Signed JA- ATACMS_Redacted.pdf

Control No: PFA-J&A22-1146

Requirements:

Control No: PFA-J&A22-1146

Reviews

I have reviewed this justification and find it adequate to support other than full and open competition.

Project Manager:

Chief Counsel

Advocate for Competition:

Program Executive Office MS:

Control No.: PFA-J&A22-1146

FAR Part 6 Class Justification and Approval (J&A) for Other than Full and Open Competition

1. Contracting Activity: U.S. Army Contracting Command-Redstone (ACC-RSA), CCAM-PFA Division, Redstone Arsenal, Alabama 35898.

2. Description of Action:

a. The Strategic and Operational Rockets and Missiles (STORM) Project Office (PO) requests approval of a Class Justification and Approval (J&A) to award new Indefinite-Delivery, Indefinite-Quantity (IDIQ) contracts for the Army Tactical Missile System (ATACMS). Awards will be made to Lockheed Martin Missiles and Fire Control (LMMFC), 1701 West Marshall Drive, Grand Prairie, Texas 75051, Commercial and Government Entity (CAGE) Code 64059. LMMFC is the Original Equipment Manufacturer (OEM) and is the only source capable of providing this requirement. The U.S. Government intends to award multiple contract actions for Fiscal Years (FY) 23 through 26 to include a base year (FY23) and three (3) (FY24-FY26) one-year ordering periods. The contracts scope is to provide production and ancillary services for the ATACMS T2K Unitary Export Variant (EV), urgent and unanticipated services for the U.S. M57A1 variant. The contracts will consist of Firm-Fixed-Price (FFP) and Cost-Plus-Fixed-Fee (CPFF) contract line item numbers. The associated work under FFP or CPFF line items is identified in Section 3, paragraphs 3a-3f. Contract award is planned for NLT May 2023. The total estimated cost of all contracts covered by this Class J&A is $2,944,319,299. The contracts will cover Foreign Military Sale (FMS) requirements funded with FMS funds, and urgent, unanticipated U.S. requirements for ATACMS missiles, funded with Congressional funds.

b. The FMS requirements will exclude those designated as directed source under FAR 6.302- 4(a)(2), International Agreement. The U.S. Government will document FMS case numbers as they become available. The Department of Defense (DoD) Future Years Defense Plan contains no funding for continued procurement of ATACMS in support of the U.S. Army. The Precision Strike Missile (PrSM), in development at LMMFC, is intended to replace ATACMS with Initial Operational Capability of PrSM scheduled for the fourth quarter of FY25 (4QFY25). Due to the uncertainty of the PrSM availability for FMS customers, the U.S. Government is procuring ATACMS in support of FMS partners. If an urgent, unanticipated, requirement develops for U.S. ATACMS missiles, and funding is provided by Congress, missile procurement funds will be utilized to fund those actions. If this occurs the contract ceiling will not change.

3. Description of Supplies/Services:

This Class J&A covers a class of contract actions, to include new contract awards and modifications, in support of the ATACMS Program. The intent is to award separate IDIQs (with Delivery Orders) for ATACMS T2K Unitary EV Production described in paragraphs A-F below. The J&A also provides the ability to procure ATACMS for the U.S. quickly if Congress provides funds for the urgent purchase of missiles. The contracts will permit purchases for all the following:

a. The ATACMS Missile Production, either T2K Unitary EV for FMS or M57A1 for

U.S., requirement includes production of ATACMS Missiles, rate tooling, and special tooling in support of production if any product improvements dictate, test equipment and quality assurance testing in support of production, appropriate packaging, and shipment of the missiles, as well as potential engineering and design updates or upgrades. The Government anticipates FFP awards for these types of efforts.

b. The Government intends to address and correct any obsolescence issues discovered during the production contract processes. The Government anticipates obsolescence requirements will be CPFF awards due to the uncertainty associated with the cost for this support.

c. Integrated Product Support (formerly Integrated Logistics Support) consists of supply support operations necessary to document, known status, accumulate, and transfer all parts to be shipped from the contractor’s shipping facility for FMS and International Partners. The Government anticipates CPFF awards for these types of efforts due to the uncertainty associated with the cost specific to each FMS customer.

d. Classroom Explosive Ordnance Disposal (EOD) System Trainer (CEST) is an inert, tactical configuration, 90-degree cutaway of the entire ATACMS missile used for classroom training. The Classroom Model may be scaled in size, but, if scaled, shall accurately reflect the location and representation of internal components. The Government anticipates FFP awards for these types of efforts.

e. Practical Explosive Ordnance Disposal (EOD) System Trainer (PEST) is a replica of an ATACMS missile that is identical externally to the tactical rocket, i.e., dimensions, weight, painting, and markings, breaks in the body (panels, sections) and fins/control surfaces, and guidance section used for training. It includes all hardware inspected, disarmed or "safed” (checked and marked safe) when performing EOD Render Safe procedures, but any items of a hazardous nature (energetic, toxic, and mechanical stored energy devices) are not incorporated in PEST hardware. PEST hardware is inert. The Government anticipates FFP awards for these types of efforts.

f. All technical publications required to operate, maintain, or repair the

ATACMS missile system, specific to each country variant. The Government anticipates FFP awards for these types of efforts.

The total estimated value of $2,944,319,299 is based on the Independent Government Estimate (IGE) dated 30 March 2023 for an annual quantity with up to 500 ATACMS missiles from FY23 through FY27 to support FMS requirements. The table below includes all ATACMS Missiles, Integrated Product Support, Obsolescence, EOD CEST, EOD PEST, and Technical Publications. The cost also includes inflationary considerations.

PROCUREMENT FY23 (Period 1) FY24 (Period 2) FY25 (Period 3) FY26 (Period 4) Total

ATACMS T2K Unitary

EV

$ 708,839,331

$ 723,858,114

$ 739,059,135

$ 754,579,376

$ 2,926,335,956

Production Line Restart

$ 11,140,226

$ 11,140,226

CEST $ 172,616 $ 176,274 $ 179,976 $ 183,755 $ 712,621

PEST $ 194,962 $ 199,093 $ 203,274 $ 207,542 $ 804,871

Integrated Logistics Support

$ 155,242

$ 158,532

$ 161,861

$ 165,260

$ 640,895

Obsolescence $ 994,176 $ 1,015,240 $ 1,036,560 $ 1,058,328 $ 4,126,529 Technical Publications $ 140,595 $ 143,574 $ 146,589 $ 149,668 $ 583,426

TOTAL

PROCUREMENT

$ 721,637,148

$ 725,550,827

$ 740,787,395

$ 756,343,929

$ 2,944,319,299

4. Authority Cited: Title 10 United States Code Section 3204(a)(1), as implemented by FAR 6.302-1(a)(2)(ii)(A) and (B), only one responsible source and no other supplies or services will satisfy agency requirements. Supplies may be deemed to be available only from the original source in the case of a follow-on contract for the continued development or production of a major system or highly specialized equipment, including major components thereof, when it is likely that award to any other sources would result in-substantial duplication of cost to the Government that is not expected to be recovered through competition; or unacceptable delays in fulfilling the agency’s requirement.

5. Reason for Authority Cited:

a. The proposed acquisition requires the use of the cited statutory authority because

LMMFC is the OEM and is the only source capable of providing the requirements contained in this J&A. As the developer and producer of all variants of the ATACMS, LMMFC has over 40 years of experience in the development, integration, production, and facilities refinement with the ATACMS Program. LMMFC is the only source with the knowledge, experience, capability, technical expertise, and facilities to produce ATACMS. As a result of this experience, LMMFC has acquired unique Multiple Launch Rocket System Family of Munitions (MFOM) technical expertise, proprietary work instructions, and corporate knowledge, which is not included in the technical data package (TDP); and the Government cannot transfer this TDP to another potential contractor for the reasons outlined below in paragraph 5b. Moreover, LMMFC is the only source with the appropriate special tooling, production infrastructure, and trained workforce to perform the production and services described in paragraph 3 above.

b. Acquisition data availability: The STORM PO does not have the technical data rights pertaining to the system level TDP, nor does it have the rights for many of the sub-components. Based on negotiations on previous contracts, the STORM PO was able to acquire a portion of each of the component drawings but never a full component TDP suitable for competition. The U.S. Government does not intend to procure the TDP due to the impending sunset of the ATACMS program after it is replaced by the PrSM.

Award to any other sources would result in-substantial duplication of cost to the Government that is not expected to be recovered through competition. An estimated $108.15M would be required as an initial investment to complete all efforts necessary to qualify a new supplier, as explained in paragraph 5.c.(1) below. These efforts include development of a TDP, operating procedures and work packages, technical demonstrations, first article inspection and testing, production and/or, procurement of production equipment to meet full rate production to 500 missiles per year, special tooling, test equipment, and production line validation and verification. It is estimated that the process of selecting and qualifying a new vendor and achieving full rate production to deliver missiles would take approximately five to six years, as explained in paragraph 5.c.(1) below which is unacceptable given the urgent customer and country needs addressed later in paragraph 5.c.(2). There is a current requirement for ATACMS in FY23-FY26 that could not be met by award to a new source.

The STORM PO anticipates this will be the last contract awarded before PrSM replaces ATACMS; thus, the Government is not likely to recover these costs through competition. Based on urgent customer country real world needs, LMMFC is the only source with the production capability and engineering expertise to produce ATACMS in time to satisfy current and future requirements in FY23-FY26.

c. Alternatives: There are no known feasible alternative sources. An alternate source would not only be required to design, develop, and successfully test all components of the ATACMS, but also to have its design and production equipment and processes qualified by responsible Government agencies as well. The new vendor would also have to develop its own work instructions. This would result in substantial duplicative expenditures of resources in both the initial investment and time. All suppliers, parts, equipment, and processes for the current program have already been qualified. Selecting another source would also require training of new personnel, which the U.S. Government estimates would result in higher labor costs in the first few years of production due to a lack of experience and costs of training new personnel.

(1) To determine if a competitive acquisition could overcome the barriers listed in the paragraphs above and result in a cost-savings, the STORM PO conducted an Economic Analysis in September 2022. That analysis determined the initial investment by the alternate source would be $108.15M and would result in a total cost savings of $708.06M, which is a saving to investment ratio of 15.2%. However, that savings would only be realized if the new supplier achieved full rate production by 2028.

The breakeven point based on the estimated savings is 11.22 years. With the replacement of ATACMS by PrSM, there is not time to recover the cost through competition.

(2) Based on the original ATACMS development, the STORM PO estimates that the integration of the missile by a new source and the construction and qualification of a new production line would require six years at a minimum. It takes approximately 8 months to obtain permits, 12 months to get the site plan approval (safety included), 24 months for the construction of facility, 12 months for staffing plan (white/blue collar) and 18 months for the qualification of facility. With current international conflicts and with the FMS customers requesting ATACMS as quickly as possible to be able to engage hostile targets, the three years to qualify a new source and approximately 27-month lead time to deliver is an unacceptable delay. This is not a viable option to meet the customers’ needs.

For the reasons described in the narrative above, award to any source other than LMMFC would result in substantial duplication of cost to the Government not expected to be recovered through competition and an unacceptable delay in fulfilling the agency’s requirements.

6. Efforts to Obtain Competition: The Contracting Officer will publish the notices required by FAR 5.201, Synopses of Proposed Contract Actions, and will consider any interested parties. A Request for Information (RFI) was published on SAM.gov on 2 May 2022 and remained open for fifteen (15) days. Two vendors, LMMFC, Dallas, TX (Cage 64059) and JTM Concepts, Inc., Rock Island, IL (CAGE 025Y9) responded to this posting. LMMFC provided a detailed white paper and schedule for the ATACMS Lot 6 FMS Production. LMMFC is the OEM for the ATACMS Missile. As such, LMMFC is considered a capable source of supply for this effort. JTM Concepts is a supplier of technical publications and training services only. They do not produce missiles. JTM may be a viable source of supply for the technical manuals and training if LMMFC opts to outsource these aspects of the procurement. Upon approval of this J&A, JTM will be advised to contact LMMFC for any subcontracting opportunities. Based on the information available to the Government through this RFI, LMMFC is the only proven source with the technical capabilities, knowledge, and special equipment required for performance of FMS EV ATACMS requirements.

a. Effective Competition: For the reasons stated in paragraph 5 above, effective competition is not possible. LMMFC is the only source that possesses the technical capabilities, knowledge, and special equipment required for performance of this effort.

Pursuant to FAR 5.201, the proposed acquisition will be synopsized in SAM.gov immediately upon approval of this Class J&A and any responses received will be considered.

b. Subcontracting Competition: The Government currently anticipates competition at the subcontract level. The Government will incorporate all required clauses for small and small-disadvantaged business subcontracting, including mandatory subcontracting with small businesses, small-disadvantaged businesses, Historically Underutilized Business Zone small businesses, veteran-owned small businesses, service-disabled veteran-owned small businesses, woman-owned small businesses, and Historically Black Colleges, Universities, and Minority Institutions into the resultant contract, including FAR 52.244-5, entitled, “Competition in Subcontracting” and Defense Federal Acquisition Regulation Supplement (DFARS) 252.219-7004, entitled, “Small Business Subcontracting Plan (Test Program).” In accordance with FAR 52.244-5, the contractor shall be required to compete, to the maximum extent possible, all components that cannot be fully justified as noncompetitive. LMMFC participates in the annual Small Business Comprehensive Subcontracting Test Program Agreement, under the DoD Test Program, as described in DFARS 219.702-70, and, as such, is required to submit an approved Small Business Subcontracting Plan in accordance with FAR 19.705-4 and DFARS 252.219-7004, Small Business Subcontracting Plan. LMMFC currently has an approved Comprehensive Small Business Subcontracting Plan dated 27 September 2022. This plan agreement between LMMFC and the Government is effective through 30 September 2023. The Statement of Work also includes requirements to enable the Government to monitor the contractor’s small business contracting performance on a routine basis.

7. Actions to Increase Competition: The Government does not plan to qualify an alternate source to increase competition due to the reasons outlined in paragraph 5.

The U.S. Army has no budget for continued procurement of ATACMS, and these IDIQ contracts are anticipated to be a last time buy opportunity for FMS customers to procure ATACMS. The time and investment required to qualify an alternate source of supply for the ATACMS will not be recovered through competition at this stage of the ATACMS lifecycle. Efforts to increase competition through subcontracting opportunities will be required to the maximum extent practicable, as described in paragraph 6.b above.

8. Market Research: The Contracting Officer approved the Market Research Report/Commerciality Determination on 24 June 2022. The report that states that a commercial solution does not exist and will not be utilized. This procurement effort is a military unique item and is not available commercially. The STORM PO conducted market research during the February 2022 through May 2022 timeframe.

Knowledgeable individuals listed below in the STORM PO conducted market research in accordance with FAR Part 10.002(b)(2)(i):

(1) ATACMS Product Director

(2) ATACMS Technical Lead

(3) ATACMS General Engineer, Configuration Management

(4) ATACMS Director, Performance Management

(5) ATACMS Lead Acquisition Analyst

a. The techniques used were personal knowledge, contact with knowledgeable persons in the Government and/or industry, review of recent market research results, publication of a formal Request for Information (RFI), and review of Government databases and commercial databases.

b. FAR Part 12 is not applicable. Commercial items, commercial items with customary or minor modifications, or non-developmental items cannot meet this requirement. This is a military unique item and is not available in the commercial marketplace.

c. In accordance with DFARS 205.205-71, DFARS 206.302-1(d), and DFARS

Procedures, Guidance, and Information 206.302-1(d), the Government posted an RFI to SAM.gov as stated above in paragraph 6 there were only 2 responses, and LMMFC is the only proven source with the technical capabilities, knowledge, and special equipment required for performance of FMS EV ATACMS requirements.

9. Interested Sources: To date, JTM and LMMFC are the only sources to express interest in the requirement. As stated in above, JTM is a supplier of technical publications and training services only and not technically capable of meeting Government requirements. The notice required by FAR 5.201(b)(1)(i) shall be published, and any proposal received shall be considered. The formal synopsis will be released in May 2023 in SAM.gov after approval of this J&A.

10. Other Facts:

a. Procurement History: The following contracts have been awarded sole source to LMMFC based on provisions of 10 U.S.C. 3204(a)(1), as implemented by FAR 6.302- 1(a)(2)(ii)(A and B), Only one responsible source and no other supplies or services will satisfy agency requirements.

Contract

Description

Award Date

Contract Type

Total Value

Sole Source/ Competitive

W31P4Q-15-C-0038 ATACMS M57 and M57E1 Modification

12/31/14 CPFF $80,814,718 Sole Source

W31P4Q-15-C-0085

ATACMS Overseas Contingency Operations Production

4/2/15

FFP/CPFF

$177,971,030

Sole Source

W31P4Q-17-C-0125

ATACMS Service Life Extension Program, Lot 1

(SLEP 1)

8/2/17

FFP/ CPFF

$80,814,718

W31P4Q-18-C-0078

Life Extension Program, Lot 2

(SLEP 2)

6/21/18

FFP /CPFF

$328,295,912

W31P4Q-19-C-0092

Life Extension Program, Lot 3

(SLEP 3)

6/24/19

FPIF/ FFP/

CPFF

$456,308,123

Life Extension Program, (SLEP 4)

3/31/20

$431,437,825

Life Extension Program, Lot 5

(SLEP 5)

3/25/21

$309,009,069

a) All contracts in the table above were awarded under FAR 6.302-1(a)(2)(ii)(A) and (B), Only one responsible source and no other supplies or services will satisfy agency requirements.

b) The previous justifications used in the prior J&As were the same as the justification used in Paragraph 5 above. The proposed acquisition requires the use of the cited statutory authority because the contractor, LMMFC, CAGE Code 64059, 1701 West Marshall Drive, Grand Prairie, Texas 75051, is the OEM and is the only source capable of providing the requirements contained in this J&A. As the developer and producer of all variants of the ATACMS GMLAs, LMMFC has over 40 years of experience in the development, integration, production, and facilities refinement with the ATACMS Program. LMMFC is the only source with the knowledge, experience, capability, technical expertise, TDP, and facilities to produce ATACMS.

c) Prior contracts using full and open competition - For the last 7 years, the production contracts have been awarded as sole source to LMMFC.

d) The DoD Future Years Defense Plan ended funding for the ATACMS program after FY21 in support of the U.S. Army. The PrSM, in development at LMMFC, is intended to replace ATACMS after FY25. As a result, the FMS countries that planned to participate in ATACMS production contracts during years 7-10 no longer have a contract vehicle to procure ATACMS.

11. Technical Certification: I certify that the supporting data under my cognizance, which are included in the justification, are accurate and complete to the best of my knowledge and belief.

Date:

12. Requirements Certification: I certify that the supporting data under my cognizance, which are included in the justification, are accurate and complete to the best of my knowledge and belief.

Date: _____

13. Fair and Reasonable Cost Determination I hereby determine that the anticipated cost to the Government for this contract action will be fair and reasonable. The basis for this determination will be cost analysis, price analysis, IGE, audit, and technical evaluation. In accordance with FAR 15.403- 4, certified cost or pricing data is required and will be obtained. The Defense Contract Audit Agency shall perform an onsite audit and provide a Final Audit Report, to be utilized by the Technical and Pricing experts to develop and negotiate fair and reasonable pricing. In addition, the previous contracts may be used in determining fair and reasonable cost or price.

14. Contracting Officer Certification: I certify that this justification is accurate and complete to the best of my knowledge and belief.