Legal_Approved_REDACTED_J&A_PATRIOT_ES.pdf

Control No.CAO-17-0045

JUSTIFICATION AND APPROVAL (J&A) FOR OTHER THAN FULL AND OPEN

COMPETITION FOR FIVE-YEAR PHASED ARRAY TRACKING RADAR TO

INTERCEPT OF TARGET (PATRIOT) WEAPON SYSTEM ENGINEERING SERVICES

(ES)

1. Contracting Activity: Army Contracting Command-New Jersey.

2. Description of Action: The Lower Tier Project Office (LTPO) requests a new Indefinite-Delivery, Indefinite-Quantity (IDIQ), five-year contract, which may include Firm-Fixed-Price (FFP), FFP Level-of-Effort (LOE), Cost-Plus-Incentive-Fee (CPIF) and Cost-Plus-Fixed-Fee (CPFF) task orders with Raytheon Company, 350 Lowell Street, Andover, MA 01810-4400, Commercial and Government Entity (CAGE) Code 05716.

The anticipated point of departure for CPIF share ratio is 80/20 and the maximum incentive fee percentage is 15. The Government’s projected award date is 1 February 18, covering an anticipated period of performance of 1 February 18 through 31 January 2023. The resulting contract will be funded with Missile Procurement, Army funds, estimated at $784,038,680, Research Development Test and Evaluation Army funds, estimated at $275,627,941, Operations and Maintenance Army, estimated at $3,381,321 and Foreign Military Sales (FMS) funds, estimated at $1,237,256,548, for a total estimated cost of $2,300,304,490. The FMS cases are not source directed.

3. Description of Supplies/Services: Approval is requested for the procurement of engineering support activities to include follow-on test requirements and the continued obsolescence refresh and integration of the PATRIOT Weapon System to other systems that provide the air and missile defense (AMD) capabilities to the United States (US) and FMS customers. This includes software development, integration, and testing for the PATRIOT Weapon System program, a five year effort with Raytheon Company.

There is a permanent critical need for the US Army and our FMS customers to maintain and sustain a low-to-medium altitude missile defense system with the capability to counter, defeat, and destroy tactical ballistic missiles, and air breathing threats which include cruise missiles, unmanned aerial vehicles, and anti-radiation missiles. The PATRIOT Weapon System is the only ground-based system that currently provides comprehensive air defense capability against this broad range of threats to the US and our FMS customers who own the PATRIOT Weapon System.

The PATRIOT Weapon System is the world’s premier air defense weapon system and is directly supported by the ES contract. Continuous and innovative software and hardware engineering solutions are mandatory to maintain readiness against current and constantly evolving threats. The new technologies and solutions are inserted into both system software and hardware through this ES effort. The entire system is under software control and the software is continually maintained and upgraded against the threat through this effort. The hardware engineering modifications are required based on software requirements, obsolescence, reliability, maintainability, or as necessary to replace or add modifications to existing equipment. There is a continuing requirement

Control No. CAO-17-0045

SOURCE SELECTION INFORMATION-SEE FAR 2.101 and 3.104 for those ES functions not related to manufacturing consisting of ongoing support for new developments and investigations, engineering support of fielded hardware and software, support for FMS customers, and those activities which draw upon data or expertise generated from previous production contracts.

The total estimated value of this IDIQ contract is shown in the table below.

Engineering Services Minimum Maximum Period of Performance Labor Hours Dollar Amount Labor Hours Dollar Amount Year 1 - 1 Feb 18 - 31 Jan 19 1,018,201 $251,266,702 1,781,852 $439,716,728 Year 2 - 1 Feb 19 - 31 Jan 20 1,033,036 $258,137,599 1,807,813 $451,740,798 Year 3 - 1 Feb 20 - 31 Jan 21 1,032,110 $260,459,918 1,806,193 $455,804,856 Year 4 - 1 Feb 21 - 31 Jan 22 1,032,110 $268,273,253 1,806,193 $469,478,193 Year 5 - 1 Feb 22 - 31 Jan 23 1,032,110 $276,322,237 1,806,193 $483,563,915 Total 5,147,567 $1,314,459,709 9,008,244 $2,300,304,490

Approximately 54 percent of the above costs are shared by the US and FMS for engineering efforts that are common to all countries, with the remaining 46 percent of the total above costs representing either US or FMS unique engineering efforts. The total five year contract shared costs are estimated at $1.25B. For the US and FMS shared efforts, the US portion is approximately 29 percent (~$363.7M) of the $1.25B.

The FMS countries fund the remaining 71 percent (~$886.3M). Shared funding for common efforts through the International Engineering Services Program (IESP) has been absolutely essential to maintaining PATRIOT Weapon System readiness and capability and has been of great benefit to the US and the FMS customers.

4. Authority Cited:

The statutory authority permitting other than full and open competition is Title 10 United States Code (U.S.C.) Section 2304(c)(1) as implemented by Federal Acquisition Regulation (FAR) 6.302-1(a)(2)(iii)(A) and (B), “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements”.

5. Reason for Authority Cited:

a. As described at FAR 6.302-1(a)(2), when the supplies or services required by the agency are available only from one responsible source, or for the Department of Defense (DoD), the National Aeronautics and Space Administration, and the Coast Guard, from only one or a limited number of responsible sources, and no other types of supplies or services will satisfy agency requirements, full and open competition need not be provided for. The proposed source is Raytheon Company, 350 Lowell Street, Andover, MA 01810-4400, CAGE Code 05716. Raytheon has been the sole-source contractor for these highly specialized services since 31 December 1991. Raytheon Company, is the only source with the corporate PATRIOT Domain Specific (PDS) knowledge, experience, capability and facilities to support the ES program.

b. Substantial duplication costs that are not expected to be recovered through competition are estimated to be at least $650M, based on a Business Case Analysis that was performed in 2013 for the Justification and Approval for the Phased Array Tracking Radar Interception of Target Weapon System Engineering Services contract for Contract Year 2014-2018, which was signed 06 May 2013. That Justification was approved by the Under Secretary of the Army in accordance with prevention of conflict of interest procedures for J&As over $1.6 billion with Raytheon Company in place for the Senior Procurement Executive at that time. A cost comparison was conducted to determine the feasibility of competing or sole source procurement for this engineering services effort. The US Army Cost Benefit Analysis Guide, dated 12 January 2010, by the Office of the Deputy Assistant Secretary of the Army (Cost & Economics) was used to validate the research data. The estimate of $650M is for duplication of facilities, test equipment, and capital investment that was provided to and currently is in use within the Raytheon Company. The Government would be required to provide an alternate source with the same Government furnished equipment (GFE) that was provided to Raytheon to perform the ES effort. The GFE could not be transferred to an alternate vendor because it supports other PATRIOT Weapon System production/modification contracts that use the same facilities and equipment. Over the past 30 years, the PATRIOT Missile System has evolved into a multi-national defense system consisting of the US and 12 international partner nations. It is through this contract with Raytheon that all 13 countries fund a large common shared engineering services effort. The ES contract shares approximately 33% of the facility/equipment cost with the other PATRIOT production contracts. This synergy of facilities/equipment among multiple contracts significantly reduces overall costs for both ES and production/modification efforts for both the US and its FMS customers. An effort to provide hard data for estimating the cost and schedule increase due to loss of synergy is not possible at this time. However, a conservative estimate would indicate an additional cost increase of 10 to 20 percent to the US Government and its FMS customers for existing and future production programs that remain with Raytheon Company.

c. Using an alternate source would result in significant unacceptable delay of services to both the US and FMS customers. Because of the different configurations of the PATRIOT Weapon System for the US and FMS customers, an alternate source must have extensive PDS familiarity with the US PATRIOT Weapon System as well as detailed knowledge of the unique aspects and subtleties of each foreign partner’s configuration. The world situation remains volatile with changing operational and threat environments. Understanding the PATRIOT Weapon System complexity and interconnectivity of the major end items and the interconnectivity among all country configurations cannot be seamlessly transferred to a new source in an acceptable period of time. A source with little to no understanding of the PATRIOT Weapon System will create an unacceptable risk of reducing performance of the systems, and affecting interconnectivity among the allied weapon systems, which could result in the significant loss of life as well as property. Based on input from software, hardware, logistics, test, configuration management, and product assurance functional areas of the LTPO, along with data from previous production contracts, it was determined that a period of not less than 7 years (at least one to two years for a new source to acquire facilities; at least two years to obtain Defense Security Services facility approvals; at least two to three years to package and move special test equipment, special tooling, major end items; at least two to three years of training, pilot line validations, and experience) would be required for a new source to reach the level of experience necessary to meet the Government’s requirement for PATRIOT ES. Currently, Raytheon Company is the only provider with the experience and corporate knowledge of the PATRIOT system to rapidly deploy a team of field support representatives to meet all US and FMS customers’ ES requirements. Award to any other source would result in unacceptable delays in performance of these critical PATRIOT Engineering Services to US and FMS customers. These services are required to maintain system readiness against currently and constantly evolving threats. Such a delay would result in significant risk to the Warfighters, including potential loss of lives and significant damage to property.

6. Efforts to Obtain Competition:

a. For reasons cited in paragraph 5, there is no alternate source that can provide the services, hardware, facilities, equipment, and technical support necessary for the PATRIOT Weapon System ES requirement. This action is authorized under the provisions of Title 10 U.S.C. Section 2304(c)(1), as implemented by FAR 6.302- 1(a)(2)(iii)(A) and (B), “Only One Responsible Source, and No Other Supplies or Services Will Satisfy Agency Requirements.” Effective competition may be accomplished at the subcontract level. The prime contractor is encouraged to promote competition for all subcontracts when possible. Based upon the technical factors stated above, effective competition is not expected subsequent to the synopsis. As a participant of the DoD test program as set forth in Defense Federal Acquisition Regulation Supplement (DFARS) 252.219-7004, Small Business Subcontracting Plan (Test Program), Raytheon Company is required to submit and adhere to an approved small business subcontracting plan. The contract for this requirement will contain FAR Clause 52.244-5, “Competition in Subcontracting”, which requires the contractor to select subcontractors on a competitive basis to the maximum practical extent, and DFARS Clause 252.219-7004, Small Business Subcontracting Plan (Test Program).

Applicable clauses pertaining to subcontracting will be included in any resultant contracts. All business concerns which are identified through the synopsis will receive due consideration as required by law. Furthermore, this service contract is part of an overarching program of the PATRIOT system of systems. Component breakout is best accomplished in the hardware production portion of the system of systems and is therefore not applicable for this action.

b. Based on information gathered in the Market Research, it has been determined that the efforts covered in this justification are not of a commercial nature, and cannot be purchased in accordance with (IAW) FAR Part 12. Market Research is continuously conducted at US Army Aviation and Missile Command through the source approval process that is published on the World Wide Web at the Competition Advocate’s homepage, http://amcomdmz.redstone.army.mil/casl_cmo/casl_cmo_home. New sources are encouraged to submit Source Approval Requests for consideration.

http://amcomdmz.redstone.army.mil/casl_cmo/casl_cmo_home

c. On 17 March 2016, a Sources Sought was issued in the Federal Business Opportunities (FedBizOpps), IAW Office of the Secretary of Defense memorandum dated 21 August 2014, Actions to Improve DoD Competition. The Sources Sought notified industry of ES needed to support the PATRIOT Weapon System. Raytheon Company, the proposed contractor, submitted the only response and was found technically acceptable. No additional competition is expected.

7. Actions to Increase Competition: Future PATRIOT Weapon System ES requirements will be evaluated to determine whether competition would be economically feasible and in the best interest of the Government. As new requirements are identified, the LTPO will continue to review requirements for possible competitive procurement opportunities. Competition at the sub-contract level by the contractor, and component breakout competition by the Government is considered the best strategy to foster competition on this program.

8. Market Research:

a. Market Research, conducted IAW FAR Part 10, was performed in August 2016 by the Acquisition Management Specialist in the Production/Configuration Management Directorate, LTPO. The following knowledgeable persons were consulted in August 2016 as part of the Market Research: Director, Systems Engineering, LTPO; Director, Production/Configuration Management Directorate, LTPO; International ES Coordinator, Production/Configuration Management Directorate, LTPO; and Director, Software Directorate, LTPO. The contractor performance assessment reporting system and FedBizOpps databases were queried. Results of recent Market Research for PATRIOT ES for contracts W31P4Q-14-C-0093 and W31P4Q-09-C-0057 for similar or identical requirements were reviewed. A formal sources sought synopsis, W15QKN-16-X-0442, was issued in FedBizOpps on 17 March 2016. The 2016 US Army Weapon Systems Handbook was reviewed. Raytheon Company, the proposed contractor, submitted the only response and was found technically acceptable. No additional competition is expected.

b. Results of the Market Research indicated that no other contractor has the immediate capability to provide the required PATRIOT Weapon System ES. In the course of developing, producing, and supporting the PATRIOT Weapon System, Raytheon Company has obtained the unique knowledge, technical expertise, unique facilities, and experience essential to the performance of this effort. As a result, Raytheon Company has performed the ES function since its initial production and deployment. The PATRIOT Weapon System is a military specific weapon, and the Government’s needs and specifications cannot be met commercially utilizing FAR Part 12. A Sources Sought, W15QKN-16-X-0442, was posted to FedBizOpps on 17 March 2016 for fifteen days IAW DFARS 205.205-71, DFARS 206.302-1(d), and DFARS Procedures, Guidance and Information (PGI) 206.302-1(d). Raytheon Company submitted the only response on 31 March 2016. The response was evaluated and found to be technically acceptable.

9. Interested Sources: To date, no other sources have written to express interest in the acquisition. The synopsis to announce the solicitation, as required by FAR 5.201, was published in the FedBizOpps on 17 January 2017. The proposed contract will be synopsized in FedBizOpps prior to award. Any additional sources identified through the synopsis procedure will receive due consideration as prescribed by law.

10. Other Facts:

a. Procurement History.

1) The following is a list of the previous PATRIOT Weapon System ES contracts:

Fiscal Year (FY)/ Contract Number Calendar Year (CY) Award Date Dollar Value

W31P4Q-14-C-0093 (CYs 14-17) 14 Aug 14 $639M W31P4Q-09-C-0057 (FYs 09-13) 30 Jan 09 $932M W31P4Q-04-C-0020 (FYs 04-08) 30 Jan 04 $1.04B DAAH01-99-C-0028 (FYs 99-03) 1 Feb 99 $636M DAAH01-95-C-0043 (FYs 95-98) 30 Dec 94 $469M DAAH01-92-C-0006 (FYs 92-94) 31 Dec 91 $436M

2) The contracts listed above were all awarded on a sole source basis to Raytheon Company.

3) The awards were all made pursuant to the authority of Title 10 U.S.C. Section 2304(c)(1) as implemented by FAR 6.302-1(a)(2)(iii)(A) and (B), "Only One Responsible Source, and No Other Supplies or Services Will Satisfy Agency Requirements."

4) To support a sole source award of the current contract for PATRIOT Weapon System ES, W31P4Q-14-C-0093, a J&A was prepared. The planned actions to increase competition stated in paragraph 7 of that J&A were to review new requirements for possible competitive procurement and encouragement of subcontracting competition to Raytheon Company. Those actions were taken, but competition for the contract actions covered by this J&A is still not feasible as a result of a continuing unacceptable expense and time involved in standing up a second source. There have been no changes since the last J&A was approved, other than indications that new FMS members are seeking to join the Patriot IESP. The ES requirement to support all FMS and US forces in maintaining readiness against the constantly evolving threats as delineated above still remains.

11. Technical Certification: I certify that the supporting data under my cognizance which are included in the justification are accurate and complete to the best of my knowledge and belief.

Typed Name: COL John M. Eggert Date: ___21 Nov 2016______________

Title: Project Manager Signature: ___//signed//____________

12. Requirements Certification: I certify that the supporting data under my cognizance which are included in the justification are accurate and complete to the best of my knowledge and belief.

Typed Name: COL John M. Eggert Date: ____21 Nov 2016_____________

Title: Project Manager Signature: ___//signed//____________

13. Fair and Reasonable Cost Determination: I hereby determine that the anticipated cost to the Government for this contract action will be fair and reasonable.

This determination will be made using the following: cost analysis, technical evaluation and independent government cost estimate.

As a part of this basis, certified cost or pricing data, will be required.

Typed Name: Therese M. Grimm___ Date: ____30 Nov 2016_____________

Title: Contracting Officer Signature: ___//signed//____________

14. Contracting Officer Certification: I certify that this justification is accurate and complete to the best of my knowledge and belief.

Typed Name: Therese M. Grimm__ Date: _____30 Nov 2016____________

Title: Contracting Officer Signature: ___//signed//_____________

APPROVAL

Based on the foregoing justification, I hereby approve the procurement of engineering support activities to include follow-on test requirements and the continued obsolescence refresh and integration of the Phased Array Tracking Radar to Intercept of Target Weapon System to other systems that provide the Air and Missile Defense capabilities to the United States (U.S.) and Foreign Military Sales (FMS) customers described herein from Raytheon Company on an Other Than Full and Open Competition basis pursuant to the authority of Title 10 United States Code Section 2304(c) (1), as implemented by Federal Acquisition Regulation 6.302-1(a) (2) (iii) (A) and (B), “Only One Responsible Source, and No Other Supplies or Services Will Satisfy Agency Requirements.” The total estimated value for this procurement, to include U.S. and FMS requirements, is $2,300,304,490.

The procurement period of performance will be five years beginning on or about 1 February 2018 through 31 January 2023. This requirement is subject to the availability of funds and provided that the services and property herein described have otherwise been authorized for acquisition.

DATE: ___9 Feb 2017________ _______//signed//__________ Steffanie B. Easter Senior Procurement Executive