JA JSMC-L Facilities 1 year extension (REDACTION) 2020_Redacted FBO.pdf

CMO Control NO: 2019-049

FOR OFFICIAL USE ONLY

DEPARTMENT OF THE ARMY

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Activity: Army Contracting Command-Warren (ACC-WRN), Warren, Michigan 48397-5000, is the contracting activity responsible for this action.

2. Description of Action: ACC-WRN proposes to award a modification to contract W56HZV-13-C-0319 with General Dynamics Land Systems (GDLS) to extend the period of performance adding 12 months and increasing the contract value by This is a cost reimbursement (no fee) facility contract. The modification will provide continuation of services to manage, maintain, and operate the real property (buildings, structures, and property) as well as to maintain, repair, replace, or acquire Government-owned industrial and other plant equipment to support production work efforts located at the Joint Systems Manufacturing Center-Lima (JSMC-L). Funding for this modification is planned to be Fiscal Year 2020 (FY20) Operations and Maintenance, Army (OMA) and Procurement Appropriation, Army (PAA).

3. Description of Supplies/Services: The services to be acquired over the next 12 months include the management, maintenance, and operation of the JSMC-L facility, a Government-owned, contractor-operated (GOCO) industrial plant located in Lima, Ohio.

Management, maintenance, and operation of JSMC-L includes providing new contractor-acquired Industrial and Other Plant Equipment, the use of Real Property and Installed Systems, New and Minor Military Construction, Replacement and Rehabilitation, Upgrade, Preservation, Installation, Use, Maintenance and Repair, Preservation, Protection and Surveillance, Accountability, and Disposition of the Government-Owned assets within the JSMC-L facility. It is the current facility for upgrade of the existing Abrams fleet to its newest variants, double V hulls for the Stryker Family of Vehicles (FOV), the Stryker Dragoon modification program, the Short Range Air Defense (SHORAD) program, the Mobile Protected Firepower (MPF) prototypes, MK46 turret for the U.S. Navy, hull fabrication for the Namer, an Israeli Armored Personnel Carrier (APC), and varying Abrams vehicle configurations for Foreign Material Sales (FMS) customers. GDLS is the contractor operator for the GOCO as well as the contractor for these production and development contracts.

This modification will extend the contract period of performance from September 2019 to September 2020 and increase the contract, by

This contract extension allows work on a follow-on sole source contract.

GDLS will continue to use a fully defined and priced Company Work Order (CWO) process to procure actual services executed through individual modifications to the contract.

4. Authority Cited: The statutory authority permitting other than full and open competition for this action is Title 10 United States Code (U.S.C.) 2304(c)(1), as implemented by Federal Acquisition Regulation (FAR) 6.302-1, “Only One Responsible

Approved for Public Release. Distribution Unlimited. Distribution A. PEO Ground Combat Systems December 2, 2019

(b) (4)

CMO Control Number: 2019-049

FOR OFFICIAL USE ONLY

Source and No Other Supplies or Services Will Satisfy Agency Requirements.”

Pursuant to FAR 6.302-1(a)(2)(iii)(B), “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:

Background/History: As described in FAR 6.302-1(a)(2), use of other than full and open competition is necessary due to the unique production-oriented nature of the services that GDLS is currently providing to the Government. GDLS, as the contractor operator of JSMC-L, is the only source that could provide seamless support to JSMC-L due to the integral link between facility operations, maintenance, and production. There is no way to decouple facility operations and maintenance from production without incurring a break in management, maintenance, and operation services, as well as production delays with the upgrade of the existing Abrams fleet to its newest variants, double V hulls for the Stryker FOV, the Stryker Dragoon modification program, MK46 turret for the U.S. Navy, the Short Range Air Defense (SHORAD) program, the Mobile Protected Firepower (MPF) prototypes, hulls for the Namer, and various Abrams vehicle configurations provided to FMS customers. GDLS has maintained the Government property and real property at JSMC-L since 1978 and is the only known source having the unique capabilities, engineering, and manufacturing knowledge necessary to manage, maintain, and operate the JSMC-L facility and maintain the production equipment required for the Heavy Combat Vehicles production referenced in section 3 of this J&A. GDLS is also the only organization possessing the proper Nuclear Regulatory Commission (NRC) licenses to support certain activities such as the maintenance of the x-ray equipment.

GDLS has established maintenance processes and procedures to ensure the production equipment is properly maintained and repaired in an efficient manner. GDLS has an established support network for materials and specialized on-site labor necessary for the maintenance/repair of Government Furnished Equipment (GFE). The established processes, procedures, and support network are integral to the operations of JSMC-L facilities and the timely completion of maintenance work on Government property, resulting in efficient production of the Heavy Combat Vehicles referenced in section 3 of this J&A. The contractor operator management services are of a diverse and unique characteristic, involving production equipment, which requires close management, coordination, and knowledge by GDLS for cost-effective production and facility operation. The continuation of support from GDLS is critical to the production of Abrams tanks, Stryker FOVs, MK46 turrets, and FMS customer requirements.

Additional Background: The volume of U.S. Army vehicle systems identified above and produced at JSMC-L have fallen considerably since the 1990s. As a GOCO, JSMC-L has considerable facility operating costs accounted for as part of the direct labor overhead rates charged to each production program at the facility. These overhead rates pay for all facility costs . A reduction in the number of production programs produced after the 1990s had a direct impact on the funding that was available for use in the support of equipment and infrastructure repairs. Dwindling production programs and the reduced number of systems produced at the facility, in combination with the lack of Production Base Support (PBS) funding over the last two decades resulted in the underutilization of the facility and the decline of the infrastructure. Recent increases in production requirements to support the SEPv3 and FMS programs have resulted in significant funding increases for JSMC-L. This contract extension and ceiling increase is critical to funding projects that directly support production equipment upgrades and to address the aging infrastructure that have accumulated over the past two decades.

Unacceptable Delay:

a. The qualification and establishment of another contractor operator of JSMC-L would create an unacceptable delay in Army readiness. GDLS used JSMC-L to produce military vehicles for over 40 years. This is not a basic facility property maintenance (building and grounds) contract, but a fully integrated production facility contract. GDLS is required to manage the upkeep of the production line equipment to ensure there is no break in production and maintain the buildings and grounds for a safe and functioning workplace.

. These overhead rates are shared among all products produced at JSMC-L.

Separating JSMC-L operating costs from the production overhead rates would result in duplication of these costs, which is not accounted for in Product Manager (PdM) Abrams’ budget. The U.S. Government cannot recuperate these costs from the production overhead rates, and PdM Abrams cannot recover these costs from FMS customers due to changes to the Fair Pricing Act in the 1990s. The GDLS overhead rates allow for the establishment of facilities maintenance and production equipment repair, resulting in the efficient production of Heavy Combat Vehicles referenced in Section 3 of this document. Separating GDLS’ integral contractor operator functions from production efforts would disrupt maintenance processes, create interference with friction points between facility maintenance, equipment maintenance, and production, and would lead to production line stoppage, resulting in an impact to fielding, technology insertion, and ultimately Army readiness. GDLS is the only source having the engineering, and manufacturing knowledge necessary to maintain the production equipment.

Competing the contractor operator function of this GOCO would result in a significantly long learning curve. The Government would incur adverse schedule impacts on each of the programs listed in Section 3 above. GDLS’ technical expertise and detailed knowledge of its own devised and implemented production processes is vital to the continued operation and maintenance of the JSMC-L facility in a manner that is responsive to production demands, to prevent the disruption of maintenance processes leading to production line stoppage.

If the Government were to award management of JSMC-L to a contractor other than GDLS, the Government would become the coordinator and arbitrator between the facility operator and the production prime. In addition, the US Government would incur costs for increased Government oversight. Risks of delays in coordinating repairs and downtimes with GDLS in the performance of the Heavy Combat Vehicle production contracts would increase and could result in a Request for Equitable Adjustment (REA) for Government caused delay, which would result in increased costs to the Government.

The schedule delay to acquire the management, maintenance, and operation services, in addition to maintaining the production equipment, from a contractor other than GDLS will result in a minimum of 18-24 months unacceptable delay. Described in the table below is the time frame to transfer the corporate knowledge and experience to another contractor:

Ref. Capabilities Time

5.a.(i)

Qualification of New Contractor Operator of the GOCO

6-12 months

5.a.(ii)

Establish management, maintenance, and operation processes and procedures for production equipment and maintenance work on Government property

6 months*

5.a.(iii) Develop an operational plan and establish processes and procedures for facility friction points

12 months*

TOTAL 18-24 Months *Can occur concurrently

(i) Qualification of New Contractor Operator of the GOCO (6-12 months): A new contractor would have to work with GDLS to understand the current layout and production processes to develop its own proactive production equipment repair/maintenance plan. The new contractor would also have to prove out the maintenance plan during the transition of responsibilities between GDLS and the new contractor.

In addition, some of the production equipment maintenance responsibilities would remain with GDLS, because the processes are the intellectual property owned by

GDLS.

(ii) Establish management, maintenance, and operation processes and procedures for production equipment and maintenance work on Government property at JSMC-L (6 months): Development of a management plan would be required along with the development of maintenance and operation processes and procedures. All would be required to ensure the timely and efficient maintenance and repair of production equipment and real property and to ensure timely completion of maintenance work on Government property so there is no interference with production schedules.

(iii) Develop an operational plan and establish processes and procedures for facility friction points (12 months): The friction points are the maintenance and/or service actions that could impact production. The contractor will need to develop an operational plan to address non-interference between the management, maintenance, and operation of the building and production equipment and the production activities and schedules at JSMC-L. The processes and procedures will need to include some of the main friction points for electrical distribution maintenance, water distribution system maintenance, heat distribution system maintenance, environment management systems, hazardous waste management, sanitary system maintenance, CWO process, real property, and government furnished property reports. Even if ACC-WRN were to solicit this effort under a competitive procurement, there is no reason to believe that a new contractor could perform this effort.

6. Efforts to Obtain Competition:

a. Effective competition: For the reasons stated in paragraph 5 above, this action will not be competed. GDLS as the contractor operator and the prime manufacturer of the systems described in section 5 above is the logical source to provide the services needed to support the production lines. GDLS manages and operates the production processes they utilize to meet the Governments’ delivery schedules. The US Government plans no further action to increase competition for this procurement since separating GDLS’ integral contractor operator functions from production efforts would disrupt maintenance processes and lead to production line stoppage, resulting in an impact to fielding, technology insertion, and ultimately Army readiness.

b. Subcontract competition: The current contract contains the following clauses: FAR 52.219-8, “Utilization of Small Business Concerns,” FAR 51.219-9, “Small Business Subcontracting Plan,” and DFARS 252.219-7003 “Small Business Subcontracting Plan (DoD Contracts).” The solicitation requested that the contractors propose positive goals for each of the socioeconomic categories of small businesses and the U.S. Army Tank-automotive and Armaments Command (TACOM) Life Cycle Management Command (LCMC) Office of Small Business Programs reviewed the subcontracting plan. The contract also incorporates the contractor’s negotiated subcontracting goals.

7. Actions to Increase Competition: A follow-on sole-source contract is planned for future requirements pursuant to the authority of FAR 6.302-1, “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.”

8. Market Research: ACC-WRN published a Market Survey on FedBizOpps from 3 May 2018 to 18 May 2018. The survey assessed the current market capability and potential vendors to provide for the direct support of active production of multiple-vehicle systems at JSMC-L.

The Sources Sought described five capability areas deemed important to the operation of JSMC-L, ranging from overall facilities operations to uninterrupted USG production of heavy combat vehicles. The following four vendors responded: GDLS, Jacobs Technology, Inc., Reagent World, Inc., and VSE Corporation.

GDLS, a large business located in Sterling Heights, Michigan, is the current contractor operator of JSMC-L and the producer of heavy combat vehicles referenced in Section 3.

It has successfully managed the GOCO without impact to the production line for the past 40 years. The Government assessed the results of the market research and determined that GDLS has the overall capability to provide this effort.

Jacobs Technology, Inc., a large business located in Tullahoma, Tennessee, is currently providing engineering and technical support services, including Operations, Monitoring, and Maintenance (OM&M), proactive Reliability Based Maintenance (RBM), and Condition Based Maintenance (CBM) to multiple military locations.

Reagent World, Inc., located in Ontario, California, is a small women-owned business and a chemical and technology development and distribution company.

(b) (4)

(b) (4)

VSE Corporation, a large business located in Alexandria, Virginia, has stated the capability to provide overall facilities operations and coordination and equipment maintenance, and operation.

Based on market research, it was determined that some of the companies could manage maintenance of select equipment and various repair and maintenance requirements of the facility, but GDLS is the only contractor that could manage the complexity of coordinating the operation and management of JSMC-L while Abrams production contracts are active. Additionally, the contractor operator services are of a diverse and unique characteristic because of the production-oriented nature of the services, which require close management by GDLS to prevent delays in the performance of the Abrams production contracts. Due to the uniqueness of this requirement, it is not reasonable to expect another contractor can perform the services adequately.

9. Interested Sources: To date no other sources, other than those noted above, have written to express an interest. The Government will synopsize the solicitation in FedBizOpps.

10. Other Facts:

a. Procurement History:

(1) A list of procurement history is as follows:

GOCO Facility:

W56HZV-13-C-0319*

Awarded September 2018 One year Contract Extension Sole Source to GDLS

W56HZV-13-C-0319*

Awarded September 2013 Sole Source to GDLS

(b) (4)

(b) (4)

(b) (4)

(b) (4)

(b) (4)

*Awarded as an E facilities contract under FAR 45.302-2, “Facilities contracts.” This has since been rescinded from the FAR and replaced with a new regulation.

(2) All previous procurements were awarded on a sole-source basis to GDLS.

(3) Authority cited for the previous contract was 10 U.S.C. 2304(c)(1) and FAR 6.302-1, “Only One Responsible Source.”

(4) Previous procurement’s justification stated that based on agency requirements closely interrelated to production and the attendant facilities, an award to any contractor other than GDLS is not practical because no other source has the engineering and manufacturing background knowledge necessary or the unique capabilities to manage, operate, and maintain the production equipment for the Abrams platform. GDLS is the only contractor that could manage the complexity of coordinating the operation and management of JSMC-L while Abrams production contracts are active.

(5) No prior award for the JSMC-L facility was accomplished by full and open competition.

(6) No unusual patterns have been revealed by a review of the procurement history.

(7) The justification for the previous procurements were also based on the same circumstances; the use of other than full and open competition necessary due to the unique production-oriented nature of the services GDLS is currently providing to the Government. No other source possesses the current engineering and manufacturing background knowledge necessary to manage the production equipment for the Abrams platform or the unique capabilities to manage, operate, and maintain these GOCO facilities within JSMC-L at this current time.

b. Other Facts: N/A

11/12. Technical and 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.

EDWARD O. LEWIS Date: 5/6/2019_______________________

Deputy Project Director, Main Battle Tank Systems Signature: //s// EOL____________________

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 based on results from a technical review and Cost or Price Analyst.

JOSEPH A. NEUMANN Date: ___08 May 2019_________________

Procuring 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.

JOSEPH A. NEUMANN Date: ___08 May 2019________________

Procuring Contracting Officer Signature: __//Signed//__________________

APPROVAL

Based on the foregoing justification, and as Senior Contracting Official pursuant to Army Materiel Command Head of the Contracting Activity Delegation of Authority #18-52, I hereby approve the procurement of services to manage, maintain, and operate Joint Systems Manufacturing Center-Lima in addition to maintaining the production equipment on an other than full and open competition basis pursuant to the authority of Title 10 United States Code (U.S.C.) 2304(c)(1). This is 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.” This approval is subject to the availability of funds, and provided the supplies and services herein described have otherwise been authorized for acquisition.

6/7/2019

X Daniel J. Gallagher Daniel J. Gallagher Senior Contracting Official Signed by: GALLAGHER.DANIEL.JOSEPH.1034297360