CMO_2016-058_Approved_JA_for_HMP400_Spares_-_redaction_v1.pdf

CMO Control: 2016-058

Department of the Army Justification and Approval for Other than

Full and Open Competition

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

2. Description of Action: This action is proposed for the award of a new stand-alone Firm-Fixed-Price contract to FN Herstal SA (FNH) to procure various sustainment special tools and spare parts for the M3P .50 Caliber Heavy Machine Pod Aircraft Weapon System (HMP 400). This one-time action will be funded under Foreign Military Sales (FMS) Case Number J8-B-UBY with fiscal year 2015 pseudo Afghanistan Security Forces Funds expiring 30 September 2016.

3. Description of the Supplies/Services: The total estimated value of this action is $2.9M. The special tools and spare parts listed below are necessary to operate and sustain HMP 400, a mounting platform for the M3P .50 Caliber machine gun attached to helicopter bodies and

ACC-WRN intends to procure the following special tools and spare parts:

4. Authority Cited: The statutory authority permitting other than full and open competition for this effort is 10 U.S.C. 2304(c)(1) as implemented by Federal Acquisition Regulation (FAR) 6.302-1“Only One Responsible Source and No Other Supplies of Services Will Satisfy Agency Requirements”. Specifically, 6.302-1(a)(2)(ii)(A )which states, “Supplies may be deemed to be available only from the original source in the

OPSEC #1 Equipment Capabillities, limitations & vulnerabilities case of follow-on contracts for the continued development or production of a major system or highly specialized equipment, including major components 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: The award to any other source besides FNH would create substantial duplication of cost to the Government that is not expected to be recovered through competition. The HMP 400 is uniquely designed entirely at private expense by FNH. As such, the Government does not have data rights in the HMP400 suitable for competition. The HMP 400 is 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 HMP 400 and essential for proper interface of parts as assembled into the HMP 400. No other vendor possesses the requisite knowledge of the correct dimensions, tolerances, form, fit or function of HMP 400 or its special tools or spare parts. FNH informed the Government that it has no interest in selling the data rights for these items in an email dated 09 March 2016. Therefore, no other vendor is able to properly manufacture these items.

Obtaining them from any other vendor increases the possibility of improperly manufactured items 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 for the HMP 400 suitable for competition, it is concluded only FNH can provide these parts.

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. Additionally, to reverse engineer the HMP 400 special tools and spares 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 current demand for these parts has an estimated value of $2.9M. Currently, no demand beyond the quantities in paragraph 3 above is known as this is a specialized FMS requirement; there are no U.S. Department of Defense requirements for this specialized system. In order to recoup the costs required to develop a competitive TDP through competition, the Government would have to repeat the current buy for an additional approximate 13 years or a make one-time buy of $37.5M based on the following: 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 required to develop a competitive TDP, approximately $37.5M in HMP 400 special tools and spare parts would have to be procured. Since this buy is only valued at $2.9M, this buy would have to be 13 times greater to break even with the costs required to develop a competitive TDP or extrapolate the current buy out to 13 years. As stated previously, there is no known requirement for these parts beyond this one-time buy. Subsequently, award to any other source would result in substantial duplication of cost to the Government and is unjustifiable at this time. Procuring these items sole source from FNH is in the best interest of the Government.

6. Efforts to Obtain Competition:

a. 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.

b. 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 proprietary to FNH and they have 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 market research was conducted in August 2015 by the Assistant Product Director of Scout Attack Helicopter to identify all qualified sources appropriate to support this procurement action. As a result, there were no commercial equivalent machine guns pods or machine gun pod special tools or spares for the HMP

400. His determination was based on his extensive knowledge of helicopter platform machine guns, and 3 years of working experience with weapons and specifically manufacturers of.50 caliber weapons parts.

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

9. Interested Sources: To date, no other sources have written to express an interest in providing the special tools or spare parts for the HMP 400 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//__________________ 03/15/2016 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//_____________ __03/15/2016 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 ___16 Mar 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 ___16 Mar 16 ___ Typed Name: Corey Richards Date:

Title: Contracting Officer