approved source(s) retain data rights, manufacturing knowledge, or technical data that are not economically available to the Government, and the data or knowledge is essential to maintaining the quality of the part. An alternate source must qualify in accordance with the design control activity's procedures, as approved by the cognizant Government engineering activity. The qualification procedures must be approved by the Government engineering activity having jurisdiction over the part in the intended application. If one source is approved, AMCs 3, 4, or 5 are valid. If at least two sources are approved or if data is adequate for an alternate source to qualify in accordance with the design control activity's procedures, AMCs 1 or 2 are valid. For these NSNs, Caterpillar has the technical data, manufacturing knowledge, and/or engineering skills essential to maintaining the quality of the part, and is the only source currently approved by the design control activity.

See FAR Part 2.101 and 3.104 Page 4 of 11

For NSNs with an AMSC of D (21,062 NSNs – See Attachment 1 Tab titled “AMSC”): The data needed to acquire this part competitively is not physically available, it cannot be obtained economically, nor is it possible to draft adequate specifications or any other adequate, economical description of the material for a competitive solicitation. AMCS 3, 4, or 5 are valid.

Caterpillar is the only source known to own or possess the technical data necessary to manufacture these part numbers.

For NSNs with an AMSC of H* (1,025 NSNs – See Attachment 1 Tab “AMSC”). The Government physically does not have in its possession sufficient, accurate, or legible data to purchase this part from other than the current source(s). This code is applicable only to parts under immediate buy requirements and only for as long thereafter as the deficiency is under review for resolution and appropriate recoding. This code is only assigned at the conclusion of limited screening, and it remains assigned until the full screening process resolves physical data questions and results in assignment of a different AMSC. If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources exist, AMCs 1 or 2 are valid. These NSNs will be synopsized and solicited. However, they will not be awarded until a permanent AMC/AMSC is assigned to each NSN.

For NSNs with an AMSC of K (1 NSN – See Attachment 1 Tab titled “AMSC”). This part must be produced from class 1 castings and similar type forgings as approved (controlled) by procedures contained in the current version of MIL-STD-2175. If one source has such castings and cannot provide them to other sources, AMCs 3, 4, or 5 are valid. If at least two sources have such castings or they can be provided to other sources AMCs 1 or 2 or valid. Caterpillar currently processes the rights to the data and is the only company who can manufacture these part numbers for the Government.

For NSNs with an AMSC of L* (14,745 NSNs – See Attachment 1, Tab titled “AMSC”): The annual buy value of this part falls below the screening threshold established by Department of Defense (DoD) components and field activities. However, this part has been screened for additional known sources, resulting in either confirmation that the initial source exists or that other sources may supply the part. No additional screening was performed to identify the competitive or noncompetitive conditions that would result in assignment of a different AMSC.

This code shall not be used when screening parts entering the inventory. This code shall be used only to replace AMSC O for parts under the established screening threshold. If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources exist, AMCs 1 or 2 are valid. The buyer conducted a review of all 14,745 NSNs and saw that Caterpillar was the only source of supply that is currently able to provide the materials for these NSNs as a manufacturer. For NSNs with an AMSC code of L with a dollar value greater than $10,000, they will be synopsized and solicited. However, they will not be awarded until a permanent AMC/AMSC is assigned to each NSN.

For NSNs with an AMSC of N (2 NSNs – See Attachment 1, Tab titled “AMSC”). Manufacture of this part requires special test and/or inspection facilities to determine and maintain ultra-precision quality for its function or system integrity. Substantiation and inspection of the precision or quality cannot be accomplished without such specialized test or inspection facilities.

If the test cannot be made available for the competitive manufacture of the part, the required test

See FAR Part 2.101 and 3.104 Page 5 of 11 or inspection knowledge cannot be documented for reliable replication, or the required physical test or inspection facilities and processes cannot be economically documented in a TDP, valid AMCs are 3, 4, or 5. If the facilities or tests can be made available to two or more competitive sources, AMCs 1 or 2 are valid. Caterpillar is the only source known to own or possess the facilities or testing to manufacture these part numbers.

For NSNs with an AMSC of P (820 NSNs – See Attachment 1, Tab titled “AMSC P”): The rights to use the data needed to purchase this part from additional source(s) are not owned by the Government and cannot be purchased, developed, or otherwise obtained. It is uneconomical to reverse engineer this part. This code is used in situations where the Government has the data but does not own the rights to the data. If only one source has the rights or data to manufacture this NSN, AMCs 3, 4, or 5 are valid. If two or more sources have the rights or data to manufacture this NSN, AMCs 1 or 2 are valid. Caterpillar currently processes the rights to the data and is the only company who can manufacture these NSNs for the Government.

For NSNs with an AMSC of Q (1,250 NSNs – See Attachment 1, Tab titled “AMSC Q”): The Government does not have adequate data, lacks rights to data, or both needed to purchase this part from additional sources. The Government has been unable to economically buy the data or rights to the data, although the part has been undergoing full screening for 12 or more months.

Breakout to competition has not been achieved, but current, continuing actions to obtain necessary rights to data or adequate, re-procurement technical data indicate breakout to competition is expected to be achieved. This part may be a candidate for reverse engineering or other techniques to obtain technical data. All AMSC Q NSNs are required to be reviewed within the timeframes cited in 2-203(b). If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources exist, AMCs 1 or 2 are valid. Caterpillar currently processes the rights to the data and is the only company who can manufacture these part numbers for the Government.

For NSNs with an AMSC of R (1,653 NSNs – See Attachment 1, Tab titled “AMSC”): The Government does not own the data or the rights to the data needed to purchase this part from additional sources. It has been determined to be uneconomical to buy the data or rights to the data. It is uneconomical to reverse engineer the part. This code is used when the Government did not initially purchase the data and/or rights. If only one source has the rights or data to manufacture this NSN, AMCs 3, 4, or 5 are valid. If two or more sources have the rights or data to manufacture this NSN, AMCs 1 or 2 are valid. Caterpillar currently processes the rights to the data and is the only company who can manufacture these part numbers for the Government.

For NSNs with an AMSC of U (6 NSNs – See Attachment 1, Tab titled “AMSC”). The cost to the Government to breakout this part and acquire it competitively has been determined to exceed the projected savings over the life span of the part. If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources exist, AMCs 1 or 2 are valid. Caterpillar currently processes the rights to the data and is the only company who can manufacture these part numbers for the Government.

For NSNs with an AMSC of Z (1,303 NSNs – See Attachment 1, Tab titled “AMSC”): This part is a commercial/non-developmental/off-the-shelf NSN. Commercial item descriptions, commercial vendor catalog or price lists or commercial manuals assigned a technical manual number apply. If one source is available, AMCs 3, 4, or 5 are valid. If at least two sources are

See FAR Part 2.101 and 3.104 Page 6 of 11 available, AMCs 1 or 2 are valid. When one or a limited number of sources are available, then a J&A is required. When an NSN is coded with AMSC “Z” and is listed on an interchange catalog or appears on a commercial cross reference list, this constitutes full and open competition and a J&A is not necessary. These NSNs are sole sourced to Caterpillar who has them available on their CPL.

*APPLIES TO LTCs - NSNs identified by AMSCs of A, H and L have been subjected to limited screening. DLA does not physically have in its possession sufficient, accurate, or legible data to purchase the NSNs from other than the identified source. NSNs identified by AMSCs of A, H and L on Long Term Contracts, are subject to annual review for possible assignment of a different or permanent AMSC. DLA L&M agrees to maintain a continual review of these NSNs to ensure that there is an annual review at a minimum, in part to determine if new technical data is available to allow for assignment of a more permanent AMSC. Any NSN determined to be competitively available during the solicitation/evaluation phase will be removed from the acquisition requirement. Any NSN determined after contract award to be competitively available may be deleted from the contract and re-solicited.

6. Efforts to ensure that offers are solicited from as many sources as practicable are:

(X) The acquisition was synopsized on 9-02-2019.

(X) Other: A Sources Sought was posted to Federal Business Opportunities (FBO.gov) (for 7 days) on July 22nd, 2019. Two companies responded to the Sources Sought. One company was a foreign dealer based out of Iraq expressing interest in delivering within Iraq. The other response was from a US dealer, but they are unable to manufacturer these part numbers or obtain them from another source.

7. The contracting officer hereby determines that the anticipated cost to the Government will be fair and reasonable. The Contracting Officer will use price analysis to determine if the prices are fair and reasonable. There may also be competition between the OEM and its distributors/dealers for some of the items, which could result in competitive pricing as the basis for a fair and reasonable determination. These requirements will be procured off of the Caterpillar CPL, which is available to the general public. Therefore, it is anticipated that the Government will pay a similar or lower price compared to the general public for these NSNs/Non-NSNs. If the proposed prices are not fair and reasonable, the buyer will ask the offeror(s) to submit other than cost and pricing information to support the pricing position.

8. Market Research/Efforts to Obtain Competition:

A market survey was conducted on/during June 28, 2019 – August 2, 2019 Total number of vendors contacted: 1 Names of vendors contacted and responding: A market survey was sent Caterpillar, CAGE 11083. Caterpillar responded to the market survey on August 2, 2019.

Techniques used to conduct survey: Phone and email.

Types of information requested: Commerciality, Minimum Quantities, Price Breaks, Estimated Delivery, Maximum Quantity delivery per month, Business Size, Number of Option years, Free On Board (F.O.B.) Points and Zones.

See FAR Part 2.101 and 3.104 Page 7 of 11

Summary of information received: DLA L&M conducted market research, consisting of a market survey issued to Caterpillar. The market survey was broken into 10 major sections:

General Interest Questions, LTC Related Questions, Cost or Pricing Data, Consolidation/Bundling Questions, Commercial Question, F.O.B. Point Question, Zone Questions, Delivery Questions, Other Miscellaneous Question and Final recommendations from the contractor. Within the market survey there are questions pertaining to NSNs/Non-NSNs commerciality, commercial clause, availability of price lists, zone preferences (one or more), F.O.B. preferences (origin or destination), Electronic Data Interchange (EDI or Email), Business size (Large or Small), capabilities (Manufacturer or Dealer), production capacity, is the company interested in a long term contract, do they prefer a base period (1 year through 5 years), quantity sensitive items, do they carry the items in their inventory and quantity breaks. Below is the summary of the market survey that was received from Caterpillar, Inc:

Caterpillar, Inc. (CAGE 11083):

Business Size: Large (104,000 employees).

Dealers are independent from the OEM.

Interested in doing an LTC with DLA.

All items are considered commercial.

Interested in doing a Requirements Contract.

Isn’t interested in doing a Performance Based Logistic (PBL) Contract.

Considers consolidation/bundling as advantageous to the Government.

See FAR Part 2.101 and 3.104 Page 8 of 11

They are EDI capable.

Provided 22 invoices for 22 NSNs and 59 Non-NSNs.

Provided the Caterpillar Commercial Price List.

In addition to the market survey, the buyer visited Caterpillar and was shown the current processes that are used to support the previous Caterpillar contract. Caterpillar visited the DLA Susquehanna location to see how DLA processed material into a DLA Stock location. At both locations Caterpillar and DLA L&M discussed ways to better improve the processes currently in place.

Information received regarding the commerciality of the NSNs/Non-NSNs: DLA currently administers Caterpillar’s current Commercial Price List via contract SPM7LX-15-D-0162. The previous J&A for contract SPM7LX-15-D-0162 is found in Attachment 4. Caterpillar stated in their market survey that these are all considered commercial items. All NSNs/Non-NSNs on this acquisition are available on Caterpillar’s website (https://parts.cat.com/). These NSNs/Non- NSNs are commercial off-the-shelf or Made as Order (MAO) part numbers that are available to the general public. Based on Caterpillar’s market survey and the market research that was performed; the Contracting Officer determined that all NSNs/Non-NSNs are commercial items.

See FAR Part 2.101 and 3.104 Page 9 of 11

On July 22, 2019, a Sources Sought Notice was posted on FBO.gov for 7 days. No manufacturers responded to the sources sought. A Market Survey was sent to Caterpillar. The buyer has added Caterpillar to the bidder’s list and they will be notified when the solicitation is available on DLA’s Internet Bid Board System (DIBBS). In an effort to obtain competition and satisfy FAR 10.001(a)(3), the solicitation will be synopsized and a copy will be furnished to any vendor expressing interest. A DD 2579 was sent to DLA Land and Maritime – Office of Small Business Programs (DU) and Small business Administration – Procurement Center Representative (SBA-PCR) for review. The small business offices may identify additional sources capable of manufacturing these NSNs/Non-NSNs; no additional sources were identified on the DD 2579. A technical review was completed to ensure all NSNs on this initiative are sole sourced. No additional sources were identified during the technical review.

9. Additional facts supporting other than full and open competition are:

(X) Based upon the technical certification on file with DLA Land and Maritime-VEP, technical data is not available, and cannot be developed to permit full and open competition. The data presently available reflects the minimum needs of the Government.

10. A listing of sources, if any, indicating an interest in the acquisition: (If none, so state) Company Name Company CAGE Caterpillar, Inc. 11083

11. In addition to actions that maybe taken by the Product Specialist of Record and other Technical Support Personnel to overcome barriers to competition before any subsequent acquisitions or recertification of class determination are made, these items are subject to the following methods of locating additional sources:

(X) The solicitation contains the provision entitled “Conditions for Evaluation,” and “Acceptance of Offers for Part Numbered Items.”

(X) A Sources Sought posting

(X) A thirty day Synopsis

CONTRACTING OFFICER CERTIFICATION

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

William Winegarner Date Contracting Officer

I have reviewed this justification.

WINEGARNER.WILLIAM.I.III.1255230537 Digitally signed by WINEGARNER.WILLIAM.I.III.1255230537 Date: 2019.12.06 16:12:22 -05'00'

See FAR Part 2.101 and 3.104 Page 11 of 11

Attachments:

1. Technical Spreadsheet

2. Active NSNs

3. Inactive NSNs

4. Previous J&A from SPM7LX-11-D-9037

5. Caterpillar, Inc., CPL

6. DD-2579