JA_SPRDL1-18-R-0498_REDACTED.pdf

ALL TERRAIN LIFTER ARMY SYSTEM

Est Dollar value:

No Previous J&A

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

SPRDL1-18-R-0498

1. Contracting Activity: The Defense Logistics Agency, Warren Detachment, is the procuring activity for this action. The statutory authority permitting other than full and open competition is 10 U.S.C. 2304(c) (1), as implemented by FAR 6.302-1, "Only One Responsible Source and no other supplies or services will satisfy requirements."

2. Description of Action: The planned contract action is for the purchase of engines for the All-Terrain Lifter, Army System II (ATLAS II), which is a 10,000 pound capacity forklift used to primarily stuff and un-stuff palletized loads into ISO containers. The ATLAS II was procured by the Government through a performance specification, and the engine was part of the ATLAS II Original Equipment Manufacturer’s internal design effort. There is no technical data package for the ATLAS II or the engine. This procurement, directed by PRON EH81L064EH, will be restricted to JLG Industries Inc., (CAGE: 1YHH8), as they are the only responsible source for this item, and no other supplies will satisfy agency requirements. This action will be funded using AWCF.

3. Description of Supplies/Services: The proposed contract action is to procure a minimum guaranteed quantity of 2 engines (NSN 2815-01-577-1838; JLG Industries Inc., part number 200328S, CAGE 1YHH8) – and maximum of 122 engines over 5 years – at an estimated cost of /unit, for a maximum estimated contract value of . Pertinent details regarding the proposed acquisition are listed below:

NSN Nomenclature Manufacturer P/N Acquisition

Method Code

2815-01-577-1838 Engine, Diesel JLG Industries Inc. P/N 200328S

3Q

Acquisition Method Code (AMC): 3 – Acquire from the actual manufacturer, whether or not the prime contractor is the actual manufacturer.

Acquisition Method Suffix Code (AMSC): Q – The Government does not have adequate data, lacks rights to data, or both, needed to purchase this part from additional sources.

4. Authority Cited: The statutory authority permitting other than full and open competition is 10 USC 2304(c) (1), as implemented by FAR 6.302-1, “Only one responsible source and no other supplies or services will satisfy agency requirements.”

5. Reason for Authority Cited: Procurement by other than full and open competition is necessary because the Government does not own any technical data on this engine.

The Government’s acquisition data for this engine is limited to NSN, part numbers and the supplier CAGE code. The end item (ATLAS II) was procured by the Government through a performance specification where the selection of its subcomponents, including engine, were left up to the end item manufacturer as part of their internal design effort. There is no technical data package for the end item or its subcomponents, including the engine.

The engine assembly covered by this procurement is designed and developed by the engine manufacturer in coordination with the ATLAS II Original Equipment Manufacturer (OEM), and the OEM owns the Technical Data Package (TDP) for the ATLAS II forklift.

Procuring proprietary technical data is estimated to be in the many millions of dollars as the typical business case for a product like this includes the expectation of a revenue stream for the manufacturer. Such a revenue stream includes worldwide sales of complete engines and spare parts for many years. The cost of procuring proprietary information is expensive, and would likely not be recovered through subsequent competition. This estimate is based on a general knowledge of the material handling industry. There are funding constraints in that scarce resources are better directed to hardware procurement rather than procuring technical data for commercial products.

We estimate 18 to 24 months would be associated with attempting to procure the required proprietary data and qualifying additional sources. This delay is unacceptable to meet the Government’s needs as it would prevent needed replacement engines to be delivered to field users in a timely manner. The ATLAS II is a vital part of the Army’s supply distribution mission, and delays of engine spares would severely impact the ATLAS II user’s mission, resulting in machines becoming non-mission capable.

This engine assembly is not a feasible candidate for reverse engineering, as it is an assembly that has already been designed by an established commercial vendor.

Reverse engineering is therefore estimated as a high-risk proposition as it would be replicating the effort associated with the original design of the engine. The risk for the Government is high as there are limited resources to commit to this type of effort. For a contractor, there is high risk in that a long detailed effort is required without the assurance that there would be enough sustained demand for the final product.

6. Efforts to Obtain Competition: Currently, there are no planned efforts to qualify other suppliers of this engine, nor will there be prior to the award of this proposed contract due to funding constraints – no funds are available to qualify additional sources, given the cost and time involved, as described below:

Costs: Increasing competition would require a reverse engineering effort, which would take approximately 30 months or more at a minimum cost of $2,000,000. In addition, the reverse engineered engine assembly would have to establish reliability comparable to the already existing design. This evaluation process would need another 12 months and an estimated additional $600,000. These costs would not be recovered by subsequent competition, as the Army’s demand for this engine is variable. There may also be additional costs related to a new engine such as costs to train soldiers in the use and maintenance of the new engine, and costs required for the TMs to be rewritten and validated/verified for a new model engine.

Delays: The 36 months or more of delays, as indicated in the preceding paragraph due to reverse engineering, qualification testing, training, and manual revisions would be unacceptable because it would further delay soldiers from having accessibility to the engine in the field. The procurement of the JLG engine will not be subject to those costs or delays in the program schedule.

7. Actions to Increase Competition: There are no known funding efforts in progress at this time to acquire the commercially controlled data needed to make the engines competitive. The time and money required to increase competition would not be recouped by the Government due to the complexity of the design and the time it would take to produce the engine in the quantities needed. Any efforts to increase competition would also create unacceptable delays in filling the Government’s requirements.

There has not been any expressed interest by any known vendor to become a qualified source to produce this item. Interested contractors can seek qualification through the Source Approval Program with the Competition Management Office (CMO). To date, there has not been any expressed interest by any known vendor(s) to become a qualified source(s) to produce this item.

8. Market Research: This item does not appear in the Advanced Procurement Planning List (APPL) dated 16 January 2018, although it is in the Competition Advocate Shopping List (CASL) dated 16 January 2018.

Market research was conducted for items customarily available in the current marketplace that are similar to JLG’s Engine All-Terrain Lifter, Army System II (ATLAS II), which is a 10,000 pound capacity forklift. It was determined that commercial items and non-developmental items were not available which would meet the Government’s needs; furthermore, no items were found that could be modified to meet the Government’s needs. The market research indicated the Government exclusively requires JLG’s Engines for its purposes.

It was also determined that customary practices regarding customizing, modifying, or tailoring of items similar to JLG’s Engines would not be able to meet the need of the Government.

The size and status of potential sources and whether their distribution and logistical capabilities could support the supplying of Engines could not be determined because no sources were identified during the market research; therefore, item cost estimates and times of delivery were not available.

-04 00

Approval Authority for Acquisitions Equal to or Greater Than $700,000

APPROVAL OF JUSTIFICATION

FOR OTHER THAN FULL AND OPEN COMPETITION

Based on the foregoing Justification, I hereby approve the procurement of the following:

a. Noun: Engine, Diesel

b. NSN: 2815-01-577-1838

c. Maximum Quantity: 122 Ea

d. Estimated Maximum Value:

This action will be awarded under other than full and open competition pursuant to the authority of 10 USC 2304(c) (1) and subject to the availability of funds. This approval is subject to the proviso that the property herein described has otherwise been authorized for acquisition

NAME:

TITLE:

SIGNATURE:

Date:

Digitally signed by

HOPSON.LILLI.A.1230127324

.A.1230127324 Date: 2018.07.20 14:12:49

HOPSON.LILLI