Redacted_J A _Pratt_and_Whitney.pdf

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

FOR GASEOUS NITROGEN (GN2) FOR PIPELINE DELIVERY UNDER

AUTHORITY OF 10.U.S.C. 2304(C) (1) ONE RESPONSIBLE SOURCE

1. Summary and Introductions: The Defense Logistics Agency Energy, Aerospace Energy Business Unit (DLA-Energy-FEM) is the Contracting Activity. This justification and approval is for the use of sole source procedures to purchase Gaseous Nitrogen (GN2), Type I, Grade A, NSN 9135-00-823-8115 in accordance with MIL-PRF-27401F, dated 10 January 2008. The customer is Pratt & Whitney Rocketdyne, Inc., located in Jupiter, FL. Also included in this acquisition is a Fixed Facility Fee for Contractor Furnished Equipment (CFE) necessary to generate and deliver GN2. This will be a five-year Firm-Fixed Price Requirement-type contract.

The period of performance is 01 December 2013 through 30 November 2018. The estimated dollar value for this five-year requirements contract is . This request is a follow-on requirement to the current contract (SP0600-09-D-1511) awarded by DLA-Energy-FEM in November 2008 to Matheson Tri-Gas, Basking Ridge, NJ. The statutory authority cited for other than full and open competition is 10 U.S.C. 2304(c) (1), Only One Responsible Source.

2. Description of Agency’s Needs (10 U.S.C. 2304(f)(3)(A)): The Contractor shall provide all supplies, management, tools, equipment and labor required to deliver the GN2 to Pratt & Whitney via their pipeline. Pratt & Whitney’s facility at Jupiter, Florida, supports the and various other programs. GN2 is used as a purge and process gas during testing and processing of rocket engines, jet engines, components and rigs. Additionally, it may be used as an inerting agent for run tanks, storage tanks and bottles that contain liquid nitrogen and liquid oxygen to calibrate transducers and gauges, and to purge and pressure test rigs and stand systems. If this contract is not awarded with a seamless transition, the critical missions performed by Pratt & Whitney would be jeopardized.

3. Authority for Other than Full and Open Competition (10 U.S.C.

2304(f)(3)(B)): As stated under FAR 6.302-1, the statutory authority, which permits other than full and open competition is 10 USC 2304(c)(1), Only One Responsible Source. Per FAR 6.302-1(a)(2)(ii), DoD may use this authority when supplies may be deemed to be available only from the original source in the case of a follow-on contract when it is likely that award to another source would result in “(A) substantial duplication of cost to the Government that is not expected to be recovered through competition or (B) unacceptable delays in fulfilling the agency’s requirements”.

Under the current contract, after being converted in a Matheson Tri Gas-owned conversion facility, the GN2 is delivered via six miles of Matheson Tri Gas-owned pipeline into Pratt and Whitney-owned pipeline. Due to the ownership of the conversion facility, pipeline, and other infrastructure, and a lack of real estate to enable another contractor to build a conversion facility and pipeline, this requirement must be Sole Source to Matheson Tri-Gas.

a. Previous Procurement History: The incumbent contractor, Matheson Tri- Gas, has been successfully supplying GN2 at Pratt & Whitney Rocketdyne since 2003. Despite infrastructure and real estate limitations to obtaining competition, unrestricted full and open competition procedures were utilized for the original acquisition. Only one proposal was received from Matheson Tri-Gas in response to the competitive RFP in 2003. The current contract with Matheson Tri-Gas, SP0600-09-D-1511, was a sole source award and will expire 30 November 2013.

b. Current Procurement Efforts: The incumbent contractor owns the facility, conversion station and 6 miles of pipeline which supplies GN2 into the Pratt & Whitney-owned pipeline. This continues to give the incumbent a significant advantage over other possible competitors. A re-competition of this requirement would cause the Government to inappropriately reinvest monies for a new contract with additional monies expended to procure the equipment needed to produce, convert and deliver GN2 into the customer’s owned pipeline. The requirement requires 24/7 supply of GN2 into the pipeline, which demands a seamless transition if someone other than the incumbent is awarded the contract. The production of GN2 requires substantial infrastructures in order to convert from liquid nitrogen to gaseous nitrogen. Thus, this transition would require significant effort to build a conversion plant and bring a new contractor up to the current incumbent’s level of competence required to successfully perform the requirements set forth in the Statement of Objectives. Although market research indicates that there are potential contractors that could satisfy the requirement, the final cost of awarding to a new contractor would initially be cost prohibitive in the delivery of GN2.

c. Pratt & Whitney does not have a conversion station located at their plant site. In order to make competition viable, other contractors would have to develop an alternate conversion facility. Disadvantages to this approach would not only include the substantial costs (in dollars and time) for new facilities, but also the costs to provide for the relocation of sewer, water, and electrical connections. Road accessibility, proximities to existing launch sites, and the large amounts of real estate required were considered, as well as, the modifications that would need to be made to the existing pipeline. Taking these factors into consideration, it would be highly unlikely that the duplication in costs to the Government would be recouped through any possibility of competition. In addition to the uncertainty and unlikelihood of recouping costs through competition, there would also be the risk of disruption to providing GN2 to the customer while modifications would be made to the pipeline in order to accommodate an alternate site. At this time there is not a justifiable need for an alternate site. Therefore, it is necessary to restrict competition to the current incumbent contractor, Matheson Tri-Gas.

4. Price/Cost Considerations (10 U.S.C. 2304(f) (3) (F): GN2 is a commercial item; therefore, cost and pricing data will not be obtained. DLA Energy-FEM will ensure that the anticipated cost to the Government will be fair and reasonable based on recent price analysis and comparison to previous prices being paid under the existing contract. Current economic trends from the Global Insight for Industrial Gases will also be utilized for yearly escalation indexes. DLA Energy may request other than cost and pricing data.

5. Market Research/Efforts to Obtain Competition (10 U.S.C. 2304(f)(3)(D) & (E): As was discussed in paragraph 3b above, market research indicates there are several contractors that could perform this contract, if price were not considered.

However, there are no economically-feasible actions the Government could take in order to mitigate the advantage that the incumbent contractor has in efforts to encourage competition at this time. It is also determined to be highly unlikely that the Government could recoup any duplication in costs through competition. The proposed contract action will be synopsized electronically on the Government’s FedBizOpps web site.

6. Actions Being Taken to Overcome Barriers to Competition (10 U.S.C. 2304(f)

(3) (F): For future requirements, the Government will continue to review and research possible options in response to the agency’s needs and market conditions.