JOFOC Office of Science Oak Ridge 03192010.pdf

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION (JOFOC) IN

ACCORDANCE WITH 41 U.S.C. 253(c)(3)

AND FEDERAL ACQUISITION REGULATION (FAR) 6.302-3(a)(2)(ii)

1. Identification of the Agency and the Contracting Activity.

Agency: U.S. Department of Energy (DOE).

Contracting Activity: Oflice of Science, Oak Ridgc Office.

Based on our evaluation, it is recommended that the Oak Ridge Office (ORO) conduct negotiations with UT-Battelle, LLC (UT-Battelle), to extend the contract DE-ACOS- 00OR22725 for the management and operation of the Oak Ridge National Laboratory (ORNL) for five additional years. This document sets forth the justification for the use of other than full and open competition in awarding the extension allowed under the Competition in Contracting Act of 1984, Title V11 of Public Law 98-369. The exercise of this exception is necessary to maintain an essential research capability provided by a not-for-profit institution operating a Federally Funded Research and Development Center (FFKDC).

2. Nature andlor description of the action being approved.

The action to be approved is for the continued management and operation of ORNL by UT- Battelle for a five-year period through March 3 I , 2015, using other than full and open competition. A management and operating (M&O) contract is an agreement under which the Department contracts for the operation, management, or support, on its behalf, of a Government-owned or controlled research, development, special production, or testing establishment wholly or principally devoted to one or more major programs of DOE.

3. A description of the supplies or services required to meet the agency's needs (including the estimated value).

The Department requires a contractor to manage and operate the ORNL FFRDC. ORNL is a multi-program national laboratory with a history of outstanding scientific achievements that spans more than six decades, and i t is now DOE'S largest science and energy laboratory.

Today, ORNL has the primary mission focus of conducting research in neutron science, energy, high-performance computing (HPC), systems biology, materials science, and national security. ORNL is a unique resource for addressing important national and global scientific and technological challenges.

ORNL is a premier FFRDC and multidisciplinary laboratory that is recognized world-wide for its scientific research. OKNL supports the DOE mission and strategic goals in the following areas: 1) Energy Security, promoting America's cnergy security through reliable, clean, and affordable energy; 2) Nuclear Security, ensuring America's nuclear security; and

3) Scientific Discovery and Innovation, strengthening U.S. scientific discovery, economic competitiveness, and improving quality of life through innovations in science and technology. ORNL's core competencies lie in six areas that map to the mission of the DOE and the Laboratory, and they provide the foundation for scientific research that will ensurc the future strength and unique nature of DOE's and Laboratory's major initiatives. ORNI,'s core competencics are: I) neutron sciences, including neutron scattering studies of the structure and dynamics of materials at nanometer length scales and under extreme conditions;

2) computing and computational sciences at extreme scales; 3) comprehensive design, synthesis, and characterization of advanced materials and interfacial chemical processes; 4) biological and environmental sciences, including terrestrial ecosystems, climate sciences, microbial ecology, systems biology of plants, and bioconversion; 5) engineering sciences, including the nuclear fuel cycle, plasma science, electric power systems, combustion and thermal engineering, and radiochemical process technology; and 6) counterterrorism and nonproliferation detection systems.

A critical componcnt of the DOE rnission is to deliver cutting-edge scientitic research and the mechanisms to transform our understanding of energy and matter. ORNL supports the DOE mission and provides the research rcquired to maintain the nation's scientific excellence and preeminence by:

Delivering and sustaining the world's foremost center for neutron scattering;

Dramatically accelerating scientific discovery through computation by delivering unparalleled capability in computational and data solutions applied to major problems in energy, the environment, and national security;

Understanding and controlling nanoscale physical and chemical phenomena for the discovery of materials and interfacial processes with tailorcd propcrties through sustained leadership in synthesis, characterization, and theory;

Providing leadership in microbial and plant systems biology and environmental science, producing sustai~lable solutions to challenges in bioenergy, climatic change, and remediation;

Developing next-generation fusion and fission energy systems and energy-efficient technologies for transportation, buildings, and the electric power grid; and Delivering innovative technologies to limit or prevent the spread of materials, technologies, and weapons of mass destruction expertise, including developing new knowledge discovery tools, algorithms, materials, and open architecture detector systems to increase situational awareness.

ORNL's research in the above areas is enabled, in part, through the research DOE conducts at the Laboratory's Designated Scientific User Facilities: I) the Center for Nanophase Materials Sciences (CNMS), DOE's first nanoscience center; 2) the Center for Structural Molecular Biology, which is dedicated to developing instrumentation and methods for determining the 3-dimensional structures of proteins, nucleic acids (DNNRNA) and their higher order complexes; 3 ) the High Flux Isotope Reactor (HFIR), the world's highest-flux reactor-based neutron source; 4) the Holifield Radioactive Ion Beam Facility (HRIBF), which produces high cluality beams of short-lived, radioactive nuclei for studies of exotic nuclei and astrophysics research; 5) the National Center for Computational Sciences (NCSS), which provides the most powerful computing and supercomputing resources in the world lor open science; 6) the Shared Research Equipment Program (ShaRE), which makes available state-of-the-art electron beam microcharacterization facilities for collaboration with researchers from universities, industry and other government laboratories; 7) the Spallation Neutron Source (SNS), the world's most powerful pulsed neutron source; 8) the Leadership Computing Facility (LCF), one of the world's most powerful scientific computing complexes for open science; and 9) the Joint Genome Institute (JGL) - Production Genomics Facility (PGF), located in Walnut Creek, California, which unites the expertise of researchers at ORNL, the Lawrence Berkeley National Laboratory (LRNL), the Lawrence Livermore National Laboratory (LLNL), the Los Alamos National Laboratory (LANL), the Pacific Northwest National Laboratory (PNNL), and industry to advance genomics in support of the DOE missions related to clean energy generation and environmental characterization and cleanup.

DOE is pursuing the following set of major activities at ORNL to support aspects of the DOE mission and to build on core strengths and capabilities of the Laboratory: 1 ) Delivering Neutrons for Science; 2) Ultrascale Computing, Data Infrastructure, and Analytics; 3) Advanced Energy and Materials: Translation from Basic to Applied Research to Commercial Solutions; 4) Biological Systems Science: From Biology to Rioenergy; 5) Climate Change Research; 6) Nuclear Science: From Basic Research to Jsotope Production; 7) Nuclear Fuel Cycle: Energy, Nonproliferation, and Global Security; and 8) Delivering Fusion Science and Technology in the II'ER Era. These activities are supportive of the DOE Strategic Themes of Energy Security, Nuclear Security, and Scientific Discovery and Innovation.

The current contract value is approximately $1 0.7 billion with an annual operating budget exceeding,$] .2 billion per year. The total value of the five-year extension is estimated at $6.0 billion.

4. Identification of the statutory authority permitting other than full and open competition.

The statutory authority to noncompetitively extend M&O contracts necessary to the performance of DOE'S energy research and development programs is found in the Federal Property & Administrative Services Act of 1949, including the amendments thereto by Public Law 98-369; specifically, Section 303(c)(3)(B) (codified in 41 U.S.C. 5 253(c)(3)(B)), which states that an executive agency may use procedures other than competitive procedures when ". . . it is necessary to award the contract to a particular source or sources in order. . .

to establish or maintain an essential engineering, research or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center."

5. Demonstration that the proposed contractor's unique qualifications or the nature of the acquisition requires use of the authority cited.

ORNL, DOE'S largest multi-program science and energy FFRDC, provides extensive capabilities in both world-class research expertise and unique facilities that do not exist elsewhere and are generally beyond the capability of any non-governmental institution to construct or operate. Through ORNL, DOE advances the energy, economic, and national security of the nation, and makes unique user facilities available to researchers from universities, industry, other government agencies, and other nations. The nature of OKNL's mission is such that it cannot be met by existing in-house or traditional Federal Acquisition Regulation (FAR)-based contractor procedures. The mission requires a long-term stable relationship that will provide continuity and attract high-quality scientific and management personnel. Only an FFRDC can provide the long-term stable relationship that is necessary for the U.S. Science and Technology mission to flourish.

ORNL supports DOE'S work in several scientific areas including neutron scattering, computational science and engineering, materials synthesis, design, characterization and processing, molecular biology and ecology, and fusion science and technology. In support of these areas, ORNL is one of the world's broadest and most capable materials science and technology laboratories achieving significant integration between basic and applied research.

The ORNL portfolio for DOE also includes expertise in buildings, transportation, and industrial end-use efficiency, electric transmission and distribution with strengths in superconducting transmission, and nuclear energy and space nuclear power. In support of the DOE Nuclear Security mission, ORNL provides research and technical expertise to prevent the spread of nuclear materials and technology. ORNL is the single largest provider of support for DOE materials protection and control programs.

DOE has also designated a number of its user facilities at ORNL as Scientific User Facilities.

These state-of-the-art facilities are shared with the science community worldwide and offer technologies and instrumentation that are not available anywhere else. ORNL operates a very diverse set of DOE Designated Scientific User Facilities-more than any other DOE national laboratory-that are available to laboratory, industrial, and academic users. These include: 1 ) the CNMS; 2) the Center for Structural Molecular Biology; 3) the HFIR; 4) the HRIBF; 5) the NCSS; 6) the ShaRE; 7) the SNS; 8) the LCF; and 9) the JGI-PGF.

DOE also houses its U.S. ITEK Project Office (USIPO) at ORNL. USIPO is responsible for project management of U.S. activities to support the ITER Project-a major, international, magnetic fusion project with the mission to demonstrate the scientific and technological feasibility of fusion energy, the power source of the sun and the stars. ORNL will accomplish the project through a collaboration of DOE laboratories (including Princeton Plasma Physics Laboratory and Savannah River National Laboratory), universities, and industry. DOE's Facilities,for the Fulure of Science: A Tnfenly-Yeur Ourlook ranked ITER as the highest priority project.

To manage the ORNL FFRDC, DOE requires a contractor that possesses exceptional and extensive capabilities in the management and operation of both world-class scientific research and facilities. The recommendation to extend the contract with UT-Battelle, a not-for-profit contractor, is based upon the continuing need for the ORNL's unique and critical capabilities as DOE's largest science and energy laboratory in delivering produc~s and services in support of DOE's mission to advance the national, economic, and energy security of the United States.

UT-Battelle, as the incumbent contractor, possesses the necessary resources through its scientific, technical, and managerial staff; research and development experience; business relationships; established padnerships; and corporate experience to provide the required capabilities to support DOE'S mission objectives. There is a continuing need for the key leadership capabilities that have been demonstrated by UT-Battelle. Since it was awarded the contract for the management and operation of ORNL, UT-Battelle has brought the expertise and resources of its partners to address the scientific and operational challenges at

ORNL.

From the outset, UT-Battelle has brought an innovative vision and positive changes to ORNL. As ORNL's largest research partner, UT strengthens thc Laboratory's partnerships among state and regional stakeholders. US-Battelle has also established partnerships with major southeastern research universities to facilitate joint appointments, collaborative research, and graduate student opportunities. This continuity is especially important to, and will enhance the likelihood of sustaining momentum in, the critical ORNL mission areas, including neutron science, HPC, and national security and in the ongoing successes of newer programs and projects such as the SNS, I,CF, CNMS, and the BioEnergy Science Center (BESC). UT-Battelle's past management successes and resulting experience will also be crucial in ensuring the completion of new projects, including a second target station at the SNS, Modernization of Laboratory Facilities Project (MLF), the U.S. contributions to ITER, other critically important Science Laboratory Infrastructure (SLI) projects, and support to the Integrated Facilities Disposition Project (IFDP), and the significant increase in programs and projects resulting from American Recovery and Reinvestment Act (Recovery Act) funding.

UT-Rattelle's performance under this contract has been exemplary. Over the past five years, IJS-Battelle has shown a consistent ability to meet and, in the strong majority of cases, to exceed DOE'S high expectations for its performance in both the scientific and technological as well as the managerial and operational areas. 'fhis is a particularly notable achievement given the size, complexity and scientific diversity of the Laboratory.

UT-Battelle has demonstrated exceptional leadership capabilities in its ability: 1) to build ORNL into a world-leading scientific institution; 2) to respond to evolving DOE priorities and mission objectives in its DOE-assigned areas of research (e.g., neutron sciences, computational sciences, biological and environmental sciences, engineering sciences, counterterrorism and nonprolifcration dctection systems, and the design, synthesis, and characterimtion of advanced materials and interfacial chemical processes), in a timely manncr, and while controlling the costs of operation, through the development and implementation of strategic plans and objectives that optimize performance throughout the Laboratory; to rebuild the ORNL infrastructure; and to cultivate and maintain partnerships neccssary to deliver on key mission areas assigned to ORNL by the DOE.

Under UT-Battelle's management, ORNL has adopted an effcctive fiscal approach to accomplishing its mission objectives. A key element ol'UT-Battelle's strategic approach has been to enable world-class scientific research and operations through cfficient financial management. UT-Rattelle has been aggressive in implementing cost saving techniques wherever possible, and as a result of its management, ORNL's overhead costs in the management and administration area have declined since 2000.

Considering the overall exceptional performance of LIT-Rattelle in these areas as well as in managing costs, DOE considers i t to be highly unlikely that significant improvements in technical or cost performance would be achieved by a new contractor at ORNL during the proposed five-year extension. A competition for the management and operation of the Laboratory was conducted in 1999, and UT-Battelle, as the successful contractor has performed in an exemplary manner. The potential for meaningful competition is also unlikely. In addition, disruption of the Laboratory caused by a competition now would have a negative effect on a number of research efforts and Laboratory revitalization activities currently underway, and on the positive gains the Laboratory has made in recent years under the current management. Competition of the contract at this time would interrupt the continuity required in critical ORNL mission areas and therefore may reduce DOE'S ability to fulfill its mission. A five-year extension would help to retain critical leadership skills that are essential to accomplish the Department's mission through the current period of dynamic change and growth. In addition, based on recent Departmental experience on previous competitions of Office of Science M&O contracts (see Section 8 below), it is unlikely that substantive and meaningful improvements can be gained through competition at this time.

6. A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether a notice was or will be publicized as required by Subpart 5.2 and, if not, which exception under 5.202 applies.

Based upon the facts contained in this justification, offers have not been solicited from other sources for this five-year extension. FAR Section 5.202 (a)(] 0) provides that the Contracting Officer need not submit the notice required by FAR Section 5.201 when the Contracting Officer determines that the action is made under conditions described in FAR Section 6.302-

7. A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

Based on the following facts, the Contracting Officer has determined that the anticipated cost to the Government will be fair and reasonable. The Department, in association with the M&O contractor, establishes an annual operating and capital expenditure budget for performance at a prescribed level of activity to fulfill its mission requirements. Contractor obligations, commitments, and expenditures are limited to specific funding levels established by the Department and are controlled through the issuance of approved funding plans and work authorizations to the Contractor. Performance and expenditures are continually monitored by the Department. Annual reviews and evaluations are performed in accordance with contractual requirements. The Department's budget process and the performance-based contract provide adequate controls to ensure that expenditures (costs) to support the required levels of authorized activity are fair and reasonable and that contractor performance remains at an acceptable level. In addition, negotiated performance fees are established in accordance with the Department of Energy Acquisition Regulations (DEAR) and policy which ensures such fees are well below market average.

The contractor's financial managcment systcm is an integrated accounting system that is linked to DOE's accounts through the use of reciprocal accounts. The M&O contractor is also required to conduct a satisfactory annual internal audit and examination of the records, operations, expenses, and transactions with respect to costs claimed to be allowable under this contract and to submit the results to the Department. The Contractor also prepares and submits annually a Cost Statement for the total of net expenditures accrued which is certified and is subject to penalty provisions for unallowable costs. DOE, after audit and appropriate adjustment, approves the Cost Statements. DOE's approval constitutes an acknowledgement by DOE that the net costs incurred are allowable under the contract and that they have been duly recorded. However, DOE's approval does not relieve the Contractor of responsibility for DOE's assets in its care, for appropriate subsequent adjustments, or for errors that are later discovered.

8. A description of the market research conducted and the results or a statement of the reason market research was not conducted.

Formal market research has not been conducted for the planned five-year extension period.

In FY 1999, DOE issued a competitive solicitation for the management and operation of the ORNL and the contract was awarded to a team comprised of Battelle Memorial Institute and the University of Tennessee. Two proposals were submitted in response to this solicitation, one of which included the incumbent.

Circumstances for competing the ORNL M&O contract were significantly different in the late 1990's. During that time, DOE performed a review of the incumbent contractor's pcrformance and determined that there was a reasonable expectation that meaningful improvement in performance could be achieved. In contrast, UT-Battelle's performance under the current contract has been exemplary and DOE considers it to be highly unlikely that significant improvements in technical or cost performance would be achieved by a new contractor at ORNL during the proposed five-year extension.

In addition, since 2005, DOE has conducted competitions for the management and operation of six other Office of Science national laboratories-LBNL, Thomas Jefferson National Accelerator Facility, Argonne National Laboratory, Fermi National Accelerator Laboratory, Ames Laboratory, and Princeton Plasma Physics Laboratory. Despite efforts, in each case, to solicit as much competition as possible, only one competitive proposal was submitted for each solicitation, and the offer was from either the incumbent or a separate corporate entity that included the incumbent. DOE's efforts to solicit competition included: 1) issuing draft solicitations; 2) holding comment workshops, one-on-one meetings, and pre-proposals conferences; and 3) maintaining websites to provide information to interested parties. There appears to be a trend that indicates the research and development business of the Office of Science national laboratories is a more specialized area for contractors to pursue than that of other government contracts which have more competitive sources that are much more motivated by significantly higher fees than that available under laboratory contracts.

Based on the Department's experience, as described above, further market research was deemed to be unnecessary.

9. Any other facts supporting the use of other than full and open competition.

As set forth in FAR 17.605, replacement of an M&O contractor is usually based largely upon an expectation of meaningful improvement in performance or cost. In accordance with DEAR 970.1 706-1, any extension to continue a contract beyond the basic contract term, including any exercised options, shall only occur when such extension can be justified under one of the statutory authorities identified in 48 CFR tj 6.302 and when authorized by the Head of the Agency.

Considering the exemplary performance of UT-Battelle, a competition at this time could not significantly improve ORNL's performance. In addition, a competition at this time would adversely impact critical programs at ORNL, cause disruptions in program and project momentum, and result in a loss of productivity at a critical time.

This is a unique time in ORNL's history, and the recommendation for a five-year extension is necessary to allow ongoing programmatic, project, and facility initiatives to mature in a stable environment. Programmatic and project initiatives fall under several research areas identified for ORNL by the DOE, such as neutron scattering, computational science and engineering, materials synthesis, design, characterization, and processing, energy technology, biological and environmental sciences, arms control and non-proliferation, and nuclear physics. In addition, new research programs and the challenge of implementing Recovery Act requirements effectively and efficiently over the next several years would be adversely impacted by a competition at this time.

In the area of neutron scattering, the $1.4 billion SNS continues to make significant progress in accordance with the facility startup plan, including increasing power, adding experimental facilities, maturing the user program, and developing plans for the Power Upgrade Project and the SNS Second Target Station Project, a Major Systems Acquisition; SNS is also supporting new research programs, new dynamic partnerships with the state and industry have been developed to support bioenergy, and partnerships with other agencies have advanced computational sciences. In addition, the world's coldest neutron source is facilitating new instrumentation capabilities at ORNL's High Flux Isotope Reactor.

In support of DOE's programs in computational science and engineering, ORNL continues to develop improved computing capabilities, developing a third-party funded multi-program Computational Data Center, and has created a synergy between multiple sponsors and partners that significantly improves DOE's ability to meet computational challenges.

In the area of materials synthesis, design, characterization, and processing, the CNMS continues to mature its user program.

In support of biological and environmental Sciences, the new Bioenergy Science Center is in its third year of operation, and ORNL is strategically positioned to compete in several Basic Energy Research (BER) scientific focus areas, including genomics fundamental science, biofuels, and climate change research.

As a leading multi-program energy technology laboratory, ORlVL is and will continue to be a key participant in addressing the current energy situation. Major initiatives for the DOE Offices of Energy Efficiency and Renewable Energy (EERE) and Electricity Delivery and Reliability (OE) funded under the Recovery Act will require continuity with the largest energy laboratory.

In addition, ORNL is in the middle of an unprecedented facility revitalization and modernization initiative, in support of which UT-Battelle has raised millions of dollars in private-sector loans and State of Tennessee funds, and to which it has contributed millions of its own dollars from its award fees. Several new facilities have thus been completed and several facilities are currently under construction, including a new Science and Technology Park that is being established adjacent to the ORNL main campus, and the Integrated Facilities Disposition Pro-ject (IFDP), plans for which are underway. Competition ofthe M&O contract at this time could potentially disrupt this effort and threaten the completion of the modernization initiative.

10. A listing of the sources, if any, that expressed in writing, an interest in the acquisition.

No sources have expressed written interest in the acquisition.

11. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or sewices required.

In the last five years, the Office of Science has competed six of their M&O contracts which managed the Department's national laboratories. Despite extensive actions to encourage competition (as described in Section 8), the Department received only one proposal for each of the competitive solicitations. This record of a lack of competition indicates the development R&D business of the Office of Science national laboratories is a more specialized area for contractors to pursue than other government contracts which have more competitive sources and significantly higher fees. Nonetheless, the Department will continue to evaluate future acquisitions in this area with a preference for full and open competition, while recognizing that the statutory and regulatory authority to noncompetitively extend an M&O contract may be justified on a case-by-case basis.

During this five-year contract extension, the Department will assess what actions, if any, may be taken to remove or overcome the barriers to competition associated with Office of Science national laboratories.

Certification:

The information contained in this "Justification for Other than Full and Open Competition for Oak Ridge National Laboratory (ORNL)" is certified accurate and complete to the best of my knowledge and belief.

Acquisition Initiator

4 Q. M& Contracting Officer f Iqlf0 Mark A. Million Date Oak Ridge Office

Reviews and Approvals

Program Senior Official m L ),/i',/ 1 0 W. F. Brinkman Date Director Office of Science, SC

Contracting Activity Competition Advocate

Date

Legal Counsel:

Manager:

Oak Ridge Office

Head of Contracting Activity:

Date

Office of Science

Senior Procurement Executive: 348-20 (0 Edward R. Simpson, s ire car Date

A .

Office of Procurement and Assistance Management