JA_SPRDL119R0131_Redacted.pdf

J&A SPRDL1-19-R-0131

Previous J&A SPRDL1-18-C-0042 is available.

source has the rights or data to manufacture this item, AMCs 3, 4, or 5 are valid. If two or more sources have the rights or data to manufacture this item, AMCs 1 or 2 are valid.

4. Authority Cited: The statutory authority permitting other than full and open competition is 10 U.S.C. 2304(c)(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.” FAR 6.302-1(a)(2)(iii)(A)(B) provides that “…supplies may be deemed available only from one or a limited number of responsible sources, and no other type of supplies or services will satisfy agency requirements, full and open competition need not be provided for. Supplies may be deemed to be available from the original source in the case of a follow-on contract when award to another source would result in substantial duplication costs to the Government that would not be recovered through competition or unacceptable delays in filling the Government's requirements”

5. Reason for Authority Cited:

a. Background:

This item can only be installed on the most recent HMMWV variants, serial number 300,000 or higher and is not backwards compatible with the older HMMWV models.

The HMMWV Rear Differential was originally designed and developed by Dana Light Axle with AM General. The Government did not acquire any rights to the technical data to enable competition of this item. As such AM General and Dana Light Axle are the only approved sources for the Rear Differential. While there is a TACOM drawing for the Rear Differential, the drawing is not fully defined and does not include vendor developed components that were considered the intellectual property of the developer. As such, the Government does not have the technical data needed to consider a product by another manufacturer.

The original HMMWV program acquisition strategy incorporated a combination of off-the shelf commercial parts, existing ordinance parts, and contractor developed parts to speed up the acquisition process and allow the Government to own some portions of the HMMWV, but not the full TDP of the vehicle system. This strategy reduced research and development time as well as overall program cost. Thus, while the HMMWV FOV has a Technical Data Package (TDP), it is not all inclusive of every component of the vehicle system. Further, the TDP does not include vendor developed components that were considered the intellectual property of the developer. A TDP for the Rear Differential was not acquired with the vehicle TDP.

Since this item was developed by the OEM at their expense, the technical information for this item is proprietary to the OEM. As such, the use of such descriptions in the acquisition is essential to the Government’s requirement thereby precluding consideration of a product manufactured by another company.

b. Costs:

There are no known funding efforts in progress at this time to acquire the commercially controlled data necessary to make NSN 2520-01-574-4828 fully competitive. Further, because this is a major system component of the HMMWV, the time, cost, and schedule impact associated with a competitive action on every single Rear Differential purchase would result in a full qualification test for each awarded vendor to validate Form, Fit and Function of the Rear Differential and would have to be performed each time a contract is awarded. This would add unnecessary cost and schedule to the acquisition of each Rear Differential of the HMMWV, which is a program that is currently in sustainment.

If the Government insisted on fully competitive procurement for the Rear Differential, the Government would have the three choices to obtain the necessary information to enable full competition: Research and Development of our own Rear Differential design, Reverse Engineering of the existing system or simply ask the vendor, in this case Dana Light Axle, for a price to purchase the full Technical Data and rights to use the item competitively. PD-LTV has tried to obtain the TDP for the Rear Differential, but Dana Light Axle’s response was “Not for Sale”. As a result, the Government has two remaining methods to acquire the data required and execute a competitive Rear Differential purchase. The remaining options are:

(i) Research and Development (R&D): To develop a competitive data package through a Research and Development (R&D) effort would involve procuring proprietary data for research, generating a requirements document and any associated technical drawings, followed by qualifying additional sources which will entail a significant amount of time, facility resources, man-hours, and funding. Based on past experience with similar efforts the estimated cost to research and develop a compatible product and qualify additional sources exceeds $5.0M with a setback of forty-two

(42) months. Required funding would include $3.5M for personnel to support research, and redevelopment of an item that would perform the same task as this NSN. That $3.5M would also include funding for staff to develop the CAD models and drawings that would be required for any potential vendor to manufacture from. An additional $1.5M-$2.0M would be required to develop prototypes to test and validate the Government design that functions identically to the original. If funding for a new start research and development effort became available, the forty-two (42) month process would consist of the following: 12 months to develop requirements, 6 to 12 months in design and prototyping, 12 months to test compatibility and function, and an additional 12 months to write the technical data package and provision the parts. A timeline of the estimated R&D process is shown for clarity.

PD-LTV Engineering estimates the following timeline for R&D:

Requirements development 12 Months Design and prototype development 6 Months Component, safety and system level testing 12 Months Write TDP, technical bulletins and provision parts 12 Months

Estimated Time to research and develop 42 Months

(ii) Reverse Engineering (RE): To reverse engineer, validate the design, procure prototypes for testing and release a competitive data package would entail a significant amount of time, facility resources, man-hours, and funding. Based on past development experience the estimated cost to develop a reverse engineered competitive product exceeds $4.5M, with an estimated delay of no less than thirty-six (36) months. Required funding would include $3.0M for personnel to support reverse engineering and validation of the design as well as fund staff to develop the CAD models and drawings. An additional $1.5M-$2.0M would be required to develop prototypes, test and finalize the product to verify that the newly created item provides equivalent performance when compared against the original. If funding for reverse engineering became available, the thirty-six

(36) month process would consist of the following: 3 months to obtain existing parts, 3 months to tear down and understand the design, 6 months to iteratively develop drawings, prototypes and bench test, 12 months to perform system and vehicle level testing, and 12 months to write the technical data package and provision the parts. To complete the reverse engineering process successfully, the Government would have to obtain a sufficient sample size of existing parts to provide a 95% probability and 90% confidence level in the actual size of the existing item to be studied. Once a large enough sample has been collected, the Government would then tear down and understand the design, conduct prototype development and produce the final TDP and associated provisioning documents at a cost of $4.5M. A timeline of the estimated R&D process is shown for clarity.

LTV Engineering estimates the following timeline for RE:

Obtain existing parts 3 Months Tear down and understand the design 3 Months Prototype development 6 Months Component, safety and system level testing 12 Months Write TDP, technical bulletins and provision parts 12 Months

Estimated Time to Reverse Engineer 36 months

In addition to the cost and delay for an R&D action or RE effort, PD-LTV estimates that it would take approximately one additional year to establish another source and procure these kits on a competitive basis. Specific events would include additional market research, solicitation, evaluation and awarding a contract. Finally, any new source of supply would require component, safety and system level testing that is estimated to take 6 months. These estimates are based on similar Government projects. These events combined are estimated to take an additional 12 months after development of the item.

Considering this vehicle configuration is out of production and future vehicle demand is unknown, the costs cited above appear to exceed any potential savings to be realized through a future competitive procurement process. Assuming the Government spends $4.5M to obtain its own version of the item and realizes a savings of %, the new cost of the Government owned Rear Differential would be , resulting in a savings of $284.11 between the Contractor-Owned and the Government-Owned versions.

Dividing $4.5M by $284.11 results in 15,839 Rear Differential required to recover the development cost. Estimating an average buy of 200 units per year we can calculate that it would take around 79 years to recover our costs.

c. Unacceptable Delay:

If the procurement of the HMMWV Rear Differential is delayed until the TDP is bought by the Government and made suitable for a competitive procurement, the Government would experience an unacceptable delay of a minimum of four years in fulfilling this requirement. The four year delay is a result of the time required to develop items of equivalent performance. AM General and Dana Light Axle are currently the only sources that can meet the requirements without substantial duplication of cost and without unacceptable delay against this action. The approved sources have the requisite technical and engineering expertise to perform all efforts required to provide the NSN identified in this Justification and Approval (J&A).

6. Efforts to Obtain Competition: The Government does not have the complete TDP required to manufacture the Rear Differential or use for competitive procurement and there are no known funding programs active at this time for qualification of additional sources. No other Rear Differential manufacturers have a drop in replacement that mounts to the HMMWV without major modifications. If there are vendors that believe they offer a product that requires no modification, costs less and increases power they can submit their offer to the Government CMO office. Those vendors can seek qualification through the Source Approval Program at their own expense. Testing and validation of any claims would have to be realized before any approval is granted. At this time, there are no contractors seeking approval through the CMO. Therefore only the parts manufactured by AM General and Dana Light Axle are acceptable for this procurement. This effort will be synopsized in accordance with FAR Part 5.201(c).

7. Actions to Increase Competition: There are no vendors in the process of being qualified for this NSN at this time and none prior to contract award. At this time, there are no current or planned efforts to qualify additional sources due to the fact that the Government does not possess a fully defined and validated TDP for NSN 2520-01-574- 4828. AM General and Dana Light Axle retain the technical data regarding this item.

Any vendor that believes they can provide this NSN for a lower cost while meeting the same requirements as the existing item should seek qualification as a secondary source through the Competition Management Office Source Approval Program at their own expense.

8. Market Research: On 10 January 2019, Engineering conducted an online search of known Rear Differential suppliers looking for published material on newly built replacement units. The results of this search did not produce any new companies that would provide a direct replacement Rear Differential for the HMMWV that is 100% new and not rebuilt that could be installed in the HMMWV without considerable time and effort to adapt the new components. Note that the HMMWV is in sustainment at this time so massive vehicle system changes to accommodate competition are not funded and unable to be fielded.

A Sources Sought Synopsis was posted to FedBizOps on 10 January 2019. To date, no other sources have expressed interest in providing this item.

Item Name: Rear Differential

NSN: 2520-01-574-4828

Part Number: 2011412-1 or 6048217 End Item: HMMWV

Sources_Sought_N otice_2019-165.pdf https://www.fbo.gov/index?s=opportunity&mode=form&id=fd07d3f7a252dee4e2448d74 3db45c6b&tab=core& cview=0

9. Interested Sources: To date, no other sources have expressed an interest in providing the items listed in Table-1. However, offerors are always encouraged to seek qualification through TACOM’s Source Approval Program (SAP) with the CMO. The notices required by FAR 5.201 will be published and any proposals received shall be considered.

10. Other Facts:

a. Procurement history:

Contract: SPRDL1-18-C-0042 Award Date: 25 October 2017 Contractor: AM General, LLC Value: $312,524.85 Competitive Status: Full and open after exclusion of sources per FAR 6.302- 1 - Only one responsible source