SAP_J A.pdf

Purchase Request Number: N0003911MP00465/N0003911MP00466

AMENDED JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

(OTFAOC)

LIMITED SOURCES JUSTIFICATION

Upon the basis of the following justification, I, as Procuring Activity Competition Advocate, hereby approve the use of other than full and open competition of the proposed contractual action pursuant to the statutory authority of Title III of the Federal Property and Administrative, Services Act of 1949 (41 U.S.C. 251, et seq.) and Title 40 U.S.C. 501, Services for Executive Agencies. The regulatory authority that applies to the requirement is Federal Acquisition Regulations (FAR) Part 8.405-6(a)(2), brand name.

JUSTIFICATION

1. REQUIRING AGENCY AND CONTRACTING OFFICE:

Agency:

Navy Enterprise Resource Planning (ERP) Program Office 47762 Ranch Road, Bldg 1490 Patuxent River, MD 20670

Contracting Activity:

Defense Information Systems Agency (DISA) Defense Information Technology Contracting Organization (DITCO) 2300 East Drive Scott AFB, IL 62225-5406

2. NATURE/DESCRIPTION OF ACTION(S):

a. This requirement is to procure an Enterprise Software Initiative (ESI) Blanket Purchase Agreement (BPA) delivery order for brand name Systems, Applications, and Products (SAP) new user license. This purchase of the license is to support the Naval Sea System Command (NAVSEA) Navy Working Capital Fund (NWCF) deployment of Navy Enterprise Resource Planning (ERP). Navy ERP is currently deployed to Naval Air System Command (NAVAIR), Naval Supply System Command (NAVSUP), and Space and Naval Warfare Systems Command (SPAWAR). Brand Name SAP products includes Employee Self Service, SAP Learning Solution (block 500), Interactive Forms based on Adobe – Enable the Enterprise, SAP Document Access by Open Text - Employee Self-Service (ESS) Level, SAP Productivity Pack and SAP Productivity Pak Help Launchpad.

b. This requirement will be awarded as a Firm-Fixed-Price (FFP) delivery order that will be solicited among the Department of Defense (DoD) ESI BPA holders. The period of performance is date of award, estimated 1 July 2011, through 31 May 2012. Funds have been provided on two Military Interdepartmental Purchase Requests (MIPRs) with Fiscal Year 2011 (FY11) Operations & Maintenance, Navy (OMN) funds and FY11 Other Procurement, Navy (OPN) funds.

3. DESCRIPTION OF SUPPLIES/SERVICES:

a. The Navy ERP Program is an initiative to consolidate four existing Department of the

Navy (DoN) ERP pilots: Supply Maintenance Aviation Reengineering Team SMART)/NAVSUP; SIGMA NAVAIR, Navy Enterprise Maintenance Automated Information System (NEMAIS) NAVSEA; and CABRILLO SPAWAR, into a single system. All four pilots independently selected and implemented SAP (Public Sector) ERP software suite. In order to consolidate the pilot programs, Navy ERP has purchased and implemented the mySAP business suite software and “add-on” software. By utilizing SAP software, Navy ERP is providing a standardization of DoN Processes, providing accurate, consistent, timely financial information from a single source, and managing and tracking cost drivers as an enterprise. Navy ERP is currently considered the financial system of record for NAVAIR, NAVSUP, NAVSEA, and SPAWAR. This software is fully integrated into the Production Environments and Disaster Recovery Centers supporting Navy ERP.

b. Navy ERP is implementing a phased deployment strategy which started in October of 2007 and will reach the Navy ERP Program of Record (POR) of approximately 71,000 end users in FY12 with future rollouts to a broader Navy base planned. Navy ERP is currently deployed to approximate 43,000 end-users.

c. SAP provides a unique service for Navy ERP, consisting of a sustainable enterprise application. SAP uses several integrated enterprise applications to perform essential, industry-specific, and business-support processes with modular solutions that are designed to work with other SAP and non-SAP software. The following SAP products are being procured under this requirement.

SAP Component User License Counts

Employee Self Service 23500

SAP Learning Solution (block 500) 4

Interactive Forms based on Adobe – Enable the Enterprise 2500

SAP Document Access by Open Text

- ESS Level 2500

SAP Productivity Pak 2500

SAP Productivity Pak Help Launchpad 2500

4. IDENTIFICATION OF STATUTORY AUTHORITY:

a. This acquisition is conducted under the statutory authority of Title III of the Federal Property and Administrative, Services Act of 1949 (41 U.S.C. 251, et seq.) and Title 40 U.S.C.

501, Services for Executive Agencies and the regulatory authority of FAR 8.405-6(a)(2), brand name, only one responsible source and no other supplies or services will satisfy agency requirements. Navy ERP requires the proprietary SAP software to standardize the Department of the Navy (DoN) processes, integrate enterprise solutions to seamlessly support end-to-end capability, provide accurate, consistent, timely financial information from a single source, and manage and track cost drivers as an enterprise. SAP software is required to integrate into the Production Environments and Disaster Recovery Centers supporting Navy ERP.

b. SAP software is proprietary and is only available from SAP and authorized resellers.

No other vendors or distributors can legally obtain access to the software nor make duplicate copies since it is protected by copyrights and patent laws.

5. DEMONSTRATION OF CONTRACTOR’S UNIQUE QUALIFICATIONS:

a. Only SAP and its authorized resellers are capable of responding due to the unique or specialized nature of the work. SAP uses several integrated enterprise applications to perform essential, industry-specific, and business-support processes with modular solutions that are designed to work with other SAP and non-SAP software. Additionally, Navy ERP will be deploying SAP Supply Chain Management (SCM) Software. SCM directly supports the war fighter by ensuring the efficient and timely appropriation, tracking and deployment of supplies.

The specialized support provided by this contracting action ensures the deployment of SAP to the commands is managed by the highest skilled technicians. Without this level of support, the scheduled deployments to the commands could potentially be delayed. SAP is able to work with the constraints of the procurement.

b. Navy ERP has fully implemented and deployed SAP software to approximately 43,000 DoN users and is the DoNs financial system of record. This software maintenance renewal supports the continued efforts to maintain SAP in an operational state to meet DoN functional requirements. The DoN requires a functioning financial system of record which will consolidate the records of the four System Commands, NAVAIR, NAVSEA, NAVSUP and SPAWAR. A reinvestment into a different software suite would be cost prohibitive and far exceed the annual maintenance support of the currently implemented software in terms of software license, implementation, infrastructure, training and deployment costs.

c. Consequences of obtaining replacement software products from other sources would require massive software conversions resulting in additional costs and unnecessary standstills for the Military Services, Agencies and central design activities. As stated above, Navy ERP is implementing a phased deployment strategy which started in October of 2007 and will reach the Navy ERP Program of Record (POR) of approximately 71,000 end users in FY12 with future rollouts to a broader Navy base planned. Navy ERP is currently deployed to approximate 43,000 end-users. It is imperative that the Navy ERP financial system is operating at full capacity at all times. Issues could lead to reduced production system health, reduced response time, lack of user access. As an ACAT I program, down time will lead to loss of functionality, which results in massive loss of funds. ACAT I programs are Major Defense Acquisition Programs (MDAPs).

An MDAP is defined as a program estimated by the Under Secretary of Defense (Acquisition and Technology) (USD (A&T)) to require eventual expenditure for research, development, test, and evaluation of more than $365 million (FY 2000 constant dollars) or procurement of more than $2.19 billion (FY 2000 constant dollars), or those designated by the USD (A&T) to be

ACAT I (10 USC 2430).

6. BEST VALUE DETERMINATION:

The Contracting Officer will make a determination and finding that the prices are fair and reasonable based on solicited quotes received, comparison of negotiated prices, General Services Administration (GSA) pricing and a comparison of the Independent Government Cost Estimate

(IGCE). Discounts from DoD ESI BPA pricing, which has previously been determined to provide the Government with pricing advantages, will be sought prior to award. A determination will be made by the Contracting Officer that the order represents the best value to the Government and results in the lowest overall cost alternative.

7. MARKET RESEARCH:

a. The first step taken in conducting market research in support of this project was to determine if other than brand name software was a solution the government could consider.

Information Technology advisory groups identified ERP leaders such as SAP, Oracle and PeopleSoft as candidates for the original competed effort in 1998. SAP was chosen as the best value solution for the Navy. Four separate Navy organizations began their ERP pilot programs independently of each other, at different times, and with separate funding. All of the pilots implemented the same ERP COTS software from SAP. Additionally each pilot was small in scale relative to the entire Navy.

b. Because of the complexity and cross command nature of the current centralized implementation the cost to convert to a different software product at this time would not be beneficial to the government. A reinvestment in a substantial amount of time, effort and costs would be needed to consider a transition to a new software package. Considerations would include re-design, re-testing, and re-training, re-architecting of the solution and interfaces, etc.

The cost to convert to different software product at this time is beyond the scope of consideration and would jeopardize our ability to complete our POR deployment by October 2012.

c. Market research was conducted on this brand name software requirement to determine if there were any authorized resellers. Research was conducted April 2011 by the Navy ERP Technical Architecture Team through internet searching. Market research was conducted on the General Services Administration Advantages website, which lists all resellers with GSA contracts, and the Enterprise Software Initiative website, which lists the Blanket Purchase Agreements made between federal agencies and vendors. Market research revealed that all items are available via ESI BPA from SAP and the following authorized resellers: Carahsoft Technology Corporation, Advantaged Solutions Inc., and Oakland Consulting Group.

8. ANY OTHER SUPPORTING FACTS.

a. In 1988, the Navy's Revolution in Business Affairs Commercial Business Practices Working Group explored business efficiencies with industry executives who attributed business process re-engineering successes to ERP Solutions. The Navy ERP Program grew from four successful Navy ERP pilots that provided the basis for the convergence of capabilities into a single Navy solution, to be incrementally developed and deployed. The four ERP pilots independently selected the Commercial-Off-The-Shelf (COTS) vendor SAP as the system solution. Following the selection of SAP, separate competitions through GSA were conducted for the award of their System Integrator (SI) contract support. All four pilots deployed in designated operational environments. The concept of use of COTS ERPs was validated by the success of the pilot programs.

b. In 2003, Assistant Secretary of the Navy-Research Development Acquisition (ASN (RD&A)) directed the convergence of the pilots to standardize business processes on a Navy-wide basis and chartered the Navy ERP Program Management Office (PMO) to oversee the acquisition and fielding of a Navy-wide ERP implementation. The product selected was the COTS vendor SAP as the system solution. Navy ERP provides the core financial and acquisition business processes as well as wholesale and retail supply business processes. The SAP software is deployed by way of a series of functional modules that align to core business process areas supported by the Navy ERP solution. They include:

• Finance (FI)

• Controlling (CO)

• Funds Management (FM)

• Asset Management (AM)

• Sales and Distributions (SD)

• Project Systems (PS)

• Material Management (MM)

• Workforce Management (WFM)

• Supply Chain Management (SCM)

Additionally, Navy ERP currently interoperates directly with 53 Navy and DoD/Federal systems to implement end-to-end Acquisition, Workforce Management, Financial Management and Supply Chain business processes.

c. The Program is currently deployed to approximately 43,000 users at the Navy’s four Systems Commands (Air, Supply, Space and Sea) and is now the Navy’s “Financial System of Record.” When the POR deployments are completed in October 2012, Navy ERP will host approximately 66,000 users, to manage approximately 51 percent of the Navy’s Total Obligation Authority (TOA). Ultimately, Navy ERP will sustain business processes for more than 120 activities affecting a total of approximately 150,000 users. The timeline for these initiatives extends through the POR and into future years. The enterprise environment includes many external interface partners, that span the financial and logistics processes of multiple agencies and multiple mandated legacy systems, creating an IT landscape that is a system of systems.

System availability today is maintained at 99.9%, a world-class benchmark.

9. ACTIONS TAKEN TO REMOVE BARRIERS TO COMPEITION:

The Government will continue to search the marketplace. If the Government determines that SAP products are no longer required, the Government will seek competition for the required functionality.

10. REFERENCE TO THE APPROVED ACQUISITION PLAN (AP) PROGRAM PLAN

(PP):

An Acquisition Plan (AP) is not required at this threshold.