J&A6.302-2SPE7LX15D0027.pdf

MEMORANDUM FOR RECORD

SUBJECT: Justification and Approval for Other than Full and Open Competition under Authority of 10 U.S.C. 2304(c)(2) of the Federal Acquisition Regulation (FAR)

The Defense Logistics Agency, DLA Land and Maritime, is the contracting activity.

The action being approved is the acquisition of supplies on other than a full and open competition basis.

Description of Agency’s Need (10 U.S.C. 2304(f)(3)(A):

The supplies required to meet the using activity's needs are described as follows:

SPE7LX-15-D-0027 (Goodyear-Aviation) All or None NSN Listing CLIN Description NSN/PN EST. ADQ AMSC 0037 Tire, Pneumatic, Aircraft 2620-00-060-7013 180 T 0038 Tire, Pneumatic, Aircraft 2620-00-070-0785 5,707 T 0039 Tire, Pneumatic, Aircraft 2620-01-063-2361 1,167 T 0040 Tire, Pneumatic, Aircraft 2620-01-142-6461 2,620 T 0041 Tire, Pneumatic, Aircraft 2620-01-159-3244 479 T 0042 Tire, Pneumatic, Aircraft 2620-01-235-2028 2,325 T 0043 Tire, Pneumatic, Aircraft 2620-01-299-1923 1,170 T 0044 Tire, Pneumatic, Aircraft 2620-01-341-0386 153 T 0045 Tire, Pneumatic, Aircraft 2620-01-357-4362 47 T 0046 Tire, Pneumatic, Aircraft 2620-01-427-2324 1,142 T 0047 Tire, Pneumatic, Aircraft 2620-01-480-5161 446 T 0048 Tire, Pneumatic, Aircraft 2620-01-568-8334 5,190 T

Totals: 20,626

Identify end item, weapon system, or class of item: Tire, Pneumatic, Aircraft

CONTRACT TOTAL FOUR YEAR VALUE (BASE + OPTIONS):

MAXIMUM CONTRACT VALUE: (only “All or None” NSNs) TOTAL AGGREGATE VALUE: (both “All or None” and Split NSNs) REVISED MAXIMUM CONTRACT VALUE: (only “All or None” NSNs) REVISED TOTAL AGGREGATE VALUE: (both “All or None” and Split NSNs)

The agency seeks to increase the contract maximum value of contract SPE7LX-15-D-0027 by This amount would increase the current contract maximum value from to account for the eleven (11) months remaining on the

DEFENSE LOGISTICS AGENCY

DLA Land and Maritime

POST OFFICE BOX 3990

COLUMBUS, OH 43218-3990

contract. For administrative purposes, the urgent and compelling tires will be new CLINs added to contract SPE7LX-15-D-0027. By adding the CLINs to the current contract, this will ease the administrative burden for monitoring and recording performance in CPARs for only one contract.

Summary/Introduction (10 U.S.C. 2304 (c)(2) - Unusual and compelling urgency):

Contract SPE7LX-15-D-0027 was awarded by DLA Land and Maritime to The Goodyear Tire & Rubber Company (Goodyear) (04NP4) on November 7, 2014, as a Hybrid Firm Fixed Price Indefinite Delivery Indefinite Quantity (IDIQ) and Requirements contract with Economic Price Adjustment (EPA), consisting of a two-year base period and two, one-year option periods. The scope of this contract is to provide Aircraft pneumatic tire support to the Tires Successor Initiative (TSI) performance based logistics contractor, contract SPM7LX-11-D-0157, who is authorized to purchase tires pursuant to FAR Part 51 directly from Goodyear; contractor may also provide direct support to the Government. The TSI contract provides coverage for CONUS, OCONUS and FMS shipments with orders placed by the TSI Contractor on behalf of military customers’ requirements.

Contract SPE7LX-15-D-0027 provides support for a total of twenty four (24) NSNs. Twelve

(12) NSNs were awarded as “All or None” and the other 12 NSNs were split awards. The split award NSNs were awarded on a Requirements basis and do not have a minimum or maximum value. The contract maximum value of is only associated with the NSNs awarded “All or None.” This contract maximum value equals the total ADV times four (the number of contract years), times 1.5, to account for possible increases in demand. The total aggregate value of contract SPE7LX-15-D-0027, including both “All or None” and Split NSNs is

The NSNs covered under the contract were solicited on an unrestricted basis and utilized full and open competition procedures in accordance with FAR Part 12, 10 U.S.C. 2304, and FAR 6.102.

The second, one year, option period of contract SPE7LX-15-D-0027 was exercised on November 2, 2017 with an effective date of November 7, 2017. The contract term of four (4) years will expire on November 6, 2018, which leaves approximately eleven (11) months of contract support remaining. The aircraft platforms supported by the “All or None” NSNs on contract SPE7LX- 15-D-0027 are illustrated in the table below:

CLIN Description NSN/PN Aircraft Platform 0001 Tire, Pneumatic, Aircraft 2620-00-060-7013 0002 Tire, Pneumatic, Aircraft 2620-00-070-0785 0015 Tire, Pneumatic, Aircraft 2620-01-063-2361 0016 Tire, Pneumatic, Aircraft 2620-01-142-6461 0018 Tire, Pneumatic, Aircraft 2620-01-159-3244 0022 Tire, Pneumatic, Aircraft 2620-01-235-2028 0024 Tire, Pneumatic, Aircraft 2620-01-299-1923 0027 Tire, Pneumatic, Aircraft 2620-01-341-0386 0028 Tire, Pneumatic, Aircraft 2620-01-357-4362 0029 Tire, Pneumatic, Aircraft 2620-01-427-2324 0030 Tire, Pneumatic, Aircraft 2620-01-480-5161 0033 Tire, Pneumatic, Aircraft 2620-01-568-8334

The twenty four (24) NSNs on contract SPE7LX-15-D-0027 support a unique category of aircraft tires manufactured in accordance with (IAW) Performance Specification MIL-PRF- 5041K and Qualified Products List QPL-5041-32. The Air Force (AF) and the tire manufacturing industry work together to insert new technology and increase the reliability of applicable tires in accordance with the Air Force’s Life Cycle Cost (LCC) Program. The TSI Program supports LCC process used by the AF to qualify new tires for selected aircraft and other designated platforms. When the AF determines a testing demand for a specific NSN, the TSI Program must have contracts in place (with the LCC NSNs) in order for the AF to timely proceed with the testing. NSNs identified as LCC shall be supported by the TSI Contractor consistent with the requirements of the LCC program outlined in TSI contract SPM7LX-11-D- 0157, and the LCC Program Air Force Aircraft Tires Memorandum of Agreement, November 19, 1969 (Revised October 4, 2005). Of the 24 NSNs on Goodyear’s contract SPE7LX-15-D- 0027, twenty two (22) of the NSNs are identified as LCC NSNs.

Authority for Other Than Full and Open Competition (10 U.S.C. 2304(f)(3)(B):

The purpose of this Justification and Approval is to support an increase to the contract maximum value referenced in Section A.19 of contract SPE7LX-15-D-0027 for the “All or None” IDIQ portion of the contract pursuant to the authority of 10 U.S.C. 2304(c)(2) and FAR 6.302-2. On September 29, 2017, the TSI Contractor notified the Government that the last order placed to Goodyear exceeded the referenced contract maximum values for the “All or None” NSNs on contract SPE7LX-15-D-0027, with eleven (11) months of the total contract term still remaining.

This is a very high demand/high volume long term contract (LTC) for that must have supply support. The average procurement lead time to have a new LTC in place to cover the 12 NSNs in question would be approximately 8-12 months, depending on pricing, negotiation and other factors. These particular solicitations are among the more complex to write and evaluate due to the hybrid IDIQ and requirements based terms contained in the contracts. With the total contract term for contract SPE7LX-15-D-0027 expiring on November 6, 2018, the Government has recently initiated successor follow-on projects in order maintain contract support. These projects are currently in the early stages of the pre-solicitation phase and award is not expected until October 2018.

. In order to ensure contract performance continues, an urgent contract action is needed to address the contract maximum value to ensure uninterrupted support and continued contract coverage for the twelve (12) “All or None” aircraft tire NSNs.

The need for this contract action is which the original calculations did not fully account for. The table below outlines the estimated annual demand quantities (ADQ) used in the original contract value calculations, in comparison to the actual annual demand quantities the Government experienced from the time of contract award to date of this action. The annual demand values (ADV) used in the calculations to determine the contract thresholds was determined by multiplying the estimated ADQ by the base contract unit price.

Estimated Annual Demand Actual Annual Demand

CLIN NSN Est

ADQ

Est

ADQ

(x4)

2014 2015 2016 2017 Total- Actual*

0001 2620-00-060-7013 219 876 25 160 105 180 470 0002 2620-00-070-0785 1,343 5,372 570 5,707 2,178 3,718 12,173 0015 2620-01-063-2361 720 2,880 87 899 1,167 561 2,714 0016 2620-01-142-6461 1,215 4,860 256 2,620 1,574 1,180 5,630 0018 2620-01-159-3244 405 1,620 0 475 333 479 1,287 0022 2620-01-235-2028 1,506 6,024 294 2,226 2,316 2,325 7,161 0024 2620-01-299-1923 1,062 4,248 100 581 1,170 1,004 2,855 0027 2620-01-341-0386 134 536 20 153 114 94 381 0028 2620-01-357-4362 43 172 9 36 47 26 118 0029 2620-01-427-2324 686 2,744 40 1,142 699 612 2,493 0030 2620-01-480-5161 400 1,600 88 413 446 410 1,357 0033 2620-01-568-8334 250 1,000 98 3,000 5,190 2,259 10,547

*Actual demand data from Nov 2014 - Nov 2017; separated by calendar year

As outlined in the table above; the “1.5” figure utilized in the contract maximum value calculation (ADV x 4 x 1.5), did not account for the actual spikes in annual demand the Government experienced for these NSNs. The increase in the actual annual demand quantities for these NSNs are attributed to an unforeseen and un-forecasted increase of Foreign Military Sales (FMS) orders. These orders are intermittent in nature and fluctuate based on operational needs. The nature of FMS orders are also driven by availability and allocation of funding on an individual country basis, which further complicates the ability to forecast these unexpected increases in demands. Additionally, aircraft tires do not have a shelf life requirement. Without an expiration for the usage of these tires; the life time expectancy is unlimited, which further attributes to the volatility of demand patterns for these items.

Immediate action is required to increase the contract maximum value of contract SPE7LX-15-D- 0027 in order to maintain continued operational support and avoid any interruption in supply of aircraft tires to support the TSI contract. As contract SPE7LX-15-D-0027 contains

DLA Land and Maritime SAPD “Pre-Award” team is currently preparing the follow-on contract for the NSNs covered in contract SPE7LX-15-D-0027. The average procurement lead-time to have a new contract in place for a contract of this magnitude is expected to be 8 – 12 months; at this point mission readiness would be severely impacted if this contract action is not immediately executed. It is estimated that current stocking levels at the TSI warehouse will be depleted as early as January 2018 and the contract production lead-time for all NSNs in this contract is 120 days.

Individual “Spot Buy” contracts were considered to fulfill AF and FMS requirements while a new LTC was awarded. Due to the volume of tires required to meet their mission, the procurement lead-time, production lead-time, and transportation time to process individual spot buys would be of such length that mission readiness would be compromised. In addition, executing spot buys would be against the Base Realignment and Closure Act (BRAC) initiatives.

On November 9, 2005, the BRAC established that the wholesale supply, storage, and distribution functions for all tires used by the Department of Defense were to be discontinued. As a result of this BRAC, DLA Land and Maritime created a performance based logistic tire supply contract;

currently known as TSI. Contract SPE7LX-15-D-0027 provides direct tire supply to the TSI contract that is able to provide customer direct delivery timeframes for CONUS requirements of 4, 6 or 12 days and OCONUS requirements with a delivery of 4, 7, or 14 days. By establishing these delivery timeframes, DLA provides a “Just in Time” supply of tires to the customer. Spot buy contracts would not be capable of meeting the delivery timeframes the AF and FMS customers require to maintain mission readiness capabilities.

The increase of to the contract maximum value for contract SPE7LX-15-D-0027 would increase the current contract maximum value from $ .

Note that the two NSNs, 8334 and 0785, alone exceeded estimated demands by $ explained in the section above. The value of this increase was calculated by taking the contract base unit price of each of the 12 “All or None” NSNs and multiplying it by the largest annual demand quantity out of the four year period to calculate a revised 11 month demand value for each NSN. The revised ADV for each NSN would not be multiplied by the additional factors originally used (ADV x 4 x 1.5), as actual annual demand quantities are being factored in and the number of possible years would no longer apply. See table below for revised ADV calculations and total.

CLIN NSN/PN ADQ -

11 months

Base Unit Price

Revised ADV

0037 2620-00-060-7013 180 0038 2620-00-070-0785 5707

0039 2620-01-063-2361 1167 0040 2620-01-142-6461 2620 0041 2620-01-159-3244 479 0042 2620-01-235-2028 2325 0043 2620-01-299-1923 1170 0044 2620-01-341-0386 153 0045 2620-01-357-4362 47 0046 2620-01-427-2324 1142 0047 2620-01-480-5161 446 0048 2620-01-568-8334 5190

Revised ADV Total:

Price/Cost Considerations (10 U.S.C. 2304(f)(3)(C):

The contract action will be executed using the same methodology and calculations initially used to establish the contract values set forth on contract SPE7LX-15-D-0027. Contract SPE7LX-15- D-0027 included an Economic Price Adjustment (EPA) clause that accounted for market conditions during the performance of this contract. As a result of this EPA adjustment, the base period NSN pricing has seen an overall reduction of since contract award. This adjustment will be used to ensure that a fair and reasonable price will be established for the CLINs added to contract SPE7LX-15-D-0027. The base unit prices for these tires were deemed fair and reasonable prior to award of contract SPE7LX-15-D-0027. Methods to determine price reasonableness included: (1) comparison of the proposed prices to historical prices paid for the same or similar items (FAR 15.404-1(b)(2)(ii), or (2) comparison of proposed prices with prices obtained through market research for the same or similar items (FAR 15.404-1(b)(2)(vi), or (3) analysis of data other than certified cost or pricing data provided by the offeror (FAR 15.404-1 (b)(2)(vii). In addition to price, these factors were also evaluated on the basis of technical acceptability: Materiel Requirement Factor, Delivery Requirement Factor, Experience Requirement Factor, Work Experience Sub-Factor, Schedule Experience Sub-Factor, Compliance Requirement Factor, Technical / Quality Control Plan Sub-Factor, Information Technology Sub-Factor, Subcontracting Plan Requirement Factor, Surge and Sustainment Requirement Factor.

Market Research/Efforts to Obtain Competition (10 U.S.C. 2304(f)(3)(D) and 10 U.S.C.

2304 (f)(3)(E):

Market research was limited to reviewing the Qualified Products List (QPL) for the aircraft NSNs listed in this contract due to the urgency of this action. The NSNs are coded as AMC/AMSC 1/T, which means that the items are controlled by strictly by QPL procedures listed in FAR 9.2. A review of the QPL found the number of sources as inadequate for competition as Goodyear is the only approved source for 10 of the 12 NSNs in the “All or None” section. As this is a urgent and compelling situation, the requirement to synopsis the proposed contract action is not required per the exception at FAR 5.202(a)(2).

Action Being Taken to Overcome Barriers to Competition (10 U.S.C. 2304(f)(3)(F):

The unforeseen spike in demand of Foreign Military Sales (FMS) requirements, which exceeded the estimated demand quantities utilized to calculate the contract maximum, has led to the unusual and compelling urgent situation and is the reasoning behind the Government’s efforts to limit competition for this action. The SAPD Pre-Award team that is currently in the pre-solicitation phase for the next round of tire supply LTC’s are aware of possible spikes in FMS demands and the direct effect this has on the contract ceiling. To help prevent this from reoccurring, contract estimates will be based on the highest ADQ over the past three years. In addition, a section of the PWS will be modified to include quarterly spend reports to monitor the overall spend against the LTC contract. By having the quarterly reports to monitor the spend, the Government will be better prepared to react to spikes in demand and to solicit for a new contract before the contract ceiling is exceeded. In addition, the Government will try to increase competition in the future by synopsizing contract actions on FedBizOps, and posting solicitations on DIBBS as an additional measure to promote competition.

APPROVAL

Based upon the foregoing justification, I hereby certify that the information contained in this justification is accurate and complete to the best of my knowledge and belief.

WILLIAM I. WINEGARNER Date Contracting Officer DLA Land and Maritime

MARY E. COUTURE Date Competition Advocate DLA Land and Maritime

ROXANNE J. BANKS Date Interim Executive Director, DLA Land & Maritime Contracting and Acquisition Management

APPROVAL REQUEST

WINEGARNER.WIL

LIAM.I.III.12552305

Digitally signed by

WINEGARNER.WILLIAM.I.III.125

5230537 Date: 2017.12.21 13:02:11 -05'00'

COUTURE.MAR

Y.E.1230253613

Digitally signed by

COUTURE.MARY.E.1230253613

Date: 2017.12.21 13:33:03 -05'00'

BANKS.ROXANNE.

JARAMILLO.11560

04908

Digitally signed by

BANKS.ROXANNE.JARAMILLO.

1156004908 Date: 2017.12.22 09:58:12 -05'00'