W56HZV08D0037_P00052_JA_30_Apr_15-_Redaction_(002).pdf

CMO Control #: 15-084

DEPARTMENT OF THE ARMY

JUSTIFICATION AND APPROVAL FOR OTHER THAN

FULL AND OPEN COMPETITION

1. Contracting Activity: Army Contracting Command – Warren (ACC-WRN).

2. Description of Action: ACC-WRN plans to issue a Firm Fixed Price modification to the production contract W56HZV-08-D-0037 to Caterpillar (CAT) Defense & Federal Products of Mossville, Illinois to add 22 each 120M Motor Grader Low Velocity Air Drop (LVAD) Kits and the effort required to install them on CAT 120M Motor Grader Type I systems. The proposed award will be funded with Fiscal Year (FY) 2015 & 2016, Other Procurement, Army (OPA) funds.

3. Description of Supplies: The proposed acquisition is to procure an estimated quantity of 22 each LVAD Kits and the effort required to install them on the 120M Motor Grader Type I system. Upon installation of the LVAD Kits, the 120M Motor Grader Type I system will meet MIL-STD-814, “Requirements for Tie Down, Suspension, and Extraction Provisions on Military Materiel for Airdrop”. After installation of the LVAD Kits, the Grader will become a 120M Grader Type IA system. This action is expected to satisfy the current Authorized Acquisition Objective (AAO). The total estimated value of this action is $1,375,000.

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(a)(2)(ii)(A), “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements”. Supplies may be deemed to be available only from the original source in the case of a follow-on contract for the continued development or production of a major component thereof, when it is likely that award to any other source would result in – (A) Substantial duplication of cost to the Government that is not expected to be recovered through competition.”

5. Reason for Authority Cited:

a. Background: CAT is the only responsible source that can fulfill this requirement without causing a substantial duplication of cost to the Government that is not expected to be recovered through competition. CAT is the developer and the Original Equipment Manufacturer (OEM) of the 120M Motor Grader and the LVAD Kit; therefore, it has the Technical Data Package (TDP) required to develop integrated kits, produce them, and install the kits. CAT is unwilling to share the technical data, as it wants to continue selling the 120M Motor Grader commercially and protect its proprietary status.

Considering these facts, in order for the Government to effect a competitive acquisition, it would have to fund a reverse engineering effort on the grader to create the data needed to design an LVAD Kit.

b. Substantial Duplication of Costs: Award to any other source would cause a duplication in costs in the amount of $1,050,000 through the following efforts:

i. The military testing estimated cost for this effort is $200,000. This is the cost of all required testing to occur at Aberdeen Testing Center (ATC) and Natick to prove the design to include the actual air drop testing of the system. This amount also includes $125,000 for Live and Static Drop Testing, $35,000 for provision testing, and $40,000 for Roller load and Air Drop Certification. These costs to test an air drop system as provided through TARDEC Engineering and are the actual values ATC and Natick charge for these efforts as actual measured costs in FY15. Testing for Air Drop is required to go through ATC and Natick because the US Air Force requires certain testing when certifying Air Drop that it must witness and certify. The Air Force will not accept testing from any civilian test agencies.

ii. Developing computer models and performing Finite Element Analysis (FEA) that already exists in CAT’s proprietary database would be required.

FEA is essential to simulate stresses prior to live air drops and will significantly reduce the risk of catastrophic failure due to design flaws.

Solid models with exact load calculations are also needed to determine compatibility and rigging configuration with the U.S. Air Force’s equipment.

Data provided by a third party contractor would have estimated calculations unless a large engineering effort was conducted. If estimated calculations were utilized, failures would occur. In order for a competitor to develop an air drop system with the required capabilities for the 120M Motor Grader I, it would need to instrument and gather extensive test data about the physical characteristics of the system. The cost for the FEA is embedded in the design cost.

iii. In addition to the required military testing and FEA, award to any other source would also require engineering costs through acquiring a CAT 120M Motor Grader Type I at a cost of $265,000 and designing an air drop kit for the CAT 120M Motor Grader to the estimated amount of $585,000.

The total engineering costs for this effort is $850,000 and are based on actual costs incurred under contracts W56HZV-08-D-0037 and W56HZV- 13-C-0230 with CAT. Award to another contractor would also require the added cost of reverse engineering the CAT 120M Grader.

The Army does not have technical descriptions of the kit components that can be provided to prospective kit suppliers, thus any company that would be interested in supplying this kit would be required to purchase a military 120M Motor Grader Type I and design a complete air drop kit. Since this kit is intended as a once only application, there is an insufficient quantity of kits that would be procured in the future to justify and recoup this investment. Additionally, the Army intends to procure the AAO for the LVAD Kits under this effort. The estimated value of this procurement is $1,375,000.00, while the duplicated costs to qualify a new contractor are estimated at $1.05M. This equates to 76.4% of the expected $ 1,375,000 cost of the procurement. As such, if the Government were to compete this requirement, it is highly improbable that the Government could achieve a cost savings of 76.4% through competition. Based on the information provided above, CAT is the only qualified source capable of providing the LVAD Kits with installation on the CAT 120M Motor Grader Type I to meet the Army requirements.

6. Efforts to Obtain Competition: Competition will not be pursued for this action for reasons stated in paragraph five above.

a. Effective competition. Pursuant to FAR 5.201, this proposed contract action will be synopsized in Federal Business Opportunities (FedBizOpps). The synopsis will state that the contract action is for supplies for which the Army intends to negotiate with only one source under the authority of FAR 6.302, Only One Responsible Source.

b. Subcontracting competition. The current contract contains FAR Clause 52.244-5 entitled “Competition in Subcontracting”, which ensures that the prime contractor competitively subcontracts the efforts to the maximum extent possible.

7. Actions to Increase Competition: Competition could be achieved if the Army was to procure the Air Drop Kit Technical Data Package (TDP) from CAT or facilitate a reverse engineering effort. However, this action is expected to satisfy the AAO. If any future efforts arise for the current LVAD Kits, it will be posted to FedBizOpps to seek out potential vendors.

8. Market Research: On 06 February 2015, the Project Engineer’s Market Survey Questionnaire was posted on the Federal Business Opportunities (FedBizOpps) website and on the ACC-WRN Procurement Network where prospective contractors may find current Government contracting opportunities. CAT was the only source who responded to the survey showing both interest in the effort and the capability to meet the Army’s needs in a timely and cost effective manner.

Market Research is continually being conducted by TARDEC Combat Engineering Material Handling personnel, which includes review of technical publications, catalogs, industry literature through either publications or on-line and direct contact with military technology manufacturers and suppliers.

9. Interested Sources: To date, no other sources have written to express an interest other than CAT. In accordance with FAR 5.201, this action will be synopsized and any resulting proposals will be considered.

10. Other Facts:

a. Procurement History:

(1) Contract W56HZV-08-D-0037 for the 120M Motor Grader was awarded to CAT on a competitive best value basis on 30 November 2007 and expires on 30 November 2017. Based on the average unit price, to date, the contract’s total value is approximately $189.5M.

(2) A modification to CAT under Contract W56HZV-08-D-0037 for the field level tool sets for the 120M Motor Grader CAT was signed by the Competition Advocate on 20 August 2010 for an estimated dollar value of $9.6M. The J&A for this sole source acquisition was supported under the authority of 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 Agency Requirements.”

(3) The Authority to award a modification to CAT under Contract W56HZV-08-D- 0037 for the C6.6 Engine Training Aids for the 120M Motor Grader to use for institutional training was signed by the Contracting Officer on 21 May 2013 for an estimated dollar value of $370,000. The J&A for this sole source acquisition was supported under the authority 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 Agency Requirements.” CAT developed the design of the C6.6 Engine and its associated technical data at its own expense.

11/12. Technical/Requirement 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.

11 March, 2015

JOHN W. DANIELE

Deputy Product Manager, Combat Engineer and Material Handling Equipment

Date

13. Fair and Reasonable Cost Determination: I hereby determine that the anticipated price for this contract action will be fair and reasonable based on a cost and price analysis. Certification of cost or pricing data will be required.

Name: REYMUNDO MONCAYO Date:_2 Apr 15_______

Title: Contracting Officer Signature: //RM//

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

Name: REYMUNDO MONCAYO Date:_2 Apr 15______

Title: Contracting Officer Signature: //RM//