REDACTED JA.DOCX

JUSTIFICATION REVIEW DOCUMENT

FAR SUBPART 13.5 SIMPLIFIED PROCEDURES FOR CERTAIN COMMERCIAL ITEMS – SOLE SOURCE JUSTIFICATION AND APPROVAL

Program/Equipment: Corpus Christi Army Depot (CCAD) has a requirement to procure Automated Storage and Retrieval System Plus (ASRS+) Maintenance.

Authority: Simplified Procedures for Certain Commercial Items, 41 U.S.C. 1901 as implemented by FAR Subpart 13.5.

Amount: $

Reviews: I have reviewed this justification and find it adequate to support Sole Source

Program Manager:

DSN:

Signature:

Legal Counsel:

DSN:

Signature:

J&A Control Number: ALC-J&A21-0633

FAR Subpart 13.5 Simplified Procedures for Certain Commercial Items – Sole Source Justification and Approval

1. Contracting Activity: Army Contracting Command Redstone Arsenal Corpus Christi Army Depot (CCAD), Contracting Office (CCAM-ALC), 9035 Ocean Drive, Building 10, Mail Stop 18, Corpus Christi, TX 78419-5260.

2. Description of Action: CCAD requests approval to award a new sole source, firm-fixed-price contract for Automated Storage and Retrieval System Plus (ASRS+) Maintenance with Dematic Corporation., 507 Plymouth Avenue NE, Grand Rapids, MI 49505-6029. The Government projects award for December 2020 and fiscal year 2021, Army Working Capital Funds (AWCF) funds will be used.

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

This action is a follow-on to contract W912NW-20-P-0014. That contract was executed as a sole source under the authority of 41 U.S.C. 1901, Simplified Acquisition Procedures, as implemented by Federal Acquisition Regulation (FAR) Part 13.5.

CCAD is looking to build a new ASRS+ with their new expansion and does not want to spend the estimated $45 million to rebuild this 28 year old system with a new contractor. The government engineers have looked into other systems and other industry options for the new ASRS that will be built.

3. Description of Supplies/Services: CCAD intends to procure maintenance of the ASRS+ system. The ASRS+ system stores and retrieves all the parts that CCAD uses to fulfill the mission. Services include all preventative and remedial maintenance on-site of the ASRS+, sub-systems, and respective components located in Building 8 at CCAD, Corpus Christi, Texas. The contractor shall provide all necessary labor, supervision, material, equipment, documentation, repair parts, maintenance supplies, tools, test equipment, and travel in accordance with the original equipment manufacturer (OEM) specifications and any federal, state, and local regulations. The Period of Performance does not include options because the Sole Source Company will quote only one (1) year at a time due to the age of the equipment.

Period of Performance: 08 December 2020 to 07 December 2021 Total Value: $

4. Authority Cited: Simplified Procedures for Certain Commercial Items, 41 U.S.C. 1901 as implemented by FAR Subpart 13.5, Only one responsible source and no other supplies or services will satisfy agency requirements.

5. Reason for Authority Cited:

a. The proposed acquisition requires the use of the cited statutory authority because Dematic Corporation (Cage 4FE76), 507 Plymouth Avenue NE, Grand Rapids, MI 49505-6029, is the OEM and installer of the ASRS+ System; and retains all proprietary rights to the software, blueprints, components, and the majority of the Automated Guided Vehicle (AGV) replacement/ repair parts. The ASRS+ System includes a Real Time Resource Supervisor (RTRS) software application, which controls all subsystem hardware and firmware. Subordinate subsystems are Discrete Controls, Storage Retrieval Vehicle (SRV) Controllers, AGV Controller, and Floor Drivers which are also proprietary to Dematic Corporation as are the AGV On-Board Processors, Printed Circuit Boards, and Imbedded Programmable Memory chips. Neither the Government nor any other known source has the knowledge, ability or license to read, modify, or maintain any of the proprietary software or technical data associated with the system currently in place.

Dematic Corporation is the only source that can perform maintenance and services to the ASRS+. The ASRS+ stores all the parts needed for production and consists of a conveyor system and automated guided vehicles. This complex system is critical in the overall production at CCAD. Maintenance and emergency repairs are performed by Dematic Corporation journeyman level technicians which have a broad range of experience in servicing the ASRS+. Depot personnel are not authorized to repair or maintain the system. Dematic Corporation has not authorized any third party company to service their equipment or provide replacement parts. It is not anticipated that Dematic Corporation will allow for third party authorized providers for maintenance support as market research has identified that Dematic is the only source who provides these maintenance services for their equipment.

Similar manufacturer’s services and parts would require the purchase of an entirely new automated system. As a result, the Government would incur substantial duplication of costs, which would not be recovered through the acquisition of another manufacturer’s similar services or items. The estimated cost to procure a new ASRS+ is approximately $45,000,000.00. This is based on market research by the customer on the estimated costs for an upgrade of the existing equipment provided by Dematic Corporation in March 2018. This would require a significant investment by CCAD.

In July 1992, the Government attempted to purchase rights, or obtain permissions to share information with third parties from Eaton-Kenway. Eaton-Kenway was not willing to sell the data rights.

In 1995, Eaton-Kenway was sold to HK Systems Inc. Ownership of all proprietary data was transferred to HK Systems for ownership.

In October 2009, the Government attempted again to purchase the data rights from HK Systems Inc. HK Systems Inc. was not willing to sell the data rights.

In 2010, Dematic Corp. acquired HK Systems, Inc. and all data transferred ownership to Dematic Corporation.

b. Alternatives:

1. Suspend Operations: If operations are suspended, then CCAD will not be able to accomplish its main mission of rebuilding helicopters for the warfighter. The ASRS+ holds all the parts CCAD uses to rebuild helicopters. The contractor is the only one with personnel with the expertise to operate and repair the system if it goes down. Suspending operations would place CCAD at a complete work stoppage.

2. Use in-house personnel/expertise: CCAD does not have in-house personnel who have expertise with the ASRS+, since the equipment and software is proprietary. There are not government personnel with the expertise to make repairs or operate the system. Utilizing Iin-house personnel/expertise is not a viable option.

3. Replace: The cost to replace the ASRS+ and the timeframe from procurement to install would be would be significant. CCAD has researched this option previously. To have a new contractor come in and replace this system they would need to replace all the software and hardware to the system. This is estimated at approximately $45 million in 2018. There would be a 6 to 9 month lead time having all the equipment and software manufactured. The installation of the new system would be approximately 6 to 9 months. Therefore, CCAD could be without ASRS support for 12 to 18 months. Additionally, the timeframe to award a new contract for the procurement and installation of a new system would take approximately 12 to 18 months. Since the ASRS is a system it would have to be procured with Capital Improvement Plan (CIP) funding which is only approved every 3 years. Based on the above, it would take approximately 5 to 6 year process to replace the entire system. This would be detrimental to CCAD’s mission and is not a viable option.

c. Delays in obtaining the required maintenance will jeopardize the operation of the ASRS+ and will risk additional damage to the equipment which would lead to an increase in the likelihood of future failures to the system. The current ASRS+ equipment has been in use at CCAD for approximately thirty (30) years. Due to the current age of the ASRS+ equipment, maintenance is essential to ensure the continuing functionality of the system.

If the Government does not procure the ASRS+ maintenance, the Directorate of Production Engineering, along with all of CCAD, will experience catastrophic delays or work stoppages. These delays will tremendously impact the mission of the Depot in its ability to support the Army, Air Force, Navy, and Marines with the ability to support the critical aviation needs of the warfighter.

6. Efforts to Obtain Competition:

a. The Contracting Officer shall publish the notices required by FAR 5.201. Release of synopsis estimated date is 30 November 2020. The requiring activity CCAD Material Management Supervisor, Industrial Engineer, and Division Chief, Materials Management performed market research from September through October 2020. The Contracting Officer concurred on Market Research Report and the Commercial Item Determination on 13 November 2020. The Market Research Determination was concurred on 13 November 2020 by the Contracting Officer. Competition is not anticipated as the Market Research shows Dematic is the only source.

b. Subcontracting Competition. There are no subcontracting Possibilities for this requirement which is documented in the No Subcontracting Possibilities Determination, contained in Paperless Contract File (PCF).

7. Actions to Increase Competition: Pursuant to FAR Part 5.201, a synopsis outlining this requirement will be published on beta.SAM.gov on or about 30 November 2020. The knowledge and expertise required to perform this effort is not readily available from any other source. However, market research is an ongoing effort within CCAD. This office will continue to monitor the marketplace for future competition through the internet and contract with industry representatives. There is no technical data package for this requirement. No actions are currently being taken to increase competition as Dematic is the only source with access to the proprietary software and technical data needed to perform the requirement, and to date they have not been willing to provide that data to the Government to allow for competition.

8. Market Research: Market Research was conducted in accordance with FAR Part 10 by Mr. Joseph Ramirez, CCAD Business Specialist from May 2020 through Sept 2020. The following market research techniques were used by Mr. Ramirez:

a. Market Survey revealed that Dematic Corporation is the only source for this acquisition. It also revealed that this is a commercial procurement; therefore, the procedures in FAR Part 12 will be followed. The market survey was conducted by Mr. Joseph Ramirez and engineers from the Production Engineering Directorate which included research into the following websites:

Dematic Corporation (www.dematic.com) - The current contractor is the only company who can still operate and maintain the aging system and older software that runs the system. No other company in the industry has technicians that still know the language and how operate the software.

AutoStore (http://autostoresystem.com) - AutoStore builds and maintains AS-RS for several companies. It does not possess the capabilities to maintain and repair current older system in place. AutoStore would have to replace the current system with modern parts, equipment, and software to be able to maintain the system.

Kardex Remstar, LLC (http://www.kardexremstar.com) - Kardex Remstar, LLC’s offer the broadest selection of AS-RS options but does not have compatible technology with the current system due to the system age. It would have to update they equipment and software to make it compatible.

Various companies within the Material Handling Industry of America website: www.mhia.org/industrygroups/as-rs

b. Contact with knowledgeable persons in Government and/or industry regarding the commercial nature of this requirement and/or standard industry practices in this area of supply/services.

Rusty Pitre, CCAD WIPCA Supervisor, Aug 2020- Contact was made with Mr. Pitre to discuss the ASRS+ system. Mr. Pitre agreed that the ASRS+ system has been repaired/restored in several areas which are vital to the continued operation, but still needs restoration to other areas that are obsolete. Continued maintenance by experienced personnel is vital to CCAD's mission. If the Government does not have experienced personnel that know how to repair and maintain this aging system, the system will cease to operate at full capacity or stop working altogether. The current contractor has fabricated parts for this system that can no longer be replaced to keep the system in an operational status. Even with the current upgrades, there are items that are obsolete that have will not be upgraded and will still need to be maintained. Without prior experience, the older parts will not be able to be repaired or maintained adequately.

Adebanjo Layade, Industrial Engineer at CCAD (SME), Aug 2020- . Contact was made with Mr. Layade to discuss the ASRS+ system. Mr. Layade confirmed that the ASRS+ system software is proprietary along with several pieces of equipment. Mr. Layade stated that there are areas needing replacement, which can only be performed by Dematic Corporation due to the lack of compatibility with the current ASRS+ system. Mr. Layade worked on establishing the requirement for updating the ASRS+ system under contract W58RGZ-19-P-0046. Although restoration was performed to the ASRS+ system, not all obsolete parts and equipment were replaced. There are still several pieces of the system that are considered a single point of failure. If these items fail, the items cannot be replaced. The only compatible technology exists within Dematic Corporation. Other ASRS+ system maintenance companies are in the commercial marketplace; however, the companies do not possess the capabilities that are compatible with this older system.

Gregg Stewart, Division Chief, Materials Management- Aug 2020-After speaking with Mr. Stewart, he stated that the ASRS Maintenance Support is vital to CCAD's overall mission since the ASRS is where the parts for all of CCAD production are stored. A working system is vital to the continued production schedule.

Mr. Ken Gibbons, Account Executive, Dematic Corporation, June 2020- Contact was made with Mr. Gibbons to discuss the ASRS+ system. Mr. Gibbons stated that the current ASRS+ system runs by proprietary software, which is owned by Dematic Corporation. Another contractor could not perform the task requirements, because the contractor would need access to the proprietary software. A new company would have to come in and replace the entire system, since the some of the equipment and software are proprietary. There is also software that operates the individual stackers from the end of aisle computers, which is proprietary. A new ASRS+ system to replace the current system in place is estimated at $45 million based on current equipment. Mr. Gibbons provided the estimated number and stated it would be plus or minus 20%. He was unable to provide a more detailed quote without receiving a formal request for quote.

c. Review of recent market research results for similar or identical supplies/services from June 2020 to August 2020:

MIAS Group- http://www.mias-group.com-They are a company that builds and maintains stacker cranes and conveyors for AS-RS. They do not possess the capability that is compatible with the current system. June-2020 Hanel Storage Systems- http://www.hanel.us - This company does not offer technology that is compatible with our current system. They only offer carousel based lifts. July 2020 Kardex Remstar, LLC- http://www.kardexremstar.com- This Company offers the broadest selection of AS-RS options but again does not have compatible technology with the current system due to the system age. Aug 2020 MHI.org- Amanda Gaston, Market Research Analyst- Ms. Gaston assisted in trying to find a company that was compatible with the current system. She could not find one due to the proprietary software that controls the equipment. It would require a new software and replacement of Dematic equipment with a current system with compatible technology. Aug- 2020 Research was performed on the MATERIAL HANDLING INDUSTRY OF AMERICA website http://www.mhia.org/industrygroups/as-rs. Many of the current cutting edge ASRS companies within heavy industry are listed on this site. If the current system did not have proprietary software it could be competed to various companies but due to the age and the obsolescence of many of the parts and the proprietary software it can only be maintenance through Dematic. June - Aug 2020.

This requirement will be posted to SAMbeta.GOV which replaced FBO (Federal Business Opportunities) in accordance with FAR 5.201 as required.

9. Interested Sources: Dematic Corporation is the only known source capable of providing the required services. To date, no other sources have written to express interest. This notice required by FAR Part 5.201 will be published on or about 20 November 2019 and interested sources identified through synopsis will receive due consideration as required by law. Any bids or proposals received will be considered.

10. Other Facts: FAR 13.5, Paragraph, Latest Version dated 11 July 2019, “Actions to Increase Competition” of the previous justification, stated the following, “Action for improving or enhancing the competitive status of acquisition of this service includes publication in the United States Army Aviation and Missile Command (AMCOM) Competition Advocates Shopping List (CASL), in accordance with FAR 5.404 and publication in FedBizOpps (FBO) in accordance with FAR 5.201. The knowledge and expertise required to perform this effort is not readily available from any other source. However, market research is an ongoing effort within CCAD. This office will continue to monitor the marketplace for future competition through the internet and contract with industry representatives. There is no technical data package for this requirement.”

a. Procurement History:

(1) W912NW-20-P-0014:

(a) Award Date: 06 December 2019

(b) Period of Performance: 08 December 2019 through 07 December 2020

(c) Total Contract Value: $ 1,404,084.00

(d) Competitive Status: Acquisition was conducted under the statutory authority of 41 U.S.C. 1901, Simplified Acquisition Procedures, as implemented by Federal Acquisition Regulation (FAR) Part 13.5

(e) Action to Increase Competition: Continual monitoring of marketplace for future completion through the internet and contact with industry representatives.

(2) W912NW-15-C-0006:

(f) Award Date: 30 June 2015

(g) Period of Performance: 01 July 2015 through 31 December 2018

(h) Total Contract Value: $5,707,259.53

(i) Competitive Status: Acquisition was conducted under the statutory authority of 41 U.S.C. 1901, Simplified Acquisition Procedures, as implemented by Federal Acquisition Regulation (FAR) Part 13.5

(j) Action to Increase Competition: Continual monitoring of marketplace for future completion through the internet and contact with industry representatives.

(3) W912NW-10-P-0150:

(a) Award Date: December 23, 2009

(b) Period of Performance: 01 January 2010 through 30 June 2015

(c) Total Contract Value: $6,291,230.49

(d) Competitive Status: Acquisition was conducted under the statutory authority of FAR 6.302-1, Simplified Acquisition Procedures, Only One Source

(4) W912NW-05-C-0003:

(a) Award Date: 30 December 2004

(b) Period of Performance: 01 January 2005 through 31 December 2009

(c) Total Contract Value: $4,422,184.28

(d) Competitive Status: Acquisition was conducted under the statutory authority of FAR 6.302-1, Simplified Acquisition Procedures, Only One Source

(5) DAAH13-00-C-0002:

(a) Award Date: 31 March 2000

(b) Period of Performance: 01 April 2000 through 31 December 2004

(c) Total Contract Value: $2,677,735.48

(d) Competitive Status: Full and Open Competition

(e) Background: Solicitation was issued to twelve (12) vendors. A pre-proposal conference with held and only three (3) vendors attended. Only one (1) offer was received, which was from the awardee HK Systems Inc.

(6) DAAH13-94-C-0005:

(a) Award Date: December 1993

(b) Period of Performance: 01 January 1994 through 31 December 1999

(c) Total Contract Value: $1,895,860.79

(d) Competitive Status: Full and Open Competition

(e) Background: Four (4) offers were submitted in response to the solicitation, including the OEM, Eaton-Kenway. The other three (3) offers were conditional based on the Government furnishing the technical information (software data) and parts. The Government was unable to provide the required technical information, which was retained by Eaton-Kenway.

(7) DAAH13-92-C-0012:

(a) Award Date: June 1992

(b) Period of Performance: 01 July 1992 through 31 December 1993

(c) Total Contract Value: $359,818.00

(d) Competitive Status: Sole Sourced to Eaton-Kenway for Maintenance until follow-on contract could be awarded.

(8) DAAH13-92-P-1134:

(a) Award Date: June 1992

(b) Period of Performance: 1 month

(c) Total Contract Value: Not Known

(d) Competitive Status: Sole Sourced to Eaton-Kenway for Maintenance until follow-on contract could be awarded.

(9) DAAH13-88-C-0023:

(a) Award Date: 23 August 1988

(b) Period of Performance: 23 August 1988 through 8 June 1992

(c) Total Contract Value: $14,137,550.74

(d) Competitive Status: Full and Open Competition

(e) Background: This contract was for procurement of the ASRS and included maintenance. Eaton-Kenway was awarded the contract.

11. Technical/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.

12. 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.

This determination will be made using the following: price analysis cost analysis IGCE audit: other: xx

As a part of this basis, certified cost or pricing data is not required because the item and/or services being acquired are considered commercial.

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

Approval

Based on the foregoing justification, I hereby approve the procurement of Automated Storage and Retrieval System Plus (ASRS+) Maintenance on a sole source basis pursuant to the authority of the Simplified Procedures for Certain Commercial Items, 41 U.S.C. 1901 as implemented by FAR Subpart 13.5, subject to availability of funds, and provided that the services or supplies herein described have otherwise been authorized for acquisition.

Date: _______________ Signature: ________________________

Advocate for Competition

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