LSJ Addendum 1 - ERP Cloud Hosting_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 1

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

1. IDENTIFICATION OF THE AGENCY AND THE CONTRACTING ACTIVITY:

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 Cloud Hosting and Subscription Licenses with Managed Services from an authorized SAP reseller in support of the Enterprise Resource Planning (ERP) Transformation Program. 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.

2003 TASK 1: Cloud Hosting & Subscription Licenses (S/4 HANA for FLIS) Firm-Fixed Price

MO 12

2004 TASK 1: Cloud Hosting & Subscription Licenses Firm-Fixed Price

MO 12

2005 TASK 1: Cloud Hosting & Subscription Licenses (S/4 HANA for EBS) Firm-Fixed Price

MO 9

Total OPTIONAL CLINs

CLIN Description Unit of Issue

Quantity Unit Price Total

TASK 2 (OPTIONAL):

Additional Cloud Hosting for Modernization Capabilities Firm-Fixed Price

MO 12

TASK 2 (OPTIONAL):

Additional Cloud Hosting for Modernization Capabilities Firm-Fixed Price

MO 12

TASK 3 (OPTIONAL):

Prototype Subscription Licenses Firm-Fixed Price

MO 11

TASK 3 (OPTIONAL):

Prototype Subscription Licenses Firm-Fixed Price

MO 6

TASK 2 (OPTIONAL):

Additional Cloud Hosting for Modernization Capabilities Firm-Fixed Price

MO 9

TASK 2 (OPTIONAL):

Additional Cloud Hosting for Modernization Capabilities Firm-Fixed Price

MO 12

TASK 4 (OPTIONAL):

Integrated Business Planning Licenses Firm-Fixed Price

MO 3

TASK 4 (OPTIONAL):

Integrated Business Planning Licenses Firm-Fixed Price

MO 12

TASK 2 (OPTIONAL):

Additional Cloud Hosting for Modernization Capabilities (EDW) Firm-Fixed Price

MO 3

TASK 2 (OPTIONAL):

Additional Cloud Hosting for Modernization Capabilities (EDW) Firm-Fixed Price

MO 12

TASK 2 (OPTIONAL):

Additional Cloud Hosting for Modernization Capabilities Cloud Repurposing Firm-Fixed Price

MO 1

Total Total Proposed Price for the Base and All Option Periods

Addendum 1:

Option Period 3 (September 29, 2025 through March 28, 2026) CLIN Description Unit of

Issue Quantity Unit Price Total

4001 TASK 1: Cloud Hosting & Subscription Licenses Firm-Fixed Price

MO 6

TASK 2:

Additional Cloud Hosting for Modernization Capabilities

MO 6

TASK 4: Integrated Business Planning Licenses Firm-Fixed Price

MO 6

Total Option Period 4 (March 29, 2026 through September 28, 2026)

CLIN Description Unit of Issue

Quantity Unit Price Total

5001 TASK 1: Cloud Hosting & Subscription Licenses

MO 6

5002 TASK 2:

Additional Cloud Hosting MO 6 for Modernization Capabilities Firm-Fixed Price

TASK 4: Integrated Business Planning Licenses Firm-Fixed Price

MO 6

Total Total Proposed Price for the Base and All Option Periods

4. THE AUTHORITY AND SUPPORTING RATIONALE AND, IF APPLICABLE, A

DEMONSTRATION OF THE PROPOSED CONTRACTOR'S UNIQUE

QUALIFICATIONS TO PROVIDE THE REQUIRED SUPPLY OR SERVICE:

The authority permitting other than full and open competition is FAR 8.405-6(a)(1)(i)(B), only one source is capable of providing the required services, and FAR 8.405-6(b)(1), items peculiar to one manufacturer. A brand name item, whether available on one or more schedule contracts, is an item peculiar to one manufacturer, SAP Public Services, Inc.

In accordance with FAR 8.405-6(b)(1), the SAP brand name is essential to the Government’s requirements, and market research indicates that other companies’ similar products, or products lacking the particular feature, do not meet, or cannot be modified to meet, the agency’s needs.

The SAP software that has been integrated within DLA’s ERP is proprietary software developed by SAP and DLA has established Business Processes and Laws, Regulations and Policies (LRP) around those Business Processes. This task order will procure SAP subscription licenses, cloud hosting, and cloud managed services to support DLA’s ERP, which resides in the cloud. The contractor will provide subscription licenses and cloud managed services for SAP and non-SAP applications. 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 1

In accordance with FAR 8.405-6(a)(1)(i)(A) the proposed bridge contract modification must be issued on a sole-source basis to the incumbent, Advantage Solutions Inc. (ASI), because the agency’s need for the services is so urgent that providing a fair opportunity would result in unacceptable delays and cause a break-in-service. Given that ASI is currently carrying out these duties, it is essential that the bridge contract modification be executed without delay. Without a bridge contract, the government faces a significant risk to its ability to provide operational support to the Armed Forces.

If the contract extension is not awarded, there will be a gap in services for the ERP hosted systems, which includes core DLA financial systems. Enterprise Business Systems (EBS), Enterprise Advanced Analytics (EA2), Center of Planning Excellence (CoPE) and Governance, Risk and Compliance (GRC) applications provide key services across multiple DLA portfolios, which will stop if no services and capabilities are available, impacting DLA and multiple DoD entities including military branches.

For EBS, this would impact vendor access to solicitation and award information and vendor quote submissions. Customer order and return processing, Material Release Order (MRO) generation and transmission to the Accountable Property System of Record (APSR) would not occur. Procurement award generation, vendor invoice payment, disposal, and recoupment functionality would not occur, impacting procurement efforts for DLA and DOD entities. SAP CRM availability impacts DLA CRM marketing support activities, DLA Customer Interaction Center (CIC) ticket processing, and web auction creation and award for Disposal items available to the general public. Multiple core business functions which generate key acquisitions, procurement and funding within DLA would cease to operate.

For EA2 systems this will impact users’ ability to perform SQL queries against EA2 HANA and other systems. This allows them to gauge supply chain/demand chain performance and conduct historical trend analysis for educated decision-making by providing the ability to examine large data sets and return actionable data within a reasonable timeframe. Reoccurring reports, operations research, and ad hoc requests are required for daily tasks such as prioritization of Buyer and CAS workloads throughout the Enterprise.

For CoPE this would prevent key batch processes from running. Planning systems will not be able to complete their Forecasts; generate Retail Stock Transfer Orders (RTSOs); Stock Transfer Orders (STOs); generate Planned Orders; generate their Disposals or process nightly batch jobs.

Furthermore, if a bridge is not awarded, ERP Transformation efforts will be delayed, potentially disrupting other planned activities and timelines to migrate ERP to the next generation platform (which includes transition from SAP ERP Central Component (ECC) to SAP S/4 HANA) as well as adopt standard SAP capabilities to the maximum extent possible. DLA will also not be able to fulfill one of its core missions, to deliver IT capabilities that enable DLA’s success as the Nation’s Logistics Combat Support Agency.

Therefore, in accordance with FAR 8.405-6(a)(1)(i)(A), the proposed bridge modification will be made under the terms of ASI’s existing task order, SP4701-22-F-0180.

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, using Lowest Price Technically Acceptable (LPTA), 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

HOLDERS AND THE RESULTS OR A STATEMENT OF THE REASON MARKET

RESEARCH WAS NOT CONDUCTED:

In accordance with DFARS 208.7402, departments and agencies shall fulfill requirements for commercial software and related services in accordance with the DoD ESI. ESI promotes the use of enterprise software agreements with contractors that allow DoD to obtain the most favorable terms and pricing for software and information technology support services. In accordance with DFARS 208.7402, PGI 208.7403, DLAD 39.9001 (h), the DoD ESI service agreements were reviewed, and it was determined that there are three ESI BPA holders for SAP Public Services Inc. (Advantaged Solutions Inc., Carahsoft Technology Corp., and Oakland Consulting Group, Inc.) who offer SAP services on their ESI BPAs against their General Services Administration (GSA) Schedules.

Market research was conducted in February 2022 by reviewing the current DoD ESI agreements for SAP Public Services. Based upon the findings of the market research, a determination has been made to issue this solicitation on an unrestricted basis via a Request for Quotation (RFQ) posted to the GSA e-Buy System (www.ebuy.gsa.gov). It is anticipated that by solicitating this requirement on GSA e- Buy, multiple proposals from authorized resellers will be received. It is anticipated that the SAP ESI agreement holders will provide the best value to the government.

7. ANY OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL AND OPEN

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.

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 embedded in DLA’s systems that this barrier to competition cannot be removed absent an overhaul of the current IT infrastructure. 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 8.405-6(b)(3)(B), the Limited Source Justification and the RFQ will be posted on GSA e-Buy.