JOFOC DICCE2 Ceiling Increase - redacted.pdf

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CUI//SP-PROCURE

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

NATIONAL NUCLEAR SECURITY ADMINISTRATION

Office of Global Material Security, Nuclear Smuggling Detection and Deterrence Design, Integration, Construction, Communications, and Engineering 2 Ceiling Increase

May 22, 2023

I. AGENCY IDENTITY AND CONTRACTING OFFICE

The Office of Nuclear Smuggling Detection and Deterrence (NSDD) program of the U.S. Department of Energy (DOE), National Nuclear Security Administration (NNSA) plans to contract for Design, Integration, Construction, Communication, and Engineering 2 (DICCE2) services under existing Multiple Award Contract (MAC) with Apogee Group, LLC (Apogee), Contract Number: DE- NA0003363, and with Tech2 Solutions (Tech2), Contract Number: DE-NA0003366 by means other than full and open competition. The contracting activity is the DOE/NNSA, Office of Partnership and Acquisition Services, Contracting Operations Division, Program Support Acquisition branch (NA-PAS- 312).

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

This document sets forth the justification and approval of the use of one of the exceptions to full and open competition allowed under the Competition in Contracting Act (CICA) of 1984. This action is a modification to each of the DICCE2 MAC with Apogee Group, LLC (Apogee), PO Box 28, Richland WA 99352 and with Tech2 Solutions (Tech2), 3200 George Washington Way, Suite D, Richland, WA 99354, to raise the shared cumulative MAC ceiling from $575 Million (M) to $680M, an increase of $105M. No change is expected to the current DICCE2 MAC Scope or Contract Period of Performance from August 12, 2016 to August 11, 2023. However, FAR Clause 52.217-8 Option to Extend Services, is included in both Master Contracts with a value of $26M and may be exercised to mitigate the impact of the risk that a protest is submitted under the follow-on award.

III. DESCRIPTION OF SUPPLIES AND/OR SERVICES

The NSDD program mission is to detect, disrupt, and investigate the smuggling of Radioactive/Nuclear (R/N) materials before those materials can be used against the United States or its interests. As one of its goals under this mission, the program builds, strengthens, and indigenizes partner countries’ baseline operability to detect, disrupt, and investigate R/N smuggling. This includes assisting partner countries to develop, maintain, and sustain their capacity to detect and interdict illegal trafficking of nuclear and radiological materials moving through international border crossings, including airports, and seaports, across borders between official points of entry, and within the borders of the country. To accomplish this mission, the NSDD program utilizes the services of private sector contractors through the DICCE2 MAC to design, integrate, construct, provide communications, and engineer integrated Radiation Detection Systems at border crossings, seaports, airports, and other strategic sites located in partner countries.

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Under the DICCE2 MAC, task orders are awarded to provide services and equipment to implement the NSDD mission. These orders include design and installation of sites, provision of Mobile Detection Systems, engineering, and support for technical exchange with partners, and other services and equipment essential to providing our international partners with capability to detect, disrupt, and investigate trafficking in nuclear and radioactive materials. The completion of these tasks includes close cooperation with Host Country Partners to ensure the equipment is installed in accordance with the Partners’ operations.

IV. AUTHORITY

The statutory authority permitting other than full and open competition is 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

NSDD awarded the DICCE2 MAC in August 2016 with a base contract period of three years and two, two-year option periods, for a total contract period of seven years. NSDD exercised the first and second two-year options for both contractors in 2019 and 2021, respectively. The ceiling of the DICCE2 MAC was identified as $400M over the total seven-year contract period. This ceiling was based on assessments and strategic planning conducted in 2014. This had assumed that over time there would be fewer new deployments each year. In 2022, the ceiling was raised by $175M from $400M to $575M due to major geopolitical developments that had greatly increased the need for additional deployments of radiation detection systems beyond what was forecasted in 2014.

Since the ceiling was increased in FY22, efforts to complete the follow-on to the DICCE2 Acquisition, Counter Nuclear Smuggling System Deployment (CNSSD) have been on-going. The follow-on acquisition is currently planned for award before or slightly after the expiration of the DICCE2 contract period. In the event of any unforeseen delay or protest, it is likely that the contract period of performance will be extended utilizing FAR Clause 52.217-8, Option to Extend Services to provide the NSDD Program the ability to continue its mission. To mitigate the high risk of mission impact, critical projects that were planned for award under the CNSSD Master Award Contract (MAC) within the first few months of the ordering period will be awarded under the DICCE2 contract before it expires. The $26M value associated with the Option to Extend Services clause will not be adequate to support these critical projects which is why additional value is needed.

There are anticipated cost increases in the projects already awarded or planned under the DICCE2 MAC that will require the additional ceiling. These include the following:

Ukraine Since the last ceiling increase in August 2022 Congress has provided NSDD supplemental funding for counter nuclear smuggling work in Ukraine.

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Inflation and supply chain challenges Effective inflation since the last ceiling increase has varied but has approached an annualized growth of 100% on some products. Construction services in several countries where NSDD is currently deploying efforts have seen even higher levels of inflation. Actual costs of projects are far outstripping estimates, many of which were generated 12 to 24 months ago. Supply chain delays, approaching 12 months on some products, have also led to schedule slippage and increased costs. These factors have most negatively impacted frontier area and Port of Entry (POE) projects in the Caucasus, the Balkans, the Middle East, and Central Asia.

Geopolitical and socioeconomic instability The Russian invasion of Ukraine has significantly increased the risk of nuclear material smuggling in the region.

NSDD took steps to reduce the burn rate on the DICCE2 contract including awarding a separate Alaska Native Corporations (ANC) 8(a) sole-source contract to cover some of the equipment provision requirements that have been impacted by the situations described above. Unfortunately, the coordination of ordering, export control, customs clearance, and testing of equipment between the ANC contractor and the DICCE2 implementing contractor has proven to add unacceptable delays, cost, and performance risk to the projects. Attempts to conduct portions of these deployments through other contractual vehicles, such as laboratory partners, have been unsuccessful due to the complexity of the work and the criticality of having a single integrating contractor to coordinate projects in each country or region.

Conducting a competition for a bridge contract for continuation of services until the follow-on contract is awarded would defer essential resources needed for the current acquisition planning and/or management of the current DICCE2 workload, resulting in unacceptable delays that will negatively impact our partner countries’ ability to secure their borders against nuclear and radiological smuggling.

A pause in work and a potential interruption of the working relationships resulting from contractor turnover could cause further risks in the form of delays and disruptions that would leave vulnerable borders unprotected for longer stretches of time.

Continuation of the planned work under the DICCE2 contracts by the current vendors is essential. The work under the DICCE2 contract takes advantage of political agreements that take time to implement.

Successful realization of the goals of these agreements relies on both political momentum and ongoing working relationships between not only the partner country governments and NSDD, but the contractor personnel working in the country on a day-to-day basis. No other contractors have established these relationships specific to the country and site that tie directly to the NSDD mission. When considering whether to compete the additional scope, NSDD must also consider the urgent nature of the work to be performed.

It is vital to the NSDD mission that the DICCE2 MAC ceiling is increased. The ceiling increase will support continuation of ongoing critical work, as well as requirements that emerge before the follow-on

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The current DICCE2 MAC Contractors, Apogee and Tech2, are the only responsible sources for the needed DICCE2 services and no other supplies or services will satisfy agency requirements.

VI. EFFORTS TO IDENTIFY ADDITIONAL SOURCES

In an effort to identify additional sources for portions of the work, NSDD has considered separating a portion of the scope into either a separate acquisition or a separate 8(a) award. These alternatives are described and analyzed below.

Alternative 1- Separate Information Technology (IT) Acquisition: The first alternative was utilized by the NSDD program under a previous contract for this scope in 2001, where the communications system vendor was contracted separately from the contractor who managed the Design, Construction, and Integration (DCI) scope of work. The DCI scope was then awarded under an ANC 8(a) sole source award, and the communications IT scope was awarded under an Interagency Agreement with the U.S.

Air Force. This allowed the program to standardize the communications system and to award DCI to a small business. However, managing the integration of the two scopes at multiple, remote sites around the world where on-site Federal oversight is subject to travel restrictions proved to be impossible and resulted in unacceptable delays and cost overruns. It was determined the two scopes needed to be combined so that a single on-site integrating contractor could ensure the design, construction, and communications were integrated effectively and efficiently and ensured accountability for the successful functioning of the integrated system was vested in the prime contractor. Therefore, the two scopes were combined under the subsequent DICCE and DICCE2 contracts. Based on this historical experience, separating the IT portion of the scope is not practicable and creates excessive risk.

Alternative 2-Separate Construction Acquisition: NSDD has not attempted to separate the construction scope in the past. However, NSDD requires DICCE2 contractors to utilize in-country construction firms to perform work whenever possible. In the rare case no local contractors are qualified to perform work, the DICCE2 contractor can utilize U.S. or third country national personnel to supplement the local contractor workforce. The purpose of this requirement is to increase indigenous capability in-country to install and maintain the Radiation Detection System (RDS), increase a sense of ownership in the RDS within the country, and incentivize the country to work closely with the program by providing jobs to local people. The impact of this approach is that the construction scope cannot be performed directly by a prime contractor and having multiple U.S. companies attempting to contract with local vendors is not practicable.

Alternative 3- Separate Equipment Acquisition: NSDD has attempted to procure equipment separately under various circumstances. NSDD has attempted to procure equipment OCONUS and/or just-in-time equipment through vendors separate from the DICCE2 awardees, including laboratory partners and small businesses. This equipment included utility panels, computers, cameras, portable radiation detection instruments, and personal protective equipment. It is necessary to purchase this equipment in-country whenever possible to improve sustainability and reduce procurement lifecycle costs. Bulk

DE-NA0003363 & DE-NA0003366 | DICCE2 Page 5 procurements of this equipment have not been practicable due to the need to customize RDS to meet the needs of each Host Country partner. Separating this scope has not been successful due to the purchasing restrictions, export control, warrantee provisions, licensing, and other logistical challenges that lead to insurmountable obstacles.

As an additional sourcing method, NSDD awarded a separate contract to an ANC 8(a) company to procure, ship, and perform logistics for deployment in support of the DICCE2 contractors (ANC approach discussed in Section V, above). This separate acquisition has a ceiling of approximately $25M, thereby reducing the ceiling increase needed on the DICCE2 MAC. This seemed to be a good solution with the operational benefit of the ANC being closely affiliated with a team member of the Tech2 Joint Venture.

It was assumed that the ANC would be able to work closely with DICCE2 contractors for turn-over of equipment, licensing, export control documentation, and Value Added Tax (VAT) documentation to avoid the logistical issues encountered when attempting to purchase equipment through other sources.

The reality has been quite different than anticipated. The burden of coordination between the contractors for all logistical aspects of the procurements has fallen on NSDD personnel who are not experts in this area. In some instances, delays have resulted in orders not being placed for a full 6 months after contract award. Working with the ANC to hand-off equipment to the DICCE2 contractor has proven confusing to both companies and the Federal Country Managers responsible for the project.

In most cases, the administrative burden of managing logistics between the companies exceeds the potential benefit.

VII. DETERMINATION OF REASONABLENESS OF COST OR PRICE

It is the determination of the Contracting Officer that the anticipated costs will be fair and reasonable.

Government objectives will be established based on a price/cost analysis performed utilizing technical cost analysis; evaluation of Defense Contract Audit Agency (DCAA) audit results; an independent Government Cost Estimate (IGCE); and historical data.

In addition, the contractors will be required to submit certified cost or pricing data for additional work awarded under the DICCE2 contracts, when applicable on individual task orders. Based off past performance and experience negotiating with the DICCE2 contractors, it is anticipated that the cost will be determined fair and reasonable after negotiation settlement.

VIII. MARKET RESEARCH

Under the Market Research performed for the follow-on to the DICCE2 MAC that was finalized March 9, 2022, two sources sought notices were published on January 28, 2021 and December 2, 2021, respectively.

The first notice was published under North American Industry Classification System (NAICS) 237990, the same NAICS code as DICCE2. Analysis of responses determined that Apogee and Tech2 are the only contractors with the capability and experience to immediately and successfully perform the full scope of DICCE2 work under this NAICS. Other contractors demonstrated capability in some areas but not the full scope necessary to integrate these deployments. The second notice was published under NAICS 541990.

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Apogee was determined to be the only small business contractor with the capability to perform the scope of work required under this NAICS. Tech2 would not qualify as a small business under any of these NAICS code. Based on the DICCE2 MAC follow-on acquisition market research, it is in the best interest to the Government to increase the ceiling on the current DICCE2 MAC.

IX. INTERESTED SOURCES

A Notice of Intent under each DICCE2 MAC was published on May 7, 2023 through the SAM.GOV.

There were no responses to the posting.

X. STEPS TO FOSTER COMPETITION

The follow-on contract will be awarded through a competitive action.