A_MON-30_(Under_93M)_FINAL_Redacted1.pdf

DEFENSE LOGISTICS AGENCY

ENERGY

Aerospace energy 1014 Billy Mitchell Blvd., bldg. 1621

San Antonio, Texas 78226-1859

18-0047

Justification for Other than Full and Open Competition

1. Summary/Introduction: This justification is executed by the Defense Logistics Agency Energy, Aerospace Energy (DLA-E FEM), as the contracting activity for the purchase of a 70/30 blend of dinitrogen tetroxide (N2O4) and nitric oxide (NO); known as Mixed Oxides of Nitrogen, or MON- 30. This modification will be negotiated with Terra Mississippi Nitrogen, Yazoo City, Mississippi, the incumbent supplier of the current dinitrogen tetroxide contract under which six types of N2O4 are produced. DLA Energy intends to add a Contract Line Item (CLIN) to the contract for the remaining period of performance of the contract, anticipated to be Date of Award of this modification through September 30, 2022 and another CLIN for the Second Option Year, 1 October 2022 through September 30, 2027, if exercised, respectively. The total estimated cost for this action is $821,075.96; thereby, increasing the current contract value including Options from $90,372,930.00 to $91,194,005.96.

2. Nature and/or description of the action being approved (FAR 6.303-2(b)(2): To the DoD and aerospace industry, a guaranteed supply of N2O4 is vital to the National Defense. With regards to N2O4, Terra Mississippi Nitrogen is the sole supplier of these N2O4 grades in the United States and has been contracted by DLA Energy Aerospace Energy to provide these products to DoD and the United States’ aerospace industry under the Commercial Space Launch Act. Terra Mississippi Nitrogen has been providing the DLA Energy FEM with these N2O4 grades for eleven years under the current contract SP0600-07-D-1564 and for the five years prior to this contract under contract SP0600-02-D-1510. For this reason and those explained herein, DLA Energy FEM intends to negotiate a modification to add a CLIN for MON-30 to the current production contract.

3. Description of supplies or services required to meet the agency’s need (including estimated value) (FAR 6.303-2(b)(3)): N2O4 is a hypergolic chemical oxidizer which, together with its sister hypergolic product, Hydrazine, are used as the primary fuel by all Department of Defense (DoD) and commercial satellites and space vehicles. The only current domestic supplier of N2O4 is Terra Mississippi Nitrogen, who operates its N2O4 plant in Yazoo City, Mississippi.

In October 2007, Terra Mississippi Nitrogen was awarded a 10-Year Base, Fixed Price with Economic Price Adjustment (EPA), Requirements Contract with two 5-Year Options (SP0600- 07-D-1564) for both Bulk and Cylinder quantities of all types of dinitrogen tetroxide and all ancillary services. The production capabilities available under the contract are for six grades of N2O4 including MON-1, MON-3, MON-3UL, MON-15, MON-25 and NTO. In July 2018, DLA Energy FEM was contacted by a new customer who has an on-going need for MON-30 over the next several years. MON-30 is not one of the grades of N2O4 currently available under the contract nor has DLA Energy FEM ever purchased MON-30 for any other DoD or aerospace

Justification for Other Than Full and Open Competition (Cont’d) (SP0600-07-D-1564 – Terra Mississippi Nitrogen) customer. However, MON-30 can be produced by increasing MON-25 (which is currently part of the contract) by 5 more units. The total estimated cost for this action is $821,075.96;

4. Identification of the statutory authority permitting other than full and open competition (FAR 6.303-2(b)(4)): This J&A is based upon the authority of 10 U.S.C. §2304(c)(1), as implemented by Federal Acquisition Regulation 6.302-1 Only One Responsible Source. The MON-30 product required by the agency is only available from Terra Mississippi Nitrogen, Yazoo City, Mississippi and no other type of supplies will satisfy agency requirements.

5. Demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited (FAR 6.303-2(b)(5)): As stated above, Terra Mississippi Nitrogen has been the contracted provider of all grades of N2O4 for over 16 years.

There is no other known source that currently has the infrastructure in place to provide this product. Utilizing this modification action, DLA Energy FEM will be adding one more grade (MON-30) of N2O4 to the other six grades currently provided under the contract. DLA Energy FEM can only acquire N2O4 from Terra Mississippi Nitrogen, as no other known source exists for this product grade. N2O4 requirements were competitively solicited twice during the above timeframe; once prior to the end of contract SP0600-02-D-1510, resulting in the award of the current contract SP0600-07-D-1564, where Terra was the only offeror; and again, prior to the exercise of the first option year under that contract, ten years later, to which no offers were received.

6. Description of the efforts made to ensure that offers are/were solicited from as many potential sources as is/was practicable, including whether a notice was or will be publicized as required by Subpart 5.2 and, if not, which exception under 5.202 applies (FAR 6.303-2(b)(6)): As stated above, Terra Mississippi Nitrogen has been the contracted provider of N2O4 for over 16 years and is the sole provider of N2O4 products in the United States. During this time, multiple Requests for Information (RFIs) looking for interested sources have been posted in FEDBIZOPPS with no responses. Prior to the end of contract SP0600-02-D-1510, solicitation SP0600-07-R-0300 was issued Full and Open Competition Limited to Domestic Sources and Terra Mississippi Nitrogen was the only offeror resulting in the award of the current contract SP0600-07-D-1564. Ten years later, prior to the exercise of the first five-year option under contract SP0600-07-D-1564, solicitation SPE601-17-R-0304 was issued as Unrestricted, Full and Open Competition. In response to SPE601-17-R-0304, no written offers were received.

A synopsis of this proposed contract modification will be posted in FEDBIZOPPS in accordance with FAR Subpart 5.2, prior to award but no responses are anticipated.

(SP0600-07-D-1564 – Terra Mississippi Nitrogen)

7. Determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable (FAR 6.303-2(b)(7)):

The Contracting Officer determines that the anticipated cost to the Government will be fair and reasonable. The Contracting Officer can utilize the base pricing under the current contract, specifically for MON-25, to ensure that at fair and reasonable base contract price can be obtained for the MON-30. This assumption is based on the fact that in order to make MON-30, the contractor will have to make MON-25 and keep adding nitric oxide until the 30 count is achieved. All of the product prices under the contract are tied to a monthly Economic Price Adjustment prior to the issuance of actual Delivery Orders. It is anticipated that the new base prices established for the MON-30 CLINs added by this action will function the same as the base CLIN prices for the other six grades of N2O4 with regard to these Economic Price Adjustments.

8. Description of the market research conducted and the results or a statement of the reason market research was not conducted (FAR 6.303-2(b)(8)): The Contracting Officer and DLA Energy Aerospace Energy is always monitoring the marketplace and, specifically, the space launch and aerospace industries in both the United States and Europe to find additional vendors willing to become suppliers for both dinitrogen tetroxide and its, sister fuel, hydrazine.

However, due to the decrease quantities of the requirements over the last ten years, new entrants to the marketplace are not likely. DLA Energy is in constant contact with aerospace industry vendors and customers inquiring as to their abilities and willingness to become a supplier for these hypergol products, without success.

9. Any other facts supporting the use of other than full and open competition, such as (FAR 6.303-2(b)(9): There are no other supporting facts.

10. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition (FAR 6.303-2(b)(10): No other capable sources have been identified over the last sixteen years despite DLA-E FEM efforts to locate them and the removal of the Domestic Source Restriction to widen competition to the entire world.

(SP0600-07-D-1564 – Terra Mississippi Nitrogen)

11. Actions that may be taken to remove or overcome barriers to competition before any subsequent acquisition for the supplies or services are required (FAR 6.303-2(b)(11)):

With regard to the hypergolic products, the DLA Energy Aerospace Energy continues to actively seek competition for any follow-on contract actions. RFIs are issued far in advance of receipt of procurement requests. The follow-on procurements are synopsized on the Government’s e-commerce web site, www.fedbizopps.gov and Pre-Proposal Conferences and one-year advance start-up times are offered to new entrants. The only barriers to competition is the lack of offerors. With regard to specifically dinitrogen tetroxide requirements, prior to the exercise of the final five-year option under contract SP0600-07-D-1564 in September 2022 another round of RFIs and solicitations will most likely be issued. Until then and as stated above, the Contracting Officer and DLE-E Aerospace Energy will continue monitor the marketplace and network with space launch and aerospace industries throughout the world to find additional vendors willing to become suppliers for both hypergolic fuels, dinitrogen tetroxide and hydrazine.

(SP0600-07-D-1564 – Terra Mississippi Nitrogen)

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

BARBARA M. PETERSON

Contracting Officer Date: ________________________

I hereby certify that the data which forms the basis for this justification is accurate and complete and that the purchase request covers only the minimum requirements to satisfy the needs of the Government.

KENNETH GRAMS

Director, Customer Operations Date:___________________

I have reviewed and concur with this justification.

SUZANNE BRANGAN

Assistant Counsel Date: _______________________

Approved:

DAMON C. MOORE

Level Higher Contracting Officer Date:________________________

Date: 2018.08.20 08:03:42 -05'00'

Date: 2018.08.20 09:50:57 -05'00'

Date: 2018.08.22 08:05:43 -04'00'

Date: 2018.08.24 11:42:31 -05'00'