SPE4AX-15-D-9441 JA Amendment 0001 - reviewed-deleted_Redacted.pdf

DEFENSE LOGISTICS AGENCY

HEADQUARTERS

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6221

JUSTIFICATION AND APPROVAL (J&A)

FOR OTHER THAN FULL & OPEN COMPETITION

AMENDMENT 0001

Solicitation: SPE4A5-14-R-1458 Contract: SPE4AX-15-D-9414

Program / Program Element: BAE Next-Generation Long-Term Contract (LTC) Cage: 63760

Revised Dollar Value of Anticipated Award(s): XXX

Statutory Authority: 10 U.S.C. 2304(c)(1). Regulatory Authority: FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements. This amendment relies upon the statutory and regulatory authority recited in the original J&A (Attachment 1) regarding spare parts supported under this contract. The current scope of this contract is limited to traditional spare parts support of sole source consumable and depot level repairable (DLR) items for aircraft and systems manufactured by BAE for worldwide DLA direct (DD) shipments for Federal Acquisition Regulations (FAR) Part 15, military unique items only. Items are added as identified and validated. The LTC is a fixed-price requirements type contract (RTC) with prospective price redetermination and awarded March 23, 2015 as a 10-year contract with a 5-year base and one 5-year option period; final expiration including option is March 22, 2025. The contract is currently within the third year of the base period. Price redetermination will take place at the option, if exercised, or as pricing expires. As requirements will be developed at different times, it is anticipated that award of increments will be staggered. It is the intent of the contracting officer to award each increment within a five-year window of the initial award with each increment having a ten-year total term (one five-year base and one five-year option period) to afford each increment the same optimal period of performance.

This is the first amendment to the class J&A. The Government requires sole source performance based sustainment activities, as described herein, in order to better provide holistic support for multiple weapon systems and platforms supported by BAE, to include but not limited to, the KC- 135, F-15, C-5, E-3A, F/A-18, F-16, HH-60 and C-130. This amendment to the Class J&A authorizes the addition of a package of support that will improve the level of availability of BAE provided items through the application of Original Equipment Manufacturer (OEM) based engineering and component reliability improvements, as well as through improved performance based supply management. Given the expanded scope of the AF customer requirement, this

Source Selection Information – See FAR 2.101 & 3.104 amendment seeks to increase the estimated dollar value of this acquisition XXX from the previously approved XXX.

A Request for Information (RFI) / Sources Sought Notice (Attachment 3) was issued on July 10, 2018 requesting any interested sources with the ability to provide performance based solutions for BAE sole source parts to identify themselves. The notice closed on July 20, 2018 and no responses were received.

This Amendment to the Class J&A authorizes the ability to contract with BAE for potential future repair services on the BAE sole source repairable items covered by the Class J&A. As the OEM of these repairable items, only BAE is uniquely qualified to perform any required repair services. The repair and refurbishment of proprietary BAE parts includes critical proprietary BAE machining processes. In order for BAE proprietary parts to perform properly and stay within required parameters and tolerance limits, these proprietary critical processes must be followed during repair. Due to the proprietary nature of the parts and machining processes, only BAE is capable of performing potential future repair services on these sole-source repairable items.

For example, the Air Force Sustainment Center (AFSC) is in need of support to acquire repair, spares/buys, and engineering services for which BAE is the only responsible source, to support sustainment for various weapon systems, platforms, Shop Replacement Units (SRUs), Line Replacement Units (LRUs), and Test Replacement Units (TRUs). AFSC requirements include but are not limited to sustainment of repairs, spares/buys, system upgrades, and engineering services where the supplier is the only responsible source to support equipment utilized on but not limited to Department of Defense agencies and Foreign Military Sales.

The AFSC performed market research with in-depth guidance from the Robins Acquisition Center of Excellence (ACE) subject matter expert (SME), as well as the Robins Small Business Office SME. The engineering team conducted research through review of up to date AFMC 761 forms, SAW and AFMC 762 forms, and CRSAW documents completed in accordance with AFMCI 23-113. Several vendors were identified and contacted during vendor surveys, which yielded the vendors either were a sub to the OEM, manufactured a component or sold the product line to BAE who is the OEM. Numerous searches were accomplished utilizing the SBA Quick Market Search tool and internet search engines such as www.thomasregister.com, www.google.com and yahoo.com. Search queries used item descriptions specific to material needing LTC coverage ranging from lower level components such as circuit card, power supply, and cable assembly to more complex assemblies such as global positioning system, radar warning receiver (RWR), and radar transponder. The above-mentioned market research results indicate BAE is the only legitimate source fully capable of providing the supplies and services needed to sustain the AFSC’s strategic contracting efforts. Market surveillance is ongoing through the monitoring of technical literature, discussion with other engineers, and attendance at expos for potential repair sources/suppliers of the subject NSNs. System program managers will use a Business Case Analysis to determine if procuring repair data maximizes the lifecycle, sustainment related support.

Also, the AFSC / Air Force Life Cycle Management Center (AFLCMC) currently has a demand needing support for the ALR-56C (RWR) Digital Upgrade to which BAE is the only responsible source of production. This requirement anticipates a purchase of 480 ship sets. The AFSC & WNY IPT are finalizing tasks for this effort.

The aforementioned examples are utilized for this amendment to demonstrate the class of sole source work that needs to be performed today, but the same type of market research and requests for information will be conducted as future requirements are identified and this will allow collaborations with DLR locations such as the Air Force Sustainment Center (AFSC) or other DoD entities, to better centralize strategic efforts and foster comprehensive supplier relationships for mission support. This Amendment to the Class J&A authorizes the ability to contract with BAE for this potential future sole source work.

This strategy supports DLA initiatives with performance based sustainment activities for various component and repairable parts across multiple weapon systems via "developing and implementing performance-based product support strategies that optimize total system availability while minimizing cost and logistics footprint."

Demonstration that BAE's Unique Qualifications or Nature of the Acquisition Requires the Use of the Authority Cited herein:

BAE has expressed agreement in expanding the Joint Opportunity Contract (JOC) to a Captains of Industry (COI) Supplier Capabilities Contract (SCC), which includes performance based supply chain management and logistics support in order to maximize the effectiveness of the contract and further expand the breadth of support provided by BAE in aid of DLA's objective to seek holistic logistics solutions.

The overall objective in transforming this LTC to a COI SCC effort is to incentivize productivity and innovation, utilizing performance-based arrangements, where appropriate, to maximize the availability and / or use of various weapon systems and platforms and provide timely material support through initiatives such as incentivizing reliability improvements, streamlining supply chain management and improving maintenance processes and procedures. This change will also allow for the consolidation of existing follow-on efforts / contracts within DLA and any other Department of Defense (DoD) contract as requested by that activity in one comprehensive contract to the fullest extent possible in a manner that enhances effectiveness and strives to reduce overall cost to the DoD. As future follow-on and new requirements develop and are awarded under this effort, it is anticipated cost reductions will be achieved through a decrease in the number of contracts awarded and administered, an increase in availability and reliability of parts supported and a reduction to the cost of material supplied. This will enable one infrastructure managed by BAE, creating an agreement that balances performance, risk and cost.

In essence, the DoD will be able to buy a level of support from BAE on any one of its sole source end-items. A level of support is being used as a general term in this document because it can vary depending on each requirement. This will involve identifying demand patterns and emergent needs for parts in various federal supply classes (FSC) which are only manufactured by BAE, and to place those items on contract as demand warrants. Projects could likely be measured by establishing a price per landing or a price per flight hour or any other pertinent, measurable outcome. The type of outcomes to be supported will vary. If necessary, each may go through a Business Case Analysis (BCA) and appropriate market research will be conducted in accordance with FAR Part 10 to ensure the project is in the best interest of the DoD and that the items involved are sole source to BAE. Market research techniques may include industry feedback, synopses, Requests for Information (RFI), technical reviews and information obtained from the applicable Services regarding drawings and technical data rights.

As required and prior to issuing any solicitation for a strategic requirement for performance based sustainment activities, an acquisition plan along with appropriate levels of review depending on the dollar amount of the project as well as coordination with the Small Business Office (SBO) and/ or Competition Advocate will be accomplished to verify that BAE is indeed the sole source with the capability and technical data to support the requirement. That strategy may include, but is not limited to, supply chain management, logistics & engineering services and sole source repair services to include, but not limited to, repair of DLRs and unplanned depot maintenance activity repair services. Performance-based sustainment and engineering efforts to support service-life extension programs and other modernization upgrades or safety modifications will fit into this phase of the overall program.

In order to achieve the overarching objective of these types of efforts, the provider must have the ability to drive changes into the weapons system configuration and, more importantly, understand, analyze, and assess the implications-both in terms of weapons system performance and operational usage-of any potential configuration change. To do so, these types of efforts require engineering and logistics support personnel with an unfettered ability to reach back to the OEM, BAE, to support engineering investigations, fault detection and isolation, repair development, modification development, supportability analysis, and the associated technical documentation development and support. BAE is the only source that can provide this capability.

Additionally, BAE has the ability to optimize the entire demand fulfillment chain and mitigate the challenges associated with traditional supply process issues such as volatile demand and lack of control over procurement and production scheduling. BAE has experience in understanding demand signals and moving requirements closer to the source of supply / industrial base. BAE performs supply chain planning using logistics engineering based data analytics, advanced demand planning and inventory management decision support tools in conjunction with collaborative supplier engagement. BAE utilizes competitively sourced (where able), long term supplier agreements that eliminate standard lead-times and optimize supplier production capacity planning and resourcing.

Only BAE can provide the necessary expertise, capacity, capability and proficiency to perform this effort. BAE is the only company, which possesses the requisite engineering expertise, configuration management, tooling and management knowledge to ensure that items conform to the proper form, fit and function, thus keeping complex items reliable and safe. BAE is the only source that possesses the full range of technical data (some of which is proprietary) required to manufacture the items that are covered under this effort. BAE is the only contractor that can leverage the production capability and has an in-depth knowledge of the vendor base capable of supporting the parts and services at the required level of support. For the sole source material anticipated, it has been determined the Government does not have complete, unrestricted data packages available. Additionally, BAE has established internal production processes and qualified various industrial support contractors as suppliers. No contractor other than BAE, the sole manufacturer of the various items to be supported, has the capability to perform all the requirements of the comprehensive performance based supply chain management program.

BAE is the only entity with the full data rights to provide all the sole source material as well as the OEM based data and systems engineering expertise to fully support the complete range of performance based sustainment activities across the full spectrum of support anticipated.

Only BAE has personnel with the requisite breadth and depth of experience and understanding of the totality of technical data necessary to fulfill this requirement and ensure the currency, accuracy and completeness of the technical data and associated databases. Finally, once modifications or process changes are made by the Government, only BAE has the existing infrastructure to ensure timely execution of such changes, including the ability to efficiently execute changes simultaneously into production and fielded aircraft.

Furthermore, by having only one contractor responsible for the bulk of supply chain management, the Government has a single focal point with management accountability and contractual responsibility. No other source has the long-standing business relationships with the supplier base that BAE has developed relative to this requirement. No other source can leverage this supplier base as well as BAE can to assure the continued effective, reliable and safe sustainment of the supply chain. Any other contractor would introduce an unacceptable degree of material cost savings associated with any future long-term arrangement under this contract Performance metrics will be unique to all individual requirements established but may include Order Response Time (ORT), Material Availability (MA), Fill Rate (FR), Backorder Reduction or Reduced Backorder Age. Metrics tied to consumable support will be measured through the DLA Enterprise Business Systems (EBS) and may be evaluated annually while metrics tied to Service end items will require data from the Services to track and identify contract performance results, but will ultimately be linked to the achievement of the desired customer outcome. All metrics will be identified in the individual requirement's SOW or associated SOW Metrics Plan.

Incentives and disincentives will be established within the individual requirement's SOW and are expected to be paid to or recouped from BAE based on the annual metric performance. Incentives and disincentives shall be applied at the cost line (i.e., before baseline profit).

Based on the foregoing, the contracting officer determines that the anticipated cost to the Government for all work to be performed under the authority of this amendment will be fair and reasonable.

I certify the above amendment is complete and accurate.

Attachments:

1. Original J&A