J-11 LBNF ICE Process. 7.12.19.pdf

LBNF ICE Process Revision No. 02

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Long Baseline Neutrino Facility (LBNF) Independent Cost Estimate (ICE) Process

Revision History

Author Description of Change Revision Date Troy Lark Original Revision Number 0 December 2017 Troy Lark Revision 1 based on IRB comments May 2018 Troy Lark Revision 2 ICE Process Change October 2018 Troy Lark Revision 3 Update Section 4.12 July 2019

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TABLE OF CONTENTS

1.0 INTRODUCTION

2.0 DEFINITIONS

3.0 RESPONSIBILITIES

4.0 PROCESS DESCRIPTION

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1.0 INTRODUCTION

This document describes the ICE process used to review and evaluate the Subcontractor’s pricing for self-performed work packages. This establishes the development, review and approvals required to execute work detailed in the Subcontract documents.

2.0 DEFINITIONS

A/E (Design) Architect/Engineer (Design) and its permitted successors and assigns or such other firm as may be designated by FRA from time to time.

A/E (ICE)

Architect/Engineer(ICE), which will consist of a nationally recognized organization consisting of industry experts with extensive underground experience. The selection will be tailored to professionals that have specific experience in developing independent estimates for the self-performed work scope identified by the successful CM/GC.

Bid Package A discrete scope of work associated with a set of drawings, specifications, schedules, plans, and any other information needed to completely describe the work and schedule. Bid Packages will be utilized for all work including both competitively bid and self-performed work.

CM/GC

Construction Manager/General Contractor

DOE

United States Department of Energy.

FRA

Fermi Research Alliance, LLC.

ICE

Independent Cost Estimate

ICE Review Team ICE Review Team will consist of the A/E (Design), A/E (ICE) and assigned FRA LBNF project staff project managers, engineers, procurement staff, FRA Subject Matter Expert (SME) representatives and other internal department staff and/or outside advisors deemed necessary or desirable to provide a comprehensive evaluation of the CM/GC proposals in comparison to the Design and ICE A/E estimates.

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LBNF

Long Baseline Neutrino Facility.

Open Book Subcontractor will be transparent in sharing cost information so that FRA can understand all aspects and have full access at any level to review and or audit labor, material, equipment and all other costs directly attributed to the scope of work (to include any information reasonably required to explain the Subcontractor’s estimating process such as the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data, and the nature and amount of any contingencies included in the price). FRA will have access to all Construction bid or self-performed proposal documents, quotations, cost models, takeoffs, subcontract bids and other construction cost estimates.

SDSTA

South Dakota Science and Technology Authority.

Self-Performed Work Any work scope performed by the CM/GC or any Affiliate of the CM/GC, including any member of a Joint Venture with the CM/GC, utilizing 100% of its own labor force. Prime-sub relationships are not considered to be an Affiliate and therefore will be required to compete for any work scope.

Subcontract Modification A written amendment to the Subcontract signed by FRA and Subcontractor that shall be used for, among other things, incorporating Options 1A Pre-Excavation and/or 1B Execution of EXC/BSI Construction Subcontract Work contained in Bid Packages, modifying the Total Fixed Subcontract Price, Options 1A Pre-Excavation and/or 1B Execution of EXC/BSI Construction Subcontract Price, Options 1A and/or 1B Total Subcontract Price, and Subcontract Time to the extent modified as a result of the award of the Bid Package

Subcontractor The Construction Manager/General Contractor (CM/GC) for the Project.

SURF

Sanford Underground Research Facility.

3.0 RESPONSIBILITIES

A/E (Design) The A/E is responsible for providing an estimate for the entire scope of work. The A/E will participate in the ICE process as defined in the process description.

A/E (ICE)

The independent consulting entity that develops the ICE is responsible for providing an estimate for the scope of work that the Subcontractor designates as Self-Performed. The A/E will participate in the ICE process as defined in the process description.

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CM/GC

The CM/GC is responsible for identifying the scope of work that it intends to self-perform. They will provide an open book firm fixed price proposal utilizing the agreed estimate format and follow the ICE process as defined in the process description.

ICE Review Team The ICE Review Team is responsible for conducting the ICE review in accordance with the process described in Section 4.0. They will be led by the LBNF Procurement Manager and will provide evaluation and analysis of the two A/E estimates and CM/GC proposal. In addition, the team will assist the LBNF Procurement Manager by preparing a report documenting the process and making a recommendation of acceptance or rejection of the CM/GC proposal.

LBNF Procurement Manager The LBNF Procurement Manager or designated procurement staff will chair the ICE review team and ensure that the ICE process is followed as described. The Procurement Manager is also responsible for documenting the process and submitting associated documents and justification to DOE for concurrence.

DOE

DOE is responsible for timely review and approval of recommendations submitted by the LBNF Procurement Manager.

4.0 ICE PROCESS DESCRIPTION

1. The CM/GC will submit the identified scope categorized by Master Format CSI numbers that it intends to self-perform in accordance with their original proposal

2. FRA will validate that the proposed scope is consistent with the CM/GC’s original proposal

3. The team consisting of FRA, CM/GC and A/E’s will collaborate to create a spreadsheet that will be used by all parties to develop estimates and the proposal in a uniform format that will assist in the comparison of self-performed work scope. While all costs will be developed independently, quantities of selected material and equipment, expressly identified as part of the Scope of Work or drawings, may be established as part of the spreadsheet collaboration.

4. These spreadsheets will be distributed by FRA to the A/E’s, the ICE Review Team and the self-performing CM/GC.

5. The Design and ICE A/E entities will independently estimate the identified self-performed work and articulate the details of their pricing by filling out the blank spreadsheets. These spreadsheets will be received by the LBNF Procurement Manager prior to receipt of the CMGC proposal. In the event the CM/GC proposal is received first, it will remain in a sealed envelope until such time as the Design and ICE A/E are received and opened. The CM/GC will develop a

6 | P a g e proposal using the same format.

6. The spreadsheets including the ICE estimate and the CM/GC proposal will be issued to the review team. The estimate established by the Design A/E firm will act as an independent validation of the process, but will not be the basis for prime comparison with the CM/GC proposal.

7. In addition to the estimates, the ICE Review Team will have multiple resources (previous cost models, outside consultants, industry experts, etc.) available to further analyze the pricing.

8. The ICE Review Team will conduct a comprehensive review and analysis of the proposal in relation to the independent estimate utilizing all resources deemed relevant.

9. In the event initial proposals exceed the 10% variance, or if the proposals cannot be easily reconciled by the ICE Review Team, parties may enter into a process of discrepancy identification that identifies price, quantity, assumptions and other differences. Based on this analysis the ICE Review Team will develop questions regarding any discrepancies and the associated entities will provide responses and/or modifications as needed to the questions.

Based on the responses to the discrepancy identification and after further reconciliation by the ICE Review Team, a final determination will be made as to whether the proposal remains to exceed the 10% variance level. In the event FRA is unable to reconcile the bid package to less than 10%, but determines the self-performed activity to be critical to project success, the following process may be followed to facilitate award of the bid package to KAJV:

(A) Detailed documentation of what was reconciled and what areas were unable to be reconciled including the basis behind why this discrepancy exists between KAJV and the ICE A/E Firm, including relevant assumptions. The justification should identify that KAJV has a substantiated understanding of the construction project requirements that is unable to be reconciled with the A/E Firm.

(B) A thorough analysis as to the reason behind moving forward with the bid package, in addition to an analysis of the proposed price that serves as the basis for determining the price to be fair and reasonable.

(C) Written approval by the Fermilab Laboratory Director.

It is the expectation that award of bid packages outside of the 10% reconciliation threshold will be permitted on an infrequent basis.

10. Upon completion of the review process the ICE Review team will develop a comprehensive report that documents the entire process and makes a recommendation to LBNF Procurement Management and Project Management to either:

a. Accept the CM/GC’s proposal for self-performed work as fair and reasonable and to proceed with the identified work scope.

b. Reject the CM/GC proposal as unacceptable and recommend competitively bidding

7 | P a g e the identified self-performed work. In this case, FRA will perform the trade package solicitation and evaluation using the established FRA competitive procurement process.

11. If the recommendation is to accept the self-performed price proposal and LBNF Project Management concurs with the recommendation identified in the review team report, the LBNF Procurement office will prepare a comprehensive procurement memorandum summarizing the process and fully justifying the reasonableness of the price. If the value of the work is within the FRA authority, FRA will issue the associated Subcontract Modification to the CM/GC per the terms of the Subcontract. If the value of the work exceeds FRA authority, the memorandum along with a checklist documenting successful completion of the process will be submitted to DOE. DOE will review and provide concurrence. Upon notification of concurrence by DOE, FRA will issue the associated Subcontract Modification to the CM/GC per the terms of the Subcontract.

12. If the recommendation is to reject, FRA will follow the terms of Subcontract Section 29.4 “FRA reserves the right, in its sole discretion, to terminate the reconciliation process and undertake such other actions relating to the Project as FRA determines, including, without limitation, the right to procure the Construction Contract scope of work by some other delivery method or cancel the procurement.” If the value of the work is within the FRA authority, FRA will issue the associated Subcontract Modification to the CM/GC per the terms of the Subcontract. If the value of the work exceeds FRA authority, the memorandum along with a checklist documenting successful completion of the process will be submitted to DOE. DOE will review and provide concurrence. Upon notification of concurrence by DOE, FRA will issue the associated Subcontract Modification to the CM/GC per the terms of the Subcontract.

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SELF-PERFORMED INDEPENDENT COST ESTIMATE

(ICE) CHECKLIST

FRA validated that the work scope proposed to be self-performed was properly identified by the CM/GC and was consistent with their competitive proposal.

FRA validated that the CM/GC proposal and the ICE & A/E estimates were completed using the spreadsheet format and reflect a common work scope.

FRA properly implemented the ICE review process per the details outlined in the LBNF ICE Process document.

FRA developed a comprehensive procurement memorandum that demonstrates a sound basis for selection.

The procurement memorandum documented internal FRA approvals required by the FRA procurement process.

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Figure 1 Process flow for ICE Process

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