JA_-_PRM_for_PdM_PAWSv_2017-058_Redaction.pdf

CMO Control Number: 2017-058

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 responsible for this action.

2. Description of Action: ACC-WRN proposes to award a new firm fixed price contract to DRS Sustainment Systems, Inc. (DRS) of St. Louis, Missouri, for Pump Rack Modules (PRMs). The procurement will be funded by fiscal year (FY) 2017 Other Procurement Army (OPA) funds. The funding will be provided by the office of the Product Manager, Petroleum and Water Systems (PdM PAWS).

3. Description of Supplies: The Government has a requirement for 27 PRMs, 12 engines on stands, and 6 fault isolator boxes. The PRM consists of a 600 Gallon- Per-Minute (GPM) diesel engine-driven centrifugal pump, filter separator, valves, fittings, hoses, and refueling nozzles. The PRM is capable of refueling both ground vehicles and aircraft and is capable of evacuating fuel prior to recovery. This action also includes the procurement of Authorized Stockage List (ASL), Prescribed Load List (PLL), On Board Spares (OBS), and special tools required for delivery to support fielded PRMs.

The estimated unit prices are found in the table below. Currently, the Authorized Acquisition Objective (AAO) of PRMs for Quartermaster, Composite Supply Companies (CSC) is 21, and 6 additional PRMs are required for testing and training, for a total of 27 PRMs. Additionally, 12 engines on a stand and 6 fault isolator boxes are required to support training. This procurement is expected to satisfy the AAO.

The total estimated value of this action is $15.9M.

Estimated Contract Cost/Quantity:

Description Quantity Unit Price Total PRMs 27 $530,000 $14.31M Engines on Stands 12 $41,000 $492,000 Fault Isolator Boxes 6 $26,000 $156,000 ASL/PLL/OBS/Special Tools Varies Varies $964,000 Totals:

$15.9*

*The costs are based on 2012 Life Cycle Cost Estimates inclusive of inflation and provisioned parts.

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.” Specifically, "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 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 Government will pursue a sole source, follow-on contract with the Original Equipment Manufacturer (OEM) to fulfill the PRM AAO. Fulfilling the AAO for the PRM will enable the CSCs to carry the required three-day supply of fuel while remaining highly mobile. The 27 PRMs are needed to complete the requirement to supply the CSCs with Modular Fuel Systems (MFS), of which the PRM is a major component. One MFS is composed of 1 PRM and 7 Tank Rack Modules (TRMs).

DRS has the only approved configuration for the PRM. DRS completed qualification testing in February 2013 while performing under the competitively awarded contract W56HZV-05-D-DF02. As detailed below, qualifying another source is estimated to result in a duplication of cost of $9.5M; reverse engineering the existing configuration to allow for a competition against a Technical Data Package (TDP) is estimated to cost $11M. Pursuing either of these courses of action would result in substantial duplication of cost that is not expected to be recovered through competition.

a. Estimated Duplicated Costs to Qualify a New Source

The Government estimates it would cost at least $9.5M to qualify a new source capable of producing the PRMs. If a new source were selected for production of the PRMs, the same Government qualification testing, logistics demonstration, verification, instructor and key personnel training, and development of logistics data in support of the new configuration would need to be completed. Based on the program’s history, these events are estimated to cost $9.5M, as shown in the table below. The cost of $9.5M represents the amount the Government would incur to bring an additional source to the pre-production phase; $9.5M is approximately 60% of the value of the current proposed action. As detailed below, the Government does not expect a 60% savings over our current planned action through competition.

Description Estimated Cost – Competitive Strategy ($)

Development of 2 PRMs $1.5M First Article Test/Logistics Demonstration/Training $3.1M Contractor’s Testing/Technical Manuals(TMs) $2.9M Development Test and Initial Operational Test and Evaluation (IOT&E)

$2.0M

Total $9.5M

b. Estimated Duplicated Costs for Reverse Engineering

Based on similar reverse engineering efforts, Tank Automotive Research, Development, and Engineering Center (TARDEC) engineers estimate it would cost a total of $11.0M to reverse engineer the MFS-PRM; this equates to 69% of the current proposed action. This cost breakdown is shown in the table below.

Description Estimated Cost Engineering Support $0.5M Testing/TMs $1.5M Contractor Test Support $1.0M Program Costs $1.5M Government Testing $2.9M TDP Development $3.6M Total $11.0M

The Government does not expect to save 60% of the estimated cost of this action through competition due to the intricacies of the PRM and the integration complexity.

The PRM contains over 200 parts and is primarily made from carbon steel, stainless steel, filter elements, and various rubber hoses and polyurethane hoses. Currently, the parts are procured from a blended source; DRS procures certain commercial items through industry partners, while others are made by subcontractors. Integration is a complex, labor intensive process completed in house by DRS. The PRM is a strict military application and there is no known demand for like items in the commercial marketplace.

6. Efforts to Obtain Competition:

a. Effective Competition. The Government does not expect effective competition for this effort for the reasons stated in paragraph 5.

b. Subcontracting Competition. A small business subcontracting plan will be required as part of the proposal. Once approved, the subcontracting plan will be incorporated into the contract by reference. The solicitation and contract will contain the clauses FAR 52.219-8, “Utilization of Small Business Concerns,” FAR 52.219-9, “Small Business Subcontracting Plan,” and FAR 252.219-16, “Liquidated Damages -- Subcontracting Plan,” for the promotion and utilization of subcontracting opportunities for Small Businesses.

7. Actions to Increase Competition: Additional competition could be achieved if the Army procured the PRM TDP from DRS or facilitated a reverse engineering effort. However, those efforts are not being pursued because the time for a reverse engineering effort and qualification of a new supplier would create an unacceptable delay and any cost savings in a future competition would not offset the estimated costs for reverse engineering and to qualify a new source. This contract action will buy out the AAO. Therefore, it is not economically cost effective for the Government to develop required technical data considering there are no anticipated future requirements.

8. Market Research: TARDEC performs market surveillance on a continuous basis to keep abreast of current technology and product development. On 28 March 2016, TARDEC’s engineers performed market research to determine if existing commercial or non-developmental items are available and suitable to fulfill the Army’s requirement for an MFS-PRM. Market research included the review of product literature published by manufacturers and dealers on the internet. The internet research into the class of pump assemblies similar to the PRM led to the discovery of four potential candidate pump assembly manufacturers: Gorman Rupp (http://www.grpumps.com/pumptype/product/Self-Priming-Pumps), Crane Pumps (http://www.cranepumps.com), Parker Hannifin (http://ph.parker.com/us/en/products), and Blackmer (http://www.psgdover.com/en/blackmer/home). From the information obtained online, there are many pump systems available, but none of them would meet the PRM requirements of Automotive Tank Purchase Description (ATPD) 2336.

Gorman Rupp, Crane Pumps, Parker Hannifin, and Blackmer manufacture items similar to the PRM. However, none of these companies has manufactured or assembled a product that would meet the PRM requirements under this action. Based on the knowledge obtained by TARDEC market research, any company other than DRS would have to develop a new design to meet the Government's requirements. Additionally, a Sources Sought Notice was posted on Fed Biz Ops on 6 December 2016 through 16 December 2016 providing notice of the “U.S. Army Contracting Command-Warren (ACC-WRN) intent to solicit a request for proposal for Pump Rack Module (PRM) National Stock Number (NSN) 4930-01-517-6942 from DRS Sustainment Systems, Inc.

(DRS)”. There were no responses from industry.

9. Interested Sources: To date, no other sources have written to express an interest. The notice required by FAR 5.201 shall be posted and any bids or proposals shall be considered.

10. Other Facts:

Procurement History: The Load Handling System Modular Fuel Farm (LMFF) was initially procured competitively under a five-year contract, W56HZV-05-D-DF02, with Systems and Electronics, Inc., the predecessor to DRS, in April 2005. In 2006, the PRM went through qualification testing, which resulted in engineering changes to improve the efficiency of the system. The ordering period of this contract expired in April 2010. The Government withdrew funding and terminated the LMFF program on 25 May 2007.

However, the Principal Deputy Assistant Secretary of the Army rescinded the termination and re-started the program as the MFS, with specific direction to fill the critical requirements of the CSC and Modified Brigade Combat Teams (MBCT).

The PRM logistics effort, which included TM development, training, and test support, was awarded sole source to DRS in December 2010 under contract W56HZV-11-C-0092. All contractual requirements have been satisfied and the PRM is set for Full Material Release.

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: HARSHA D DESAI DATE: 9th Nov 2016 TITLE: Executive Director, Systems Integration & Engineering SIGNATURE: // Harsha Desai/

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: BRYAN J. MCVEIGH DATE: 14 NOV 2016

TITLE: Project Manager, Force Projection SIGNATURE: //Bryan J. McVeigh//

13. Fair and Reasonable Cost Determination: I hereby determine that the anticipated cost for this contract action will be fair and reasonable. The basis for this determination will be results of a Defense Contract Audit Agency (DCAA) audit and technical analysis of DRS cost proposal and certified cost or pricing data. The contractor's proposal will be reviewed by technical personnel who will address the appropriateness of the proposed labor hours and categories, materials, etc. Cost analysis and audit recommendations will be used to discern that costs proposed are current and justifiable. The final negotiated agreement will consider all contractual requirements including the delivery schedule to support a determination of fair and reasonable prices for these items. A certificate of current cost or pricing data is required by DRS at the close of negotiations.

NAME: Lynn M. Byrne DATE: 16 Nov 2016 TITLE: Contracting Officer SIGNATURE: //Lynn M. Byrne//

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

NAME: Lynn M. Byrne DATE: 30 Mar 2017 TITLE: Contracting Officer SIGNATURE: //Lynn M. Byrne //

APPROVAL

Based on the foregoing justification, and as Principal Assistant Responsible for Contracting (PARC) pursuant to Army Materiel Command (AMC) Head of the Contracting Activity (HCA) Delegation of Authority (DOA) #15-19, I hereby approve the procurement of the MFS-PRMs, engines on stands, fault isolator boxes, and ASL/PLL/OBS/special tools 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)(i i)(A), “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements,” with an estimated cost of $15.9M. This procurement is subject to availability of funds and provided the services and property herein described have otherwise been authorized for acquisition.

DATE:_3 Apr 2017_ SIGNATURE: //signed//KAM

KRISTAN A. MENDOZA

Principal Assistant Responsible for Contracting