JA_Hartchrom_REDACTED.pdf

CMO Control Number: 2016-041

DEPARTMENT OF THE ARMY

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

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

2. Description of Action: This action is for the acquisition of Chrome Plating Services for 155mm and 120mm cannon tubes, minor parts, and associated ordnance in support of the Watervliet Arsenal (WVA) production mission for major and minor gun components. Under a Facilities Use Agreement between the Arsenal Business and Technology Partnership (ABTP) and Hartchrom, Inc., of Albany, NY, Hartchrom is in possession of the WVA chrome plating facility. As a result of this tenant use agreement, the Government will award a new firm-fixed price service contract to Hartchrom to chrome plate cannon tubes in support of the WVA production mission for U.S. and Foreign Military Sales customers. The funding to be used is Army Working Capital Funds (AWCF). The term of this contract is anticipated for one base-year, plus two one-year option periods to be exercised at Government discretion. This requirement must conform to stringent standards: Technical Data Packages (TOP), Special Process Procedures (SPP), and Quality Assurance Provisions (QAP), will not allow for variation or alternate procedures.

3. Description of Supplies: This effort will involve surface chrome plating services from Hartchrom to chrome plate WVA machined cannon tubes and cannon and mortar components to support WVA production mission requirements for major and minor gun components and associated ordnance in support of the warfighter. The total estimated value of this contract including all options is $16,979,892 , as shown in the Independent Government Estimate below.

Independent Government Estimate

Annual Number of FY17 Costs* FY18 Costs* FY19 Costs*

Components

Minor Components Coatings 12,287 $1,854,153 $1,889,289 $1,927,115

Tube, 120mm 117 $1,421,852 $1,448,796 $1,477,803

Tube, 155mm 17 $200,447 $204,246 $208,335

Tube, Full Bore Chrome 155mm 150 $2,172,030 $2,178,330 $2,257,500 Prototype and Rework $97,416 $102,667 $103,076

Overtime $15,945 $16,804 $16,871 Current Year Dollars Per Year* $5,761,843 $5,840,132 $5,990,699

Current Year Dollars Total* $17,592,674

FY16 Constant Dollars Per Year $5,659,964 $5,659,964 $5,659,964

FY16 Constant Dollars Total $16,979,892

* Estimated Costs were adjusted for inflation for each FY using the Weapons/Track Combat Vehicle Appropriation factors dated 13 Feb 2015

4. Authority Cited: The statutory authority permitting other than full and open competition is 10 U.S.C. 2304(c)(1 ), as implemented by FAR 6.302-1 , "Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements." FAR 6.302-1 (a)(2)(iii)(A) provides that full and open competition need not be provided for when supplies or services required by the agency "may be deemed to be available only from the original source in the case of follow-on contracts for the continued provision of highly specialized services 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:

This effort requires the use of 120mm cannons at WVA and involves special processes and procedures for surface chrome plating that are unique to Hartchrom. The procedures to apply the chrome plating are complex, requiring highly skilled employees. Hartchrom is the only contractor with the experience and skill capable to chrome plate cannon tubes. Moreover, the operation is capital intensive, requiring expensive and unique equipment.

Duplication of Cost. There are many duplication of cost areas associated with this procurement. An Independent Government Cost Estimate (IGCE) was performed on two major areas: Fixtures and Tooling and Learning Curve. Should this requirement be recompeted, the Government would incur duplication of costs because a new contractor would recover costs associated with procuring the necessary fixtures and tooling to perform the coating services under a new contract. The total estimated cost for fixtures and tooling is $2.3M, which is not expected to be recovered through competition.

Another duplication of cost is the learning curve associated with this action. There is a lack of expertise for these very specialized services, which indicates there would be a learning curve for another contractor to develop the same level of productivity that the current contractor has. The current contractor has been performing these services with the Government since 2002. With a new contractor, initially there would be a lower productivity level, resulting in more labors hours, materials, and energy being required to perform these services, which would result in additional cost to the Government. The total estimated additional cost associated with the learning curve is $3.1 M; this cost is not expected to be recovered through competition. The learning curve cost for another contractor would be high because of the inconsistent volume of production and the diversity of components in the minor category. The learning curve was estimated based on the complexity of the work, the uniqueness of plating large cannons as opposed to commercial components, and the uniqueness of the process.

Duplication of Costs Fixtures and Tooling:

Learning Curve:

Total

$2,300,000.00 $3, 100,000.00

$5,400,000.00

The total duplication of costs is approximately 32% of the estimated cost of this contract; it is expected these costs would not be recovered through competition.

6. Efforts to Obtain Comcetition:

a. Effective competition. This action will be synopsized on FedBizOpps; however, due to Hartchrom's long-term tenant use agreement, gaining additional competition is not currently possible since other contractors do not have the required facility/equipment to plate items the size of the 120mm cannon. A Sources.Sought Notice was issued in April 2015 and no responses were received. Had responses been received , additional information and dialogue would have been performed to determine the possibility of considering additional sources to satisfy this requirement.

b. Subcontracting competition. Due to the nature of this procurement, Hartchrom does not subcontract any of the chrome plating process out to other businesses.

All chrome plating services are done on Watervliet Arsenal.

7. Actions to Increase Competition: Future actions to increase competition will involve including this requirement in the Advance Planning Briefing to Industry and supplementing Sources Sought Notices posted on FedBizOpps with direct contact to companies involved in chrome plating to ensure they are aware of the notice.

Watervliet Arsenal will also consider adding an announcement of the requirement to any industry events it hosts in the future.

8. Market Research: The Contract Specialist conducted market research in April 2015 via a Sources Sought Notice on FedBizOps as well as additional internet research to identify prospective contractors using an industry specific search engine for chrome-plating companies in the State of New York and surrounding area. Six companies were identified that offered chrome plating services:

Fountain Plating, West Springfield, MA Anoplate Corp., Syracuse, NY R & J Metal Finishing , Inc., Depew, NY Products Finishing, Inc., Erie, PA U.S. Chrome Corp., Batavia, NY New Method Plating Co., Worcester, MA

CMO Control Number: 2016-041

However, the six companies identified do not have the required facility/equipment to plate items the size of the 120mm cannon. There were no responses to the Sources Sought posting.

9. Interested Sources: To date, no other sources have written to express an interest in the acquisition of these items.

10. Other Facts:

a. An integral component of the cannon tube is the chrome plating applied at the end of the manufacturing process. The procedure to apply the chrome plating is complex, requiring highly skilled employees. The operation is also capital intensive, requiring expensive and unique equipment. Prior to the award of the previous contracts with Hartchrom, \flNA was the only organization in the United States with the experience and skill capable of chrome plating cannon tubes.

b. When \flNA initially awarded the contract to Hartchrom, all of the chrome plating experience resided with \flNA. Therefore, to maintain quality standards, highly skilled \flNA employees, under an Intergovernmental Personnel Mobility Act (IPA), were tasked to perform the chrome plating processes for Hartchrom. Over time, many of those employees left Government service and became employees of Hartchrom. Hartchrom now possesses significant skill and experience in chrome plating cannon tubes that could only be regained by Government personnel with significant monetary and time investment.

Procurement History:

Contract: W911 PT-14-D-0001 Contractor: Hartchrom Award Date: 1 October 2013 Competitive Status: Non-Competitive (FAR 6.302-3)

Contract: W911 PT-08-D-0014 Contractor: Hartchrom Award Date: 29 May 2007 Competitive Status: Non-Competitive (FAR 6.302-3)

Contract: DAAA09-02-D-3013 Contractor: Hartchrom Award Date: 1 September 2002 andrew.j.zielinsky Highlight andrew.j.zielinsky Sticky Note

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Competitive Status: Non-Competitive (FAR 6.302-3)

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

NAME: Thomas Pond TITLE: Director, Industrial Operations and Production Directorate SIGNATURE: //s/fTEP DATE: 3/29/16

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

NAME: Thomas Pond TITLE: Director, Industrial Operations and Production Directorate SIGNATURE: //s/fTEP DATE: 3/29/16

13. Fair and Reasonable Price Determination: I hereby determine that the anticipated price for the contract action will be fair and reasonable. A firm-fixed priced proposal will be required for the new requirements and Certified Cost or Pricing Data will be required as part of the action in accordance with FAR 15.403- 4 .

NAME:

TITLE:

SIGNATURE:

Reymundo Moncayo Contracting Officer

//RM// DATE: 27 JAN

2017 Oct

14. Contracting Officer Certification: I certify that the facts and representations under my cognizance, which are included in this justification, are accurate and complete to the best of my knowledge and belief.

NAME:

TITLE:

SIGNATURE:

Reymundo Moncayo Contracting Officer

//RM// DATE: 27 JAN

APPROVAL

Based on the foregoing justification, and as Principal Assistant Responsible for Contracting pursuant to Army Materiel Command (AMC) Head of the Contracting Activity (HCA) Delegation of Authority #15-04, I hereby approve the procurement of Chrome Plating Services for Watervliet Arsenal at the total estimated value of $16,979,892 on an other than a full and open competition basis pursuant to the authority of 10 U.S.C. 2304(c)(1) as implemented by FAR 6.302-1 , "Only one responsible source or only from a limited number of responsible sources and no other supplier or services will satisfy the agency requirements," subject to the availability of funds, and provided that the services and property described herein have otherwise been authorized for acquisition.

Date: Ju I J.017 I I

(}_ lJ Principal Assistant Responsible for Contracting