Redacted_-_JA_for_PANTHER2017-110.pdf

CMO Control Number: 2017-110

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: This justification requests approval to award a new Firm Fixed Price (FFP) contract to Advanced Electronics Company Ltd (AEC) for the purchase of Panther radio systems, installation kits and ancillary communication components. The contract length will not exceed two years and includes manufacturing and delivery of base quantity and option quantity. This action is in support of the SWORD program for the Royal Saudi Land Forces (RSLF) and the Kingdom of Saudi Arabia (KSA). The contract will be funded using Foreign Military Sales (FMS) funds for the total anticipated amount of $8.3M.

3. Description of Supplies/Services: Under the proposed FFP contract, ACC-WRN will purchase a quantity of 212 Panther radios,133 installation kits and ancillary communication components for the M1A2S Abrams tank. The requirement will also include an option for an additional 20 Panther radios and 20 installation kits to support the SWORD program. The Letter of Request (LOR) identifies the RSLF's desire for a production quantity of 133 (each) M1A2S Abrams tanks and 20 (each) M88 HERCULES recovery vehicles that are being procured on separate contract mechanisms. The base quantity of 212 radios will provide 79 of the 133 M1A2S tanks with dual radio capabilities; the remaining 54 tanks will be single radio configuration. Both radio configurations utilize the same installation kits. The option quantities of 20 Panther radios and 20 installation kits will support the M88 HERCULES vehicles if exercised.

The Panther radio systems will be a split delivery with installation kits delivered and installed at the Joint Systems Manufacturing Center (JSMC) in Lima, OH. The installation kit will be Government Furnished Equipment (GFE) and provided to General Dynamics Land Systems (GDLS) during the Abrams Integrated Maintenance (AIM) overhaul process. Due to encryption restrictions, the radio unit is sent directly to the RSLF de-processing facility in Tabuk, Saudi Arabia and installed by RSLF maintainers.

The required delivery date of 12 April 2019 for the installation kits supports the production timeline for the latest increment of (133) M1A2S combat vehicles under case SR-B-VTF. The Panther system includes components identified in table 3.a.

Description Part Number QTY Estimated

Unit Price Extended Price

Panther Radio AEC 331 w/ encryption

100-100010-

212 $30,500 $6,466,000

*Antenna Kit – Base + Elements 900-003299 266 $750 $199,500 *Radio Mounting Plate Assembly 266 266 $150 $39,900 *Quick Release Mounting Bars 900-100013 266 $390 $103,740 *Cable, RF Wiring Harness 700-003780-

0400-00 133 $200 $26,600

*Cable, RF Wiring Harness 700-003781- 0520-00

133 $80 $10,640

*Cable, Radio to Loudspeaker 700-003779- 0150-D

133 $335 $44,555

*Loudspeaker Amplifier Unit MA 4988B-TA 133 $3,400 $452,200 *Handset RA250 27332-007-00 266 $530 $140,980 Operator Card (English) A8258 E/AEC 133 $15 $1,995 User Handbook (English) A8067 E/AEC 133 $100 $13,300 Operator Card (Arabic) A8258 A/AEC 133 $15 $1,995 User Handbook (Arabic) A8067 A/AEC 133 $100 $13,300

TOTAL BASE $7,514,705

Table 3.a. Panther Radio Components – Base Requirement

*Note: Items identified above make up the installation kit delivered to JSMC for installation.

Description Part Number QTY Estimated Unit Price

Extended Price

Panther Radio AEC 331 w/ encryption

100-100010-

20 $30,500 $610,000

Antenna Kit – Base + Elements 900-003299 40 $750 $30,000 Radio Mounting Plate Assembly 266 40 $150 $6,000 Quick Release Mounting Bars 900-100013 40 $390 $15,600 Cable, RF Wiring Harness 700-003780-

0400-00 20 $200 $4,000

Cable, RF Wiring Harness 700-003781- 0520-00

20 $80 $1,600

Cable, Radio to Loudspeaker 700-003779- 0150-D

20 $335 $6,700

Loudspeaker Amplifier Unit MA 4988B-TA 20 $3,400 $68,000 Handset RA250 27332-007-00 40 $530 $21,200 Operator Card (English) A8258 E/AEC 20 $15 $300 User Handbook (English) A8067 E/AEC 20 $100 $2,000 Operator Card (Arabic) A8258 A/AEC 20 $15 $300 User Handbook (Arabic) A8067 A/AEC 20 $100 $2,000

TOTAL OPTION $767,700

Table 3.b Panther Radio Components – Option Requirement

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.) Section 2304(c)(1), as implemented by Federal Acquisition Regulation (FAR) 6.302-1(a)(2)(ii)(A) and (B), “Only One Responsible Source and No Other Supplies Will Satisfy Agency Requirements.”

Pursuant to FAR 6.302-1(a)(2)(ii)(A) and (B), 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, or

(B) Unacceptable delays in fulfilling the agency’s requirements.

5. Reason for Authority Cited: AEC (Cage Code SE455) is the OEM for the Panther radio system. AEC is the only source possessing the license and technical data rights to the Panther system. AEC has a long history of providing Panther systems to KSA through Direct Commercial Sales (DCS) and FMS cases between the U.S. and KSA.

The current Case, (SR-B-VTF) is a result of a LOR from KSA dated 28 September 2015, later amended on 22 December 2016. The LOR identifies the RSLF’s desire for additional quantity of 133 (each) M1A2S Abrams tanks and 20 (each) M88 HERCULES recovery vehicles. Included with the LOR is a detailed list of equipment and ancillary components to support the requested vehicles. Item “I” and “J” of the list specifies the desire for the Panther Communication Equipment for both vehicle configurations. The request for Panther equipment is consistent with the previous FMS Case (SR-B-VTC) and the successful production of 369 M1A2S tanks between 2009 and 2017.

The design and development of the M1A2S was accomplished under FMS Case (SR-B- VTC) and engineering contract (W56HZV-09-C-0095) between the U.S. and GDLS, the Original Equipment Manufacturer (OEM) for the M1A2 Abrams Tank. The RSLF requested the Panther system for the communications package to maintain interoperability with the country’s existing secure communications infrastructure and to retain user recognition/familiarity and uniformity of supply across the fleet of RSLF vehicles. GDLS incorporated the Panther system into the M1A2S Prime Item Specification, Technical Data Package (TDP) and corresponding drawings. All subsequent production of vehicles supporting the SWORD program have been tested and fielded with the Panther system. GDLS owns the TDP for the M1A2 Abrams to include the KSA M1A2S variant. All efforts to procure the M1A2 Abrams TDP from GDLS have been unsuccessful to include recent request from PM Abrams on 27 March 2017.

a. Future procurement of radio systems from a source other than AEC would require a redesign of the existing communications platform and would result in a significant duplication of cost and unacceptable delays. Redesign efforts would include Engineering Change Proposals (ECPs), updates to the Prime Item Specification, changes to existing Technical Data Package to include drawings and manufacturing process sheets. In addition, introducing an alternate radio system would require First Article Testing (FAT) and qualification tests to verify the new system meet the required communication parameters, compatibility with the existing vehicle software and interoperability with existing communications infrastructure in KSA. The Government estimates 55 months to complete the evaluation, system integration, testing, manufacturing and delivery of a new radio system. Taking into account a 55-month timeline, a competitive solicitation issued 1 August 2017 would likely result in a final delivery of radios in 1 March 2022. The current M1A2S production schedule requires all GFM (including radio installation kits) delivered to JSMC at least on month prior to start of production, 1 April 2019. This Required Delivery Date (RDD) will aid in meeting KSA’s requested M1A2S delivery as identified in Case SR-B-VTF. Any delay to the vehicle production or delivery will have a negative impact on political relations between the U.S. and KSA. In addition to political ramifications, delays will also have an economic impact to the U.S. resulting from layoffs and break in production at the JSMC.

AEC is the only source capable of delivering the required communications components to meet the RDD of 12 April 2019.

b. This effort is a follow-on to three previous contracts for Panther radio systems.

Each of the previous contracts included an average delivery of final product within 12 months from contract award. The 55-month schedule delay, resulting from selecting and qualifying using a competitive approach to acquire an radio system from a contractor other than AEC is described in table 5.a. below:

Ref. Tasks Time 5.b.(i) Competitive Source Selection 9 months 5.b.(ii) Qualification of New Supplier (Prime

Contractor) 7 months

5.b.(iii)

Development of Technical Drawings and Logistics Data

3 months

5.b.(iv) Validation/Verification of Technical Documents and Manuals

6 months

5.b.(v) Validation/Verification of Software 6 months 5.b.(vi) Field Testing and Validation/Verification of

Compatibility with existing M1A2S fleet 6 months*

5.b.(vii)

New Platform Unique Specialized Equipment, Tooling and Fixtures, Development of Manufacturing Fixtures at JSMC

6 months

5.b.(viii) Establishing Supply Chain 6 months 5.b.(ix) Manufacturing and Delivery 12 months TOTAL 55 Months

Table 5.a. Estimated Timeline

*Occurs concurrently with previous listed tasks

**NOTE: The engineering time estimates outlined above and explained below are actions incurred and experienced during the initial design and development of the M1A2S communications system and electrical/wiring systems (contract W56HZV-09-C-0095). Basis of Estimate (BOE’s) from the initial design contract were used to verify estimated times with focus on Work Breakdown Structure (WBS) 1.1.6 “Communications”, WBS 1.1.3.2 “Turret Electrical” and WBS 1.2.4.3 “Engineering Support”. The requirements for incorporating a new intercom system would exhibit a similar timeline.

(i) Competitive Source Selection (9 months): The estimated time for ACC-WRN to execute a Source Selection Evaluation Board (SSEB) requirement for competitive versus sole source procurement is six months. This estimate timeline takes into consideration using a Lowest Price Technically Acceptable (LPTA) process ensuring the offer meets the minimum technical requirements. Using a full trade-off SSEB process that includes evaluation of cost and not cost factors would likely result in additional time beyond the nine month timeline.

(ii) Qualification of a New Prime Contractor (7 months): Prior to awarding a competitive action to a new source, the Government would perform a pre-award survey to assess whether the new contractor could meet contractual requirements (1 week); validation of manufacturing processes (for example: software development, fabrication, testing, outsource processes) (4-6 months); qualification of quality systems (International Standards Organization (ISO) 9001:2008 (Quality Management Systems) compliance) (2 weeks); as well as verification of contractor’s familiarity with Government Production Quality Deficiency Reports (1 week).

(iii) Technical Drawings and Logistics Data (3 months): The update and delivery of technical drawings and logistics data for a new radio system would require approximately 3 months including all performance requirements and drawings necessary to produce a conforming system.

(iv) Validation and Verification (VAL/VER) of technical data (6 months): It would take approximately 6 months to validate and verify the technical data and logistics documentation against the vehicle Prime Item Specification and TDP.

(v) VAL/VER of Software (6 months): It would take approximately 6 months to validate software requirements for a new radio system and compatibility with existing vehicle software platform.

(vi) Field Testing and VAL/VER of Compatibility (6 months): It would take approximately 6 months to evaluate a new radio system using the same environmental conditions and operational procedures currently used in KSA. The validation and verification will also test the compatibility of the new radio system with the existing vehicles software and electronics equipment. Field-testing and VAL/VER testing can be conducted concurrently with software validation and verification testing mentioned above.

(vii) New Platform Unique Specialized Equipment, Tooling and Fixtures Design and Fabrication of Fixtures, Development of Manufacturing Fixtures, Processes, (6 months): Production of SWORD vehicles has been an ongoing process since 2010.

Existing fixtures, brackets, mounts and an established manufacturing process are in place for installing the Panther radio system using at specific stations in the manufacturing line. It would take approximately 6 months to establish new fixtures and create a new installation process for a radio system other that the Panther system.

(viii) Establish Supply Chain (6 months): A new contractor would have to establish and qualify a supply chain of sources of supply to provide parts or materials that are compliant with specifications.

c. In addition to the schedule delay, if the Government were to compete this requirement and award a contract to a contractor other than AEC, the result would be approximately $925,280.00 in duplication of costs. The cost duplication includes all engineering efforts to reconfigure the vehicle communications platform, internal and external testing of the new system, training for operators and vehicle maintainers, and logistics costs associated with changes. The duplication of costs associated with incorporating a radio system other than Panther are described in table 5.b below:

Ref. Tasks Cost 5.c.(i) Engineering – Integration $ 266,863.00 Firepower & C-4-I $79,393.47 Electronic Product Develop. $168,453.61 Structural Design $15,847.00 Quality Assurance $3,169.40 5.c.(ii) Testing $ 485,739.00 EMI Test $150,000.00 First Article Test $135,739.00 Validation-Verification $200,000.00 5.c.(iii) Training – Operator/Maintenance $ 160,000.00 5.c.(iv) Logistics - Publications $ 12,677.00

TOTAL $ 925,280.00

Table 5.b Duplication Cost – System other than Panther

i. Engineering - Integration ($266,863.00): Engineering and Integration cost estimates were developed using hours from BOE’s on the M1A2S design contract (W56HZV-09-C-0095) and average engineering rate of $158.47 from the current GDLS System Technical Support (STS) contract, (W56HZV-17-C-0067).

ii. Testing ($485,739.00): Estimated testing costs include three distinct tests:

Electromagnetic Interference (EMI) testing and First Article Testing (FAT) or “control test” and Validation and Verification Testing.

- EMI Testing ($150,000.00): EMI tests are conducted to measure the amount of electromagnetic emissions a system produces and the affect the disturbance has on other electrical components within the vehicle. All new or modified systems introduced to an existing vehicle design are required to go through EMI testing. The estimated amount of $150,000.00 is based on previous EMI testing for the M1A2S program conducted at the White Sands Missile Range, NM in August 2012.

- FAT Testing ($135,739.00): First article test is required to ensure a new contractor can produce a radio system that fully meets the technical and contractual requirements. The estimated cost to conduct a FAT test on two units is $135,739.00. This amount includes labor at an estimated $75,361.00 and materials at $60,377.00. The labor costs are similar to FAT testing conducted on the M1A2S Digital Engine Control Unit (DECU) components under contract W56HZV-16-C-0003 with Honeywell. Material costs are consistent with historical Panther purchases, and include the purchase of two new Panther units for testing.

- Validation and Verification (VAL/VER) Testing ($200,000.00): VAL/VER testing includes the functional verification of the radio system in an operational environment. This testing measures system performance capabilities when subjected to fluctuating temperature conditions as well as noise level adjustments during vehicle operations. The estimated cost to conduct VAL/VER Field Testing is $200,000.00 and is based on similar testing (EMI) conducted on the M1A2S with an increase for travel requirements to/from KSA.

iii. Training ($160,000.00): Training cost estimates are based on the assumption that RSLF soldiers and maintainers in KSA would require new equipment training on a system other than the existing Panther system that is currently utilized across the RSLF fleet of vehicles.

iv. Logistics ($12,677.60): The estimate for logistics includes 80 hours to complete changes to vehicle technical publications and manuals related to a new intercom system. The USG estimated two weeks (80 hours) to accomplish the changes at an average rate of $158.47 per hour.

6. Efforts to Obtain Competition:

a. Effective Competition: The Government does not anticipate competition for this acquisition for reasons stated in Section 5 above.

b. Subcontracting Competition: In accordance with FAR 19.702(b)(3), a subcontracting plan is not required for this effort. This contract will be performed entirely outside of the United States and its outlying areas.

7. Actions to Increase Competition: The Government will continue to survey the communications market to determine if additional sources are capable of producing and delivering a radio system capable of integration into the existing RSLF communications infrastructure or any future communications requirements supporting the SWORD program.

8. Market Research: ACC-WRN published a Market Survey in FedBizOpps on 03 May 2017 to assess the current market capabilities for delivering the Panther radio system.

The Market Survey referenced the potential procurement of Panther systems. Included in the survey were technical requirements and specific part numbers include in the Panther system. The survey encouraged potential sources to respond to the notice with a capabilities statement and information relating to experience and past performance with the Panther or similar systems. The Market Survey closed 18 May 2017 with one response received.

Shamis Technologies Est. (CAGE: SHD12), responded to the Market Survey on 15 May 2017 with a capabilities statement and a history of recent contractual actions. Shamis Technologies, a Saudi owned company, has an extensive history providing communication solution services to the Royal Saudi Air Force (RSAF). The company also provided contract experience selling different radio products to the RSAF using DCS and FMS through the U.S. Government.

On 24 May 2017, a phone call was made to Shamis Technologies for additional information regarding the company’s capabilities. Shamis Technologies demonstrated extensive knowledge of the RSLF communications infrastructure and the exclusive use of the Panther system across its fleet of vehicles. Although Shamis did not have a license to sell the Panther product, the company does have a memorandum of understanding (MOU) and working relationship with AEC for training, operations, maintenance and integration. Shamis Technologies expressed an interest in possible installation or integration of the Panther system under this requirement. The Government explained that the installation process for the SWORD program is a two-phase approach. The first phase includes installation kits incorporated into the vehicle at JSMC during the AIM process. The second phase is the installation of the radio unit itself. Due to sensitive encryption requirements, the radio unit is delivered directly from AEC to the Tabuk maintenance facility in KSA. The radio is then installed by RSLF maintainers and GDLS Arabia contractors. Any additional requirement for training, operations, maintenance or additional integration would be a separate sub-contract and not part of this requirement. Following the call on 24 May 2017, Shamis confirmed in an email that its company could not manufacture or sell the Panther system without a license from AEC. The Government has confirmed that AEC does not offer license agreements to sell the Panther radio system directly. The Government has determined that although Shamis Technologies has experience with training, operations, maintenance and integration of the Panther radio, the company cannot be considered a potential source for this requirement.

AEC is the only source with the experience, technical data, and resources necessary to produce and deliver the Panther radio system that conforms to the testing and design of the SWORD vehicles. No other firm is currently capable of meeting this requirement.

9. Interested Sources: The contract action for this requirement will be synopsized in FedBizOpps in accordance with FAR 5.201. To date, no other sources have written to express an interest in the Panther radio requirements for the SWORD program other than mentioned above. However, the Government will evaluate and consider any proposals received in response to the synopsis.

10. Other Facts:

a. Procurement History:

(1) Contract Award Date_

Radios:

W56HZV-15-C-0012 OCT 2014

W56HZV-13-C-0142 MAR 2013

W56HZV-13-C-0142 P00001 MAR 2013

W56HZV-11-C-0311 JUL 2011

Install Kits:

W56HZV-15-C-0012 OCT 2014

W56HZV-11-C-0331 JUL 2011

W56HZV-11-C-0331 P00003 JUN 2012

W56HZV-11-C-0331 P00004 SEP 2012

W56HZV-11-C-0331 P00005 DEC 2012

To date, AEC has delivered 656 Panther radios and 368 Installation Kits for the SWORD program with a combined cost of $22,457,133.10.

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

(3) All previous contracts for the Panther systems cited the authority of Title10 U.S.C. Section 2304(c)(4) and FAR 6.302-4. This authority states that full and open competition need not be provided for when precluded by the terms of an international agreement or treaty between the US and a foreign government, or the written directions of a foreign government reimbursing the agency for the acquisition of supplies or services for such government.

(4) The Government will continue to survey the communications market to determine if additional sources are capable of producing and delivering a radio system capable of integration into the existing RSLF communications infrastructure.

(5) No prior awards of the Panther systems was accomplished by full and open competition.

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

(7) Previous contracts identified above were executed under Case SR-B-VTC, which identified AEC as the requested Sole Source for the Panther radio system.

Although the LOR for the follow-on FMS Case (SR-B-VTF) sighted the Panther radio specifically, KSA did not include Sole Source requests for any item or service. The reason for omitting Sole Source requests are unknown to the Government at this time.

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.

DANIEL P. SIMON Date: 30MAY2017 M1A2S Project Manager, Saudi Arabia Management Office (SAMO) Signature: /S/ Daniel Simon

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.

CHAD D. YOUNG Date: 30MAY2017 Chief, Saudi Arabia Management Office (SAMO) Signature: /S/ Chad Young

13. Fair and Reasonable Cost Determination: I hereby determine that the anticipated cost to the Government for this requirement will be fair and reasonable.

Certified Cost or Pricing Data will be required and will form the basis for negotiating a fair and reasonable price.

MICHAEL R. CHANEY Date: 27 July 2017 Procuring Contracting Officer Heavy Combat, Foreign Military Sales Team Signature: Michael R. Chaney //s/

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

MICHAEL R. CHANEY Date: 27 July 2017 Procuring Contracting Officer Heavy Combat, Foreign Military Sales Team Signature: Michael R. Chaney //s//

APPROVAL

Based on the foregoing justification, I hereby approve justification and approval for the procurement of Panther radio systems to support the production of vehicles under FMS Case SR-B-VTF. This approval is pursuant to the authority of Title 10 U.S.C.

2304(c)(1), as implemented by FAR 6.302-1(a)(2)(ii)(A) and (B), “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.” The approval is subject to the provision that the property herein described has otherwise been authorized for acquisition. The total estimated value is $8.3M.

X LaRuth Shepherd Competition Advocate