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W58RGZ-13-R-0309

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

APACHE PERFORMANCE BASED LOGISTICS FORD-UNIQUE,

E- UNIQUE and DIE COMMON COMPONENTS (AH-64D/E)

1. Contracting Activity: Army Contracting Command-Redstone (ACC-RSA), Aviation Logistics Directorate, Depot Partnering/Depot-Support Division, CCAM-ALD, Redstone Arsenal, AL 35898-5000. The Depot Partnering/Depot Support Division is responsible for the procurement of the Apache AH-64D/E component, performance based logistics (PBL) requirement.

2. Description of Action:

a. This proposed effort for the Apache AH-64D/E PBL services and supplies will be a new follow-on contract with one base year and three 1-year options. The 4-year period of performance is being considered because it will (1) allow the Project Office the necessary time to continue pursuit of additional technical maintenance data and tooling with which to continue building public sector core depot capabil ities; and, (2) provide PBL incentives for the original equipment manufacturer (OEM) to continue investments in both supply chain management performance and material reliability improvements.

b. The proposed effort will be a performance-based fi rm fixed price (FFP) contract for both material and services. Performance incentive provisions will be included in the contract to achieve a supply availability rate of 85 percent. The proposed contract will be awarded November 2014 and will include scope to cover the program needs for program years (PY) 2014-2017. A program year is a 12~month period of time.

c. It is the United States Government's (USG) intention to place orders against this contract as requirements materialize for the various items for PY 2014-2017.

d. Anticipated contract type to be utilized is FFP. Army working capital funds (AWCF) will be used for the depot level repair and sustainment effort. Aircraft procurement Army funds will be utilized for engineering services. The AWCF or operation and maintenance army funds will be used as appropriate for obsolescence mitigation.

3. Description of Supplies/Services:

a. The proposed acquisition is to acquire under other than full and open competition for the Apache AH-64D/E aircraft PBL components. Apache AH-64D/E aircraft PBL components are those components that are either manufactured or procured by the contractor, which are found only on the Apache AH-64D/E helicopter. As a consequence, the USG retains complete control over the OEM's acquisition of replacement components from vendors and suppliers who manufacture an estimated 75 percent of the components found on the Apache AH-64D/E helicopter.

SOURCE SELECTION INFORMATION - SEE FAR 3.104

b. Except for the USG owned, contractor managed, inventory of components already acquired from the OEM, the PBL program contractor will be required to provide all other equipment, material, labor, facilities, technical support and screening, performance tracking of hardware and software, to include technical publications and Integrated electronic technical manuals, other logistical support resources, and engineering services deemed necessary to support and sustain Apache AH-640/E aircraft PBL components. The specific PBL support services required of the PBL contractor will include depot-level component repair for highly complex items, below depot level repair support, system component support, unique consumable items supply, test equipment support, and the necessary supply/retrograde transportation infrastructure up to and including delivery of serviceable components to USG specified supply support activities and a comprehensive obsolescence management program to identify, prioritize risks and develop solutions. These PBL services will also include the performance of supply chain management for all Apache AH-640/E aircraft PBL components; stockage, storage and maintenance of inventory; issuance of required Apache AH-640/E aircraft PBL components to Army Missile Command Life Cycle Management specified delivery points; receipt of retrograde unserviceables, reparable Apache AH-640/E aircraft PBL components to include packing and shipment of retrograded items; loading of software and configuration management of Apache AH-640/E aircraft PBL components and equipment including aircraft integration efforts.

c. An estimated acquisition program schedule is as follows:

Base Year Option Year 1 Option Year 2 Option Year 3 PY14- PY Nov14-0ct PY Nov15-0ct PY Nov 16-0ct PY Nov 17-0ct PY18

15 16 17 18 TOTAL - - - - -

4. Authority Cited: The statutory authority permitting other than full and open competition is Title 10 United Stated Code (U.S.C.) 2304(c)(1 ), as implemented by Federal Acquisition Regulation (FAR) 6.302-1 (2)(ii), entitled "Only One Responsible Source and No Other Supplies or Services will Satisfy Agency Requirements."

5. Reasons for Authority Cited: This is a justification to procure services and supplies by other than full and open competition for continued support to Apache Airframe D- Uni ue E-Uni ue and DIE common com onents AH-640/E PBL program, from the

Commercial and Government Entity Code The proposed acquisition is limited to the Company, the only responsible source capable of providing the requisite PBL, for the Apache AH-640/E Aircraft PBL components. This is based on the following:

a. All logistics support for Apache AH-640/E aircraft PBL components have been acquired through the Extended Block II and low rate production contracts as contractor logistics support and through the current PBL contract action. All of these contracts were sole source to Boeing, the OEM of the Apache helicopter.

W58RGZ-'13-R-0309

b Boeing is responsible for the configuration baseline of the Apache AH-64D/E aircraft hardware and associated components. The initial acquisition strategy for the Apache AH-64 helicopter did not include subsequent competition. While the Fiscal Year (FY) 89 engineering manufacturing development contract included provisions allowing the USG to obtain technical data packages (TDPs) suitable for competition, those TDPs has not yet been made available. The Project Manager (PM) was instructed by the Army Acquisition Executive in FY 04 to identify program funds in the amount of approximately for the development of an organic depot capability for a selected number of unique components. That identification has been made and the PM continues to work with Corpus Christi Army Depot (CCAD), Tobyhanna Army Depot (TYAD) and Boeing in developing those specific component capabilities whi le simultaneously presenting challenges to all of Boeing's restrictive technical data rights assertions. The PM's intent is to gain sufficient access to AH-64D/E technical data to support both the establishment of organic depot capabilities and subsequent commercial competition/sustainment for Apache AH-64 DIE aircraft PBL components.

c. The previous 4-year AH-64D unique components PBL contract was designed to provide unbroken system sustainment by leveraging the best aspects of both public and private sector capabilities while minimizing cost and the battlefield logistics footprint.

Simultaneously, the Project Office continued to actively pursue the creation of Apache AH-64D/E aircraft PBL components organic depot capabilities through the enhancing of existing capabilities with the selective acquisition of technical data and tooling for those components.

6. Efforts to Obtain Competition: Pursuant to FAR 5.201, the proposed acquisition will be synopsized in the Federal Business Opportunities (FedBizOpps) on or about

, in both the services and supply arenas. This effort was published in the Competition Advocate's Shopping List (CASL) in (CASL # ). All inquiries received and any additional sources identified through the synopsis procedure will receive due consideration, as prescribed by law. However, due to reasons stated in paragraph 5, competition is not anticipated.

7. Actions to Increase Competition: This requirement was synopsized in the sources sought notice in the FedBizOpps on . However, due to the reasons stated in paragraph 5, competition is not anticipated until the USG has obtained technical data rights. Historically, has been the only source to supply the "D/E" unique parts.

Their subcontracting is governed by a USG approved small business subcontracting plan. It is anticipated that maximum opportunity for competitive subcontracts shall be realized. ACC-RSA and the Apache attack Helicopter Project Manager's Office continue their ongoing program of determining the cost effectiveness of competitive strategies for future lots. To date, no sources have expressed full or partial interest in this requirement from the synopsis or the sources sought synopsis published.

The USG is currently undergoing an initiative to gain the rights for the TOP. In the PM chartered a special integrated process team to bring additional focus to the need for clearly establishing rights in technical data for both software and unique hardware components. In the PM approved a three point initiative to challenge Boeing's restrictive assertions applied to the USG's rights in technical data.

The initiative is in compliance with Title 10 statutes, applicable Defense Federal Acquisition Regulation Supplement (DFARS), and Department of Defense (DoD) policies addressing rights in technical data. (See paragraph 1 O(c) below for a detailed description of the three-point initiative.) Based on solicitation and funding process, the expected schedule slip should the effort require secondary source development, would be a minimum of 48 months for second source certification.

It is estimated that the PM, Apache, the AMCOM ALC, and the Aviation RDEC would collectively require a minimum of 48 months and at least in additional funding to successfully qualify a second source business entity capable of satisfying the Government's (USG) unique component sustainment requirements for the AH-640/E.

Availability of correctly marked, technical data information is the root cause for the additional time and fiscal requirements to qualify a second competitive source of support. The following elements of information were considered in development of the estimate.

As a direct result of the technical data package (TOP) acquisition strategy described above, it is assumed that the USG will eventually succeed in obtaining reproduced, Boeing formatted, TDPs for the AH-640/E unique components at no additional cost to the USG. In that event, there would be a minimum USG fiscal investment requirement in obtaining the TOP information.

It is also assumed that a large majority of that information will be declared "unlimited rights in technical data," which will allow the USG to conduct detailed market research and to issue competitive solicitations for Apache unique repair and overhaul requirements.

However, - has become increasingly resistant to the USG's efforts for obtaining AH-640/~ TOP data. It is anticipated that there will be a very lengthy contractual legal arbitration attached to the process. Because of that, it is also possible that the USG may elect to agree to "Government Purpose Rights" markings, which could restrict the use of such data in a competitive environment.

If the arbitration process results in GPR data markings, then the preferred competitive alternative for the overhaul and repair of these Apache unique components is a successful expansion of an existing Apache organic depot sustainment capability at the Corpus Christi Army Depot (CCAD). Application and use of the - formatted, GPR TOP information by the USG's CCAD artisan labor workforce would be supplemented with the technical expertise of ~roduction line engineers and overhaul technicians. This type of partnersnTParrangement with - has worked well for almost a decade in support of Apache and Chinook depot level sustainment requirements. The additional CCAD Depot Maintenance Plant Equipment (DMPE), special tools and test equipment (STTE) investments for support of these unique components represent the estimated required for success in completing this competitive alternative.

If second source private sector overhaul and repair entities were successfully identified from market research activities, those interested entities would necessarily have to demonstrate existing repair skills and capabilities for correctly interpreting the Boeing formatted TOP instructions and meeting USG quality standards. USG production and quality assurance engineers would then have to complete the detailed processes of validating the second source claims of trained personnel availability and possession of

- cial equipment necessary to perform the work. This would also contribute to the

8. Market Research: Market Research, as defined in FAR, Part 10, was conducted.

This requirement was published in the CASL on The research included a review of all parts and services and it was determined that this effort to be performed by does not meet the definition of a commercial item as prescribed in FAR Part 2.

Therefore, the contracting officer has determined that FAR Part 12, "Acquisition of Commercial Items" will not be utilized for this acquisition. Any additional sources identified through the synopsis procedure will receive due consideration. The review Queried Dun and Bradstreet, Commerce Net, Aircraft Internet Parts Locator System Government Wide Acquisition Contract (GWAC) Scientific and Engineering, Industry Link. The queries resulted in no success in finding a contractor capable of providing technical, engineering, and logistical support to the Apache Weapon Systems.

9. Interested Sources: is the only known contractor who can satisfy the USG's requirement within the required timeframe. However, the USG will monitor any sources expressing an interest in this requirement as a result of the sources sought synopsis notice required by FAR 5.201. The proposed acquisition will be synopsized in the Federal Business Opportunities (FedBizOpps) on or about . Any contractor who expresses written interest in this requirement will receive full consideration as required by law and regulation. To date, no sources have expressed full or partial interest in this requirement from the synopsis or the sources sought synopsis published. To date, no sources have expressed full or partial interest in this requirement from the synopsis or the sources sought synopsis published.

10. Other Factors:

a. Procurement History: It is the intent of this Apache AH-640/E aircraft PBL components PBL effort, to award a performance based contract with incentives and specific performance metrics consistent with US Army PBL guidance. As the incumbent

OEM of the Apache AH-64D/E aircraft PBL components, can provide unique economical and technical advantages to the Army. has been under contract for Apache AH-64D aircraft D-Unique components sustainment since original fielding of the components. The following contracts represent current procurement history to Boeing for production and sustainment of Apache AH-64D/E Aircraft PBL components:

System Blk Ill System Development and Demonstration

EBll

CCAD Boeing AID Common Partnership Depot Repair Contract

Low Rate In Production

D~Unique PBL Contract

Contract Number

W58RGZ-05-C-

W58RGZ-06-C-

W58RGZ-04-C-

W58RGZ-09-C-

W58RGZ-11-C-

Description Amount Multi-Year I Modification of AH-64D to

AH-64E

Support of production line and logistics support

D-Unique PBL Modification to the CCAD Depot Repair Contract

Support of Block Ill Unique initial spares and logistics support D-Unique Depot Repair Contract

The above contracts were solicited/awarded sole source to the

Award Date -pursuant to 10 U.S.C. 2304 (c)(1 ), as implemented by FAR 6.302-1. Since the previous acquisitions, there have been no changes in the contracting circumstances.

b. Subcontracting Opportunities. This solicitation will include FAR 52.244-5, "Competition in Subcontracting" and other clauses applicable to subcontracting potential. Boeing will be encouraged to subcontract with small business arid small disadvantaged business concerns and to restrict subcontracting competition to small disadvantaged businesses whenever possible. To further implement these economic programs, applicable FAR and DFARS clauses will be included in all program requests for proposals and contracts. This acquisition does not require any research or studies of the type normally performed by historically black colleges and universities/minority institutions, hispanic serving institutions, and tribal council universities. The proposed contract will also incorporate the provision that encourages the contractor to continue participating in the DoD Mentor-Protege Program as a method to increase their small business base.

c. Acquisition Data Availability: In November 2010, the PM, initiated a special effort to bring additional focus to the USG's efforts in acquiring an AH-640 unique airframe components TOP. To that end, the PM chartered a special technical data IPT that included broad representation from the PM/PEO, Army Material Command (AMC), ACC-:-RSA, Research Development Engineering Center, and Legal Counsels from both the AMC and AMCOM intel1ectual property and contracts divisions. The technical data IPT has recommended that the PM adopt a three-point initiative to counter _ restrictive assertions on the USG's rights in AH-640 technical data. The solicitation and resulting contract will include DFARS 252.227-7026 "Deferred Delivery of Technical Data or Computer Software" and DFARS 252.227-7027 "Deferred Ordering of Technical Data or Computer Software". These three initiatives are briefly summarized below.

(1) Issue a formal challenge to - requiring clarification and justification of all Boeing assertions that are other than unlimited USG rights in AH-640 technical data.

(a) On 15 March 2012, a contracting officer's letter was issued to requesting clarification and delivery of appropriate justifications for Boeing's restrictive technical data assertions.

(b) After an extended exchange of correspondence, the PM hosted a "Technical Data Summit" in October2012 where - presented data in defense of both their software and hardware restrictive rights assertions. The justifying data presented for software assertions was declared insufficient, and the PM agreed to allow additional time for Boeing to collect and organize data justifying their hardware assertions.

(c) On advice of the AMCOM Intellectual Property counsel , the PM issued a November 2012 contracting officer's letter notifying - that under the provisions of DFAR Clause 225.227-7013 - had 60 days toPrQduCe final justifying data for their AH-640 software restrictive assertions.

(d) On 13 March 2013, the PM issued a contracting officer's letter notifying

- of the USG's intent to unilaterally declare Government purpose rights for AH-640 software rights in technical data. On acknowledged receipt of the Government's letter and notification to appeal.

(e) - had 90 days from the date of the USG's 13 March 2013 letter to appeal the decision by either appealing the issue to the Board of Contract Appeals, or by sending notice to the USG that they intend to file suit in an appropriate court within a year from the March letter. ~pril 2013 letter of acknowledgement does not relieve them of their appeal obligations and does not currently require a response from the USG. The USG did not get GPR in all of the Software in June. The USG did receive v1 .2 E Model software marked as GPR, but then in August 2012, the USG received a letter from - rescinding that. The D model software has always been marked Restricted Rig"'1iiS"'aiid the USG is currently involved in a formal data rights dispute with Boeing over these restricted rights portions. That dispute is currently pending before the Armed Services Board of Contract Appeals but has been stayed so the USG can try to resolve the dispute without further litigation before the board. If the USG cannot do so by the middle of the stay will be lifted and the issue will be litigated before the board .

(2) Reconstruct the contracts data requirements list (CORL), DD Form 1423-1 for the delivery of AH-64 technical data in contractor format and attach the new CORL to all subsequent AH-64E production contracts.

(a) The reconstructed CORL is complete and will be included in the next draft request for proposal for AH-64E production lot requirements.

(b) "In contractor format" is being designated as a cost reduction measure.

Upon receipt of the commercially formatted maintenance process technical data, the data will be provided to the CCAD and TYAD resident depot engineering offices for reformatting into organic depot technical maintenance instructions for artisan laborers.

It is the PM's intention that the AH-640/E technical data rights process will be concluded not later than 48 months after declaration of AH-64E initial operational capability.

APPROVAL

Based on the foregoing justification, I hereby approve the procurement of the supplies and services in support of the Apache AH-640/E aircraft performance based logistics for the Apache AH-640/E aircraft PBL components. This contract will cover a period of 4 years and wi ll be awarded to The Boeing Company, on an other than full and open competition basis pursuant to the authority of Title 10 U.S.C, Section 2304 (c)(1 ), as implemented by FAR 6.302-1 (2)(ii), subject to the availability of funds, and provided that the supplies and property herein described have otherwise been authorized for acquisition. The total estimated value of the proposed contract is $475.3M, the Base Year is valued at$144.3M, Option Year is valued at 1 $104.9M, Option Year 2 is valued at $104.9M, and Option Year 3 is valued at $121.2M.

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