NNSA-2024-003085 - Attachment 1 - JOFOC for KCNSC MO Contract signature_sjc.wjq.pdf

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JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

NATIONAL NUCLEAR SECURITY ADMINISTRATION

KANSAS CITY NATIONAL SECURITY CAMPUS

MANAGEMENT AND OPERATING CONTRACT NO. DE-NA0002839

JUNE 12, 2024

I. AGENCY IDENTITY AND CONTRACTING ACTIVITY

The United States (U.S.) Department of Energy’s National Nuclear Security Administration (DOE/NNSA) plans to noncompetitively extend Contract No. DE-NA0002839 with Honeywell Federal Manufacturing & Technologies, LLC (Honeywell FM&T). The contracting activity is the Management and Operating Contracting Branch (MOCB) within the NNSA’s Office of Partnership and Acquisition Services (NA-PAS).

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

This document provides the justification and approval for the use of one of the exceptions to full and open competition allowed under the Competition in Contracting Act of 1984.

The action being approved is a modification to extend the current Kansas City National Security Campus (KCNSC) management and operating (M&O) contract with Honeywell FM&T for five years. The current period of performance expires September 30, 2025, inclusive of the base period of performance and all option years. This modification will extend the contract through September 30, 2030. KCNSC is currently working on the development of future weapon modernizations which includes weapon life extension programs (LEPs) and weapon alterations (ALTs). Three LEP and ALT programs are currently underway, including two at a critical juncture that must be completed within the next three years. To support mission growth, Kansas City Non-nuclear Expansion Transformation (KCNExT), an effort to grow KCNSC manufacturing capabilities through the purchase of land and buildings in close proximity to existing KCNSC operations, is also ongoing. This contract extension will ensure continuity and uninterrupted KCNSC operations to meet the critical Life Extension Programs and weapons alterations along with the KCNExT program.

III. DESCRIPTION OF SUPPLIES AND/OR SERVICES

Under NNSA Contract No. DE-NA0002839, Honeywell FM&T is responsible for all management and operation activities at KCNSC. The anticipated total value of services resulting from this extension is $10,618,680,000.

Honeywell FM&T’s primary facility is located in Kansas City, Missouri. This Government-owned production plant manufactures nonnuclear components of nuclear warheads and bombs.

Honeywell FM&T is one of six production facilities in the Nuclear Security Enterprise (NSE) with satellite operations located in New Mexico. The KCNSC has experienced significant mission growth since 2017 and needs additional facilities to incrementally expand its manufacturing capacity and office space necessary to sustain continued production growth required to meet national security requirements.

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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

Honeywell FM&T is the only responsible source with the unique capability to execute the LEPs and ALTs that will be at a critical juncture in the next few years and support the ongoing KCNExT plan. Extending Honeywell FM&T’s M&O contract will minimize impacts to NNSA’s missions and provide uninterrupted KCNSC operations for meeting critical non-nuclear production requirements.

The KCNSC is currently executing three weapon LEPs and ALTs, with two that are in the final delivery years and are currently in production. In addition, one strategic partnership project is nearing first production unit (FPU) this fiscal year (FY). Honeywell FM&T is best positioned to continue performance on these requirements. Recompeting the M&O contract during this phase poses a number of risks. For example, during other NNSA recompete efforts, the existing M&O contractor found retention of existing staff and recruitment of new staff challenging in the year prior to the recompete completion. In those cases, there was added turmoil prior, during, and after the transition to a new M&O contractor. While this disruption may be typical during a recompete effort, the timing of the disruption in this instance would coincide with the delivery of the three weapon LEPs and ALTs. Delays in delivery of the KCNSC developed parts could translate to delays in adding the corresponding weapons into the stockpile.

For KCNExT, the risk of increased costs due to duplication is highest in the next four to five years. From 2026 onward, the federal government annually will accept/purchase the land and improvements associated with a phase, starting with phase one. The program of requirements for the phases, developed by the government, in conjunction with Honeywell FM&T, will provide the basis for the design of future phases.

Honeywell FM&T’s planning and layout of equipment to provide weapon parts to NNSA is based on the Honeywell FM&T method of manufacturing. This method likely has developed from a combination of Honeywell corporate best practices and experience meeting NNSA requirements. Honeywell FM&T’s overarching plan for the layout, outfitting, and use of the office and manufacturing spaces that will be developed and purchased through the KCNExT program will be completed by the end of phase 4 (estimated to occur in FY 2029). After phase 4, the Central Utility plant will be developed and acquired, as well as the first office space, first manufacturing space and all support buildings. While another M&O contractor would be able to pick up the KCNExT outfitting program, post-phase 4 phases, such a change would be costly and disruptive for the government during the first four phases. Another M&O contractor may approach the manufacturing and development of weapon parts and components differently, depending on their parent organizations processes and procedures. That difference in approach could require a different mix of equipment, a different layout of equipment, a different make vs.

buy plan or any combination thereof. Since some of the design has already started utilizing the methodology used by Honeywell FM&T, a change in M&O contractor in the early phases would

DE-NA0002839 Page 3 result in a design and layout plan that could be incompatible and require redesign and rework.

The potential delays associated with a contract competition, to both the delivery of current weapon systems and the KCNExT program’s future capacity to deliver future weapon systems, are heightened during the critical next few years. These delays would constitute an unacceptable risk to KCNSC’s ability to fulfill NNSA’s missions. Honeywell FM&T is the only responsible source that can ensure continuation of the ongoing critical mission activities and planned future requirements while minimizing potential disruption to the NNSA.

VI. EFFORTS TO IDENTIFY ADDITIONAL SOURCES

The current M&O contract expires on September 30, 2025. NNSA published a Notice of Intent to award a contract extension to Honeywell FM&T, contract DE-NA0002839, for a period of five years, beginning October 1, 2025, on a sole source basis. The notice was published through SAM.Gov on March 27, 2024, for the public, and was active for 15 days as required by FAR 5.203(a). There has been no interest shown by any business in performing this work.

VII. DETERMINATION OF REASONABLENESS OF COST OR PRICE

Due to the nature of the work, a firm price cannot be established. NNSA, 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 NNSA and are controlled through issuance of Approved Funding Programs and Work Authorizations to the contractor. Performance and cost are continually monitored and undergo annual reviews and appraisal evaluations through the budget review and award-fee process. The actual amount of fee earned is subject to the NNSA Corporate Performance Evaluation Process and unilaterally decided by the NNSA Fee Determining Official, assuring a reasonable fee based on actual contractor performance. The budget process and NNSA oversight of performance provide adequate controls to assure that expenditures to support the required levels of authorized activity are fair and reasonable. The DOE Office of Inspector General’s Department-wide implementation of the new Independent Audit Strategy will result in enhanced oversight and will further ensure reasonableness of incurred costs.

VIII. MARKET RESEARCH

As stated in Section VI above, NNSA published a Notice of Intent to award a contract extension on a sole source basis to Honeywell FM&T under Contract No. DE-NA0002839 on March 27, 2024. In the synopsis, interested sources were afforded the opportunity to identify their interest and capability to respond to the requirement. No parties expressed interest.

IX. OTHER FACTS

None.

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X. INTERESTED SOURCES

As stated above in Section VIII, no companies submitted a response to the Notice of Intent expressing interest.

XI. STEPS TO FOSTER COMPETITION

As stated, NNSA is extending the Honeywell FM&T contract to ensure continuity and uninterrupted operations to meet critical non-nuclear production requirements. NNSA will implement steps and take actions designed to increase and enhance competition for the future follow-on contract.

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.

Signature Date

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.

Signature Date

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