SPHS - Class JA Page_ Redacted.pdf

BUDGET

Control Number: 2025-021

DEPARTMENT OF THE ARMY

CLASS JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND

OPEN COMPETITION

1. Contracting Activity: Army Contracting Command – Detroit Arsenal (ACC-DTA), Detroit Arsenal, MI.

2. Description of Action: This Class Justification and Approval (J&A) covers multiple contract actions for Project Manager Self Propelled Howitzer Systems (PM SPHS). The contract is for an estimated 281 sets of vehicles that fall under PM SPHS portfolio for M109A7 - Self-Propelled Howitzer (SPH) and M992A3 - Carrier Ammunition Tracked (CAT). The contract will also cover Total Package Fielding (TPF) and Anniston Army Depot (ANAD) support (refurbishment of M109A6 and M992A2 parts to support production of M109A7 and M992A3 vehicles). Award is to BAE Systems Land and Armaments, York, Pennsylvania. The existing Undefinitized Contract Action (UCA) will be modified. The Fiscal Year (FY) 2024 portion of the UCA was awarded under the authority of the prior J&A. The anticipated definitization is not later than 30 September 2025. The second action is for a FY25 UCA, with FY26-28 pricing added at the time of FY25 definitization. This action will result in a five-year Requirements contract.

The contract will include Firm-Fixed-Price, Fixed-Price-Incentive, and Cost Reimbursable contract line item numbers for FY 24-28. If pricing cannot be established for all five years at the time of award, modifications for each funding year will be utilized to add pricing for the out years. Army Procurement Appropriation funds will be obligation. The table in Section 3 summarizes the anticipated quantities of vehicles and support in each FY, as well as the respective amount of funding to support. The first award is planned for the 4QFY26. The contract is a follow-on to contract W56HZV-17-C-0001, which covers production years FY17-23, and was also awarded sole source to BAE for production of the M109A7 and M992A3 vehicles.

3. Description of Supplies/Services: In addition to the estimated 281 sets of vehicles, BAE will supply TPF kits, which consist of spare parts to support the vehicles, and ANAD support from BAE of York, Pennsylvania.

BAE leverages ANAD to refurbish and remanufacture M109A6 and M992A2 components, which are inducted into the M109A7 and M992A3 production lines. The total value of this effort is estimated at and includes the following:

i. Up to 281 M109A7s - SPH vehicles

ii. Up to 281 M992A3s - CAT vehicles

iii. TPF Kits - up to 10 packages

iv. ANAD Support

The Independent Government Cost Estimate (IGCE), developed by PM SPHS Business Management in October 2024, summarized the five years of the requirement (including FY24 which is already on contract in an undefinitized state), reflecting an estimated total value of . For FY24, the IGCE provided an estimate for a quantity of 41 sets of BUDGET

CUI Control Number: 2025-021 vehicles; however, the UCA was awarded for a quantity of 40 sets. For FY25-FY28, the IGCE estimated cost for 60 sets of vehicles per FY. The cost summary is below:

4. Authority Cited: Title 10 United States Code (U.S.C. 3204(a)(1)), as implemented by Federal Acquisition Regulation (FAR) 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements. Specifically, the use of this authority for other than full and open competition is supported by FAR 6.302- 1(a)(2)(ii)(A) and (B), Supplies may be deemed to be available only from the original source in the case of a follow-on contract for the continued development or production of a major system or highly specialized equipment, including major components thereof, when it is likely that award to any other source would result in (A) Substantial duplication of cost to the Government that is not expected to be recovered through competition; and

(B) Unacceptable delays in fulfilling the agency’s requirements.

5. Reason for Authority Cited: History and current market research supports BAE as the only source capable of meeting the Government’s requirement.

Background/History: BAE is the designer and developer of the M109A7 and M992A3 vehicles in their current configuration, originally procured under the W56HZV-14-C-0002 Low-Rate Initial Production (LRIP) contract and Full Rate Production (FRP) contract W56HZV-17-C-0001. BAE has knowledge of the new M109A7 and M992A3 subsystems as well as the predecessor subsystems and how they interface with each other and

* Production Qualification Testing (PQT) ** Full-Up System-Level (FUSL)

i. Engineering Development (Hardware and Software): The 14-month timeline required for the prototype design is attributed to the need to redesign and reengineer the components and systems for which the Government does not have technical data. In order to accomplish this, another contractor would need to develop complete design parameters for components, Computer Aided Design (CAD) models, and performance models for the entire vehicle and each LRU interface. These estimates include reverse engineering of vehicle components, CAD models, and development of performance models and TDPs.

ii. Prototype Manufacturing: The 17-month timeline is required for the new contractor to acquire vendors, build prototype components and systems, deliver material, and build the prototype vehicles. BAE has a supply chain, with already established procurement lead times, that is facilitating current production builds.

iii. Developmental and Limited User Testing on Vehicle Prototypes: Any new contractor would be required to build and test prototype vehicles. The vehicle prototypes are required to be tested for reliability and durability to ensure that they meet the vehicle performance specifications. In addition, software qualification testing will be performed on the prototype vehicles. This will take 31 months to complete.

iv. Vehicle Build and Facilitization: Based on current production build rate and timeline, a new contractor will be required to establish their manufacturing facilities including tooling, fixtures, and inspection tools to build the production vehicles. The timeline includes supply chain development, material lead time, and production build, and is expected to take 18 months.

v. Software Qualification on LRIP Vehicle: As a basis of estimate, Product Director (PdD) Paladin leveraged the time it took BAE systems to complete the software qualification and assessed that a new vendor would require approximately the same duration of two months to complete the qualification.

vi. Production Qualification Testing (PQT)/ Full-Up System-Level (FUSL)/IOT:

As a basis of estimate, PdD Paladin leveraged the time it took BAE systems to complete the PQT, FUSL Live-Fire test, and IOT, and assessed that a new vendor would require approximately the same duration of 14 months to complete all test activities.

6. Efforts to Obtain Competition:

a. Effective Competition: Based on the detailed rationale provided in paragraph 5 above, the Government has no plans to obtain competition for the proposed contract action at the prime contractor level. In accordance with FAR 5.201, the action will be synopsized on SAM.gov to identify contracting and subcontracting opportunities and to notify potential offerors that all proposals received after the date of publication will be considered by the Government.

b. Subcontracting Competition: This follow-on contract will include the following clauses 52.244-5, Competition in Subcontracting, 52.219-16, Liquidated Damages – Subcontracting Plan, and DFARS 252.219-7003, Small Business Subcontracting Plan (DoD Contracts). In addition, BAE will be required to submit a Small Business Subcontracting Plan as part of its proposals, in accordance with FAR Clause 52.219-

9. This plan, along with BAE’s bi-annual report submissions, will be used by the Government to monitor the contractor’s actual subcontracting activity.

7. Actions to Increase Competition: Since the Government does not have the technical data and/or sufficient data rights to key components, such as the

, the Government is hindered in its ability to facilitate a competitive procurement. The Government will continue to conduct market research and make attempts to obtain specifically negotiated licensed rights in an effort to enhance competition.

8. Market Research: In accordance with FAR 10.002(b)(2), PM SPHS issued a market survey in the form of a Sources Sought Notice to determine the level of interest in this acquisition. The Sources Sought was posted for 30 days to the SAM.gov website, from 16 August 2024 to 16 September 2024. The Sources Sought requested information from vendors regarding their production history, production rate, quality, configuration management, cost, schedule support, supply chain, and life cycle support. No sources responded to express an interest.

9. Interested Sources: To date, no sources have written to express an interest.

10. Other Facts:

a. Procurement History

i. M109A7 and M992A3 Production

(1) Contract number and award date: W912CH24D0016; Undefinitized Contract Action 03 July 2024

(2) Competition status: Sole Source

(3) Authority previously cited: FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

OPSEC

(4) Actions to increase competition: Restrictions on the Government’s data rights to key components and limitations on delivery of manufacturing data will hinder the Government’s ability to compete M109A7 and M992A3 production. The contractor shall make the maximum use of competition between qualified sources. PM SPHS is working to qualify additional sources for key components to the greatest extent practicable, keeping quality and fiscal considerations in mind.

(5) Prior Full and Open Competition: Not applicable.

(6) Unusual Patterns: Not applicable.

(7) Justification for Sole Source Procurement: Award to any other source would result in “unacceptable delays attributable to learning and a substantial duplication of cost to the Government that is not expected to be recovered through competition.” “Without the ability to provide a complete, competitive production level TDP to another vendor, it would take approximately 96 months for a second vendor to be ready to produce full rate production vehicles.”

ii. M109A7 and M992A3 Production

(1) Contract number and award date: W56HZV-17-C-0001; Undefinitized Contract Action 31 March 2017, Definitized 30 December 2017

(2) Competition status: Sole Source

(3) Authority previously cited: FAR 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

(4) Actions to increase competition: Restrictions on the Government’s data rights to key components and limitations on delivery of manufacturing data will hinder the Government’s ability to compete M109A7 and M992A3 production. The contractor shall make the maximum use of competition between qualified sources. PM SPHS is working with the contractor to qualify additional sources for key components to the greatest extent practicable, keeping quality and fiscal considerations in mind.

(5) Prior Full and Open Competition: Not applicable.

(6) Unusual Patterns: FRP decision delayed/postponed several times. FRP granted 24 January 2020.

(7) Justification for Sole Source Procurement: Award to any other source would result in “unacceptable delays attributable to learning and a substantial duplication of cost to the Government that is not expected to be

OPSEC

APPROVAL

Based on the foregoing class justification, I hereby approve the procurement of an estimated 281 sets of M109A7 Self Propelled Howitzer (SPH) and M992A3 Carrier, Ammunition, Tracked (CAT) vehicles, Total Package Fielding material, and Anniston Army Depot (ANAD). The total estimated cost is . Award is to BAE Systems on an other than full and open competition basis pursuant to the authority of Title 10 United States Code 3204(a)(1), as implemented by Federal Acquisition Regulation 6.302- 1(a)(2)(ii)(A) and (B), "Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements." This approval is subject to the availability of funds and provided that the supplies and services herein described have otherwise been authorized for this acquisition.

Patrick H. Mason Senior Official Performing the Duties of the

Assistant Secretary of the Army (Acquisition, Logistics and Technology)