SCEP Class J-A.pdf

Justification and Approval (J&A) for Other Than Full and Open Competition

CUI

I. Agency and Contracting Activity.

The requirements activity is the Air Force Sustainment Center (AFSC) 448th Supply Chain Management Wing (SCMW). The contracting activity is AFSC/PZA Supply Chain Contracting Division, which includes contracting offices located at Robins Air Force Base, Georgia; Tinker Air Force Base, Oklahoma; and Hill Air Force Base, Utah.

II. Nature and/or description of the action being approved.

Due to the circumstances described herein, the activity requests authority to acquire Air Force supply chain requirements using Other Than Full and Open Competition as prescribed by the Revolutionary Federal Acquisition Regulation (FAR) Overhaul (RFO) 6.103-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

This Class Justification and Approval (J&A) consolidates approval of Supply Chain Enterprise Partners (SCEP) requirements for which adequate technical data does not exist for competition. This J&A relies on the Air Force Materiel Command (AFMC) Screening Analysis or Repair Screening Process as detailed by AFMC Instruction 20-102 (AFSC Supplement), Department of the Air Force Manual (DAFMAN) 23-300, AFMC Manual (AFMCMAN) 21-149, and Defense FAR Supplement (DFARS) Procedures, Guidance, and Information (PGI) 217.75, which details if data is available for competitive repair or production. Prior to using the J&A, screening results will be verified through current market research and as applicable, discussions with the identified sole-source contractor will be held to ensure the basis for the J&A remains valid. This J&A is not expected to increase exceptions to competition, but to consolidate the administrative actions of requirements that will require exceptions during the validity of this Class J&A. This Class J&A is valid for 5 years after approval or until obligations reach $4.29B, whichever comes first.

Upon approval of this J&A, the Air Force will begin to issue multiple commercial and/or non-commercial contracts in support of the 448th SCMW requirements. These contract actions may include requirements type, Indefinite Delivery Indefinite Quantity (IDIQ), definitive contracts, and orders, all of which may utilize the Class J&A if in scope and approved for use.

III. Description of supplies/services required to meet agency needs.

This SCEP requirement is for the repair, overhaul, remanufacture, and procurement of National Stock Number (NSN) listed items in support of the 448th SCMW managed assets that have been screened and validated with a Repair Method Code/Acquisition Method Code (RMC/AMC) of "3" or "4" and have a Repair Method Suffix Code/Acquisition Method Suffix Code (RMSC/AMSC) of either "P," "Q," or "R" on the Engineering Screening Analysis and there are data rights restrictions to the Department, thereby limiting competition. By AFMC policy, these are coded as follows:

RMC/AMC 3 - Repair/Acquire, for the second or subsequent time, directly from the actual manufacturer.

RMC/AMC 4 - Repair/Acquire, for the first time, directly from the actual manufacturer.

RMSC/AMSC P - The rights to use the data needed to contract repair/purchase this part from additional source(s) are not owned by the Government and cannot be purchased, developed, or otherwise obtained.

RMSC/AMSC Q - The Government does not have adequate data, lacks rights to data, or both needed to contract repair/purchase this part from additional sources.

RMSC/AMSC R - The Government does not own the data or the rights to the data needed to contract repair/ purchase this part from additional sources.

Two examples of items managed by the 448th SCMW that have resulted in these screening codes are the F-15 aircraft regulating fuel valve and the F-16 Force Transducer within the flight controls. Both items are proprietary to their respective contractors and received screening codes of “3R.” Once this screeding is verified through market research, those items would be applicable to this Class J&A. Some of the requirements covered under this J&A are a mixture of Critical Application Items and Critical Safety Items, as defined by the Aviation Critical Safety Item Management Handbook, Joint Aeronautical Commanders Group (JACG) dated 16 March 2011. A Critical Safety Item is defined as a part, assembly, or piece of equipment for an aircraft or aviation weapon system where a failure, malfunction, or absence of the item could lead to catastrophic consequences. These requirements will be for items that are components of their respective military weapon systems.

The maximum ceiling value of this J&A is $4.29B. The dollar amount is reflective of the projected, known 5-year requirements, including inflation of 3.5%, plus a 10% reserve for new requirements identified through the screening process during the life of this J&A. The ceiling forecast was derived by analyzing sole-source designated NSNs from the 448th SCMG. Demand and cost data were projected using the supply management ESCAPE system, with a 3.5% annual inflation rate applied to account for future cost adjustments. This forecast allocates $1.823 billion for spares (553 NSNs) and $2.076 billion for contract repair (564 NSNs) totaling $3.899 billion with an added 10% ($390 million) reserve. The reserve is included to provide a ceiling for new requirements or adjustments needed to meet increased customer demand over the life of this J&A.

The specific funds/appropriations/contract type and delivery dates will be identified on each contract action utilizing this J&A.

At time of individual contract award, the Procuring Contracting Officer (PCO) will update the J&A usage spreadsheet (maintained by AFSC/PZA-R) to ensure the ceiling is properly managed.

IV. Demonstration that the contractor's unique qualifications or the nature of the acquisition requires use of the authority cited above.

Requirements utilizing this Class J&A will have an approved source annotated on an AFMC 761/762 Screening Analysis Worksheet and thereby are identified as the only known source that possesses the pre-requisite technical data to manufacture, repair, overhaul, remanufacture and/or repair to the latest approved United States Air Force (USAF) configuration. Additionally, they are the only known source to possess the unique qualifications which can include but are not limited to sub-assemblies, piece parts, expertise, special tooling, special test equipment, and design engineering resources required to meet the Government's requirement. Some repairs may or may not require special tooling and special test equipment. Qualification requirements and acceptance criteria for these repairs cannot be developed due to the unavailability of technical data. It is not possible to draft adequate specifications for these repairs and parts without design engineering efforts or access to the owning contractor’s technical data. The Government will query all available sources of data to include All Purpose Tool Engineering Analytics Management (A-TEAM), Military Engineering Data Asset Locator System (MEDALS), and the Enhanced Technical Information Management System (ETIMS), as a part of the screening process, to ensure no additional data is found.

Attempting to procure these services from an alternate source without the necessary technical data would introduce unacceptable risks to airworthiness and reliability. Completion of a reverse engineering program for highly specialized end-items found on the major weapon systems is known to take an average of five years through the Consolidated Sustainment Activity Group Sustaining Engineering program once funding is available. This timeframe is an engineering estimate which includes the budget request period, purchase request processing, contract negotiation and award, production lead times, period of performance for qualification testing, and source qualification. These delays will result in the lack of spare parts available, causing the weapon systems to become inoperable. This is not an acceptable option.

Reverse engineering is considered high risk due to the highly specialized end-items requiring unique contractor skills, considerable trained Government resources for inspection and analysis, and to ensure no change to the technical baseline and airworthiness certifications. Further, reverse engineering may require a complete redesign of the component, causing a need to recertify the component airworthiness which would cause critical delays to mission requirements. Therefore, only the current approved sources can satisfy the agency's requirements for maintaining these essential weapon system components within an acceptable timeframe and at an acceptable level of risk to the fleet.

As identified above, the 448th SCMW has determined that award to any other source in these cases would result in unacceptable delays in fulfilling the Government's requirements. One such example is the Large Aircraft Infrared Countermeasures (LAIRCM) system. This electronic warfare component provides deterrents for large aircraft that are unable to deploy conventional deterrent means such as chaffs and flares. This component is managed by the 448th SCMW and has been screened “3R” due to its proprietary nature to Northrop Grumman. Attempting to repair this component by any other source would result in unacceptable delays and could result in loss of aircraft or aircrew. To illustrate, one of the laser assemblies for LAIRCM has a monthly repair demand rate of 30; meaning the fleet size, sortie rate, and failure rate of this item requires 30 monthly repairs to maintain fleet readiness. If an award to the owning contractor could not be pursued, and a reverse engineering project was started, the fleet would lose threat countermeasures at an approximate rate of 30 aircraft a month. An estimated five-year reverse engineering project length, as described above, would result in substantial aircraft grounding and an unacceptable loss of mission capability.

Likewise, the F-16 Force Transducer described in paragraph III is another good example. This asset was similarly screened as “3R” due to its proprietary nature. The transducer has a monthly repair demand rate of three. Like LAIRCM, if award could not be made to the owning contractor, each month of no repair production would result in an impact to approximately three aircraft a month. An estimated five-year reverse engineering project would result in substantial aircraft grounding and an unacceptable loss of mission capability.

Lastly, to illustrate a production buy example, the F-15 aircraft regulating fuel valve described in paragraph III has also been screen as “3R” due to its proprietary nature. This asset has a current buy requirement of 198 each. A buy requirement represents demand for an item to fill needed spares in the supply chain. If award could not be made to the owning contractor, each month of no production would steadily decrease the amount of replenishment spares available for the F-15 platform. An estimated five-year reverse engineering project would result in substantial aircraft grounding and an unacceptable loss of mission capability.

If at any time during the screening or market research process, it is discovered that the USAF possesses sufficient data rights (e.g., Government Purpose Rights or Unlimited Rights) to enable competitive procurement for a specific NSN, the NSN shall be immediately re-coded with an appropriate competitive AMSC/RMSC that allows for competition. Those NSNs shall be immediately excluded from the scope and authority of this Class J&A. This two-step action ensures that this J&A is used strictly and only for items where a lack of competitive data rights has been rigorously verified and confirmed.

V. Description of efforts made to ensure that offers are solicited from as many potential sources as practicable, including whether a notice was or will be publicized as required by subpart 5.2 and, if not, which exception under FAR 5.202 applies.

An individual Sources Sought (SS) Notice/Request for Information (RFI) will be posted for each acquisition utilizing this J&A prior to contract award. Each requirement will be synopsized on SAM.gov, as required, as a notice of contract action in accordance with FAR 5.201. The PCO will verify no responses were received from alternate/additional sources that can meet the requirement. If additional responses are received and deemed to be viable sources, a competitive procurement will be pursued, and the J&A will not be used.

Prior to use of this J&A, the Government will ask to purchase required data to compete the requirement from the owning contractor. Should the contractor be willing to sell the data at a price expected to be recouped through competition, those procurements will not be within scope of this J&A. To use this Class J&A, market research must conclude that there are no alternate/additional sources capable of meeting the Government's requirements for these particular AMSC/RMSC coded items. The owning contractor must be verified as the only known contractor capable of satisfying the Government requirements. This finding will be re-verified for each individual requirement prior to use of this J&A.

As a part of the market research process for this class of requirements, the Government will contact the owning contractor identified as the approved source on the screening analysis worksheet to determine whether the necessary technical data required can be purchased. This outreach will assess the owning contractor’s willingness to sell the data and at what cost. The results of this inquiry will be used to determine whether the data is available at an economical price and to evaluate the feasibility of developing competitive acquisition strategies across the covered items.

VI. Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The PCO will comply with the procedures and criteria contained in FAR Part 30 - Cost Accounting Standards Administration, Part 31 - Contract Cost Principles and Procedures, Subpart 15.4 - Contract Pricing, to include technical evaluations, audits and Certified Cost and Pricing Data, and Part 12 - Acquisition of Commercial Items as appropriate. This detailed documentation and justification of price reasonableness will be disclosed in the official Price Negotiation Memorandum, to be prepared upon completion of negotiations.

VII. Description of the market research conducted and the results, or a statement of the reasons market research was not conducted.

The foundation for this Class J&A is not based solely on a review of market research, but is the direct result of the formal, systematic screening process mandated by the AFMC guidance and instructions detailed in paragraph II. These instructions prescribe mandatory procedures for determining the appropriate acquisition and sustainment strategy for all parts and equipment managed by the 448th SCMW. A key outcome of this screening process is the assignment of a verified AMC or RMC and an AMSC or RMSC.

For the NSNs covered by this Class J&A, the screening processes have concluded with the assignment of a data restrictive

AMSC/RMSC. This code signifies an official, documented determination by the cognizant engineering and logistics authorities that the Government does not own or have access to the necessary technical data, drawings, or specifications required to support competitive procurement and/or the Government does not possess intellectual property rights (e.g., license rights) that would allow it to use contractor-owned data for competitive purposes.

This Class J&A serves to provide the necessary contracting authority that aligns with the technical conclusions of the screening process.

After the screening process has occurred, in accordance with FAR Part 10, the Government will conduct appropriate market research for each acquisition utilizing this J&A to verify the results of screening. This will include SS/RFIs and synopsis of the proposed contract actions, advising industry of the pending acquisition and soliciting inquiries from interested parties.

VIII. Any other facts supporting the use of Other Than Full and Open Competition.

None.

IX. List of any sources that expressed, in writing, an interest in the acquisition.

Sources that express interest as a result of an individual SS/RFI or notice of contract action will be assessed and documented in the individual market research report.

X. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisitions for the supplies or services required.

This Class J&A will be executed not merely as a procurement vehicle, but as a proactive and strategic instrument designed to foster a more resilient and competitive Defense Industrial Base (DIB). A foundational intent is to actively create prime and subcontractor opportunities and convert sole-source items to full and open competition over the life of this Class J&A.

To ensure compliance and accountability, specific procedural checks will be conducted before this J&A is utilized for any acquisition. First, the cognizant PCO will validate that the owning contractor is unable or unwilling to sell its proprietary data to the Government.

Second, before use, any previous J&A for the requirement will be reviewed to ensure the Government completed its planned actions to remove barriers to competition. These diligence steps will be formally verified and documented on the SCEP Class J&A Usage Checklist. This administrative tool, which is managed by the designated centralized SCEP PCO, ensures each contract action is compliant and properly justified. This checklist will be reviewed and approved by the centralized SCEP PCO prior to utilizing the J&A. The approval process to utilize this Class J&A will allow for easy consolidation of requirements, allowing the 448th SCMW to actively engage industry.

The key components of this active engagement strategy include:

1. Targeted industry days or individual partner meetings as appropriate, with the goal of fostering dialogue between industry and Government leadership. Such engagement is intended to explore opportunities for increasing competition in the future.

2. Issuing more robust RFIs and questions to industry in order to assess and cultivate a more competitive industrial base.

The intent behind such discussions would be to not only gather technical data, but also to identify and encourage partnership proposals from companies that possess the capability and willingness to invest in reverse-engineering, requisite testing, and the successful completion of the Source Approval Request (SAR) process. The SCEP Class J&A Usage Checklist will enforce and confirm these discussions have occurred. This approach is aimed at actively fostering the development of new, qualified sources of supply.

3. Creating a Public Data Repository: While contract award data is public, its current format on platforms such as SAM.gov can render it practically unusable for the purpose of fostering competition. A prime or subcontractor cannot reasonably sift through millions of contract actions to find a handful of relevant opportunities. When approval is granted to utilize this Class J&A, true requirement data will be consolidated into a single location and posted publicly. This data will show industry the various components the 448th SCMW is actively purchasing, the associated weapon systems, and which company currently owns the data. The value of this data is far more than forecast data or an exhaustive list of all items the 448th SCMW manages. Although this data exists now, it is released at intermittent times and there is no focal point for collection and consolidation. Management of this Class J&A and its ceiling necessitates this information come through one approval source, thereby establishing the mechanism for consolidated and a standard release point. The objective of such an initiative would be to transform data from being merely public to being truly accessible and useful, thereby lowering the barrier to entry and actively encouraging the industrial base to pursue capability or ownership of items being purchased. This list will be kept current as the J&A is utilized.

The 448th SCMW is committed to developing strategies to foster competition and small business participation for future requirements. The 448th SCMW will actively pursue a data rights acquisition strategy, evaluate reverse engineering feasibility, and conduct market research to identify potential future sources. The 448th SCMW will also consider breaking out requirements in future acquisitions if data rights are adequate. Small business set-asides are a long-term goal, contingent on securing data rights. The 448th SCMW will encourage subcontracting opportunities where feasible.

The ultimate objective of this strategy is to reduce the administrative burden and consolidate J&As supporting SCEP requirements where the Government does not have adequate technical data rights to pursue competition. However, the process to establish and ensure control over this Class J&A provides an opportunity to consolidate information which will enhance the DIB’s awareness and actively create new prime contractor opportunities and convert sole-source items to full and open competition. By actively facilitating and encouraging industry investment by showing known purchases, a competitive environment can be created that drives down long-term costs, enhances supply chain resilience, and provides improved support to the warfighter.

XI. Certification by the Contracting Officer.

As evidenced by my signature above, I certify that this justification is accurate and complete to the best of my knowledge and belief.

XII. Certification by the technical/requirements personnel.

As evidenced by my (our) signature(s) above, I (we) certify that any supporting data contained herein, which is my (our) responsibility, is both accurate and complete.