Justification & Approval for Sole Source

4. Authority Cited: 10 U.S.C. 3204(a)(5) as implemented by FAR Part 6.302-5 --
Authorized or Required by Statute -- Section 874(b)(2) of the 2022 National Defense
Authorization Act (NDAA) -- Pilot Program to Incentivize Contracting with Employee-
Owned Businesses

5. Reason for Authority Cited:
On [Redacted], this anticipated procurement was approved by the Acting Director of
Contract Policy (CP), Defense Pricing and Contracting (DPC), Office of the Under
Secretary of Defense for Acquisition and Sustainment (OUSD(A&S)), under the Pilot
Program to Incentivize Contracting with Employee-Owned Businesses authorized by
Section 874 of the National Defense Authorization Act for FY 2022 (Pub. L. 117-81). This
Pilot Program allows the noncompetitive award for certain follow-on contracts to an
employee-owned business that meets the definition of a "qualified business." Section 874
defines a "qualified business" as an S corporation (as defined in section 1361(a)(l) of the
Internal Revenue Code of 1986) for which 100 percent of the outstanding stock is held
through an employee stock ownership plan as defined in section 4975(e)(7) of such code.
ARL received approval from Defense Pricing and Contracting to sole source this
procurement to ARA under the Section 874 Pilot Program using the authority at FAR
6.302-5, Authorized or Required by Statute. ARA has certified that it meets the definition
of a qualified business, wholly owned through an Employee Stock Ownership Plan (ESOP)
and is a participant in this pilot program. Therefore, ARA is the sole source for the subject
requirement for GEOINT Production Systems.
ARL will use this new contract to extend the existing ARA-lead projects currently
supporting [Redacted]. The pilot authority will allow ARL to ensure that the truly mission
critical work that ARA is performing will be seamlessly supported. The pilot program will
result in a sole source extension. [Redacted]. As such, ARL will take advantage of ARA’s
employee stock ownership plan (ESOP) status to enable/ensure continuous support of the
projects they lead.
[Redacted]
Therefore, based upon the approval from Defense Pricing and Contracting to sole source
this procurement to ARA under the Section 874 Pilot Program, this procurement will be
sole sourced to ARA for the aforementioned GEOINT Production Systems. No other
company is positioned to continue to provide seamless support to ongoing [Redacted].

6. Efforts to Obtain Competition: As required by FAR 5.201, a synopsis was posted to
SAM.gov on 27 February 2023, and any responses from industry will be considered.
a. Effective competition. Effective competition is not anticipated for this procurement
based upon the Government’s market research and approval from Defense Pricing and
Contracting to sole source this procurement to ARA under the Section 874 Pilot Program
using the authority at FAR 6.302-5, Authorized or Required by Statute. To date, no sources
other than ARA have written to express interest in this acquisition.
b. Subcontracting competition. An Individual Subcontracting Plan will be required as
this is a non-commercial purchase over $750,000.00 awarded to an other than small
business. In order to promote subcontracting competition, the resultant contract will
include FAR clauses, 52.219-8, Utilization of Small Business Concerns, and 52.244-5,
Competition in Subcontracting.

7. Actions to Increase Competition: ARL will continue to monitor the market for other
potential sources to increase future competition for this requirement and any associated
services. ARL will continue to pursue web searches, consultations with knowledgeable
Government, university, and industry personnel, and attend trade shows or web-based
communications to help locate alternative sources that can provide the required services.
The Government does not plan to compete this requirement to other sources due to the
approval from Defense Pricing and Contracting to sole source this procurement to ARA
under the Section 874 Pilot Program using the authority at FAR 6.302-5, Authorized or
Required by Statute. The Government will also continue to evaluate opportunities to
promote competition by considering the feasibility of pulling out portions of future sole
source requirements for competition.

8. Market Research: Market research was performed from June 2021 through September
2022 by the NGA Technical Executive and Contracting Officer’s Representative for the
services being procured. The Government contacted knowledgeable people and subject
matter experts within Government and industry to determine if other vendors have the
capabilities to meet the requirements of the projects noted above. In addition, Government
representatives continually provide market research surveillance by searching and
reviewing catalogs, literature on manufacturers, distributors, and dealers, along with online
sources, such as, Amazon Cloud Products Offering, The Drone Databook, and GSA
Technology & Services Online Capability Resource to seek qualified and interested
vendors. There are currently no other companies offering the system services and
associated training for the technical areas note above that meet the accreditation and
security requirements with the associated NGA architecture. Thus, no other company is
positioned to continue to provide the seamless support to [Redacted].

9. Interested Sources: To date, only the proposed vendor, ARA, has written to express
interest in this acquisition.

10. Other Facts:

a. Procurement History
Contract: [Redacted]
Contractor: Applied Research Associates
Award Date: 26 September 2019
Period of Performance: 28 September 2018 – 8 March 2023
Dollar Value: [Redacted]
Competitive Status: Competitive Task Order
Authority: Not Applicable

Awarded contract W911QX23C0010 to unknown vendor for unknown amount on 2023-07-14.