AAR_CLASS_JA_Redacted.pdf

DDEFENSE LOGISTICS AGENCY

AVIATION

8000 JEFFERSON DAVIS HIGHWAY

RICHMOND, VIRGINIA 23297-5100

CLASS JUSTIFICATION FOR OTHER THAN

FULL AND OPEN COMPETITION

I. CONTRACTING ACTIVITY

This Class Justification and Approval (J&A) is submitted to request authority for Other Than Full and Open Competition to support requirements generated for any Department of Defense (DoD) activity. The contracting authority for this requirement is DLA Aviation, Strategic Acquisition and Programs Directorate in Richmond, VA.

II. NATURE AND/OR DESCRIPTION OF THE ACTION BEING PROCESSED

Due to the circumstances described herein, this activity requests authority to use Other Than Full and Open Competition as prescribed by Federal Acquisition Regulation (FAR) 6.302-1. Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements to acquire United Technologies Corporation Aerospace Systems (UTAS) and Unison Industries, LLC (Unison), items/spares from the following OEM CAGE codes.

OEM Location CAGE UTAS Jupiter, FL 55820 UTAS Rockford, IL 99167 Unison Jacksonville, FL 59501

This sole source requirement will be purchased from AAR Parts Trading, INC., doing business as AAR Defense Systems & Logistics (AAR), CAGE 1Y249, 1100 North Wood Dale Rd., Wood Dale, IL 60191, a large business and the sole exclusive distributor of these OEMs’ items. AAR has submitted each distributorship agreement, which clearly confirms the sole and exclusive nature of the distributorships, and includes their expiration dates and their provisions for extension, termination and effect of termination. This action will result in the award of one or two multiple year, Indefinite Quantity Contract(s) (IQC), which will be Fixed Price with a one-year base period(s) and four one-year options, for a potential duration of five years. All of the distribution agreements are effective for the duration of the proposed contract(s), either by the terms of the expiration date or by automatic annual renewal. The contract(s) will include special provisions enabling the Government to manage support for these items in the event the agreements are terminated prior to the expiration of the proposed contract. For ease of administration and to ensure proper coverage of this initiative, DLA Aviation may award either a hybrid type contract covering both FAR parts 12 and 15, or two separate contracts, one for FAR part 12 and another for FAR part 15.

Source Selection Information – See FAR 2.101 & 3.104

AAR Defense Systems & Logistics

The Government may add support for additional sole source parts based on other Exclusive Distributor Agreements with AAR.

III. DESCRIPTION OF THE SUPPLIES/SERVICES REQUIRED TO MEET THE

AGENCY’S NEEDS

DLA Aviation, Strategic Acquisition, Richmond, VA, seeks to establish a joint opportunity contract with AAR for items managed and procured by any DoD activity, including, but not limited to, DLA and the Military Services. This Indefinite Quantity Contact (IQC) for AAR consists of 224 National Stock Numbers (NSNs). All of the items are configuration controlled.

The primary customers for these items are the United States Army, Air Force, Marine Corps and Navy. The currently identified items support multiple weapons systems including, but not limited to: B-52, CH-46, CH-47/D, C/KC-135/R, C-130, C-5, F-15, F-5, A-10, E-3A, F-16, HH- 60L/H/U, MH-60R, H-60, UH-60, H-46, CH-53, F/A-18A-D/E/F/G, SH-60B/F, AH-1Z, UH-1Y, AV-8B, B-1B, P-3, JFS, V-22, QF-16 Drone, AC-130H/J, MC-130, LCS, MH-60K/S/R, H-1, MH-47E, MH-53E, CV-22B, V-22A, LCAC, CG, B-2, T-AOE, DDG, LHD, LHA, EH-60A, M1A1, LVTP7, AAVC7A1, AAVP7A1, and AAVR7A1. Engine Support: T-56, T-58, T-62, 501K17, LM-2500, F-108, T-56, GE T-700, F100-PW-100/200, T700-GE-700/701C, F101-GE-

102, J85-GE-5/13, F100-PW-220/229.

The estimated annual quantities for the applicable NSNs vary with each NSN. The non-availability of some of the items may cause the weapon system to be grounded. The Defense Working Capital Fund is the appropriation that will be used to fund each requirement.

This Class Justification and Approval (J&A) will cover the acquisition of all sole-source OEM’s (listed in section II) spare parts that are exclusively distributed by AAR. The items cross multiple Federal Supply Classes (FSCs). A population of 224 NSNs with an estimated five-year value of has been identified as potential items for this acquisition. Because of changes in demand activity and the need for flexibility to add items as demand patterns change, the maximum value of the J&A is This figure includes a 5% escalation factor to cover demand spikes and the potential add-on populations, as well as fluctuation in demand. Of the 224 items, 102 NIINs are coded as Commercial Off the Shelf (COTS), and are recommended for inclusion in the initial Request for Proposal (RFP). These NIINs are candidates for a FAR part 12 population, have an estimated five-year value of and represent 82% of the total spend of the AAR project. The estimated values are calculated by multiplying the Material Acquisition Unit Cost (MAUC) to the Average Annual Demand Quantity (AADQ) for the five-year contract duration. This contract will be expanded by adding items in groups or phases throughout the contract period.

This initiative involves identifying demand patterns for sole source NSNs in various FSCs and placing those NSNs on contract as demand warrants. Continuous spare parts support is required to avoid impacting the mission requirements of the various weapon systems utilizing these parts.

Goals of this initiative are to improve product availability, reduce Administrative Lead Time (ALT), reduce transactional order costs, and stabilize unit pricing.

The delivery requirements for the population were developed using the Industrial Base Management System (IBMS) website. In accordance with Defense Logistics Agency Directive (DLAD) requirements, prior to being included in the solicitation for this long-term effort, the NSNs were reviewed on an individual basis by querying the IBMS database on date to determine if any surge requirements exists for the NSNs. This review did not result in any surge requirements for the population and, therefore, a surge plan is not required for this procurement.

IV. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION

Use of Other than Full and Open Competition is authorized by 10 U.S.C. 2304(c)(1) and FAR 6.302-1, as there is only one responsible source and no other supplies or services will satisfy agency requirements. The acquisition is restricted by the prime manufacturers’ exclusive distributor relationships with AAR, making AAR the only source of supply known to have the capability of furnishing the required logistics support.

V. DEMONSTRATION THAT THE CONTRACTOR’S UNIQUE QUALIFICATIONS

OR NATURE OF THE ACQUISITION REQUIRES THE USE OF THE AUTHORITY

CITED ABOVE

The authority in paragraph IV above applies because the OEM’s (listed in section II) are the only known source of supply for the items identified in Attachment 1. The AMC and AMSC for each item are identified in Attachment 1. Items are identified with an AMC of 3 or 5, which specifies that the parts are to be directly acquired from the actual manufacturer or the sole source contractor, which for these items, are the OEM’s (listed in section II). Items within this population are sole source for a variety of reasons, including, in part that the technical data is proprietary or is not otherwise available to the Government; the parts require engineering source control approval by the design control activity; and/or the parts must be acquired from a manufacturing source specified on a source control drawing.

Items identified in the class population may currently carry a temporary AMSC of A or H or not have an AMSC assigned yet. In accordance with DLA Aviation Acquisition Workforce Guidelines (DAAWG) 6.303-2 9G(b), for locally approved justifications with temporary coding, the Contracting Officer shall obtain concurrence from the cognizant DLA Aviation COMPAD.

Only items with a permanent AMSC will be placed on this contract; items with temporary AMSCs are currently excluded from consideration. In the future, an item not assigned an AMSC, or currently assigned an AMSC of A or H, may be considered for addition to the contract. A complete review, screening and technical certification of each NSN will be completed prior to inclusion on the contract. Technical certifications for the initial candidate population are complete, and have been included in this package as Attachment 2. Based upon the technical certifications, only parts that are restricted to the only source of supply known to have the capability of furnishing the required parts will be included on the solicitation.

These OEMs have entered into distributorship agreements with AAR for these items. Under the terms of the distributorship agreements, AAR has the sole and exclusive right to distribute these items on the OEMs’ behalf. Coverage for these items will remain under this contract until the agreements expire or terminate, or until an alternate manufacturing source is qualified by the engineering support activity.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE

This requirement will be synopsized in the Federal Business Opportunities (FedBizOpps) web page as required by FAR 5.201. It is anticipated that sources having an interest in subcontracting may be identified through synopsis. Although the Government does not own data to support acquisition of these items from any other source, any source which responds to the Government’s synopsis will be identified to the prime contractor as a potential for subcontracting possibilities. Future interest from additional sources is not anticipated at this time, but future requirements will nevertheless be advertised via FedBizOpps as well to ensure that potential alternate sources are aware of the requirement and can identify interest in support for the applicable items.

VII. DETERMINATION BY THE CONTRACTING OFFICER THAT THE

ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND REASONABLE

The Contracting Officer has determined the anticipated cost to the Government of the supplies covered by this Class J&A will be fair and reasonable. AAR and the OEMs (listed in section II) will be required to provide sufficient commerciality documentation to demonstrate the ability to use FAR Part 12 for commercial items or AAR and the OEM’s (listed in section II) will be required to provide certified cost or pricing data in accordance with FAR Part 15 for non-commercial items. A review of the proposed prices will be conducted during which the Government will review the provided cost data including proposed labor hours, types and quantities of material, historical material prices and other direct costs. An audit may be requested to be conducted by the Defense Contract Audit Agency and a technical/pricing review by the Defense Contract Management Agency may also be requested. Profit will be negotiated using the Weighted Guidelines Method.

If an item is determined to be commercial, price analysis techniques will be utilized to evaluate the proposed price. These techniques include use of historical contractor sales data, publicly offered catalogs, published price lists, or analysis of limited cost or pricing data provided. If limited cost or pricing data is utilized, the Government’s negotiation objective will be developed using local technical analysis. The contract will include commercial clauses. In view of the foregoing the Contracting Officer hereby determines the anticipated cost to the Government will be fair and reasonable.

VIII. DESCRIPTION OF THE MARKET RESEARCH CONDUCTED AND THE

RESULTS, OR STATEMENT OF THE REASONS MARKET RESEARCH WAS NOT

CONDUCTED

Market research was conducted on the NSN population and it was determined based on the Government’s internal information that the items are not competitive. A review of the class population confirmed the initial items to be solicited are all coded as sole source to the OEM’s (listed in section II) and contained within those OEM’s exclusive distributor agreement with AAR. A Sources Sought notice was posted to FedBizOpps on April 19, 2016 to identify additional suppliers who have the authority and/or capability to provide the items within this population, with a requested response date of May 3, 2016. The Government received no responses to the Sources Sought notice. Technical certifications will be required for every NSN prior to issuance of the RFP. A review of the contract history reveals there is extensive history to support the parts have been and will continue to be sole source to these OEMs. As discussed in the Market Research Report, a data pull was requested to determine past procurement history.

Of the 224 NSNs in the body of work, 218 have been procured in the past 3 years. The majority of NIINs considered for this acquisition have been supported on a transactional basis with purchase orders under The preponderance of orders have been made to AAR (CAGE 1Y249). Based on the procurement history data, awards were also made to 54 other contractors, in addition to AAR. A breakdown of the awards follows:

AAR: 2,275 awards for Other than small business contractors: 173 awards for Small business contractors: 136 awards for

Based on the Small Business data pull, a small amount of tactical purchase orders have been awarded to small business distributors within the past three years (noted above). However, based on the market research conducted, the items considered for this project are contained in the exclusive distributor arrangements between AAR and the noted OEMs. In addition, as mentioned above, a sources sought notice was posted to FedBizOpps in order to determine if any additional sources hold the permission and capability of supplying these NIINs to the US Government based on any other distributorship agreements. DLA did not received any responses to the sources sought, which further solidifies the position that AAR is indeed the only approved distributor for these items. As these items are coded as sole source (AMC 3), and as AAR is the only approved distributor, none of the NIINs included in this population should be removed for small business purposes. A FedBizOpps synopsis will be issued to advise industry of the pending procurement and solicit inquiries from interested parties. It is anticipated that no other source other than AAR, the only known source capable of providing these parts, will be interested in this procurement.

IX. ANY OTHER FACTS SUPPORTING THE USE OF OTHER THAN FULL AND

OPEN COMPETITION

As detailed herein, the OEM’s (listed in section II), with AAR as its exclusive distributor, are the OEMs for the components described herein. These OEMs are unwilling to sell data rights to the Government, which means the technical data package, specification, and engineering description is not suitable for Full and Open Competition. The Government has determined that reverse engineering is cost prohibitive.

X. LIST OF SOURCES, IF ANY, THAT EXPRESSED INTEREST IN THE

ACQUISITION

As indicated in Section VI above, this requirement will be synopsized on the FedBizOpps website as required by FAR 5.201. No sources have expressed an interest in the acquisition to date. However, if sources other than UTAS, UNISON or AAR Defense Systems & Logistics (as the sole distributor) express interest, they will be directed to a copy of the solicitation.

XI. A STATEMENT OF THE ACTIONS, IF ANY, THE AGENCY MAY TAKE TO

REMOVE OR OVERCOME ANY BARRIERS TO COMPETITION BEFORE MAKING

SUBSEQUENT ACQUISITIONS FOR THE SUPPLIES

As previously discussed, AAR, the exclusive licensee for the OEM’s (listed in section II), is the only source with the capability of furnishing the required supplies; therefore, the Government does not intend to compete this procurement. However, the Government does intend to include FAR 52.219-16, Liquidated Damages- Small Business Subcontracting Plan and FAR 52.219-10, Incentive Subcontracting Program in the contract and work in close coordination with both the DLA Small Business Office and the OEM’s (listed in section II) to select subcontractors on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract and sound business case analyses. DLAD Clause 52.217-9002, Condition for Evaluation/Acceptance of Part Numbered Items, will be included in the solicitation which provides guidance for potential suppliers.

The Contracting Officer will synopsize items that may be added to this contract in order to investigate the possibility of competition. The Competition Advocate will also review the requirements to verify all requirements are sole source. As stated above, AAR, as the OEM’s (listed in section II) exclusive distributor, is the only known source with the capability of furnishing the required NSNs.

Future requirements will nevertheless be advertised in the FedBizOpps website (www.fedbizopps.gov) in order to ensure potential alternate sources are aware of the requirement and can express their interest in supporting these items. Any items which become competitive after award, either because of an alternate manufacturing source or because of an alternate distribution source, will be removed from the contract in accordance with DLAD 52.216-9006, Addition/Deletion of Items.

XII. CONTRACTING OFFICER’S CERTIFICATION

The Contracting Officer’s signature on the Coordination and Approval Document provides evidence that she has determined this document to be both accurate and complete to the best of her knowledge and belief.

Attachments:

1 - NSN Listing (Electronic) 2 - NSN Technical Certifications (Electronic)