CMO_2016-0057_Approved_JA_for_HMP400_Pods_-_Redaction_v.pdf

CMO Control: 2016-057 Amendment 001 recovered through competition. The HMP 400 and its associated management equipment were uniquely designed entirely at private expense by FNH. As such, the Government does not have data rights in the HMP 400 and its associated management equipment suitable for competition. FNH informed the Government that it has no interest in selling the data rights for these items in an email dated 09 March 2016. The HMP 400 and its associated management equipment are designed that the dimensions and tolerances of each individual part are proprietary to and known only by FNH. These dimensions and tolerances are critical to the proper and safe operation of the weapon system and essential for proper interface onto aircraft. No other vendor possesses the requisite knowledge of the correct dimensions, tolerances, form, fit or function of HMP 400 and its associated management equipment and therefore, no other vendor is able to properly manufacture these items. Obtaining them from any other vendor increases the possibility of improperly manufactured parts liable to damage equipment, increasing the risk of safety hazards to personnel and operational failure. Therefore, since the data for these items are solely owned by FNH and the Government does not have data rights in the HMP 400 and its associated management equipment suitable for competition, it is concluded only FNH can provide these items.

a) A Government Technical Data Package (TDP) is not available and no qualification procedures exist to approve an alternate source. The U.S. Army Armament Research, Development and Engineering Center (ARDEC) has estimated that to establish qualification procedures to approve an alternate source would cost approximately $1.5M. It is estimated that the engineering testing and analysis would cost an additional $4.5M to complete. Additionally, to reverse engineer the HMP 400 and its associated management equipment to develop a competitive TDP would cost approximately $9M. As a result, the total cost to develop a competitive TDP is estimated at $15M. Therefore, an award to any other source besides FNH would not recover these costs through competition.

b) The costs required to develop a competitive TDP are not expected to be recouped through competition based on the projected demands for these items.

The three year demand for these items has an estimated value of $6.4M.

Currently, no known demands for this specialized FMS requirement beyond the three year estimates that is shown in paragraph 3. There are no U.S. Department of Defense requirements for this specialized system. In order to recoup the costs required to produce a competitive TDP through competition, the Government would have to repeat the current three year buy for an additional approximate 18 years or a make one-time buy of $37.5M. Based on the recent procurement for similar small arms parts (components of the M240 medium machine gun and M4 carbine) which were competed for the first time showed a cost savings from competition between 20% and 40%. If we use the most optimistic cost saving and assume a value of 40%, in order to recoup $15M in costs required to produce a competitive TDP, approximately $37.5M in HMP 400s and its associated management equipment would have to be procured. Since this buy is only valued at $6.4M, this buy would have to be almost 6 times greater in order to break even with the costs required to produce a competitive TDP or extrapolated out to 18 years. Award to any other source would result in substantial duplication of cost to the Government and is unjustifiable. Procuring these items sole source from FNH is in the best interest of the Government.

6. Efforts to Obtain Competition

c) Effective Competition: This effort will not be competed due to the reasons stated in Paragraph 5. This procurement action will be synopsized in FedBizOpps.gov per FAR 5.201 to alert interested contractors and subcontractors. Due to the complexity of the items being procured, additional competition is not expected.

d) Subcontracting Competition: A subcontracting plan is not required in accordance with FAR 19.702(b)(3).

7. Actions to Increase Competition: The technical data required to produce these items are owned by FNH. The Government does not have data rights in the HMP 400 and associated management equipment suitable for competition. FNH has no interest in selling the technical data rights to the Government. In addition, per paragraph 5 above, it is not cost effective for the Government to pursue development of a competitive TDP for these items. Pursuant to PGI 206.302-1, a Sources Sought notice for these items was posted on FedBizOpps (FBO) on 09 March 2016 and closed on 16 March 2016. No responses were received. The Government, however, will continue to monitor both FNH's willingness to sell its data rights and whether these items’ requirement quantities change such that the competitive TDP development effort becomes cost effective for future procurements.

8. Market Research: The following market research was conducted during August 2015 to identify all qualified sources appropriate to support this procurement action.

Assistant Product Director of Scout Attack Helicopter determined there are no commercial equivalent machine gun pods or associated management equipment for the HMP 400 and its associated management equipment. His determination was based on his extensive knowledge of helicopter platform machine guns, including 3 years of experience working with weapons and specifically the manufacturer of .50 caliber weapons parts.

Industry catalogs and other product literature available online from .50 caliber weapons parts manufacturers such as Manroy Defense Systems, US Ordnance, and General Dynamics Ordnance and Tactical Systems were also reviewed. From this review it was determined that there are no commercial equivalent machine gun pods or machine gun pod associated management equipment that will meet the Government's needs. The three companies above have shown no interest in manufacturing the HMP 400 and its associated management equipment.

9. Interested Sources: To date, no other sources have written to express an interest in providing the HMP 400 and its associated management equipment to the US Army.

The notices required by FAR 5.201 will be published and any proposals received shall be considered.

10. Other Facts:

Procurement History: HMP 400s were procured by MD Helicopters, Inc. as part of a procurement for MD530 helicopters under contract W58RGZ-15-C-0002 on a sole source basis, awarded by Army Contracting Command-Redstone Arsenal which used the authority for Other Than Full & Open Competition IAW 10 U.S.C. 2304 (d)(1)(b), as implemented by FAR 6.302-1, "Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements." This was necessary due to 1) no other sources able to provide MD530 helicopters, 2) MD Helicopters, Inc.’s unwillingness to sell its proprietary TDP for the MD530 helicopters and, 3) requirements not reaching levels to warrant consideration of a reverse engineering effort. MD Helicopters, Inc.

procured HMP 400s from FNH which acted as a subcontractor in contract modification, W52RGZ-15-C-0002-P00001, awarded 01 October 2014.

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

Signature: //s//__________________ 04/28/2016 Typed Name: Gilbert Liptak Date:

Title: Director, TACOM SAMD

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

Signature: _____//s//_____________ __04/28/2016 Typed Name: Gilbert Liptak Date:

Title: Director, TACOM SAMD

13. Fair and Reasonable Cost Determination: I hereby determine the anticipated cost to the Government for this contract will be fair and reasonable based on cost and price analysis. Certified cost or pricing data will be obtained in accordance with FAR 15.403-4.

Signature: //s// Corey Richards ___ 28 Apr 16 ___ Typed Name: Corey Richards Date:

Title: Contracting Officer

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

Signature: //s// Corey Richards ___ 28 Apr 16 ___ Typed Name: Corey Richards Date:

Title: Contracting Officer