Thermal_Spray_JA-18-C-353_Fully_Signed_Redacted_Rev3final(002)_Redacted.pdf

Control Number: JA-18-C-353 Contractor: Raytheon K-Tech

Program/Equipment: GPS Army (PM PNT) Current GPS UE

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JUSTIFICATION REVIEW DOCUMENT

FAR PART 6 JUSTIFICATION AND APPROVAL FOR OTHER THAN

FULL AND OPEN COMPETITION

Program/Equipment: This procurement is for thermal spray products (primer and powder kits) used in the manufacture of the current Global Positioning System (GPS) Precise Positioning Service (PPS) User Equipment (UE) in support of Program Manager, Positioning, Navigation and Timing (PM PNT), GPS Army (SMC/GPA), and the Survivability, Vulnerability and Assessment Directorate (SVAD) at the White Sands Test Center (WSTC).

Authority: 10 U.S.C. 2304(c)(1) as implemented by FAR Part 6.302-1 -- Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.

Amount: $ 3,729,320.

Prepared by: David Swanson DSN: 258-1828 Chief, Semiconductor Support Branch Date:

SVAD / WSTC

Email: david.a.swanson1.civ@mail.mil

Contracting Officer: Nicholas Granata, Jr. DSN: 848-4766 Contracting Officer – ACC-APG Date:

Email: nicholas.granata.civ@mail.mil

Technical: Randolph Brady DSN: 258-0655 Director, SVAD / WSTC Date:

Email: randolph.m.brady.civ@mail.mil

Requirements: Guler Padgett DSN: 633-3241 Deputy Program Manager, GPS Army Date:

Email: guler.padgett@us.af.mil

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Reviews: I have reviewed this justification and find it adequate to support other than full and open competition.

Program Manager:

Typed Name: Mr. Michael Trzeciak

DSN: 848-2258

Signature:

Legal Counsel:

Typed Name: Thomas Clark

DSN: 848-5219

Sig

TRZECIAK.MICHAEL.

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FAR Part 6 Justification and Approval for Other than Full and Open Competition For Contract Extension and Increased Ceiling.

1. Contracting Activity: U.S. Army Contracting Command - Aberdeen Proving Ground

(ACC-APG), ATTN: CCAP-CCC

6565 Surveillance Loop, Bldg. 6001

Aberdeen Proving Ground, MD 21005

2. Description of Action: Program Manager, Positioning, Navigation and Timing (PM PNT), GPS Army (SMC/GPA), and the Survivability, Vulnerability and Assessment Directorate (SVAD) at the White Sands Test Center (WSTC) requests a firm-fixed price modification to contract W9124Q-14-D-0001 with Raytheon K-Tech,1300 Eubank Blvd.

SE, Albuquerque, NM 87123-3336, for a contract ceiling increase and period of performance extension. This action will allow additional Thermal Spray primer and powder kits to be purchased to support on-going production of current Global Positioning System (GPS) Precise Positioning Service (PPS) User Equipment (UE). This modification will increase the contract ceiling by $3,729,320 and add three (03) one-year options to the period of performance through December 2021. The Government projects award for October 2018. Research, Development, Test & Evaluation (RDTE) 2018 funds will be used for Option Year 4, RDTE 2019 for Option Year 5, RDTE 2020 for Option Year 6, and RDTE 2021 for Option Year 7.

The current total contract ceiling is $3,965,910.22. With the inclusion of the additional ceiling ($3,729,320), the revised total contract ceiling is estimated to be $7,695,230.22 (Item 03 breaks out the modification increase).

An acquisition plan is not required because this procurement does not meet the threshold at Defense Federal Acquisition Regulation Supplement (DFARS) 207.103(d)(i)(B).

3. Description of Supplies/Services: PM PNT’s mission is to provide optimal and affordable positioning, navigation and timing capabilities with designs, products, and solutions that promote decisive action in all Army operations. In support of its mission, PM PNT works with the Survivability, Vulnerability and Assessment Directorate (SVAD) / White Sands Test Center (WSTC), due to its unique storage capabilities and support to the GPS, to provide Thermal Spray primer and powder kits to the GPS UE industry.

The primer is sprayed over electronic circuits and coated with the powder. Under high temperature, the primer and powder fuse into a hard ceramic coating that protects the underlying circuits from external tampering.

In the mid-1990s, to improve functionality and security of GPS PPS UE, the Joint Staff directed the Air Force, the National Security Agency (NSA) and trusted vendors to develop the Selective Availability/Anti-Spoofing Module (SAASM) security architecture.

This security architecture employs a multi-chip crypto key data processor (the KDP-II design) and Combined Input/Controlled Output (CINCO-IIA) integrated circuit to use unclassified key material from the NSA to control access to the GPS military signal. A ceramic tamper-resistant thermal spray coating is applied over the entire module to

Page 4 FOR OFFICIAL USE ONLY protect the GPS Enterprise Critical Program Information (CPI) stored in the SAASM This lessens the probability of classified compromise. This security architecture was subsequently adopted and used by all major GPS PPS UE vendors (i.e., L3 Communications, Raytheon, Trimble Military and Advanced Systems (Trimble), Rockwell Collins, ITT/Excelis, General Dynamics, and Mayflower Communications).

In the mid-2000s, with advent of a new generation of Complementary Metal Oxide Semiconductors (CMOS), the Air Force, NSA, and two GPS PPS UE vendors developed two new single integrated SAASM modules (i.e., Mayflower Communications with their KDP-III design and Rockwell Collins with their KDP-IV design). Because everything is on a single Application Specific Integrated Circuit (ASIC), a thermal spray coating is not required to protect the GPS Enterprise CPI.

Only Rockwell Collins has taken their KDP-IV based SAASM design to production.

Because of the emerging threats to GPS, Congress mandated that the US military purchase a new generation of GPS PPS UE after Fiscal Year 2017 (Section 913 of Public Law 111-383). This next generation of Military GPS User Equipment (MGUE) will take advantage a new Military Code (M-Code) signal and modernized GPS satellites (i.e., GPS IIR-M/IIF/III) and provide even greater functions, flexibility and security. Three contracts have been awarded to L3 Communications, Raytheon/Trimble Military and Advanced Systems (Trimble), and Rockwell Collins, to develop MGUE Increment 1 receiver cards. All three vendors are developing a ground embedded card, while only Raytheon/Trimble and Rockwell Collins are developing an aviation/maritime receiver card. However, development and fielding of MGUE receivers is taking longer than expected and M-Code capable UE is not expected before 2020. This is because these new receivers employ a new generation of cryptography, direct acquisition of the M- Code signal, and improved anti-jam and anti-spoofing algorithms. All three vendors have struggled to meet the extremely challenging requirements, but the GPS Directorate now expects to complete its Technical Requirements Verification (TRV) of the first MGUE ground embedded receiver card in 2QFY19 and TRV of the first MGUE aviation/maritime receiver card in 2QFY20. In the meantime, there are currently 1 million SAASM receivers in the field, with tens of thousands more on order by the US military and 58 allied countries for air, land, sea, and space applications. SAASM UE offers a secure bridge between legacy GPS receivers and modernized GPS receivers and the DoD needs a thermal spray supply contract to continue providing thermal spray primer and powder to the GPS UE industry.

As discussed above, with the exception of Rockwell Collins and Mayflower Communications, the remaining GPS PPS UE manufacturers are all currently producing KDP-II based SAASM receivers to meet the needs of the US military. The US government has already spent several billion dollars to integrate and test these receivers into a variety of military applications which are currently in production. The lack of thermal spray kits mainly impacts Mercury Systems, which provides thermal spray coated SAASM modules to L-3, Raytheon, and Trimble to produce military GPS receivers. These receivers, in turn, are used by Northrop Grumman Corporation, Honeywell, Lockheed Martin, Raytheon Missile Systems, Orbital ATK, and many other

Page 5 FOR OFFICIAL USE ONLY companies to produce a myriad of military products for United States and 58 allied countries.

A partial list of impacted products include:

• L-3:

• Raytheon:

• Trimble:

All of these products must utilize Thermal Spray, in conjunction with the CINCO-IIA in order to meet their data protection requirements IAW direction provided by the Joint Chiefs of Staff. If Thermal Spray is not available, all these system would need to be re-engineered to use the Mayflower Communications KDP-III design or the Rockwell Collins KDP-IV design. Based on the on-going work to develop a new generation of military GPS receivers, it costs more than $30 million to certify a new aviation receiver to fly in civil airspace and it costs more than $15 million to re-engineer and requalify a new receiver in a typical GPS guided precision guided munition (PGM).

As a result, the cost to upgrade all of the above mentioned products would be prohibitive—especially when all of these systems would need to be replaced with an M- Code capable receiver once these become available per PL 111-383.

The following Government Instructions, Plans, and Policies that direct the use of SAASM UE are identified below:

i. Chairman of the Joint Chiefs of Staff Instruction CJCSI 6140.01A, dated 31 March 2004, paragraph 4(c). NAVWAR (Navigation Warfare) requires all DoD GPS users to incorporate NSA SAASM, which makes provisions for the transition to 'black keys', eliminate requirements to acquire GPS satellites using the civil signal (C/A), and incorporates new technology into the navigation sensor.

ii. Master Positioning, Navigation, and Timing Plan, Joint Staff, Washington DC, Doc Number CJCSI 6130.01F, dated 30 September 2016, Enclosure D, paragraph 4.

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Thermal Spray primer and powder kits are critical components that combine to effectively protect the security device used to provide access to the military GPS encrypted signal with a proven tamper-resistant coating. These items must be procured in accordance with PS-TSG2-001 “Navstar Global Positioning System Product Specification for Thermal Spray Generation Two Kit Manufacturing, Revision A” (U//FOUO) and PS- TSG2-002 “Navstar Global Positioning System Product Specification for Thermal Spray Generation Two Kit Materials, Revision A” (SECRET//NOFORN).

To meet the expected demand for KDP-II SAASM receivers while the GPS Directorate completes development of the MGUE Increment 1 receiver cards, SVAD/WSTC estimates the following number of Thermal Spray primer and powder kits will be needed:

Primer Kits Powder Kits Remainder of Option Period 4 200 300 Proposed Option Year 5 150 200 Proposed Option Year 6 100 100 Proposed Option Year 7 100 60 TOTAL 550 Kits 660 Kits

To procure these kits, the existing Thermal Spray Indefinite Delivery Indefinite Quantity (IDIQ) supply contract must be modified to raise its ceiling and to extend its period of performance to 31 Dec 21.

The proposed contract modification would increase the contract ceiling as follows:

Original Value:

Base Year: 13 DEC 13 to 12 DEC 14 Option Period 1: 13 DEC 14 to 12 DEC 15 Option Period 2 13 DEC 15 to 12 DEC 16 Option Period 3: 13 DEC 16 to 12 DEC 17 Option Period 4: 13 DEC 17 to 12 DEC 18 Total Contract Value: $ 3,965,910

Proposed Modification Increase:

Option Period 4: 13 DEC 17 to 12 DEC 18 Option Period 5: 13 DEC 18 to 12 DEC 19 Option Period 6: 13 DEC 19 to 12 DEC 20 Option Period 7: 13 DEC 20 to 12 DEC 21

Total Ceiling Increase: Value: $ 3,729,320 *Option Period 4 is for a ceiling increase only as there is current POP available under the original contract.

Option Periods 5, 6 and 7 are related to the POP extension and ceiling increase.

Total Revised Contract Ceiling Value: $7,695,230

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4. Authority Cited: 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.

5. Reason for Authority Cited:

(a) As described at FAR 6.302-1(a)(2), when the supplies or services required by the agency are available only from one responsible source, and no other types of supplies or services will satisfy agency requirements, full and open competition need not be provided for. 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 substantial duplication of cost to the Government that is not expected to be recovered through competition.

It is the Government’s intent to award this proposed modification on a sole source basis to Raytheon K-Tech, 1300 Eubank Blvd SE, Albuquerque, MD 87123-3336. This is because, based on the market research work performed as described in Section 8 of this document, Raytheon K-Tech is the only known US industry supplier with the necessary NSA certification to produce the required thermal spray products.

The requirements to produce these specialty items are quite significant. These include, but are not limited to, the security requirements to safeguard this technology, oversight, and NSA facility certification. NSA controls the Thermal Spray materials specifications and the processing procedures used for their application. Facilities producing the required Thermal Spray and Primer Kits must be certified by the NSA. The true barrier for competition is not the manufacturing of the powders and primer, but the requirement to obtain NSA facility approval. The length of time it would take to get the facility certified precludes companies from investing the time and/or cost into their infrastructure to submit a proposal because the NSA certification would need to be completed before contract award. This stringent security requirement of SECRET//NOFORN also eliminates vendors from being able to employ qualified personnel and have their facilities qualified for the classified requirement. If the current Thermal Spray supply contract is not modified, there would be unacceptable mission delays (at least 24 – 30 months for procuring the needed infrastructure, certification and verification of acceptable material).

This time duration is based upon the process experienced with Ratheon K-Tech (K-Tech at the time) to obtained qualification as a new vendor in 2006. Unlike most vendors, K- Tech had much of the necessary equipment and laboratory. Additionally, there will be increased costs (> $8 Million Dollar Investment based on cost of the minimum necessary infrastructure, security requirements (Classified Product and Specification) and product validation for the SAASM components) to develop a new source to produce required tamper-resistant primer and powder. This increased cost is based upon the necessary infrastructure that is comprised of necessary rather expensive hardware on the order of > $ 5M to conduct the mixing and measurements, the need for a Classified Laboratory with all the certifications >$ 2M to obtain the proper certifications and having the correct security handling personnel. Additionally, it would cost approximately $2M for a new vendor to produce a minimum of 100 primer kits and 100 powder for verification of the all the unique specifications for the Thermal Spray product. The proposed Contract

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Thermal Spray Powder Kits

MAR 18 APR 18 MAY 18 JUN 18 JUL 18 AUG 18 SEP 18 OCT 18 NOV 18 DEC 18

300 Starting Kits 30 30 30 20 30 30 30 30 30 30 TOTAL Available 252 222 192 172 142 112 82 52 22 -8

Thermal Spray Primer Kits

MAR 18 APR 18 MAY 18 JUN 18 JUL 18 AUG 18 SEP 18 OCT 18 NOV 18 DEC 18

124 Starting Kits 15 15 15 10 15 15 15 15 15 15 TOTAL Available 94 79 64 54 39 24 9 -6 -21 -36

Does Not Include Any Powder Kits for Teledyne

Does Not Include Any Powder Kits for Teledyne

(b) Alternatives—Sandia National Laboratories (SNL) maintains a backup manufacturing capability for these products. If Raytheon K-Tech were to leave the market, this Federal Funded Research and Development Corporation (FFRDC) could continue to provide these items to SVAD/WSTC. However, because they are federally funded, FFRDCs are prevented from competing with commercial industry.

(c) Commerciality--Since these classified products are only used by government approved thermal spray coating providers to coat GPS SAASM multi-chip modules, these products are inherently non-commercial in nature.

(d) Pricing Factors--The current thermal spray kit prices are based on historical firm, fixed price (FFP) unit prices escalated for inflation. Factors that might increase the cost of the product include: raw material shortages and the cost to maintain DoD security clearances and classified facilities. Factors that might lead to lower prices include:

increase in demand for current GPS UE from the US military or foreign military sales (FMS) and end-of-life buys for current GPS UE.

Failure to obtain approval of the J&A to increase the contract ceiling and extend the period of performance of the existing Thermal Spray contract will have a cascading negative effect on the current military GPS User Equipment industry, and ultimately on all branches of the US military which rely on GPS for precise positioning, navigation, timing, and precision guided munitions. The requested contract action serves multiple DoD programs by creating a store of Thermal Spray Primer and Powder at WSTC so that this product can be sold to authorized thermal spray coating providers. It is essential to ensure that the DoD maintain a reliable supply of these products through 2021 because suitable military GPS User Equipment (MGUE) will not be available until then. As discussed in Section 9 and 10.a, there is only one source for Thermal Spray and no other contracting action will satisfy the agency’s minimum needs. If approval is not received to execute this contract ceiling increase and period of performance extension, the current stock of Thermal Spray primer and powder will be depleted on or around 15 October 2018 and will ultimately cause a shutdown of multiple military hardware production lines because of the tamper-resistant coating requirement for GPS security devices. The GPS PPS UE manufacturers would be unable to fulfill their obligation to deliver billions of dollars of warfighting equipment. Failure to field this equipment would jeopardize the ability of the warfighter to complete their mission and would increase the risk of serious injury of loss of life. Similarly, if the existing contract ceiling is not raised in a timely manner, government contracts that depend upon timely

Page 10 FOR OFFICIAL USE ONLY delivery of GPS guided weapons and platforms would be adversely impacted. The end-state is that the DoD defense contractors would be unable to fulfill their contractual obligations to the Government in delivering their hardware to US and allied warfighters.

6. Efforts to Obtain Competition: The Contracting Officer shall publish the notices required by FAR 5.201 and any bids or proposals received shall be considered.

a. Effective Competition: Due to the fact this is a sole source action, effective competition is not applicable.

b. Subcontracting Competition: FAR 52.244-5, Competition in Subcontracting, is in contract W9124Q-14-D-0001.

7. Actions to Increase Competition: There are currently no known mechanisms to increase competition. Because of the NSA restrictions, competing the requirement is not possible due to unacceptable schedule delays and substantial duplication of cost. Due to the unique requirements, only Raytheon K-Tech is capable of producing the Thermal Spray powder kits and primer in the required time frame as addressed above. Raytheon K-Tech is currently the only contractor with the required NSA certifications, personnel with the proper clearance, and the infrastructure willing to supply the thermal powders within the Governments parameters.

8. Market Research: In accordance with Defense Federal Acquisition Regulation Supplement (DFARS) 205.205-71 and DFARS Procedures, Guidance and Information (PGI) 206.302-1(d), a request for information or sources sought was posted to Federal Business Opportunities (FedBizOps) on 15 March 2018, closing on 05 April 2018 and the results were that only Raytheon K-Tech responded to the sources sought solicitation.

Additionally, prior to the award of the current thermal spray supply contract, a previous Source Sought was put on FedBizOps in August 2013, and Raytheon K-Tech was the only vendor who responded to the sources sought solicitation. Lastly, Market Research was conducted prior to every option over the contract period and no additional vendors who could meet the requirements were found.

Some additional Market Research techniques, as listed and expanded upon in the Market Research Report, revised 3 July 2018, are as follows: contacted knowledgeable people working Government and industry in specific markets, reviewed market surveys prepared by commercial entities, conducted site visits, attended trade shows, conferences, and symposia, and used Internet tools and performed Web searches. No new sources for the desired thermal spray products were found.

9. Interested Sources:

As stated above, only Raytheon K-Tech has shown interest in the requirement. To date, no other sources have expressed an interest in this requirement and none are anticipated.

10. Other Facts:

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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.

Typed Name: Randolph M. Brady Date: 25 JUL 18 Title: Director, SVAD / WSTC Signature:

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.

Typed Name: Guler Padgett Date:

Title: Deputy Program Manager, GPS Army Signature:

13. Fair and Reasonable Cost Determination: I hereby determine that the anticipated cost or price to the Government for this contract action will be fair and reasonable, based upon, cost analysis techniques, a comparison of proposed prices with an Independent Government Cost Estimate and previous contracts data. Certified cost and pricing data will be obtained.

Typed Name: Nicholas Granata, Jr. Date:

Title: Contracting Officer Signature:

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

Typed Name: Nicholas Granata, Jr. Date:

Title: Contracting Officer Signature:

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Approval

Based on the foregoing justification, I hereby approve the procurement of Thermal Spray Products via a ceiling increase and three (03) one year options period of performance extension to contract W9124Q-14-D-0001, in the amount of $3,729,320 on an other than full and open competition basis pursuant to the authority of 10 U.S.C. 2304(c)(1) as implemented by Federal Acquisition (FAR) 6.302-1, Only one responsible source and no other supplies or services will satisfy agency requirements, subject to the availability of funds, and provided that the services or property herein described have otherwise been authorized for acquisition.

Cynthia A. Jackson Date:

Special Advocate for Competition Signature: