PNM SP8000-21-C-0011.pdf

CUI

Source Selection Information See FAR 2.101 and 3.104

FOR OFFICIAL USE ONLY (FOUO)

PRICE NEGOTIATION MEMORANDUM (PNM)

AEROSPACE-GRADE RAYON

SP8000-21-C-0011

Controlled by: DCSO-F2 CUI Category: PRVCY Applicable Distribution: DLA/J6/Strategic Materials/DCSO POC: Matthew Fox, Contract Specialist (571) 363-7958

Ronald E. Fairley, Contracting Officer (571) 363-7069

PRICE NEGOTIATION MEMORANDUM

(PNM)

Non-Competitive Acquisition

DCSO

8725 John J. Kingman Rd. Fort

Belvoir, VA 22060

1. SUBJECT: Final Price Negotiation Memorandum

a. Contractor Name & Address: ICF Mercantile LLC (ICF), 150 Mount Bethel RD STE 2, Warren, New Jersey 07059-5170

b. Contract #: SP8000-21-C-0011

c. Item(s) Acquired: ENKA 300/60 AS Select Rayon

d. Purchase Request #: 88449417

e. Pricing Case: N/A

f. Delivery Schedule: One (1) base year. Material must be delivered within 720 calendar days of the contract award date (CLIN 0001).

g. Contracting Officer: Ronald E. Fairley, DCSO-F2, Email: Ronald.fairley@dla.mil (Ph) 571-363-7069

h. Date of Memorandum: September 20, 2021

2. INTRODUCTORY SUMMARY:

a. Type of Contractual Action: The acquisition will result in a Firm Fixed Price (FFP) contract, and the requirement was authorized by purchase request (PR) 88449417, solicitation SP8000-

21-R-0006.

b. This acquisition is sole sourced to ICF Mercantile LLC (ICF) to purchase 420,000 pounds

(lbs.) of ENKA 300/60 AS Select Rayon with a delivery occurring over 720 calendar days from date of award. ICF is currently the sole domestic provider of qualified Rayon.

The only qualified rayon source for DoD and NASA applications is manufactured from

ENKA at a single site in Germany and distributed solely in North America by ICF

Mercantile. The product is ENKA 300/60 denier AS Select. There are no other qualified substitutes to meet defense and aerospace applications. ENKA rayon was qualified when the sole domestic rayon manufactured, NARC, exited the market. ENKA rayon specifications have been qualified to meet the requirements of manufacturers of end products for defense and aerospace applications.

ICF’s proposals and Independent Government Cost Estimate (IGCE) are shown in the following charts:

mailto:Ronald.fairley@dla.mil

Project

Element

ICF’s Initial

Proposal

ICF’s Unit

Price

Proposal

IGCE Government

Unit price on ICGE

Base Year $4,305,000.00 $10.25 $4,410,000.00 $10.50

Contract Type: Firm-fixed price contract

Project

Element

ICF’s Final

Proposal

ICF’s Unit

Price

Proposal

IGCE Government

Unit price on ICGE

Base Year $4,368,000.00 $10.40 $4,410,000.00 $10.50

c. Clearance Authority: Ronald E. Fairley, Contracting Officer, is the approval authority for this acquisition.

3. PARTICULARS:

a. Supply Description:

To reduce the risk of import reliance in the Aerospace-grade rayon supply chain, DLA

Strategic Materials intends to purchase 420,000 pounds (lbs.) of ENKA 300/60 AS Select

Rayon with a delivery occurring over 720 calendar days from date of award. DLA Strategic

Materials received authority to procure Aerospace-grade rayon in the FY2019 National

Defense Authorization Act (NDAA). Rayon is also listed in the FY20 NDAA.

b. Previous Contracts: This is the first time DLA Strategic Materials has procured this material. Aerospace-grade rayon fiber is a new requirement for DLA Strategic Materials.

NASA, DoD, and NSS have bought downstream products, such as carbon cloth phenolic composites, and have purchased individually held stockpiles from qualified rayon facilities before they exited the market. Fibers are woven into fabric and then carbonized in proprietary configurations and combined with a resin system to form a carbon cloth phenolic

(CCP). The CCP is used as an ablative in solid rocket motors (SRM) and re-entry heat shields.

c. Price Analysis: Price analysis was performed using ICF’s proposal against a Government

IGCE fully relied upon to determine the price fair and reasonable in accordance with FAR

15.404-1(a)(2)(b)(2)(C)(v).

DLA Strategic Materials gathered information from several sources throughout the evaluation and development process. Pricing data for the material was obtained by contacting

NASA and prime and subprime contractors who manufacture products or parts that incorporate rayon fiber. Companies such as: Northrop Grumman, Aerojet Rocketdyne, and

NASA Marshall provided recent unit prices of the 300/60 AS Select rayon to DLA Strategic

Materials. It was determined that the unit price for this material is a $10.50. The Market Price is $10.50 based on market research.

d. Contract Line-Item Numbers: This acquisition contains one (1) CLINs. As indicated in 2b of this document, ICF’s proposed price is summarized along with the Government’s IGCE.

e. Negotiation: DCSO asked ICF for a proposal:

Government Participants:

(1) Ronald E. Fairley, Contracting Officer, DLA Strategic Materials, Fort Belvoir, VA*

(2) Matthew Fox, Contract Specialist, DLA Strategic Materials, Fort Belvoir, VA

ICF Participant:

(1) David E. Ronner, President/Owner*

*Lead Representative

4. ACQUISITION SITUATION:

a. Acquisition Background:

ENKA 300/60 AS Select rayon is a critical constituent for use in advanced composite materials in various critical Department of Defense (DoD) and National Security Space

(NSS) applications such as rocket motors and re-entry heat shields. Rayon-based carbon phenolics have been the industry standard material for nozzle exit cone liners and other hard insulator applications, offering a good combination of thermal insulation, erosion resistance, and producibility. US manufacturers of rayon such as AVTEX Fibers closed rayon operations in 1990 and North American Rayon Corporation (NARC) closed operation in

2000.

With NARC rayon no longer in production, the DoD and NASA qualified ENKA rayon in its place making it the only qualified source for certain critical DoD and NASA solid rocket motors and heat shield applications. ENKA’s aerospace-grade rayon product is ENKA

300/60 AS Select.

To ensure DoD, NASA, and NSS have access to a supply of these materials, DLA Strategic

Materials received Congressional authority to procure Aerospace-grade rayon. Through research on rayon, the Government determined to procure ENKA 300/60 AS Select for the

National Defense Stockpile (NDS). It is anticipated that the stockpile inventory will be established over 720 calendar days from date of award.

One offer was received from ICF for a firm-fixed price acquisition. The proposal was received 7 September 2021. The offer is as follows:

Contractor's Name: ICF

CLIN QTY Unit Price Total Price

0001 420,000 LB $10.25 $4,305,000.00

Total $4,305,000.00

Period of performance is one (1) base year with a delivery of 720 days from date of award.

The Contract Specialist (CS) sent the contract award to ICF on 20 September 2021 for their review and signature. Mr. Ronner called the CS for clarification on delivery destination to

Scotia, Depot. The CS clarified that the delivery cost should cover the shipping cost all the way to Scotia, Depot in New York. ICF priced their product as FOB New Jersey to their

Warehouse. The cost for pre-paying the shipping to Scotia, NY was not included in their quote. Their quote did include European inland freight, ocean freight, and U.S. inland freight to their warehouse. The estimated cost addition to prepay the freight to Scotia, NY is

$0.15/lb. ICF adjusted the quote to $10.40/lb. The new total amount of the quote is

$4,368,000.00.

The final proposal was received 20 September 2021. The offer is as follows:

Contractor's Name: ICF

CLIN QTY Unit Price Total Price

0001 420,000 LB $10.40 $4,368,000.00

Total $4,368,000.00

Period of performance is one (1) base year with a delivery of 720 days from date of award.

Outside influences/unusual time constraints:

a. In October 2015 Alion Science and Technology performed a deep dive assessment on the aerospace-grade supply chain. During that supply study it was found that there have been ten different qualified rayon suppliers over past 35 years, (Shutdown dates in parenthesis), IRC –

US (12/72), American ENKA – US (3/75), FMC – US (7/76, acquired by AVTEX), AVTEX

– US (11/88), AVTEX restart – US (2/90), NARC – US (5/97), Grupo Cydsa – Mexico

(7/01), and C2 – Austria (1/08). US Government programs would place a bulk order when the facility shuts down so they can fulfill their future rayon requirements. Currently the only qualified aerospace grade product for SRM and re-entry heat shields is 300/60 denier AS

Select manufacture by ENKA in Germany.

The sole North American distributor of ENKA rayon is ICF Mercantile in New Jersey.

ENKA rayon comes over to the US in the form of yarn and distributed by ICF Mercantile.

The material is Aerospace-grade Rayon plied or twisted at Middleburg Yarn Processing Co.

Prime DoD contractors will place an order with Middleburg which Middleburg will then place and order with ICF Mercantile who will receive the material from ENKA.

The Department of Defense (DoD), National Aeronautics and Space Administration (NASA), and National Security Space (NSS) will buy parts that contain rayon fibers but do not procure the raw material directly. The raw material is often bought by second tier contractors who incorporate the material into a semi-finished products such as carbon cloth phenolic composites

(CCP), which will then be delivered to a prime contractor or to a DoD or NASA program. Over the past 35 years at least 10 different carbonized rayon fibers have been qualified as carbonized carbon cloth but have since exited the market. After the closing of the NARC North American plant the US Government bought and stockpiled the NARC rayon fiber. That NARC rayon stockpile is dedicated to NASA programs and some DoD programs. Currently the only qualified source of aerospace-grade rayon that meets current and future DoD requirements is foreign sourced from ENKA in Germany – ENKA 300/60 denier AS Select.

b. Government furnished facilities, property, and equipment: Not applicable.

c. Special Clauses/Unique Features/Provision Having Cost Impart Implications: Not applicable.

5. Negotiation Summary:

a. Non-Price Evaluation Factors: The one non-price evaluation factors for this requirement were Technical Approach.

(1) Technical Evaluation: The Technical Evaluation Board reviewed ICF’s technical approach and found the proposal to be technical acceptable with the Statement of

Work (SOW). The Contracting Officer (KO) reviewed the Technical Proposal and

SOW and agreed with the Technical Evaluation Board.

b. Price Analysis Summary:

Initial Proposal: The KO performed a price analysis comparing ICFs initial proposed price of $4,305,000 from the Independent Government Cost Estimate (IGCE) price of $4,410,000 and determined ICFs price is -2.44% ($105,000) less than the IGCE.

The initial analysis covered the following elements:

Project Element ICF’s Proposal IGCE

Base Year $4,305,000.00 $4,410,000.00

Final Proposal: The KO performed a price analysis comparing ICFs second proposed price of $4,368,000 from the Independent Government Cost Estimate (IGCE) price of $4,410,000 and determined ICFs price is -0.95% ($42,000) less than the IGCE.

The initial analysis covered the following elements:

Project Element ICF’s Proposal IGCE

Base Year $4,368,000.00 $4,410,000.00

c. Per FAR Part 9.405-1 -- The Contracting Officer on 20SEP2021verified in SAM that ICF

Mercantile, currently has no Exclusion. (See SAM Report). Also attached is the FAPIIS report as of 20SEP202 showing that ICF has no CPARS reports.

d. Conclusion: As documented above, the final price of $4,368,000.00 was offered by ICF.

Based on the information presented above, ICF’s price to be Fair and Reasonable with FAR

15.404-1(a)(2)(b)(2)(C)(v) Price Analysis using IGCE.

6. ADVISORY REPORTS/KEY DOCUMENTS

a. Reliance Statement: The Contracting Officer fully relied upon pricing data to establish the price objectives and to determine a fair and reasonable price.

b. Proposal of Record: ICF’s initial proposal of record was dated 9 September 2021. ICF’s final proposal of record was dated 20 September 2021.

7. SIGNATURES

Digitally signed by

FOX.MATTHEW FOX.MATTHEW.J.12643256

.J.1264325699 Date: 2021.09.21 09:29:37

-04'00'

Name Date Name Date

Matthew Fox Ronald E. Fairley

Contract Specialist Contracting Officer

Attachments:

1. SAM Report

2. FAPIIS Report

Controlled by: DCSO-F2 CUI Category: PRVCY

Applicable Distribution: DLA/J6/Strategic Materials/DCSO POC: Matthew Fox, Contract Specialist (571) 363-7958

Ronald E. Fairley, Contracting Officer (571) 363-7069