VDATS Teradyne JA 13 Jul 20_Redacted.pdf

Justification and Approval (J&A) for Other Than Full and Open Competition

FOR OFFICIAL USE ONLY

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I. Contracting Activity.

This Justification and Approval (J&A) is to request authority for Other Than Full and Open Competition supporting requirements generated for the 402d Electronics Maintenance Group (EMXG), 569th Electronics Maintenance Squadron (EMXS) and 402d Software Engineering Group (SWEG), 581st Software Engineering Squadron (SWES). The contracting activity for this requirement is AFSC/PZIMA. The Purchase Request number supporting this contracting action is F3QCCM0071A101, Budget Authorization Form FD2060-20-66504.

II. Nature and/or description of the action being processed.

Due to the circumstances described herein, the activity requests authority to acquire Versatile Diagnostic Automatic Test Station (VDATS) kits as listed in Section III below using `Other than Full and Open Competition' 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 contract which will be a Firm Fixed Price (FFP) Requirements contract with a 60 month ordering period. The estimated contract award date is projected to be 24 August 2020. Orders can be issued beginning this date through 23 August 2025.

This sole source requirement will be purchased from the following company:

Teradyne Incorporated DBA: Assembly Test Division 700 Riverpark North Reading, MA 01864-2635

CAGE: 23350

Large Business

III. Description of supplies/services required to meet agency needs.

The purpose of this acquisition is to procure the kits required to assemble the VDATS stations. The VDATS is an organically designed test station with Open Architecture and Virtual Modular Equipment (VME) Extensions for Instrumentation (VXI) technology. The test station contains flexible hardware and software architectures that are fully expandable and customizable, and eliminate or reduce the need for active Interface Test Adapters (ITAs).

The VDATS consists of standardized, commercially available test equipment, components and software. There are two configurations of VDATS, the Digital Analog (DA)-1 and DA-2.

Additionally, there are augmentations that provide additional capability to the core DA racks:

Auxiliary Bays (ABs), Mission Equipment Support Sets (MESSs) and Radio Frequency (RFs) roll-up racks. Currently, these configurations support the A-10, B-1, B-2, B-52, C-5, C-17, C-130, E-3, E-8C, F-15, F16, F-22, H-53, H-60, KC-135 MC-4, MQ-9, Navy ships, and UH-1 weapon systems.

All materials must be purchased as new, direct from the OEM in order to maintain configuration control and performance according to test station specifications. The remaining life cycle for the VDATS system is 30 years.

The Kits covered by this J&A are shown below:

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The ordering period for this Requirements contract will be 60 months after award, anticipated to be 24 August 2020 through 23 August 2025. Delivery of the kits is to be determined based on the particular kits and quantities included on each order. This J&A covers the ordering period of the Requirement contract through completion of all delivery orders.

These part numbers identified are applicable to PGI 217.7506 Spares Breakout Program for centrally managed replenishment or provisional parts for military systems and equipment. These kits are form, fit, and function configurations and are managed by the VDATS program office (AFLCMC/WNA) which maintains Operational, Safety, Suitability, and Effectiveness (OSS&E) authority. These kits are not stock listed and therefore were not screened.

IV. Statutory authority permitting other than full and open competition.

10 USC 2304(c) (1), as implemented by FAR 6.302-1, one responsible source and no other supplies or services will satisfy agency requirements.

V. Demonstration that the contractor's unique qualifications or nature of the acquisition requires the use of the authority cited above (applicability of authority).

The agency's minimum needs can only be satisfied by the unique supplies available from Teradyne, Inc. Teradyne is the Original Equipment Manufacturer (OEM) for these kits and is the only source capable of providing the specific parts they comprise, that are tested and approved for the VDATS.

Acquisition must remain restricted to the controlled baseline that is approved and tested for the

VDATS.

There is currently no existing contract available to satisfy new FY20 through FY25 VDATS requirements. This instant acquisition is necessary for the continued production of a highly specialized system.

AFLCMC/WNA maintains OSS&E authority. The part numbers included in the kits may be altered, but form, fit and function of the parts will not change. As such, minor configuration changes may be required to accommodate operational needs or avoid obsolescence. Configuration changes are approved by AFLCMC/WNA. EMXG is the procuring source in accordance with the Acquisition Plan WRALC - 0901 dated 5 July 2012. When obsolescence occurs, the 581st Software Integration Lab (SIL) will research the replacement parts and provide recommendations to WNA. All materials must be purchased as new, direct from the OEM in order to maintain configuration control and performance according to test station specifications. The remaining life cycle for the VDATS system is 30 years.

To maintain strict configuration control of current production efforts and to comply with the technical requirements identified in the VDATS system technical documentation, the exact kits are required and must be procured in order to maintain the configuration control baseline and promote transportability of workload between test stations. In accordance with the DoD Automated Test Station (ATS) Selection Guide which can be found at the following link: https://www.acq.osd.mil/log/MPP/ ats_library.html, program managers are mandated to select from appropriate, DoD approved ATS families to satisfy testing requirements.

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Acquisition must remain restricted to the controlled baseline that is approved and tested for the VDATS ATS. Any change to the VDATS configuration potentially impacts every VDATS user and creates a ripple effect for software and firmware within Test Program Sets (TPS) for Line Replaceable Units or Shop Replacement Units (LRU/SRUs) tested on the VDATS Support Equipment.

Accordingly, Teradyne is the only source capable of providing the supplies described in Section III above in accordance with the VDATS technical data package.

The Government does not own the data rights to these proprietary Teradyne items. A request for purchase of data from Teradyne was sent to Teradyne on 7 April 2020. Teradyne replied that they would not sell the data for their kits as the proprietary data forms the basis of their competition in the marketplace.

The DoD ATE framework that is shared by Air Force, Navy, Marines, and Army is structured around the use of COTS instruments. This is due to the difficulty of re-engineering those components; the measurement science that is required for National Institute of Standards and Technology (NIST)-traceable calibration adds a great degree of complexity to the design and sustainment of these instruments. In the event of obsolescence, AFLCMC/WNA would qualify a substitute COTS item.

Qualification of substitute parts only occurs due to obsolescence, which is difficult to forecast as it is based on technological improvements by commercial entities, developmental efforts on different airframes, and/or diminishing sources of supply. The review of substitute parts is completed at a part number level, and each new part requires extensive regression testing to ensure uninterrupted production on over 2500 Test Program Sets (TPSs) that currently run on the VDATS platforms. The research required to qualify a part includes approximately 12 months of review/testing. The cost of 12 months of analysis, testing, and integration for one part in any of the VDATS configurations is estimated at $127,154 . Teradyne has nine VDATS kits comprised of 26 unique parts and the average cost per part is $33,848. Each kit contains an average of nine unique parts. The average kit requalification cost of $1,449,018.26 is shown below.

Substitute Qualification Estimates Cost per part =analysis testing + cost of the part $127,154 + $33,848 = 161,002.03 Cost for all parts =Cost per part X 26 unique parts $161,002.03 X 26 = $4,186,052.78 Cost per kit =cost per part X 9 unique kit parts $161,002.03 X 9 = $ 1,449,018.26

Requalification of individual parts within the kit from another vendor would add additional administrative costs such as duplication of contract efforts and supplying multiple vendors with required GFP for testing. It would also have significant detrimental effects to the delivery and EMXG's manufacturing schedule as planning/forecasting obsolescence is difficult, if not impossible, to accomplish with enough certainty and lead time to establish alternate vendor procurement methods to meet existing performance requirements. Therefore, requalifying individual parts through alternate vendors is not a viable option. Requalification of the entire kit would not be a viable alternative either as the programs are capitalizing on commercial off the shelf items with pricing and availability directly tied to the commercial marketplace. On average, commercial pricing in the market fluctuates

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+/-10%. Based on historical purchase data, the most a competitive market would offer would be an additional 3% savings (see breakeven analysis below); therefore, it would take nine years to breakeven (recoupment of additional upfront costs through potential long-term savings).

Breakeven analysis Average Part Cost $ 33,848.03 3% Savings per Part $ 1,015.44 Requalification cost per part $161,002.03 Breakeven - # of buys 159 Avg Qty Purchased per year 18 # of years to Breakeven 9

Previous acquisitions of VDATS parts were done on an individual basis. Due to the modular nature of requirements, Teradyne is now providing the required parts for specific modular configurations as kits. The only kit that has been previously purchased by the Government is Part Number 660-112-10, VDATS AB-13 Instrument Kit (Reaper HSSub Augmentation Kit Config B). This was purchased on 24 June 2019 under sole source contract FA8571-19-P-A057. The contract was awarded to purchase Teradyne High Speed Subsystems, Retrofit Kits, and Loopback Kits for use in United States Air Force VDATS augmentation designs at Robins AFB. The procurement of the VDATS items as kits is expected to result in reduced administrative burden, better configuration control, and reduced costs over individual item purchases.

Award to any other source would result in substantial duplication of cost to the Government that is not expected to be recovered through competition and unacceptable delays in fulfilling the Air Force's requirements.

Unacceptable Delay: Award to any other source would result in unacceptable delays in fulfilling the Air Force's requirements. The VDATS are highly specialized equipment; without serviceable assets that have been tested and approved, system performance in accordance with test station specifications will be placed at great risk. Lack of proper configuration impacts every VDATS, causing failure to execute mission or preventing the achievement of critical objectives. The DoD ATS Selection Guide mandates program managers to select from appropriate, DoD approved, ATS families to satisfy testing requirements. Significant delay would be realized if testing and approval are required from sources other than the OEM. The estimated timeline is based on a minimum of 18 months to prepare a competitive solicitation, and up to 48 months to test and approve each applicable part.

The items being acquired are critical to maintaining configuration control in all of the test stations. In order to maintain this control, Teradyne is the only known source that can satisfy the Government's requirement. Any attempts at Full and Open Competition at this time would cause a significant time delay. Therefore, this acquisition will be a new contract for the production of highly specialized equipment.

Accordingly, Teradyne is the only firm capable of providing the supplies and services described in Section III above without the U.S. Air Force experiencing substantial duplication of cost that could not be expected to be recovered through competition and unacceptable delays in fulfilling its requirements.

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VI. Description of efforts made to ensure that offers are solicited from as many potential sources as practicable.

A Request for Information (RFI) was posted to beta.SAM on 19 March 2020 with a response date of 20 April 2020 under solicitation F3QCCM0000A101. The RFI requested responses from interested vendors that possess the expertise, capabilities, and experience to meet qualification requirements for this effort. The Government received responses from Teradyne and one other vendor, Ridgetop Group, Inc. The vendors were evaluated for their capability based on whether they have the proprietary data required to produce the individual parts within the kits. Ridgetop Group, Inc. was deemed incapable because they lack the proprietary data required to produce the individual parts within the kits. The exact part numbers are required in order to maintain the configuration control baseline and promote transportability of workload between test stations. Due to the proprietary nature of the data, Teradyne is the only source identified as being capable of meeting the exact and mandated requirements of the Government.

This requirement will be synopsized on beta.SAM in accordance with FAR 5.201. It is anticipated that sources having an interest in subcontracting may be identified through synopsis. Any source who responds to the Government as a result of this synopsis will be identified to the prime contractor as a potential subcontracting possibility.

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 fair and reasonable to the Government. In accordance with FAR 15.403-3, the Contracting Officer will require the submission of other than certified cost or pricing data. Price analysis or cost analysis based on “information other than certified cost or pricing data” will be used to examine and evaluate the proposed prices to determine fair and reasonable pricing. Price analysis techniques include comparison of proposed prices to historical prices paid for a same or similar item; comparison with published price lists, offered catalog prices and prices obtained through market research for a same or similar item; comparison of proposed prices with independent Government estimate; or analysis of data other than certified cost or pricing information.

VIII. Description of the market research conducted and the results, or a statement of the reasons market research was not conducted.

Market research in accordance with FAR Part 10 was conducted from 26 January 2020 through 20 April and finalized on 21 April 2020. Techniques used included posting a RFI as well as a search of the Small Business Dynamic Small Business Search (DSBS) engine.

As described in section VI above, an RFI was posted to beta.SAM advising the industry of the pending acquisition and soliciting inquiries from interested vendors. The RFI was posted on 19 March 2020 with a response date of 20 April 2020 under solicitation F3QCCM0000A101. The Government received responses from Teradyne and one other vendor, Ridgetop Group, Inc. The vendors were evaluated for their capability based on whether they have the proprietary data required to provide the exact kit contents. Ridgetop Group, Inc. was deemed incapable because they lack the proprietary data required to produce the individual parts within the kits. The exact part numbers are required in order to maintain the configuration control baseline and promote transportability of workload between test stations. Due to the proprietary nature of the data, Teradyne is the only source identified as being

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A DSBS search for HUBZone, 8(a), Veteran, Woman Owned and Service Disabled Veteran Owned businesses using North American Industry Classification System code 334515 and key words “test equipment” was conducted and returned a list of 105 vendors. Several sources for “test equipment” were identified, however, due to the proprietary nature of the parts being procured, none are capable of satisfying the requirement. A large business, Teradyne, owns the proprietary data needed to maintain configuration control and performance according to test station specifications.

The VDATS kits are considered commercial items as defined in FAR 2.101. The parts within the kits are used by both military and commercial customers. The VDATS consists of standardized, commercially available test equipment, components and software.

The market research concluded Teradyne, Inc. is the only vendor capable of fulfilling the Government's requirement.

IX. Any other facts supporting the use of Other Than Full and Open Competition.

None.

X. List of any sources that expressed, in writing, an interest in the acquisition.

See Section VI above.

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 or services required.

Acquisition must remain restricted to the controlled baseline that is approved and tested for the VDATS. A request for purchase of data from Teradyne was requested on 7 April 2020. Teradyne replied that they would not sell the data for their kits as the proprietary data forms the basis of their competition in the marketplace.

While the current market research indicates a sole source environment for the VDATS, the Government will continue to engage with the OEM on an annual basis to determine the feasibility of procuring the technical data package. Alternate sources of supply for equivalent parts are constantly being reviewed/evaluated in order to increase competition and system responsiveness. If a replacement for the VDATS is required in the future, competition would be considered.

There was no prior J&A for VDATS kits with exception to the Single Source Justification (SSJ) approved by the Contracting Officer for VDATS AB-13 Instrument Kit, P/N 660-112-10. Previous acquisitions of VDATS parts were done on an individual basis. The plan to overcome barriers to competition in the SSJ for the AB-13 Instrument Kit purchase was to scan the market frequently for new companies that could satisfy the Government's requirements. For the current requirement the VDATS team has scanned the market as described and determined that Teradyne is the only capable source. Based on completion of the prior plan, higher level approval in accordance with DFARS PGI

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206.304 (a) (S-70) (ii) is not required.

XII. Certification by the Contracting Officer.

As evidenced by my signature above, I have determined this document to be both accurate and complete to the best of my knowledge and belief.

XIII. Certification by the technical/requirements personnel.

As evidenced by my (our) signature(s), I (we) certify that any supporting data contained herein, which is my (our) responsibility, is both accurate and complete.