04_-_JOFOC_-_Palladium_89233122QNA000254_-_06-13-2022_TO6222_1.pdf

Department of Energy

National Nuclear Security Administration P.O. Box 5400

Albuquerque, NM 87185

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

VIRGIN PALLADIUM SPONGE, RFQ No. 89233122QNA000254 June 13, 2022

I. AGENCY IDENTITY AND CONTRACTING OFFICE

The Savannah River Field Office (SRFO) of the U.S. Department of Energy (DOE), National Nuclear Security Administration (NNSA) plans to contract for the purchase of palladium by means of other than full and open competition. The contracting activity is the DOE/NNSA Office of Acquisition & Project Management, Field Services Acquisition Branch, NA-APM-125, Albuquerque Complex, New Mexico.

II. NATURE AND/OR DESCRIPTION OF THE ACTION BEING APPROVED

This document sets forth the justification and approval of the exception to full and open competition allowed under the Competition in Contracting Act (CICA) of 1984 under FARSubpart 6.302-1 Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements. This new (follow-on) contract action is for a 5-year period of performance. NNSA intends to sole source this acquisition to Colonial Metals, Inc. (CMI) 505 Blue Ball Rd Bldg. 20 Elkton, MD 21921-4873 for the purchase of virgin palladium sponge.

III. DESCRIPTION OF SUPPLIES AND/OR SERVICES

To support the project, the contractor, CMI will be required to provide virgin palladium sponge meeting the requirements of specification ASTM B 589-94. In addition to those requirements, the sponge must also contain < 5 ppm sulfur. The supplier shall provide a Certificate of Compliance that the procured product meets all specifications and specify the refining process that was used. The estimated value of this 5-year requirements acquisition is: $68,000,000

PERIOD OF PERFORMANCE Estimated Palladium to Ship Year 1 (FY2022/23) $19,450,000 311.6 kg Year 2 (FY2023/24) $15,000,000 240.4 kg Year 3 (FY2024/25) $15,000,000 240.4 kg Year 4 (FY2025/26) $14,850,000 238.0 kg Year 5 (FY2026/27) $ 3,700,000 59.3 kg_____ Total: $68,000,000 1089.7 kg

IV. AUTHORITY

41 USC 3304(a)(1), as implemented by the Federal Acquisition Regulation (FAR) Subpart 6.302-1 entitled “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements”.

V. APPLICATION OF AUTHORITY

CMI entered into a separate contract with the Savannah River National Laboratory (SRNL) (formerly Savannah River Nuclear Solutions (SRNS) now Battelle Savannah River Alliance (BSRA)) to process palladium for purposes associated with national security at the Savannah River Tritium Enterprise (SRTE) with a period of performance ending in 2027. It is anticipated that CMI will obtain future palladium processing contracts with SRNL in the foreseeable future. The ultimate use for this material after processing is unique and requires extensive work to ensure the stringent specifications are met. The scope of the contract with BSRA only pertains to the processing of the palladium. As such, the acquisition of the virgin palladium sponge is not within the scope of the existing contract. Aligning the acquisition for the purchase of palladium under this anticipated 5-year contract will assist the program office in aligning period of performance of the separate acquisitions. This will allow for the development of a future acquisition to include both the acquisition of palladium processing as well as the virgin palladium sponge.

CMI, over the years, has learned the unique processing techniques to obtain the required material properties, which also includes knowing where to source the virgin palladium sponge material to meet the specifications required for this acquisition. Because CMI understands the end product requirements, they have the distinct and relative knowledge needed to obtain the highest-grade material per the identified specifications. Not all palladium material is the same; some virgin material is combined with recycled material, which would not meet the ASTM 589-94 specifications or the < 5 ppm sulfur requirement. These are the current circumstances associated with palladium processing at the Stillwater Mine in Montana, the only palladium mine within the United States. While palladium ore is mined there, it is also the location of one of the world’s largest producers of platinum group metals (including palladium) recycled from spent automotive catalytic converters. Recycled palladium and virgin palladium ore are commingled at the Stillwater Mine processing facility, making their palladium metal unsuitable as a starting material for production of palladium powder at CMI. Additionally, the Stillwater Montana Mine is owned by Sibanye-Stillwater, a South Africa-owned corporation.

VI. EFFORTS TO IDENTIFY ADDITIONAL SOURCES

The DOE/NNSA SRFO has contacted knowledgeable individuals in Government and industry [i.e., SRS and Y-12 Management and Operating (M&O) contractors experienced in the purchase, use and management of the subject material] regarding sources in the market capable of meeting the current requirement; conducted an online search; as well as reviewed the previous acquisition history. Such sources include email confirmation from the DOE Precious Metals Business Center, dated 21 March 2022, confirming that the necessary quantity of Palladium is not available in inventory.

A Request for Information (RFI) was issued on 14 March 2022, with responses due on or before the RFI closing date of 1 April 2022. CMI was the only source to respond with no other interest shown by either large or small business in performing this contract. Because there were no additional responses submitted to RFI No. 89233122NNA000088, it was determined that there were no additional vendors with the relevant experience and capabilities to provide the virgin palladium sponge currently being provided by CMI; therefore, a synopsis of the Government’s intent to sole source this procurement action was issued under Reference Number 89233122QNA000254 and published on 26 May 2022 with a closing date of 10 June 2022. Details pertaining to responses received for this synopsis can be found in Paragraph X – Interested Sources below.

VII. DETERMINATION OF REASONABLENESS OF COST OR PRICE

A commercial, Firm-Fixed-Price contract with Economic Price Adjustment is anticipated for this effort.

It is the determination of the Contracting Officer that the anticipated price will be fair and reasonable based on a price analysis performed utilizing technical experts’ evaluation and analysis; comparison to the Independent Government Cost Estimate (IGCE); previous historical data (previous component costs, estimates, etc.), and the Price Analyst evaluation and recommendations. Further, this requirement is considered a commercial product as palladium is a precious metal that trades daily as a commodity.

Therefore, the price varies daily and may be checked on any number of commodity indexes for price.

VIII. MARKET RESEARCH

In addition to the SRFO’s efforts to identify additional sources as stated above, market research consisted of a small business dynamic search which revealed there is not a reasonable expectation that two or more small businesses are available to respond to this effort. Additionally, no existing spend under management solutions/contracts are within the scope of this requirement and cannot be provided by the AbilityOne or the Federal Prison Industries programs, or other required sources. Therefore, the solicitation procedures and the resultant contract will be sole sourced as a Tier 0 – Open Market Award and are not within the general scope of existing Category Management solutions. The acquisition history includes the most recent full and open competition which resulted in contract award to CMI on 16 December 2021. During this competition, a total of three proposals were received. CMI successfully submitted a proposal to provide the required material at specification whereas the two other proposals submitted did not discuss meeting the required material specifications. No other source has been identified that can meet the required material specifications.

IX. OTHER FACTS

The SRFO Program Office has performed continuous market research with a determination that CMI is the only commercial firm in the U.S, with the ability to meet the required specifications and quantities.

Additionally, CMI has performed this supply contract for over 7 years with continual satisfactory past performance. The SRFO revealed and it is not feasible for the Government to establish another contractor to do this work as such an effort would increase the required funding and time exponentially.

It is anticipated that CMI will obtain future palladium processing contracts with SRNL for the foreseeable future unless another viable source(s) is identified that can meet the Government’s specifications. The ultimate use for this material after processing is classified and requires extensive work to meet the stringent specifications. As such, delay in contract award would result in significant risk to the DOE mission.

X. INTERESTED SOURCES

A Request for Information (RFI)/Capability Statements was issued on 14 March 2022, with the incumbent contractor, CMI (a small business concern) being the only vendor responding to the RFI prior to its closing on 1 April 2022.

A Notice of Intent to Sole Source was posted on 26 May 2022, Reference Number 89233122QNA000254, with two acknowledgements received. TWF Enterprise submitted an acknowledgement and capability statement on 26 May 2022. Upon review of TWF’s capability statement by the program office and CO, it was determined the company is a full services machine shop and does not appear to have any previous experience with the acquisition of palladium. The CO provided a response on 26 May 2022 to clarify the Government's notice of intent to sole source and TWF’s capabilities however no response was received from TWF. An acknowledgement from Royal Media Network Inc. was received on 27 May 2022. A review of the company’s website indicates they are an office products supplier and are not capable of supporting an acquisition for this type of supply.

Additionally, upon review of the Contractor Responsibility Assessment this company was flagged for at least one FAPIIS record or FPDS-NG Termination for Cause or Default. No other acknowledgements or vendor interest/responses were received for this acquisition prior to the closing date of 10 June 2022.

XI. STEPS TO FOSTER COMPETITION

To foster competition, several steps have already been taken by conducting market research, as previously mentioned above, to include the RFI and Notice of Intent to Sole Source, with no current sources found to meet the specified requirements beyond the incumbent contractor. However, continued research for capable resources will continue prior to subsequent acquisitions for obtaining these supplies.

XII. CERTIFICATIONS

Acquisition Initiator/Technical Representative:

I certify that the facts and representations under my cognizance, which are included and form a basis for this justification, are complete and accurate.

George Klipa Contracting Officer Representative

Contracting Officer:

I certify that this justification is accurate and complete to the best of my knowledge and belief.

Larry P. Veltman Contracting Officer

Head of Contract Activity:

I have reviewed this justification and find it to be accurate and complete to the best of my knowledge and belief. Since this JOFOC does not exceed $75M, this review serves as approval.

Douglas Bergevin Head of Contracting Activity Office of Acquisition Management