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CH53E Phase II Smart Multifunction Color Display

Solicitation Number: H94003-04-R-CET-12-228
Agency: Other Defense Agencies
Office: Defense Microelectronics Activity
Location: Defense Microelectronics Activity
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Justification and Approval (J&A)
FAR 6.302-1 - Only one responsible source (except brand name)
August 22, 2012
Added: Oct 30, 2012 7:40 pm
Justification for an Exception to Fair Opportunity
Advanced Technology Support Program III (ATSP3) Indefinite Delivery / Indefinite Quantity (ID/IQ) Delivery Order Contract

I. Contracting Activity: Defense Microelectronics Activity, Contracting Office (DMEA/MEE), McClellan, CA
II. Nature and/or Description of the Action Being Approved:
The Naval Air Command (NAVAIR) has requirement for timely deployment and aircraft integration of the Smart Multifunction Color Display (SMFCD), as a limited production effort (Contractual Engineering Task (CET)) 12-228. This new requirement of 62 units will bridge the gap from system development completion until a full production contract may be established. This requirement will be procured as a cost-plus-fixed fee logical follow-on delivery order, estimated at $17,225,000. The delivery order period of performance will be 14 months from award, and is anticipated to begin in May 2012 (concurrent with existing developmental flight testing) and be completed by July 2013.
The requirement will consolidate all the aircraft survivability information, all the blue force tracking situation information and some time sensitive threat information onto one display. Currently, all of this data is available to the aircrew; however, not having the data on one display requires the aircrew to look at several different places in the cockpit to review this information. The Command desires to reduce the number of lost aircraft and personnel due to poor situational awareness experienced in flights operating in Afghanistan and Iraq. Raytheon, performing under their initial delivery order will modify the existing SMFCD system to meet the updated requirements, integrate a prototype SMFCD system into a CH-53E helicopter, perform SMFCD qualification and aircraft developmental flight testing, build and install prototypes as a initial production effort, and validate and verify assets.
III. Description of the Supplies/Services Required to Meet the Agency's Need (including the estimated value):
The U.S. Marine Corps has an immediate need to deploy 60 of the integrated SMFCD's on a rotational basis linked to squadron deployment. Two (2) additional units will be integrated into trainer systems. The delivery order will provide a stop gap limited production run of these 62 units. The units will then be integrated into the CH-53E aircraft and trainer systems on an aggressive schedule that is rotationally based upon squadron deployment and training over a 14 month period beginning in September 2012.
The current SMFCD production ramp is estimated to be five (5) to six (6) months to first article testing. The first month production is expected to produce four (4) units, ramping to a steady state of eight (8) units until completion of the limited production run. The first product integration is estimated to begin six (6) to seven (7) months from award of the delivery order. The initial production and integration requirement is estimated to be $17,225,000 (using Navy FY11 17506, Aircraft Procurement funds) provided by NAVAIR, who manages funding for all Marine aircraft programs. The funding is available until completely expended.
IV: Identification of the Exception to Fair Opportunity (Authority Cited):
FAR 16.505(b)(2)(i)(C), the delivery order must be issued on a sole-source basis in the interest of economy and efficiency because it is a logical follow-on to an order already issued under the contract, wherein all awardees were given a fair opportunity to be considered for award of the original order.

V: Supporting Rationale for Exception to Fair Opportunity:
BACKGROUND: In September 2004, DMEA/MEE awarded Multiple Advanced Technology Support Program III (ATSP3), Indefinite Delivery Indefinite Quantity contracts with a combined ceiling of $4.6 billion; a five (5)-year tasking period, and two 5-year options through September 2019 (see Attachment 1).
Late in Calendar Year 2010, NAVAIR came to DMEA/MEE with an urgent requirement (CET 11-127) for initial design, non recurring engineering work and testing to replace the existing CH-53E Pilot Display Units (PDUs) with the Smart Multifunction Color Display (SMFCD). DMEA sought competition on the requirement under their existing ATSP3 ID/IQ wherein all contractors were given a fair opportunity to be considered for award. Raytheon Systems is the only ATSP3 ID/IQ contractor who provided a proposal. The proposal included an excellent technical approach, was determined to be fair and reasonable. The original delivery order was awarded on 8 February 2011, under Contract Number H94003-04-D-0006, Delivery Order number 0182, in the amount of $9,713,900. The delivery order was modified to add Forward Looking Infrared (FLIR) capability on 14 September 2011 in the amount of $4,689,370 for a total delivery order ceiling of $14,403,270.
Under the initial delivery order, Raytheon has previously developed proprietary data rights for items such as the Interface Control and the SMFCD Electronics Architecture. Use of those proprietary rights is required for performance under the follow-on delivery order.

a. Due to Raytheon's proprietary data rights under the SMFCD, it is not considered viable (in terms of technical approach, cost and schedule) to solicit and award the CET 12-228 requirement to another firm. The CET 11-127 data/documentation and processes are proprietary to Raytheon. No other supplier (contractor) is capable or would be capable of integrating the CET 12-228 requirements for production and integration of the SMFCD (CET 11-127) system into the CH-53E aircraft, and produce, integrate and test this system on the aircraft.

b. An award to a source other than Raytheon, would also result in substantial duplication of cost (estimated at $5.5 million) to the Government to acquire or redevelop the Interface Control and SMFCD Electronics Architecture. In response to the Government's data rights questions,
Raytheon provided a Rough Order of Magnitude (ROM) cost estimate of approximately $5.5 million for the acquisition of these data rights. The cost of redevelopment would be the same
order of magnitude. Unless the data rights are acquired or redeveloped, cost in both time and money to develop a competitive source would be prohibitive. Additionally, the lifetime sustainment cost is estimated to be $5.16 million, which supports a sole-source decision rather than procuring the data and developing a competitive source. See attachment for operation and supportability costs.

c. An award of this requirement to a source other than Raytheon, would also cause
unacceptable delays in fulfilling the Government's need. The integration of CET 12-228 into the SMFCD is essential to troop deployment. Redevelopment of the Interface Control and SMFCD Electronics Architecture, from a schedule perspective, will be in excess of six (6) months. Efforts to award this requirement competitively would require replication of engineering
development, test labs, test equipment, documentation, manufacturing processes and testing under the CH-53E aircraft.

d. Due to the learning curve, a new start would include high technical risk of the SMFCD failing to perform properly when integrated with CH-53E. Raytheon's previous expertise will allow them to perform successful integration of the SMFCD with the CH-53E aircraft as well as demonstrate capabilities and reliability through flight test. This delivery order can be duplicated only with unacceptable increased schedule and cost risk. No other contractor can meet the requirements for production and integration within the CH-53E acceptable cost and performance risk.

e. lt is in the Government's best interest to leverage Raytheon's current successful experience, ensuring the best possible technical performance, lowest cost, and lowest schedule risk is realized during performance of this new requirement.

f. Performance under the initial delivery order has been very good despite complex requirements of software with the existing system dependencies. The performance is expected to continue in a very close interdependent manner with the requirements under the follow-on delivery order. This will be accomplished by allowing a schedule overlap between the end of the design effort (under the initial delivery order 0182) with the follow-on delivery order limited production ramp. This will allow the contractor to flow through design data to the limited production effort at the earliest point possible. The contractor will also gain knowledge and experience in the integration of this specific system into the aircraft that can be effectively leveraged with the Marine troop deployment/training schedule. The period of performance for delivery order 0182 ends on 31 August 2012. Since CET 12-228 will provide a limited number of prototypes and mission essential integration and testing of the SMFCD, the work under the new delivery order is planned for completion by 31 July 2013.

g. Raytheon's experience with the SMFCD system and production capabilities allows them to provide an aggressive ramp to limited production and successful integration of the system to meet this urgent need.

Competition under the existing ATSP3 ID/IQ contracts was considered. However, upon further analysis and program definition, it became clear that due to proprietary data rights, Raytheon is the only feasible alternative.

lf not approved, the Government would essentially have to redesign or acquire the Interface Control and SMFCD Electronics Architecture from Raytheon. As annotated above, the estimated cost to acquire those data rights is $5.5 million. It would also result in additional testing prior to integration into the CH-53E, thereby precluding integration prior to troop deployment as early as September 2012. Any delay in approval will increase the schedule risk associated with the urgent CH-53E SMFCD deployment, which will increase the likelihood of personnel and aircraft loss or damage.

VI. Effort to Obtain Competition: None. Based on information in above paragraph 5, competition for this action was not feasible.
VII. Actions to Increase Competition: Future requirements will be procured by the Naval Air Command.. DMEA will not be involved in any future production contract actions for this program.
VIII. Market Research: Market research was accomplished by analyzing the ATSP3 contractors' capabilities and expertise to determine which contractors could meet the technical, cost and schedule requirements of this program. All contractors, other than Raytheon, would need to re-develop the technical requirements; or the government would have to acquire the proprietary Interface Control Document and the MFCD Electronics Architecture data owned by Raytheon to complete this effort. The cost and schedule impacts required to achieve that re-development would be prohibitive and add unacceptable risk to the program.
IX. Interested Sources: No other known sources.
X. Other Facts Supporting the Exception to Fair Opportunity: None.


4234 54th Street
McClellan, California 95652
United States
Jeanne M. Woodcock,
Contract Specialist
Phone: 9162311510