TSA_Class_JA-2017-04-0037_for_EDS_-__Redacted.pdf

CLASS JUS'fIFICA TION FOR OTHER THAt'I FCLL AND OPEN COMPETITION (41 U.S.C. 3304(a)(l))

Pursuant to the requirements of the Competition in Contracting Act (CICA) as implemented by the Federal Acquisition Regulation (FAR) Subpart 6.3 and in accordance with the requirements of FAR 6.303-1, the justification for the use of the statutory authority under FAR Subpart 6.3 is justified by the following facts and rationale required under FAR 6.303-2 as follows:

1. Agency and Contracting Activity

The Transportation Security Administration {TSA) Office of Acquisition Program Management (OAPM) and Office of Contracting and Procurement (OCP) propose to award three (3) sole source indefinite delivery and indefinite-quantity (IDIQ) contracts for production and installation of Explosive Detection Systems (EDS) on the basis of other than full and open competition pursuant to FAR 6.302.

The Justification and Approval tracking number for this document is JA-2017-04-0037.

2. Nature and/or Description of the Action being Approved

This Class Justification and Approval sets forth the Agency's rationale to award three (3) sole source, single awardee IDIQ contracts for production and installation of EDS in furtherance of the Electronic Baggage Screening Program mission requirements. The IDIQ contracts will be awarded to EDS manufacturers that have certified and qualified EDS products currently deployed for checked baggage screening: L-3 Communications Corporation, Inc. (L-3) (!OE Commerce Way, Woburn, MA 01801-1028), Morpho Detection, LLC (MD) (715 I Gateway Blvd., Newark, CA 9456-1012), and Reveal Imaging Technologies, Inc. (Reveal) (10260 Campus Point Dr., Room 6133, San Diego, CA 92121-1522).

(a) The L-3 IDIQ contract will be for production and installation of eXaminer 6700 Medium Speed EDS (MSEDS). The examiner 6700 is typically intei,'Tated into the baggage handling system during installation consistent v.~th the Checked Baggage Inspection System (CBlS) design previously developed to enhance checked baggage screening. The intended contract will have a five year ordering period and ceiling of $500 million.

(b) The MD IDIQ contract will be for production and installation ofCTX-9800 MSEDS and CTX- 5800 Reduced Size EDS (RSEDS). The CTX-9800 is typically integrated into the baggage handling system during installation consistent with the Checked Baggage Inspection System (CBlS) design previously developed to enhance checked baggage screening. The CTX-5800 is typically used in a stand-alone configuration for temporary screening purposes or smaller screening operations but can be integrated into an in-line configuration ifrequired. The intended contract will have a five year ordering period and ceiling of $500 million.

(c) The Reveal IDJQ contract will be for production and installation ofCT,80DR+ RSEDS. The CTX- 5800 is typically used in a stand-alone configuration for temporary screening purposes or smaller screening operations but can be integrated into an in-line configuration if required. The intended contract will have a five year ordering period and ceiling of $200 million.

TSA anticipates using 2017/2018 Aviation Security Funds and 2017/2018 Capital Funds to award any potential orders that would be issued under the subject IDIQ contracts in Fiscal Year 2017.

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Each contract ceiling was projected from the Independent Government Cost Estimate (IGCE), which is based on estimated EDS production and installation needs over the next five years (September 2017 through September 2022) as reflected in the Electronic Baggage Screening Program (EBSP) Life Cycle Cost Estimate (LCCE) version 4.0 approved by the Component Acquisition Executive on July 24, 2015.

The total estimated spending shows TSA anticipates spending on EDS production and installation over the next five years. Given the EDS manufacturer is unknown for many of the projects estimated in the LCCE, it is difficult to estimate which manufacturer TSA will procure required supplies and services. As a result, the contract ceilings for each resulting contract are intended to provide adequate program support for all potential production and deployment needs for the next five years. This includes spending and requirement increases, such as unanticipated recapitalization oflegacy EDS, as well as changes to TSA certification and qualification requirements that would change EDS deployment plans.

lndenendent Government Cost Estimate (IGCE)

COLUMN A COLUMNS COLUMNC COLUMND

_::::::.:::/<:---:::··:>/':. \'._:<;"._\-:/'.I.:_\X{:::·t\i\i-{/;l{t >;·,\·-_ Total EDS -·_>- -_>,},-' _ _ _ , :· ::?<·:::\: -·_::---;·:\··r.>-)t.>t-i< ti,JWS·ffl!CJuf(!!mtnt$;1:ly,FY'

QTY by FY Total Install/Integrate by FY 1,> Tot.al Estimated \1,1111.e

FY17 $ FY17 FY17 $ FY17 $

FY18 $ FY18 FY18 $ FY18 $

FY19 $ FY19 FY19 $ FY19 $

FY20 $ FY20 FY20 $ FY20 $

FY21 $ FY21 FY21 $ FY21 $

FY22 $ FY22 FY22 $ FY22 $

TOTAL $ TOTAL TOTAL TOTAL $

' .. 17~ijlfii!SED~R~~if,IJ!~ll!S Total MSEDS Install/Integrate ' · ... Total MSEDS ·•· .. · ,,.,, .. , byFY . '\ QTY by FY by FY . .· JotaiMSEOS E~timat~Value •

FY17 $ FY17 FY17 $ FY17 $

FY18 $ FY18 FY18 $ FY18 $

FY19 $ FY19 FY19 $ FY19 $

FY20 $ FY20 FY20 $ FY20 $

FY21 $ FY21 FY21 $ FY21 $

FY22 $ FY22 FY22 $ FY22 $

TOTAL $ TOTAL TOTAL $ TOTAL $

T~f~I ~,l>§~tc,i~•t~il't~:~Y'• Total RSEDS Total RSEDS Install/Integrate by __ ;,_<-_:·:'_'-.:-·_ -,,-: >._ . ;. )"· __ -,,-_}tt:'.·_·-/·:''i}}(_ ,_. ' . . FY, .

QTY by FY FY 1'.otal,RSEQS l;5ti'!'l!tea\lah1e, ·'· .. ·

FY17 $ FY17 FY17 $ FY17 $

FY18 $ - FY18 FY18 $ - FY18 $ -

FY19 $ FY19 FY19 $ FY19 $

FY20 $ FY20 FY20 $ FY20 $

FY21 $ - FY21 FY21 $ - FY21 $ -

FY22 $ FY22 FY22 $ FY22 $

TOTAL $ TOTAL TOTAL $ TOTAL $

(I) Totals for Column A are based on the product of proJected EDS quantity per airport through 2022 and average price of EDS

(2) Totals for Column B are based on total projected needs by airport through 2022

(3) Totals for Column C are based on average MSEDS and RSEDS installation price over last two years multiplied by the total EDS quantity

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(4) Totals for Column Dare based on sum of totals in Columns A and C

3. Description of Supplies/Services.

EBSP, a Department of Homeland Security (OHS) Level I Investment Program, is responsible for acquisition and deployment of checked baggage screening technologies. Public Law I 07-71 states that I 00 percent of checked baggage must be screened at all federalized airports across the United States with an explosive detection system or a suitable alternative be implemented and deployed. EBSP is currently in a mixed acquisition life cycle, focusing predominately on the produce/deploy/support phase of the acquisition process. The primary technology acquired and deployed under EBSP is EDS.

EBSP continues to require EDS production and installation for planned deployments to support two primary objectives:

1. EBSP supports airport developments to enhance checked baggage screening. This may include building a new baggage screening solution where none currently existed or upgrading old checked baggage screening infrastructure that will enable improved and automated detection.

This objective also includes considerations made for replacement of Explosive Trace Detection (ETD) with EDS for primary screening.

ii. Recapitalization (or replacement) addresses the programmatic elements required for EDS life cycle replacement. The range of EDS recapitalization efforts may include replacement of existing stand-alone EDS, replacement of partially integrated EDS, and the replacement of in-line EDSs.

Such projects require work to remove the existing EDS and install and test the new EDS.

The purpose of the intended contracts is to establish a contract vehicle to continue purchase of certified and qualified EDS hardware and installation services in support of program requirements over the next five years. All IDIQ contracts will include two primary requirements needed to produce and install EDS at selected airport locations:

(a) EDS Production: This includes all hardware production for the unit and any ancillary hardware required to operate the system, such as primary and secondary viewing stations, printers, bar code readers, network servers, uninterruptible power supply, entrance and exit conveyors, and operational test kits. All hardware, software, and documentation required for operation and support of the EDS will also be provided under this requirement.

(b) Installation of EDS: This includes all labor, materials, equipment and services needed to assemble, power up, configure, and install the EDS machine into the required operational condition for the intended end-state configuration (in-line integration or stand-alone). All support activities in furtherance of integration and integration testing will also be provided to support this requirement.

4. Identification of Statutory Authority Permitting Other Than Full and Open Competition.

The statutory authority permitting other than full and open competition is 41 U.S.C.3304(a)(l) implemented by the FAR Subpart 6.302-1 entitled "Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements."

5. Demonstration that the Nature of the Acquisition Require Use of the Authority Cited.

All EDS currently deployed have passed rigorous testing and successfully completed TSA's latest certification and qualification requirements. EBSP is currently updating system requirements for its next generation of EDS. The current schedule will open test windows for product certification and qualification

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in FYI 8 and may take up to two years to complete testing activities. Until new products are available for deployment, EBSP requires EDS for planned deployments over the next three to five years. If the subject Class Justification were not approved, and consequently, if contracts are not available to provide the needed supplies and services, EBSP will not be able to deploy screening systems intended to deter, detect, mitigate and prevent transportation of explosives on commercial aircrafts.

The vendors identified in this Justification are the Original Equipment Manufacturer (OEM) and proprietary holders of EDS that have passed all TSA testing requirements and are currently deployed in the field. The proprietary information of the EDS consists of the software, firmware, design and hardware associated with the system as well as networking configuration. The TSA does not own the intellectual property or data rights for any EDS equipment. Based on proprietary data restrictions and the complexity of the equipment, only the equipment manufacturer is capable of producing and installing EDS at the level of expertise required to ensure that the work is completed to the TSA specifications without jeopardizing the proprietary nature of the equipment. As such, the OEMs are the only responsible source capable of satisfying TSA's requirements at the level of expertise needed.

Further, the EDS security technology requires customized electrical, mechanical, and networking component configurations in order to conduct high volume automated screening and movement of baggage.

Because of these unique configurations, the costs involved to substitute presently-available EDS are prohibitive 1. Factors such as Baggage Handling System (BHS) redesign, reprogramming, removal of existing systems and mechanical components, disposal, equipment movement, additional electrical requirements and operational testing all must be considered when evaluating the potential cost of switching or substitution. TSA would also suffer the loss of operational capability, decreasing TSA 's ability to screen baggage accurately and efficiently while redesign and technology substitution is ongoing. These factors represent substantial duplication of cost to the Govermnent that is not expected to be recovered through competition.

Due to the complexity of TSA 's requirement for technical and engineering support services for EDS, as well as the proprietary nature of the EDS, only the respective OEM is capable of providing these services at the level of expertise required to satisfy TSA's requirements. Therefore, per 41 U.S.C. 3304(a)(l), the respective EDS OEM is the only one responsible source and no other supplies or services could satisfy TSA's requirements for required support services.

6. Description of Efforts Made to Ensure that Offers are Solicited from as Mauy Potential Sources as is Practicable.

On January 10, 2017, TSA issued a Notice of Intent TSA25-04-02502 on the Federal Business Opportunities (FBO) website regarding TSA 's intent to contract using other than full and open competition with the OEMs for EDS production and installation services. In the Notice oflntent, TSA offered interested parties the opportunity to identify their interest and capability to respond to the requirement by January 31, 2017. TSA did not receive any responses to this Notice oflntent by the response due date.

More detailed information regarding market research conducted is described in Section 8 of this Justification.

, The costs for changing and EDS model after design or initiation of construction of the Checked Baggage Inspection System (CBIS) are dependent on the size and complexity of the CBIS. As an example, the cost to the Govermnent to switch EDS models after design and partial construction of the CBIS the EDS would be integrated into at Terminal 2 of Fort Lauderdale International Airport (FLL) was approximately $707,834 in 2013.

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7. Determination by the Contracting Officer that the Anticipated Cost to the Government will be Fair and Reasonable.

The Contracting Officer will ensure that the anticipated prices to the Government will be fair and reasonable based on proposal analysis techniques in accordance with FAR 15.404-1 prior to award. In order to determine fair and reasonable pricing, the Contracting Officer anticipates using the historical contract data and actual cost data for comparison purposes.

8. Description of Market Research.

Market Research is based upon products that have passed qualification requirements for EDS over the past 5 years. Products that successfully passed qualification testing requirements were placed on TSA 's Qualified Product Lists (QPL). The QPL was an unrestricted open testing process that allowed any interested vendor an opportunity to test products against TSA detection and operational specifications and standards. Testing may have included technology readiness and certification, successful completion of Transportation Security Lab (TSL) Certification testing (CERT), TSA Systems Integration Facility (TSIF) Integration testing and Initial Operational Test and Evaluation (!OT &E).

Only equipment placed on the QPLs were determined to satisfy program requirements and considered for deployment into the field. At this time, there are only three manufacturers with EDS products on the QPL:

L-3, MD, and Reveal. There are no additional sources that possess the technical capabilities necessary to meet the Government's requirements. Since TSA does not own sufficient technical data or property rights to EDS, awarding a contract to a vendor other than the OEM is not possible. In addition, a third party vendor would have difficulty obtaining the technical and propriety data required to perform services needed to fulfill TSA' s requirements.

This requirement was also publicized under FBO notice TSA25-04-02502 as a notice of intent to contract using other than full and open competition. No new information was provided in response to the FBO announcement that refutes the determinations documented in this Justification.

9. Any Other Facts Supporting the Use of Other Than Full and Open Competition.

None.

10. A Listing of the Sources, if Any That Expressed, in Writing, an Interest in the Acquisition.

None.

11. A Statement of the Actions, if Any, the Agency May Take to Remove or Overcome Any Barriers to Competition Before Any Subsequent Acquisition for Supplies or Services Required

OAPM is currently making investments that will improve the interoperability of EDS through standardized interfaces for security system components and establishing standard image and data formats for certain security technology systems. Resources are currently being spent to define a system architecture that will create conceptual models that describe the existing and future structures of a particular system as well as their components and the relationships between each component. The standardization of component interfaces will allow accelerated independent development of critical component technologies as well as the establishment of modular security system platforms. Standardized image and data formats will reduce barriers to integration that exist because of the technical differences between proprietary vendor systems.

It will also provide flexibility to acquire capabilities that have the potential to be integrated with independently developed detection algorithms, imaging programs, and operating platforms. Other efforts, Page 5 of7 such as development of common Graphical User Interfaces, (GUI) are ongoing to support common system platforms as well. Once a common system architecture is built, OAPM intends to engage in new and innovative partners to solve problems to emerging needs, increasing the number vendors to support TSA security technology.

Additionally, TSA is piloting a procurement strategy that would allow for competing EDS production and installation during the Checked Baggage Inspection System (CBIS) design phase. Current EDS production and installation procurements are predicated upon CBIS design specifications and agreements executed prior to EDS purchase. The new approach is aimed to accelerate EDS purchase requirements during design activities in order to leverage opportunities for competition where available. If successful, TSA could compete $ of anticipated EDS procurements through Fiscal Year 2022. Request for Proposals HSTS04-l 7-R-STDI 72 and HSTS04-17-R-STD029 were posted on December 30, 2016 to FBO to solicit the first competitive EDS proposals aligned with the new procurement approach.

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12. Contracting Officer's Certification.

I certify that the data supporting the recommended use of other than full and open competition is accurate complete to the best ofmy knowledge and belief.

Date

13. Technical/Requirements Personnel Certification.

I certify this requirement meets the Government's minimum need and that the supporting data, which

· · complete and accurate.

Assistant Administrator Office of Acquisition Program Management

Division Director Security Tee I ology Acquisition Division

APPROVAL:

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~4/2?d/;z Date

Date

Date

Date

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