JA&_SPM4A816R0002_Redacted.pdf

DEFENSE LOGISTICS AGENCY

AVIATION

8000 JEFFERSON DAVIS HIGHWAY

RICHMOND, VIRGINIA 23297-5002

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

SPM4A8-16-R-0002

I. CONTRACTING ACTIVITY

This Justification and Approval authorizing Other Than Full and Open Competition supports requirements generated for the Defense Logistics Agency - Defense Supply Center Richmond, VICA. The contracting activity for this requirement is Defense Logistics Agency (DLA)

Aviation, Defense Supply Center Richmond, VICA. The purchase request number supporting this contracting action is 16-25-1039.

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

The action being approved is the use of other than full and open competition to acquire the items listed in this document, as prescribed by FAR 6.302-1, Only One Responsible Source and No

Other Supplies or Services Will Satisfy Agency Requirements. This action will result in the award of a new firm-fixed price contract. This sole source requirement will be purchased from the following company:

Starrag USA, Inc.

Skyport Business Park

2379 Progress Drive

Hebron, KY 41048

CAGE: 42DF7

Large Business

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

AGENCY’S NEEDS

Under the contemplated contract Starrag USA will provide the following supplies required by the Naval Foundry and Propeller Center (NFPC) to support the Navy Virginia class submarine and the replacement program for the Ohio class submarine, a submarine that launches ballistic missiles with nuclear warheads used to deter nuclear and non-nuclear attacks. Both submarines are critical elements of the United States nuclear deterrence program fielding approximately 70% of U.S. deployed nuclear warheads.

NSN NOUN QTY UNIT PRICE TOTAL PRICE

N/A 6-axis CNC 2 Each

High Speed Propeller Profiler (28-foot diameter)

N/A 6-axis CNC 1 Each

High Speed Propeller Profiler (24-foot diameter)

NSN NOUN QTY UNIT PRICE TOTAL PRICE

N/A Foundation 3 Each $

TOTAL POTENTIAL CONTRACT VALUE: $

The estimated pricing is based on market research performed by the customer. The requested completion timeframe is 545 days after receipt of contract. Delay in the completion timeframe will impact the Navy’s mandate of starting construction on the Ohio replacement in 2021 with initial patrol in 2031. There is no additional room for delay in the construction timeline if the

United States Strategic Command (USSTRATCOM) requirements are to be met.

AMC/AMSC codes are not available for this non-NSN item.

DLA Aviation Industrial Plant Equipment Division has a tentative agreement with finance that the machines will be financed out of the DLA Working Capital Funds. NAVSEA will provide incremental funding to DLA after the details of the arrangement are agreed upon by all parties.

Surge and sustainment requirements do not apply to this non-NSN item.

IV. STATUTORY AUTHORITY PERMITTING OTHER THAN FULL AND OPEN

COMPETITION

10 U.S.C. 2304(c)(1); 10 U.S.C. 2304(d)(1)(B); FAR 6.302-1(a)(2)(ii)(A)&(B): Available from only one or a limited number of sources. 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 substantial duplication of cost to the government that is not expected to be recovered through competition or unacceptable delays in fulfilling the agency requirements.

V. DEMONSTRATION THAT THE CONTRACTOR’S UNIQUE QUALIFICATIONS

OR NATURE OF THE ACQUISITION REQUIRES THE USE OF THE AUTHORITY

CITED ABOVE

In 2005, after award of contract SP0490-05-C-6034 to DS Technology (USA), solicited under full and open competition, the Navy provided a computer-aided design (CAD) model of an unclassified propeller model to DS Technology. The CAD model was used to design a new unique head that reached all areas of the propeller blade. The resulting design is proprietary to

Starrag, USA, who bought out DS Technology.

The High Speed Propeller Profilers, designated as Spindle Units (SU), are the only high speed milling machines the Navy has to support the manufacturing of the Navy and Ohio Class

Submarine Propulsor Program. The sixth axis milling head designed by DS Technology is part of the SU-16 and SU-17 machines procured under contracts SP0490-05-C-6034 and N00189-11-C-

Z013. The same head must be included in the new units which are to be designated as SU-18, SU-19, and SU-20. The machine heads and spindles will be interchangeable, allowing work to continue in the event of failure on one part of the machine and prevents the delay of a propeller that is in a critical stage of completion. The CAD model used to develop the sixth axis milling head has since been deemed classified data by the Navy who has no intention of declassifying the CAD model for competitors use.

The spindle units are high speed machines with translational speeds reaching over 600 inches per minute and spindle rotations of 14,000 revolutions per minute (RPM). The high speeds necessitated development of new tooling, performed through a process of trial and error. If a differently designed machine were to be used the dynamic differences would impact tooling geometry, tool life and surface finish, requiring the tooling process to be recreated for the new machine.

A Post Processor is used to translate language programs into machine language. The time to develop the Post Processor to a successful working state was over two (2) years. The requirement for the new spindle units will use the same Post Processor and will be able to go into immediate production. Conversely, procurement of a different machine is expected to require an additional two (2) years of development before production could ensue, time the Navy does not have to spare in the overall timeline of the propulsar portion of the nuclear deterrence program.

The Naval Foundry and Propeller Center (NFPC) maintenance department has developed a spare parts inventory for these unique machines. Acquisition of additional units from the same manufacturer will enable NFPC to support each machine from one spare parts pool rather than procuring and supporting multiple spare part inventories. Additionally, the learning curve of the

NFPC machine operators and maintenance personnel for the existing spindle units was long and difficult. The training required in the current Purchase Description will serve as a refresher for the current NFPC personnel. Training on a new design would require much more extensive training, reducing production time and increasing the potential for errors in performance.

Repeating the research and design stages of the procurement, developing a new post processor, and training all personnel to utilize the new machinery is expected to incur a delay of three (3) plus years before the machines could be utilized by the naval foundry.

Based on the above facts, opening the High Speed Machining Center/propeller profiler to competition would require substantial duplication of cost to the Government that is not expected to be recovered through competition. It would also cause unacceptable delays in maintaining the

Virginia Class submarines and in meeting the mandated timelines to field the replacement Ohio

Class submarines.

VI. DESCRIPTION OF EFFORTS MADE TO ENSURE THAT OFFERS ARE

SOLICITED FROM AS MANY POTENTIAL SOURCES AS DEEMED PRACTICABLE

This requirement will be synopsized on Federal Business Opportunities (FedBizOpps) as required by FAR 5.201 once the solicitation is prepared and approved. It is anticipated that sources having an interest in subcontracting may be identified through synopsis.

Although the classified design prohibits acquisition of this 6-axis CNC High Speed Propeller

Profiler from any other source, any source who responds to the government as a result of this synopsis will be identified to the prime contractor as a potential for subcontracting possibilities.

A Sources Sought notice (attached) posted to FedBizOpps on June 23, 2016 under solicitation number SPM4A8-16-R-0002. The notice stated DLA’s intention to award a sole source contract to Starrag USA for three (3) each 6-axis CNC High Speed Propeller Profilers. The notice advised interested parties with high-level security clearances and the background and knowledge to assist

Starrag in providing a turn-key service, to state their interest and capability by 2:00 p.m. Eastern

Standard Time on June 30, 2016.

The Sources Sought notice closed without any vendor response. No other actions are planned to facilitate competition for this acquisition.

VII. DETERMINATION BY THE CONTRACTING OFFICER THAT THE

ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR AND REASONABLE

The overall cost of this acquisition will be considered fair and reasonable based upon FAR 12 negotiation procedures using price and cost analysis. Methodologies to assure this will be:

commercial pricing techniques utilizing publicly offered catalogs, comparison to historical contractor sales, and/or analysis of limited cost and pricing information which could be made available by the contractor. In the event that limited cost and pricing information is made available, the government’s negotiation objective will be developed using local technical analysis applied to direct and indirect rate factors recommended by the DCAA and/or DCMA.

Based on 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 performed by the Naval Foundry and Propeller Center (NFPC), Naval

Supply Systems Command (NAVSUP) Fleet Logistics Center (FLC), Philadelphia office. A proposed contract action synopsized on the Navy Electronic Commerce Online website

(www.neco.navy.mil) on April 06, 2016 received responses from Machine Tools USA and

Lagun Engineering Solutions. NAVSUP FLC contacted both companies. Machine Tools USA determined that they would not be able to provide the required units but expressed interest in potentially serving as a subcontractor for the current or similar requirements. Lagun Engineering

Solutions did not respond to multiple inquiries from the Navy’s contracting office.

NAVSUP FLC also reached out to Machine Tool Research, a vendor who expressed interest in the prior requirement for Spindle Unit (SU) 17. Machine Tool Research did not respond to the inquiries. The Navy noted that prior research performed by NFPC determined that the company did not have the capability to supply the SU-17 machine and that it would be unrealistic to conclude that Machine Tool Research was a viable source for this requirement.

The results of the research, taken in conjunction with the requirement to utilize a proprietary design, support a sole source restriction to Starrag USA.

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

OPEN COMPETITION

The computer-aided design (CAD) model used by Starrag USA to develop their proprietary design for the sixth milling head has since become classified. NAVSEA has no intention to declassify the CAD model. Without the CAD model vendors are unable to develop and prove out a new design for the sixth milling head.

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

ACQUISITION

There are currently no sources that have expressed interest in this project. It is anticipated that there will be interest from Starrag USA, and perhaps Machine Tools USA, after the solicitation is publicized.

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

NAVSEA anticipates procuring three (3) more spindle units as separate contracting actions in

FY17. NAVSUP FLC Norfolk Contracting Office, Philadelphia Office, noted that if another potential source emerges they would assess whether competition for future requirements is feasible.

XII. CONTRACTING OFFICER’S CERTIFICATION

The contracting officer’s signature on the Coordination and Approval Document evidences that he/she has determined this document to be both accurate and complete to the best of his/her knowledge and belief.

XIII. TECHNICAL/REQUIREMENTS PERSONNEL’S CERTIFICATION

As evidenced by their signatures on the Coordination and Approval Document, the technical and/or requirements personnel have certified that any supporting data contained herein, which is their responsibility, is both accurate and complete.