LSJ Addendum 3 - ERP Prototype Envnironment_Redacted.pdf

CUI

Source Selection Information -- See FAR 2.101 and 3.104

DEFENSE LOGISTICS AGENCY

CONTRACTING SERVICES OFFICE - PHILADELPHIA

700 ROBBINS AVENUE

PHILADELPHIA, PA 19111-5092

LIMITED SOURCE JUSTIFICATION ADDENDUM, Addendum 2, Addendum 3

(For Acquisition Conducted Under the Authority of the Multiple Award Schedule Program)

1. IDENTIFICATION OF THE AGENCY AND THE CONTRACTING ACTIVITY:

Agency Requiring Activity:

Defense Logistics Agency (DLA) Information Operations J62 8725 John J. Kingman Rd Fort Belvoir, VA 22060 POC: Nora Steigerwalt Phone: (215)-737-3825 Email: Nora.Steigerwalt@dla.mil

Contracting Activity:

DLA Contracting Service Office-Philadelphia (DCSO-P) 700 Robbins Avenue Philadelphia, PA 19111-5092 POC: Cecilia Geraghty Phone: (215)-737-3054 Email: Cecilia.Geraghty@dla.mil

2. NATURE AND/OR DESCRIPTION OF THE ACTION BEING APPROVED:

In accordance with FAR 8.405-6, this limited source justification authorizes and approves the procurement of brand name SAP licenses and services from an authorized SAP reseller in support of the Enterprise Resource Planning (ERP) Program. This action is for the development of the Prototype Environment, facilitation of the Business Process Reengineering, and development of requirements for the S/4 HANA transformation from a highly customized Suite 7 environment. The SAP software licenses will support the development of the Prototype Environment. The resultant firm-fixed price order will be placed against a General Services Administration (GSA) Federal Supply Schedule (FSS) Multiple Award Schedule contract and may use Department of Defense (DOD) Enterprise Software Initiative (ESI) agreements.

3. A DESCRIPTION OF THE SUPPLIES OR SERVICES REQUIRED TO MEET THE

AGENCY'S NEEDS/ESTIMATED DOLLAR AMOUNT:

DLA’s ERP solution is a cohesive SAP business environment with multiple integrations and customizations that enable DLA to establish end-to-end processes to fulfill logistics and financial.

Controlled by: DLA DCSO Philadelphia CUI Category: General Procurement and Acquisition/ Source Selection Information see FAR 2.101 & 3.104

Distribution/Dissemination Controls: FEDCON POC: Cecilia.Geraghty@dla.mil / 215-737-3054 for the Prototype Environment. SAP S/4 HANA is a new proprietary system that will replace SAP Suite 7 and requires certified SAP resellers who are authorized to demonstrate what the S/4 HANA Business Processes are and how they compare to the Suite 7 Business Processes. SAP Public Services Inc. and its resellers are the only authorized service providers for these services. Any company other than an authorized service provider would not have the necessary access to current SAP system details required to perform this effort.

The SAP software licenses currently in use by DLA must seamlessly interact with any new software licenses acquired for use in the DLA ERP. SAP owns the proprietary data of the software licenses currently in use. Only SAP software is capable of operating fully within the current ERP infrastructure due to the current implementation of SAP software throughout the system, which cannot seamlessly interact with any other company's software. An alternate company's software cannot be modified by the Government, nor can another offeror operate acceptably in the current ERP infrastructure since SAP owns the proprietary data needed to modify any other company's software for functional use within the ERP environment. A complete revamp of the ERP infrastructure would be required in order to use another company's software in this environment. This would result in multiple issues such as the need for extensive retraining of the administrative staff, extensive recoding of software by the application staff, and extensive application and database downtime to implement the new database solution. Non-SAP software licenses cannot be modified to enable integration into the existing SAP ERP operation; therefore, it has been concluded that SAP software licenses are the only currently compatible products that will meet DLA’s needs, and therefore the required services relate solely to SAP software.

Services provided by any source other than SAP Public Services, Inc. or its authorized service providers will not satisfy this requirement due to the proprietary nature of the SAP software currently utilized by DLA and the proprietary nature of the services necessary to maintain DLA’s existing environment. Moreover, no alternate company has the authority to provide the proprietary SAP services necessary to meet this requirement. Consequently, only SAP Public Services, Inc., and its authorized resellers/service providers can fulfill this brand name requirement.

ADDENDUM 2:

Advantage Solutions Inc. (ASI) is the only vendor capable of completing the required pre-work.

Adding these tasks to the Prototype Task Order will allow DLA the ability to address Notice of Findings and Recommendations (NFRs), which currently prevent an unmodified audit opinion, and aid in compliance with Finance regulations and policies aligning with OSD policies. This required work includes Data Archiving and Optimization of DLA’s unique ERP data and Customer Vendor Integration (CVI), which requires expert knowledge of the current ERP Landscape and the future state vision of the DLA ERP Landscape and data structures within the S/4 HANA Upgrade which is only resident with ASI. This expert knowledge, which only ASI possesses, is necessary to ensure the accuracy of key documentation for the Business Process Reengineering (BPR) efforts, to identify impacts to Data Archiving and Optimization and CVI design decisions for Procure to Pay, and to mitigate risks and incompatible solutions to the ERP Transformation effort. Failure to receive support from ASI will jeopardize the DLA supply chain operations with the inability to process transactions by the end user, as well as archiving the wrong data or implementing CVI incorrectly, negatively impacting DLA’s ability to complete an unmodified audit opinion and upgrade to S/4 HANA.

Per FAR 8.405-6(a)(1)(B), only one source, ASI, is capable of providing the required services and therefore the required pre-work for S/4 HANA Upgrade will be added to the current task order SP4701-22-F-0050 with ASI.

ADDENDUM 3:

Advantage Solutions Inc. (ASI) is the only vendor capable of completing the required S4 Acceleration Modification.

This required work includes Information Exchange – S4 HANA Dependency Analysis, ERP Environment Build, and upgrade Activities, which requires expert knowledge of integration for S/4 HANA, the current ERP Landscape, and the future state vision of the DLA ERP Landscape and data structures within the S/4 HANA Upgrade which is only resident with ASI. This expert knowledge, which only ASI possesses, is necessary to identify dependencies and integration plans to Information Exchange – S4 HANA Dependency Analysis, to develop strategies for ERP Environment build, to ensure the accuracy of key documentation for the efforts associated with upgrade activities, and to mitigate risks and incompatible solutions to the ERP Transformation effort. Failure to receive support from ASI will jeopardize the DLA supply chain operations with the inability to stand up an environment to conduct efforts that align to DLA implementation timeline, which DLA hopes to accomplish by October 1, 2027, as well as negatively impact DLA’s ability to complete an unmodified audit opinion and upgrade to S/4 HANA. Additionally, this modification is requesting travel funds in support of the services to assist in the accomplishment of the DLA ERP Transformation S4 Prototype Procurement Process Re-engineering (PPR)s, Pilot testing, and Fit/Gap Sessions.

Per FAR 8.405-6(a)(1)(i)(B), only one source, ASI, is capable of providing the required services at the level of quality required because the supplies or services are unique or highly specialized and therefore the required acceleration for S/4 HANA Upgrade will be added to the current task order SP4701-22-F- 0050 with ASI.

5. DETERMINATION BY THE ORDERING ACTIVITY CONTRACTING OFFICER

THAT THE ORDER REPRESENTS THE BEST VALUE CONSISTENT WITH 8.404(d):

SAP products and services are available under established ESI agreements. These agreements were issued against GSA FSSs and the terms and usage of these agreements are in accordance with DFARS 208.74. Pricing under the ESI agreements has been determined fair and reasonable and has included negotiated discounts to GSA FSS pricing.

The Contracting Officer will determine that the order represents the best value to the Government consistent with FAR 8.404(d). In making this best value determination, the Contracting Officer will perform a price reasonableness analysis utilizing the techniques found at FAR 15.404-1, including, but not limited to: (1) Comparison of proposed prices received in response to the solicitation (FAR 15.404-1(b)(2)(i)); (2) Comparison of proposed prices to historical prices paid, whether by the Government or other than the Government, for the same or similar items (FAR 15.404-1(b)(2)(ii)); (3) Comparison of proposed prices with competitive published price lists, published market prices of commodities, similar indexes, and discount or rebate arrangements (FAR 15.404-1(b)(2)(iv)); and (4) Comparison of proposed prices with the Independent Government Cost Estimate (FAR 15.404- 1(b)(2)(v)).

6. A DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AMONG SCHEDULE

COMPETITION:

DLA has utilized SAP products over 10 years and has invested over $1 billion dollars in SAP software, maintenance, and training. In order to re-compete this requirement with another software product, DLA would have to be willing to invest at least $1B more to accomplish the current requirements.

This procurement will afford DLA the opportunity to address the upcoming end of life in FY27, however if DLA isn’t able to migrate on that schedule SAP has offered support through FY30 for an additional premium fee. This modification will accelerate the schedule allowing DLA to meet the FY27 timeline and cost avoidance of the SAP Premium fee through FY30 for the current SAP Suite 7 by upgrading to SAP’s new S/4 HANA platform.

The below chart demonstrates the cost of a custom configuration versus a standard configuration for each of the ERP RICE (reports, implementations, changes, upgrades, interfaces, etc.) objects. By converting custom RICE objects to standard RICE objects, the cost of maintaining the ERP will be significantly less due to fewer customizations. The RICE objects that DLA currently maintains under the standard SAP Suite 7 platform cost significantly less than a DLA-customized object. DLA will realize more cost savings by standardizing on the SAP S/4 HANA platform and reducing the number of custom objects. In addition, moving from customization to a standard SAP S/4 HANA will allow for additional benefits such as an easier to sustain environment, improved processing capability, more security, and earlier receipt of software updates.

8. A STATEMENT OF THE ACTIONS, IF ANY, THE AGENCY MAY TAKE TO REMOVE OR

OVERCOME ANY BARRIERS THAT LED TO THE RESTRICTED CONSIDERATION

BEFORE ANY SUBSEQUENT ACQUISITION FOR THE SUPPLIES OR SERVICES IS

MADE.

SAP software is so imbedded in DLA’s systems that this barrier to competition cannot be removed absent an overhaul of the current IT infrastructure. At this time, DLA requires SAP expertise who have the detailed knowledge of S/4 HANA Business Processes and how SAP ultimately makes the solutions all come together on S/4. SAP Public Services, Inc. and its authorized resellers/service providers are the only sources that can support DLA’s existing software and meet the Government’s needs.

However, DLA has and continue to exercise competition as often as possible and is required to conduct ongoing reviews to keep abreast of new technology, both in industry and in the Government as a continuing effort within DLA. DLA uses a variety of vendors, manufacturers, and contracts to fulfill its requirements and will continue its practice of surveying the market to ensure full and open competition whenever possible.

In accordance with FAR Part 8.405-1(c)(2), the Limited Source Justification and the RFQ will be posted on GSA e-Buy.