Redacted_JA_Facilites_Extension_PARC_approved_15_June.pdf

CMO Control Number: 2016-102

DEPARTMENT OF THE ARMY

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Agency: Army Contracting Command–Warren (ACC-WRN) is the contracting activity for this action.

2. Description of Action: ACC-WRN proposes to award a modification to contract W56HZV-12-C-0067, with Allison Transmission Incorporated (ATI) of Indianapolis, Indiana, for the maintenance of Government-owned production equipment in the contractor-owned Plant 14. The requirements procured under this contract will be used to support production of the Abrams Tank Transmission and retain the Government’s capability to meet surge requirements. This modification will be awarded on a cost no-fee basis utilizing Fiscal Year (FY) 2015, 2016, and 2017 Procurement Appropriations Army (PAA) and Production Base Support (PBS) funds.

3. Description of Services: The Government has acquired various pieces of plant equipment in support of transmission production since the program’s inception in FY79.

At present, ATI manages 2,417 line items of Government-owned plant equipment with an initial acquisition value of $86,600,339.83. Currently, 94% of the equipment is at least 20 years old and maximum recommended life for this same equipment ranges from 15 to 25 years. Current production capability at Plant 14 includes various machining operations, copper plating, heat treatment, testing, and assembly. Over the past 31 years, ATI has provided the supplies and services necessary for the acquisition, installation, maintenance, repair, replacement, rehabilitation, preservation, protection, surveillance, accountability, and disposition of the Government-owned equipment necessary to ensure the continued production of the Abrams Tank transmissions as well as transmission overhaul kits for Anniston Army Depot in Anniston, Alabama.

The work performed under this contract will include the repair, retrofitting, and replacement of Government-owned equipment by skilled trades including but not limited to electricians, millwrights, riggers, and pipefitters. Qualifying the equipment for production and training employees on new equipment is also included in the Government Work Orders (GWOs).

a. Under the proposed facilities contract extension, the Government will continue to support the Government-owned equipment located in Allison’s Plant 14 production facility. The total estimated value of this action is $27M and will be for GWOs placed between award of this modification and 31 December 2017. GWOs will be awarded via modifications. The $27M estimate for this acquisition captures the estimated cost of the top projects prioritized by Government subject matter experts as critical to the successful production of the near term requirements anticipated to be awarded to ATI for the support of the Abrams tank program during this period of time.

b. Activities under this contract will be executed via the existing Government Work Order (GWO) method. The contractor shall submit GWOs to the Government Contracting Officer’s Representative (COR) for review and approval of the project.

GWOs will also be reviewed by Government personnel on site who will provide the COR with feedback. Performance on all GWOs will be monitored by the Administrative Contracting Officer (ACO) and the COR.

4. Authority Cited: The statutory authority permitting Other than Full and Open Competition is Title 10 United States Code (U.S.C.) 2304(c)(1), as implemented by Federal Acquisition Regulation (FAR) 6.302-1(a)(2)(iii)(B), “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.”

Services may be deemed to be available only from the original source in the case of follow-on contracts for the continued provision of highly specialized services when it is likely that award to any other source would result in unacceptable delays in fulfilling the agency’s requirements.

5. Reason for Authority Cited: ATI owns the real property where the Government furnished equipment is located. Plant 14 is also a United Auto Workers represented facility with negotiated labor agreements. All labor performed in the plant is required to be insourced to the maximum extent possible. Competing this requirement and allowing a third party contractor access to Plant 14 would violate that negotiated agreement and potentially expose ATI’s proprietary parts and processes to an outside source. The Government-owned equipment and contractor-owned equipment are utilized together in the contractor’s proprietary processes necessary to build the Abrams transmission. For this reason, ATI has a financial interest in maintaining production operability in Plant 14 that no other contractor would have. To compete the requirement for equipment repair and maintenance, the equipment would have to be relocated, or, in the case of older machines that would not survive a move, purchased new and located in a new production facility. Removing the equipment from ATI owned Plant 14 and proprietary processes, or purchasing new equipment, would first necessitate the competition of the production requirement.

Production competition would require re-engineering the Abrams transmission because ATI is the custodian of the technical data and owns the proprietary rights to two major replacement components in the Abrams X1100 transmission. The key components are the torque converter assembly and the hydrostatic steer unit. These two components consist of 32 individual parts. ATI has informed the Government it will not sell a license for the technical data because these components or their designs and related manufacturing processes support ATI’s commercial transmission business base. The Government has only the higher level, source controlled drawings of these 32 parts.

The drawings available to the Government do not contain sufficient technical data for competition, manufacture, or production of the transmission. Therefore, a Technical Data Package suitable for competitive procurement is not available due to the nature of the proprietary parts, as well as the time it would take to develop the requisite data.

a. In accordance with subject matter experts in the Tank Automotive Research Development and Engineering Center (TARDEC) and Program Directorate Main Battle Tank System who conducted a study in the fall of 2014 on the complete re-engineering process required to produce the X1100-3B transmission, preliminary estimates to reverse engineer the transmission consist of the following time elements:

Technical Data Package Development 36 Months

Procurement Lead Time 24 Months Tooling Development 18 Months Testing (First Article, Durability, Quality) 24-36 Months Full Production 12 Months

Total 114-126 Months or 9.5-10.5 years to production

In August 2015, a third party firm, at the request of Program Executive Office Ground Combat Systems, conducted an industrial base study on Plant 14 and reviewed and incorporated the results of the TARDEC re-engineering study into its report. The firm validated the results of the TARDEC study to be current, accurate, and complete as of the date of its report in August 2015.

b. The 9.5 to 10.5 years estimated for a re-engineering effort and development of a new supplier of the transmission would create an unacceptable delay for the Abrams System Enhancement Program Version 3 (SEPv3) production. SEPv3 tanks are estimated to begin production in July 2017 with a requirement for the following transmissions to be delivered to support production:

Month QTY/Month January 2017 3 February 2017 3 May 2017 1 June 2017 2 July 2017 3 August 2017 3

September 2017 – August 2018 4

Developing a new supplier for equipment repair and maintenance of the equipment, which would first necessitate the re-engineering of the production requirements, would place SEPv3 transmission production between November 2025 to November 2026, delivering transmissions nearly 9-10 years after they are required to support tank production.

6. Efforts To Obtain Competition:

a. Effective Competition: There is no plan to obtain competition for this requirement due to the reasons stated in Section 5 above.

b. Subcontracting Competition: Subcontracting competition will be encouraged by including FAR clause 52.244-5, “Competition in Subcontracting,” which requires the contractor to select subcontractors on a competitive basis to the maximum extent practicable.

7. Actions to Increase Competition: Due to the unique nature of this requirement, the reasons listed in Section 5, and its close association to the X1100 transmission production, no efforts will be been made to increase competition for subsequent procurements.

8. Market Research: A Sources Sought survey was published on 26 October 2015 on

Federal Business Opportunities (FedBizOpps) with a response date of 22 November 2015. The sources sought notice was issued to ascertain the capabilities and availability of vendors that may be able to perform the required equipment services as detailed in Section 3, for Government-owned equipment at Allison Transmission’s Plant 14. The only interested response received from the Sources Sought survey was from Allison Transmission, the manufacturer of the Abrams transmission and owner of Plant 14 where the Government equipment is located.

9. Interested Sources: To date, no other sources have written to express an interest.

Notices required by FAR 5.201 shall be published, and any bids or proposals received shall be considered.

10. Other Factors:

a. Procurement History:

1) A list of previous contracts for the repair and maintenance of Government production equipment supporting transmission production are as follows:

Contract Number Obligated Amount Date W56HZV-12-C-0067 $ 1,230,405.41 15 March 2012

DAAE07-02-E-N001 $16,681,630.77 14 March 2002

2) All previous procurements were awarded on a sole-source basis to ATI or to its preceding corporate incarnations.

3) Authority cited for the previous contracts was 10 U.S.C. 2304(c)(1) and FAR

6.302-1, Only One Responsible Source.

4) The previous Justification and Approval for this requirement cited FAR 6.302-

1(b)(1), Use of Other Than Full and Open Competition. The rationale used to support this justification focused on the close interrelation of the facility maintenance requirement and the production requirement stating that Allison

“is the only contractor that can develop a comprehensive equipment maintenance plan that will support production deliveries.”

5) The prior contract was not accomplished using full and open competition.

6) No unusual patterns were seen in the procurement history.

7) Please see information in paragraph 10.a.4 for prior justifications. There have not been any significant changes to the previous Justification and Approval.

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.

Name: CONSTANCE M. TUCKER Date:_13 April 2016___

Title: Deputy Project Director, Signature:_____//signed//___________ Main Battle Tank Systems

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.

Name: CONSTANCE M. TUCKER Date:____13 April 2016

Title: Deputy Project Director, Signature:___//signed//_____________ Main Battle Tank Systems

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. Certified Cost or Pricing Data will be required in accordance with FAR 15.403-4.

Name: Lisa Behnke Date:_6 May 2016_____ Title: Contracting Officer____ Signature:_____//S//LB_______

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

Name: Lisa Behnke Date:_6 May 2016_____ Title: Contracting Officer____ Signature:_____//S//LB_______

APPROVAL

Based on the foregoing justification, and as Principal Assistant Responsible for Contracting (PARC) pursuant to Army Material Command (AMC) Head of the Contracting Activity (HCA) Delegation of Authority(DOA) #15-19, I hereby approve the procurement of the services required to maintain Government-owned production equipment at Allison Transmission Plant 14 in Indianapolis, Indiana, on an other than full and open competition basis pursuant to the authority of 10 U.S.C. 2304(c)(1) as implemented by FAR 6.302-1(a)(2)(iii)(B), “One Responsible Source and No Other Services Will Satisfy Agency Requirements,” subject to the availability of funds, and provided that the services and property herein described have otherwise been authorized for acquisition. The total estimated value of this action is $27M.

15 June 2016 //signed// KAM

DATE: ________________ SIGNATURE: _______________________________

KRISTAN A. MENDOZA

Principal Assistant Responsible for Contracting