KZ NNC JA_28Oct2024_Redacted for posting.pdf

UNCLASSIFIED

UNCLASSIFIED

DEFENSE THREAT REDUCTION AGENCY

8725 JOHN J. KINGMAN ROAD, STOP 6201

FORT BELVOIR, VA 22060-6201

JUSTIFICATION FOR OTHER THAN FULL AND

OPEN COMPETITION

Security and Elimination (S&E) Department Global Nuclear Security (GNS) – Kazakhstan

Project [REDACTED]

1. Nature and/or Description of Action

The Defense Threat Reduction Agency (DTRA)’s Cooperative Threat Reduction (CTR) contracting activity under the Global Nuclear Security (GNS) Program intends to solicit and award a single award indefinite-delivery, indefinite-quantity (ID/IQ) contract to the National Nuclear Center of Kazakhstan (NNC) for Project [REDACTED] without using full and open competition in order to support continued nuclear material and testing infrastructure security and elimination and capability sustainment at the Semipalatinsk Test Site (STS) through the issuance of task orders. The ID/IQ and initial task order will be solicited under request for proposal

(RFP) # HDTRA1-25-R-0006.

2. Description of the Supplies/Services Required

DTRA’s CTR GNS program cooperates with international partners to secure nuclear and radiological material, weapons, and related expertise. GNS and its predecessor programs have partnered with the Government of Kazakhstan for these purposes since 1993, with formal implementing agreements beginning in 1995. Since 1995, DTRA has contracted with the NNC (also known as the RESPUBLIKANSKOE GOSUDARSTVENNOE PREDPRIYATIE NA

PRAVE KHOZYAISTVENNOGO VEDENIYA NATSIONALNYI YADERNYI TSENTR

RESPUBLIKI KAZAKHSTAN MINISTERSTVA ENERGETIKI RESPUBLIKI

KAZAKHSTAN), a Kazakhstani (state owned) entity, on a sole-source basis through a number of contract vehicles, all executed with supporting J&A, as outlined below.

Project [REDACTED] is the follow-on to Project [REDACTED] (HDTRA120C0075), which was awarded on 30 September 2020 and is set to expire on 30 September 2025; [REDACTED].

Prior to Project [REDACTED], DTRA awarded contracts between 2008 and 2020 under a basic order agreement (BOA, HDTRA108G0001 with NNC, used for five orders, 0001-0005). The BOA succeeded contracts DNA001-95-C-0179, DNA001-96-C-0099, DSWA01-97-C-0027, DSWA01-98-C-0016, HDTRA1-05-C-0036, and HDTRA1-06-C-0047.

Under Project [REDACTED], the NNC will perform labor involving the surveying, characterizing, and where necessary, remediating and securing, identified nuclear material and

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related infrastructure. Efforts will also include [REDACTED]. Program objectives include [REDACTED]. NNC's work will ensure [REDACTED].

All subject work will be performed within the NNC’s jurisdiction in Kurchatov, Kazakhstan, at STS itself, or in other localities where meetings and activities outside of Kurchatov and STS directly support implementation activities. [REDACTED] partnership with NNC remain a high priority for the USG and the Government of Kazakhstan. Several formal requests for assistance, an Umbrella and Implementing agreement, and non-binding memoranda of understanding between the parties support these efforts.

The Project [REDACTED] ID/IQ Statement of Work (SOW) and subsequent task order SOWs include the planned scope of work implemented under this J&A. The cumulative estimated value of all actions (task orders) under this J&A is $[REDACTED]. This amount represents the ID/IQ ceiling and covers performance for all anticipated requirements throughout the ten-year ID/IQ ordering period (broken out into a five-year base ordering period followed by a five-year optional ordering period). The total value of all task orders issued under the ID/IQ will not exceed the established ceiling of this J&A, unless separately approved.

3. Statutory Authority

The statutory authority for this non-competitive action is 10 U.S.C. 2304(c)(1), as implemented by Federal Acquisition Regulation (FAR) 6.302-1, only one responsible source and no other supplies or services will satisfy agency requirements. The Department of Defense (DoD) need not provide for full and open competition when only one or a limited number of responsible sources are available and no other supplies or services will satisfy agency requirements. Specifically, FAR 6.302-1(a)(2)(iii)(A) is applicable to this effort, which states, for the DoD, services may be deemed to be available only from the original source in the case of follow-on contracts for the continued provision of highly specialized services when it is likely that award to any other source would result in substantial duplication of cost to the Government that is not expected to be recovered through competition.

4. Applicability of Authority

Project [REDACTED] is a follow-on contract to Project [REDACTED] (HDTRA1-20-C- 0075) and several other previous contracts for similar services, all issued without competition to NNC. NNC is the only acceptable and capable performer for this work because Kazakhstan tightly restricts operations at STS through the issuance and continued adherence to many national-level legal and regulatory documents enforced by the Government of Kazakhstan, to include Resolution 1002 by the Government of the Republic of Kazakhstan on Additional Measures to Ensure Operation of National Nuclear Center of the Republic of Kazakhstan, as well as Nuclear Radiation Safety at its Facilities, originally dated August 13, 1996, which establishes:

The National Nuclear Center of the Republic of Kazakhstan as the lead organization for the elimination of nuclear weapons infrastructure at the former Semipalatinsk test site, subject to the [Umbrella] Agreement of December 13, 1993 between the Republic of Kazakhstan and the United States of America on the destruction of silo launchers of

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ballistic missiles, liquidation of the consequences of emergency situations and prevention of the proliferation of nuclear weapons and the [Implementing] Agreement of October 3, 1995 between the Department of Defense of the United States of America and the Ministry of Science and New Technologies of the Republic of Kazakhstan on the elimination of nuclear weapons infrastructure.

Upon inquiry with the NNC and U.S. Embassy on August 22, 2024, DTRA determined that the national-level legal and regulatory documents, including Resolution 1002, are still in effect.

The documents effectively mean that the Government of Kazakhstan will not permit or sanction any labor-related implementation at STS by any entity other than NNC, which severely restricts DTRA’s acquisition alternatives to meet its mission objectives. The NNC has full access to the STS and is specifically authorized by its government to enter into contracts, to include those with foreign governments, for this type of work. NNC also executes all work within the purview of the December 13, 1993 “Agreement Between the United States of America and GOK concerning the Destruction of Silo Launchers of Intercontinental Ballistic Missiles, Emergency Response and the Prevention of Proliferation of Nuclear Weapons” and the October 3, 1995 “Agreement Between the Department of Defense of the United States of America and the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan Concerning the Elimination of Nuclear Weapons Infrastructure”, as noted in the aforementioned resolution.

This course of action is substantiated by this effort’s Market Research Report, in addition to a Memorandum for Record (MFR) accompanying the J&A, which contains a detailed analysis of the source documents serving as the foundation for the J&A, specifically all the national-level legal and regulatory documents enforced by the Government of Kazakhstan referenced in this J&A.

The unique combination of the nature of the requirement and national-level legal and regulatory documents enforced by the Government of Kazakhstan reduces the pool of capable performers to one vendor: NNC. While the work itself is highly specialized [REDACTED], the scope of work does include some goods or services customarily used or performed by the public or other entities, but due to the regulatory and legal requirements, cannot be performed by another source at STS. These legal frameworks inherently preclude competition to satisfy USG requirements. Furthermore, the tasks expected under the contract are so integrally related, all involving performance at STS and serving a common end goal, that only a single source can efficiently perform the work.

DTRA does compete requirements for different work performed in Kazakhstan outside the STS, since other entities are capable of fulfilling ancillary requirements [REDACTED].

However, due to the aforementioned national-level legal and regulatory documents enforced by the Government of Kazakhstan regarding NNC and STS, a competed alternative for Project [REDACTED] would be costly and overly burdensome. The Government could compete the requirement (for example, amongst the DTRA Cooperative Threat Reduction Integrating Contract [CTRIC] III or future CTRIC IV ID/IQ holders); however, the vast majority of the work would have to be subcontracted to NNC resulting in significant pass-through charges.

These pass-through charges would likely well exceed 70% (see FAR 15.404-1(h)) since the vast

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majority of the requirements involve continued performance of services at the STS—work that only NNC can perform. To estimate the substantial duplication of cost that the Government would likely incur to compete this requirement, the Government reviewed typical indirect costs and fees applied to subcontractor labor and support. In doing so, the Government determined at a minimum, use of another acquisition vehicle would result in the incurrence of substantial General and Administrative (G&A) fees of around [REDACTED]% and fee/profit of around [REDACTED]%, based on existing contract vehicles. In essence, the Government would pay another contractor approximately $[REDACTED] (assuming the amount subcontracted to NNC is approximately $[REDACTED] for the first task order), at a minimum, to manage and subcontract to NNC, which is costly, inefficient and unnecessary.

This total cost estimate does not quantify the intangible risks to quality, performance, and bandwidth, or their associated tangible costs. The Government would also expend significant time and resources not only to compete the requirement, but also, should a vendor other than NNC win, to engage a new contractor in knowledge transfer sessions, re-establishment of critical stakeholder relationships, and re-validation of operational processes. These additional efforts would cost additional funding and human capital hours that DTRA does not have, introducing delays and inefficiencies, jeopardizing the overall success of the project. By issuing a contract directly to NNC without competition, DTRA can avoid these unnecessary costs and risks and ensure seamless project execution, ultimately serving the best interests of DTRA and the Government of Kazakhstan. In summary, competing this requirement would create additional administrative, cost and management burden, resulting in a substantial duplication of cost, that would generate additional risk to the Government and would not be recovered through competition.

5. Effort to Solicit Potential Sources

Per several national-level legal and regulatory documents enforced by the Government of Kazakhstan, NNC is the only entity permitted to perform this requirement in Kazakhstan.

Since the Government is executing this requirement on a sole-source basis under FAR 6.302- 1, posting a sources sought or request for information (RFI) is required prior to executing the accompanying J&A. In accordance with DFARS PGI 206.302-1(d), the Contracting Officer sought a waiver of the requirement to issue a sources sought or RFI for this action, given the limiting nature of the national-level legal and regulatory documents enforced by the Government of Kazakhstan, which was approved by the Head of the Contracting Activity (HCA) on 25 October 2024. As such, there are no results from a sources sought or RFI to discuss in this document (DFARS PGI 206.303-2(b)(i)).

However, in accordance with FAR 5.207(c)(16)(ii), the Government did post a combined synopsis/notice of intent to sole source the requirement on www.sam.gov, which afforded interested parties 15 calendar days to submit a capabilities statement. By the deadline, the Government had received no responses.

6. Fair and Reasonable Costs

The resultant cost/price of all contract actions under this J&A will be determined to be fair and

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reasonable by the Contracting Officer through cost and price analysis techniques outlined in FAR 15.404 and by requiring the submission of certified cost or pricing data IAW FAR 15.403-

4. Sufficient historical data from previous efforts dates back to the 1990s and will be referenced to determine if proposed costs are fair and reasonable. This includes previous costs for similar work performed by the NNC at STS as well as the Independent Government Cost Estimate (IGCE) supporting this specific vehicle. The combination of directly relevant historical data combined with an established business relationship with the NNC will allow the Contracting Officer to anticipate negotiation of fair and reasonable prices for this work.

7. Market Research

The market research conducted demonstrates that the NNC is the only performer both capable of and permitted to execute the requirements and access STS in accordance with several national-level legal and regulatory documents enforced by the Government of Kazakhstan.

Additionally, the research shows the NNC to be the only performer to have the required expertise, certifications, permits, and site access permissions to STS, all of which are essential to execute the tasks covered under this vehicle. Conducting a competition would not be effective, efficient or feasible because no other performers have the required mix of mandate, access, expertise, and experience executing the work in question, and the USG will remain beholden to Government of Kazakhstan requirements. The NNC has proven to be a reliable partner and has displayed consistent technical and management competence under multiple previous DTRA contracts. Where possible, GNS does compete contracts in support of other projects in support of work at STS, but only for ancillary [REDACTED].

8. Other Facts

Kazakhstan requested assistance from the USG in securing STS to prevent the proliferation of weapons-usable nuclear material and its associated infrastructure. The Kazakhstani government agency responsible for non-proliferation issues is the Ministry of Energy and Mineral Resources, which replaced the Ministry of Energy, Industry and Trade in the following: “Agreement Between the Department of Defense of the United States of America and the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan Concerning the Elimination of Infrastructure for Weapons of Mass Destruction, dated October 3, 1995, as amended June 10, 1996, September 9, 1998, December 17, 1999, July 29, 2000, May 31, 2002, April 2, 2003, June 28, 2004, December 7, 2004, August 23, 2005, May 2, 2006, and August 13, 2009.” The initial request for assistance has since been substantiated by repeated renewals of the relevant agreements and commitments from senior leaders in both governments.

9. Interested Sources

Several national-level legal and regulatory documents enforced by the Government of Kazakhstan mandate that the NNC is the implementing organization for nuclear security work at STS.

10. Subsequent Actions

Until the national-level legal and regulatory documents enforced by the Government of Kazakhstan are removed or revised, the USG cannot remove or overcome this barrier to competition before any subsequent acquisition for continued supplies or services is required.

The USG will continue to seek opportunities to compete related requirements [REDACTED].

The USG will also verify NNC’s status and the status of the national-level legal and regulatory documents enforced by the Government of Kazakhstan prior to any future actions. No subsequent actions to remove or overcome barriers to competition are anticipated at this time.

DFARS 206.303-2(b)(ii) and DFARS PGI 206.304(a)(S-70) apply since this is a non-competitive follow-on to a previous award for the same service supported by a justification for other than full and open competition citing the authority at FAR 6.302-1. As such, this justification for Project [REDACTED] includes a copy of the previous justification for Project [REDACTED] (HDTRA1-20-C-0075) to assist the approval authority in determining whether the planned actions to remove any barriers to competition cited on the previous justification were completed and the approval authority shall determine whether the planned actions were completed. Amendment 1 to the J&A for Project Minuteman (dated 11 August 2021) did not identify any planned actions to remove any barriers to competition and specifically stated “no subsequent actions are anticipated at this time.” This is because DTRA cannot influence, change or overcome the aforementioned national-level legal and regulatory documents enforced by the Government of Kazakhstan limiting access to STS beyond NNC. Therefore, since there were no actions to complete, the Senior Procurement Executive (SPE) need not approve this justification for this reason; however, the SPE remains the approver of the J&A due to the total estimated value of Project [REDACTED] exceeding $[REDACTED].

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Technical Certification

I certify that the data and information forming the basis for this justification are accurate and complete to the best of my knowledge and belief.

[REDACTED]

Date Project Officer, CT-SE

Contracting Officer Certification

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

Contracting Officer, AL-ACC Date

General Counsel Coordination

This justification is legally sufficient.

Attorney Date

Competition Advocate Coordination

Competition Advocate, AL-ACP Date

Head of the Contracting Activity Coordination

Head of the Contracting Activity, AL-AC Date

Approval

Based on the above justification, I hereby approve accomplishment of this acquisition by means other than using full and open competition.

Senior Procurement Executive Date