JOFOC_DICCE2_Ceiling_Redacted_final_1.pdf

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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

June 30, 2022

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) of Richland, WA, Contract Number: DE- NA0003363, and with Tech2 Solutions (Tech2) of Richland, WA, Contract Number: DE-NA0003366 by means other than full and open competition. The contracting activity is the NNSA Non-Management and Operating (Non-M&O) Contracting Operations Division (NA-APM-12).

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

This document sets forth the justification and approval for 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 DICCE MACs, with Apogee and Tech2, to raise the shared MAC ceiling from $400 Million (M) to $575M, a shared increase of $175M. No change is expected to the current Ordering Period of August 12, 2016 to August 11, 2023.

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 (U.S.) 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 R/N materials moving through international border crossings, including border crossings, 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 (RDS) at border crossings, seaports, airports, and other strategic sites located in partner countries.

Under the DICCE2 MAC, task orders (TOs) 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 the capability to detect, disrupt, and investigate trafficking in R/N and radioactive materials. The completion of these tasks includes close

DE-NA0003363 & DE-NA0003366 | DICCE2 Page 2 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

NNSA awarded the DICCE2 MAC in August 2016 with a base ordering period of three years and two, two-year option ordering periods, for a total potential ordering period of seven years. NNSA exercised the first and second two-year option ordering periods for both contractors in 2019 and 2021, respectively.

The shared ceiling of the DICCE2 MAC was awarded as $400M over the total seven-year ordering period. This shared ceiling was based on assessments and strategic planning conducted in 2014. These assessments and plans were based on threat indicators, available technology, partner country requests, and the global political situation in 2014. The plans assumed that deployment of new systems would decrease over the following seven years as more partner countries moved from an implementation phase of capability building assistance and into a sustainability phase focused on operation of existing systems.

This had assumed that over time there would be fewer new deployments each year.

Over the six years since the award of DICCE2, several major geopolitical developments have greatly increased the need for additional deployments of RDS’ beyond what was forecasted in 2014. Below is a depiction of the planned vs. actual spend:

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Six of the most significant and unexpected situations and their impacts on the DICCE2 level of effort are described below to underscore the scale of unanticipated changes since DICCE2 was initiated.

Loss of Cooperation with Russia Relations with Russia have become increasingly strained, and direct NSDD cooperation with Russia has ceased. The lack of access to assess and remediate operations at Russian sites has substantially reduced confidence in Russian detection system operations and has driven NSDD to increase the number of planned deployments in countries along Russia’s borders, including Ukraine, Kazakhstan, Uzbekistan, and other Former Soviet Union (FSU) countries.

Conflicts in the Middle East Destabilization in the Middle East that was caused by the Islamic State of Iraq and Syria (ISIS), the war in Syria, and other regional conflicts has increased the need for additional deployments in that region. As refugees fled across borders, there were needs for additional deployments to Lebanon and for supplementary work to expand systems in Jordan and Israel.

Azerbaijan-Armenia Border Crisis Starting in 2021, Azerbaijan and Armenia began engaging in clashes over their border. As a result, deployment teams had to be evacuated and the sites shut down for several months. Work has resumed at the sites that were in progress prior to the crisis, however, the destabilization of the border between the two countries led to an increased threat of smuggling in that area as well as increased costs for program execution. An unexpected increased need for capability to interdict this smuggling was identified and new deployments for RDS’ are planned to cover portions of the border between these official points of entry. This deployment is currently estimated to cost approximately $13.5M. These systems, known at the time as Green Borders Security Initiative (GBSI) deployments, were determined to be within the scope of the DICCE2 contracts in July 2018.

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Explosion in Lebanon Installation of a RDS at the Port of Beirut, Lebanon was completed in 2010. This system was operational until August 4, 2020, when an explosion destroyed much of the port including the RDS.

Rebuilding of this system was critical to mitigating the threat of smuggling R/N materials through Lebanon. Therefore, this rebuild of the Beirut system was added to the DICCE2 contract in 2021 at a cost of $6M and could not have been foreseen at the time of DICCE2 award.

Collapse of Afghanistan In summer 2021, the government of Afghanistan collapsed, and the Taliban took over the country.

The impact of this was a destabilization of the borders around Afghanistan and an increased threat of smuggling in the region. Systems deployed by NSDD, including multiple Mobile Detection System vans, were lost with the collapse of the government. Increased capability to deter and interdict smuggling of radioactive material in the region around Afghanistan is hence needed. This has resulted in an increase of deployments of RDS’ on the Uzbekistan border and the potential for additional work with Turkmenistan and Tajikistan. These deployments are estimated to total approximately $18.5M.

Russia’s War on Ukraine The largest cause of the increased burn rate on the DICCE2 contract is Russia’s ongoing war with Ukraine. Russia first invaded Ukraine in 2014. At that time, the acquisition planning and calculation of the needed ceiling was already underway. The full impact of the war was not known at that time and is still difficult to assess today. The ongoing invasion has had an ongoing and increasing impact on the deployment strategy in Ukraine and neighboring countries. Three impacts are the change of equipment from systems previously used from a Russian vendor, increased deployments along the Donbas region, and expanded deployments of equipment to Ukraine and its neighbors.

First, prior to the invasion in 2014, the Program’s Ukrainian partners required that RDS’ be installed at their sites with Russian equipment. This was to mitigate the cost of ongoing operations including maintenance, parts, and training that were accessible in nearby Russia. After the invasion, the Ukrainian partners banned the import of new Russian-manufactured equipment. This change in requirements had cascading impacts and costs on the DICCE2 deployments including re-design of sites, import and testing of different equipment, and additional training for partners on the new equipment. Due to the complicated nature of these changes and their timing, concurrent with other changes and delays that were occurring due to the invasion, the value of these changes is difficult to define.

Second, throughout execution of the DICCE2 Ukraine TO, additional deployments have been needed to increase the capability to detect and interdict smuggling through the Donbas region that is under attack by Russia’s proxies. These deployments have included mobile RDS’ and surveillance systems to increase the probability of detecting and interdicting smugglers. These deployments have cost $17M. Again, in this case, the need for detection along the administrative lines internal to Ukraine could not have been foreseen at the time of DICCE2 award.

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Third, Russia’s renewed attack on Ukraine began in February 2022. As a result, the Program’s Ukrainian Kyiv-based team had to re-locate to Lviv and in access to numerous RDS’ previously deployed was lost. The team continues to work toward TO requirements from Lviv and has also been tasked with logistical support for additional deployments of radiation detection equipment into Ukraine to assist with the overall effort to deter and interdict smugglers who may use the ongoing war as an opportunity. The value of this impact is not yet assessable though is anticipated to be significant.

Looking Forward Due to the ongoing war, it is anticipated that the need for deployments will continue or increase in FY23. This increase may take the form of rebuilding the detection capabilities of Ukraine after the war, further increasing the assistance to Eastern Europe if the war continues, or a combination of the two. It is clear that after the war ends, Ukraine will need assistance with rebuilding their capabilities in areas where the RDS’ as well as the supporting infrastructure have been decimated. A continuation, escalation, or expansion of the war would necessitate additional assistance to countries bordering Ukraine as those borders destabilize. In any case, it is anticipated that additional deployments of assistance will be necessary and that assistance is estimated to cost approximately $50M.

As a result of these unanticipated changes in the global situation, NSDD has used the DICCE2 MAC to address the emerging threats and increasingly tenuous security situations, primarily in Central Asia, Eastern Europe, the Balkans, and the Middle East. NSDD has increased and expanded deployments to respond to the elevated threat environment. The resulting usage will quickly exhaust the contract ceiling.

Without a ceiling increase, these critical deployments will abruptly end without a contract vehicle to complete the mission.

Competing a contract of this size requires a minimum of two-years of planning. Knowing that the DICCE2 ceiling would not last through the ordering period, NSDD began acquisition planning for the follow-on contract in fiscal year (FY) 2020, a year early with anticipation of award in FY22. In FY21, a thorough needs analysis was completed, and the resulting forecasted work requirements altered the planned procurement from a construction NAICS 237990, Other Heavy and Civil Engineering Construction, to a services NAICS 541990, All Other Professional, Scientific, and Technical Service.

This change had a cascading effect on the procurement planning including altering the primary expertise required from construction contracting to services contracting and altering the small business restrictions on subcontracting from 15% to 50%, per FAR 19.505(a).

These changes necessitated a second sources sought notice with the updated NAICS code and small business subcontracting restrictions. This second sources sought notice demonstrated that there was no reasonable expectation that two responsible small businesses, competing independently, can perform the requirement under the services NAICS code. This led to a determination that the follow-on competition will not be set aside for small business. The second sources sought notice, analysis of results, and briefings to Small Business Administration representatives on the change to the acquisition planning delayed the procurement planning for six months. Additionally, changing global situations and the need

DE-NA0003363 & DE-NA0003366 | DICCE2 Page 6 to process urgent contracting actions in response to emergent needs has delayed the planning a further six months. As a result, this significant acquisition will likely take three years and award of the follow-on is not expected until FY23.

The Program is taking steps to reduce the burn rate on the DICCE2 contracts including awarding a separate Alaska Native Corporation (ANC) 8(a) sole-source contract to cover some of the equipment provision requirements that have been increased by the situations described above (This ANC is discussed further in Section VI, Alt 3, below). Other 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 to cover the continued work 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 R/N smuggling. A pause in work and a potential interruption of the working relationships resulting from contractor turnover could cause further 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 contractors 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 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. Ukraine, for example, is facing ongoing invasion; rebels, terrorists, and the potential that other opportunists may take advantage of the unrest to move R/N material into or out of the country.

Therefore, it is imperative that the work to secure the borders around Ukraine continue as planned. The ongoing conflict has already led to decreased capacity to detect, disrupt, and investige the illicit movement of materials in this area. New systems will need to be deployed to maintain a robust nuclear detection architecture. Romania, Lithuania, Latvia, Estonia, Moldova, and other countries may also become targets of R/N smuggling due to their proximity to the increased conflict in the region.

Therefore, increased capacity to detect, disrupt, and investigate the movement of R/N materials along these borders is a priority. Additionally, securing borders against R/N smuggling in the Middle East, Central Asia, and the Caucasus continues to be crucial to the security of our partner countries due to developments including the Taliban takeover of Afghanistan, the recent border conflict between Azerbaijan and Armenia, and the activities of violent extremist organizations such as ISIS.

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NNSA has now finalized a thorough Market Survey for the follow-on contract and is working to complete the next steps of the acquisition planning process. NNSA is planning to compete the Statement of Work and award a new contract before expiration of the current DICCE2 ordering period. However, NNSA must increase the shared DICCE2 MAC ceiling to prevent a break-in-service to the existing scope of work under contract as continuous service is vital to the NSDD mission in support of the host countries. This ceiling increase will ensure that the remainder of the work in countries where TOs have already been awarded under the DICCE2 MAC, as well as requirements that emerge before the follow-on contract is awarded, can be completed.

As shown under Section VIII below, market research has demonstrated that the current DICCE2 MAC Contractors, Apogee and Tech2, are the only contractors that currently have the capabilities and experience necessary to quickly respond to these urgent deployment needs. Therefore, 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, the Program 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: This 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 that 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 accountability for the successful functioning of the integrated system once installed was vested in the prime contractor. Therefore, the two scopes were combined under the subsequent DICCE and DICCE2 contracts. This historical experience demonstrates that separating the IT portion of the scope is not practicable and creates excessive cost and risk.

Alternative 2-Separate Construction Acquisition: The Program 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 the work, the DICCE2 contractor can utilize U.S. or third country national personnel to supplement the local contractors. The purpose of this requirement is to increase indigenous capability in-country to install and maintain the RDS, increase a sense of ownership in the RDS within the country, DE-NA0003363 & DE-NA0003366 | DICCE2 Page 8 and incentivize the country to work closely with the program by providing jobs to local people. The impact of this requirement is that the construction scope cannot be performed directly by a prime contractor and having multiple U.S. contractors attempting to contract with local vendors is not practicable.

Alternative 3- Separate Equipment Acquisition: The Program has attempted to procure equipment separately under various circumstances. NSDD has attempted to procure equipment OCONUS and/or execute just-in-time equipment procurement through vendors separate from the DICCE2 awardees, including laboratory partners and small businesses. These equipment procurements 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 and lifecycle costs. Bulk 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, warranty provisions, licensing, and other logistical challenges that lead to insurmountable obstacles.

There is some equipment that is deployed or expected to be deployed on multiple projects and can be purchased in-CONUS. This equipment primarily includes radiation detection equipment. The Program has attempted to purchase this equipment in bulk through other vendors including small direct federal contracts, M&O contracts, and M&O subcontracts. In most cases, the Program has found that having equipment provided by a different vendor other than the shipping and installing contractor has led to issues with export control, Value Added Tax (VAT) exemption, and warranties and licensing. These issues have resulted in unacceptable delays and cost overruns. This alternative has worked on a small number of bulk purchases; however, these successful equipment purchases are a small portion of the overall scope. In most cases, the administrative burden of managing logistics between the companies exceeds the potential benefit.

The Program has submitted an acquisition package to award a separate contract to Sealaska Remediation Services (SRS), an ANC 8(a) company, to procure, ship, and perform logistics for deployment through DICCE2 contractors (the ANC discussed in Section V, above). This is logistically feasible because SRS, closely affiliated with Sealaska Technical Services (STS), is a team member of the Tech2 Joint Venture.

SRS will be able to work closely with DICCE2 contractors for turn-over of equipment, licensing, export control documentation, and VAT documentation and avoid the logistical issues encountered when attempting to purchase equipment through other sources. This separate acquisition will have a ceiling of approximately $25M and has reduced the ceiling increase needed on the DICCE2 MAC by $25M. If necessary, this acquisition strategy can be duplicated to partially cover further emergent needs.

A notice under each DICCE2 MAC will be published in the Governmentwide Point of Entry (GPE), System for Award Management (SAM) as required by FAR 5.2. The notice will be published for 15 days.

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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 and 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 previous historical data.

In addition, the contractors will be required to submit certified cost or pricing data or other than certified cost or pricing data for additional work awarded under the DICCE2 contracts, when applicable, on individual TOs. 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, 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 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.

Apogee is 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. OTHER FACTS

To calculate the amount of ceiling increase required, plans for new work to be awarded before the end of the ordering period on August 11, 2023, were compiled. This work includes implementation of new sites, as well as deployments of equipment to respond to recently emergent needs. The cost of equipment that will be procured through the separate contract with SRS was not included in the forecast.

As shown below, the total Estimate at Completion for all work under the DICCE2 MAC contract is $575M. The current contract ceiling is $400M; therefore, a contract ceiling increase of $175M is needed.

Anticipated Ceiling Needs by TO:

Task Order Total FY22 Total FY23 FY24PM* FY25PM* Balkans $3,000,000 $1,000,000 Caucasus $4,500,000 $16,000,000 Kazakhstan $10,610,000 $1,788,089 $1,717,452 $1,717,452 Lebanon2 $4,150,000 $11,000,000 $873,288 $873,288 Lithuania2 $2,000,000

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Middle East $1,000,000 Anticipated New TOs $6,000,000 $5,000,000 Peru2

PM $4,000,000 $3,000,000 $2,000,000

PM $4,000,000 $3,000,000 $2,000,000

Romania3 $3,000,000 SE Asia $3,293,149 $6,000,000 Tajikistan $6,304,000 $944,370 $1,259,160 $1,259,160 Turkmenistan2 $700,000 $3,684,027 $912,036 $912,036 Ukraine4 $3,769,000 $11,404,468 $1,872,624 $1,872,624 Uzbekistan $7,555,036 $7,528,254 $2,037,672 $2,037,672 Anticipated Work $54,881,185 $73,349,208 $14,672,232 $12,672,232 Anticipated Additional Work due to War $20,000,000 $30,000,000 $2,000,000 $2,000,000

Total Anticipated Need $74,881,185 $103,349,208 $16,762,232 $14,672,232 *Work awarded on TOs during the ordering period are predicted to extend into FY2025

Ceiling Needs Summary:

Current Award Value $ 364,772,900

FY22 $ 74,881,185

FY23 $ 103,349,208

FY24 $ 16,672,232

FY25 $ 14,672,232

Total Value needed $ 574,347,757 Current Award Ceiling $ 400,000,000 Added Ceiling Needed $ 174,347,757

X. INTERESTED SOURCES

A notice under each DICCE2 MAC was published on the SAM.GOV. There were no responses to the posting.

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XI. STEPS TO FOSTER COMPETITION

The follow-on contract will be awarded through a competitive action. The type of competition is not yet finalized.

XII. CERTIFICATIONS

Acquisition Initiator/Technical Representative:

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

Signature Date

Contracting Officer:

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

Senior Procurement Executive:

I have reviewed this Justification for Other than Full and Open Competition and find it to be accurate and complete to the best of my knowledge and belief. Since this JOFOC exceeds $75M, this review serves as approval.