ORNL JOFOC 2025.pdf

Acquisition Plan, Attachment 1

JUSTIFICATION FOR OTHER

THAN FULL AND OPEN COMPETITION (JOFOC) IN ACCORDANCE WITH

41 U.S.C. 3304(a)(3) and FAR Section 6.302-3(a)(2)(ii)

1. Identification of the Agency and the Contracting Activity.

Agency: United States Department of Energy (DOE or Department) Contracting Activity: Office of Science (SC) It is recommended that the Department of Energy (DOE) Office of Science’s (SC) Oak Ridge National Laboratory (ORNL) Site Office (OSO) conduct negotiations with UT-Battelle, LLC (UT-Battelle) for a five-year extension of DOE Prime Contract DE-AC05-00OR22725 for the Management and Operating contract (M&O) for ORNL. This document sets forth the justification for the use of other than full and open competition under the Competition in Contracting Act of 1984, Title VII of Public Law 98-369. The use of this statutory authority is necessary to maintain an essential research capability provided by a nonprofit institution operating a Federally Funded Research and Development Center (FFRDC).

2. Nature and/or description of the action being approved.

This action is for the non-competitive extension of Management and Operating (M&O) contract DE-AC05-00OR22725 with UT-Battelle to operate ORNL for the period of April 1, 2025, through March 31, 2030. An M&O contract is an agreement under which the Department contracts for the operation, management, or support, on its behalf, of a Government-owned or controlled research, development, special production, or testing establishment wholly or principally devoted to one or more major programs of the DOE.

3. A description of the supplies or services required to meet the agency’s needs (including the estimated value).

ORNL is a multi-program, government-owned, contractor-operated national laboratory which develops and maintains diverse and, in some cases, unique research and development (R&D) capabilities.

ORNL conducts R&D missions in the areas of neutron science, energy, high-performance computing, systems biology, materials science, environmental management, and national security. ORNL is actively engaged in a variety of national and international partnerships with industry and educational institutions as a world leader in a range of scientific areas supporting DOE's scientific discovery and innovation, energy, nuclear security, and environmental missions.

Twenty-four of the Department’s twenty-five core capabilities are currently delivered by ORNL for SC. ORNL maintains facilities for scientific research in, as examples, neutron science, nuclear energy research, and high-performance computing.

The current contract value is approximately $38 billion with an annual operating budget approximately $2.5 billion per year. The total value of the five-year extension is estimated at $12-13 billion.

4. Identification of the statutory authority permitting other than full and open competition.

The statutory authority to noncompetitively extend M&O contracts necessary to the performance of DOE’s energy research and development programs is found in the Atomic Energy Act of 1954, as amended, and the Federal Property & Administrative Services Act of 1949, including the amendments thereto by Public Law 98-369; specifically, Section 303(c)(3)(B), codified at 41 U.S.C. 3304(a)(3)(B), which states that an executive agency may use procedures other than competitive procedures when “... it is necessary to award the contract to a particular source or sources in order ... (B) to establish or maintain an essential engineering, research or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center.” Regulatory implementation is 48 C.F.R. 6.302-3 (a)(2)(ii).

5. Demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited.

The recommendation to extend the contract with UT-Battelle, LLC, a non-profit, is based upon the continuing need for the ORNL FFRDC. In support of the Department’s mission, ORNL provides extensive capabilities in world-class research expertise and unique facilities that do not exist elsewhere and are generally beyond the capability of any nongovernmental institution to construct or operate.

To manage the ORNL FFRDC, DOE requires a contractor that possesses exceptional and extensive capabilities in the management and operation of both world-class scientific research and facilities. Through UT-Battelle’s recruitment and retention of its key leadership team and key scientists, industry knowledge, business relationships, and its corporate history of designing, constructing and operating ORNL, UT-Battelle possesses the necessary resources to provide the required capabilities to support DOE’s mission objectives. There is a continuing need to retain the key management and leadership capabilities that have previously been demonstrated by UT- Battelle. ORNL’s capacity and aptitude to provide science solutions to the nation requires both a strategic vision and prudent stewardship of the laboratory’s world-class user facilities, infrastructure, and outstanding researchers.

SC performed a robust analysis of the contractor's performance to assess whether DOE's requirements and expectations were successfully achieved, and to project whether meaningful improvement in performance or cost might reasonably be achieved as a result of contract competition. Considering the overall exceptional performance of UT-Battelle in science and technology, management and operations, and in managing costs, it is highly unlikely that significant improvements in performance would be achieved by a new contractor during the proposed five-year extension. DOE has no expectation of meaningful improvement in technical or cost performance as a result of competition at this time.

6. A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether a notice was or will be publicized as required by Federal Acquisition Regulation (FAR) Subpart 5.2 and, if not, which exception under FAR Section 5.202 applies.

Based on the facts contained in this justification, offers have not been solicited from other sources. FAR Subpart 5.202(a)(10) provides that the Contracting Officer need not submit the proposed contract action as required by FAR 5.201, when the Contracting Officer determines that the contract action is made under conditions as described in FAR 6.302-3. This justification will be made publicly available pursuant to FAR Section 6.305.

7. A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

An M&O contract establishes a close-working relationship between DOE and the M&O contractor. The type of work conducted at ORNL is not conducive to establishing a fixed price contract. The DOE, 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 DOE and are controlled through issuance of approved funding programs to the contractor. The Department continually monitors the contractor’s performance and costs. Annual scientific, business, Environment, Safety and Health, and Safeguards and Security reviews, appraisals, and performance-based evaluations are conducted in accordance with contractual requirements and annually developed Performance Evaluation and Measurement Plans under the established performance-based contract. The DOE budget process and the performance-based contract provides the necessary controls to ensure that expenditures (costs) to support required levels of authorized activity are fair and reasonable and that contractor performance remains at an acceptable level in all areas. In addition, negotiated performance fees are established using DOE guidelines which ensure such fees are well below those offered for National Nuclear Security Administration laboratories or DOE Environmental Management contracts.

The Contractor’s financial management system is an integrated accounting system that is linked to DOE’s accounts through the use of reciprocal accounts. The Contractor is also required to conduct an annual internal audit and examination satisfactory to DOE of the records, operations, expenses, and the transactions with respect to costs claimed to be allowable under this contract.

The contractor is also subject to the Department’s Independent Audit strategy and will be subject to annual Incurred Cost audits under that strategy. The cognizant DOE Contracting Officer has final approval of allowable costs under the contract.

The Department’s review of UT-Battelle’s performance and cost of work at the Laboratory, along with UT-Battelle’s comprehensive and expeditious actions to correct and/or mitigate identified issues, indicates that it is unlikely that the Government’s position would be meaningfully improved in terms of cost or performance by seeking competition for the five-year extension period.

Based on the discussion above, the Contracting Officer has determined that the anticipated cost to the Government will be fair and reasonable.

8. A description of the market research conducted and the results or a statement of the reason market research was not conducted.

Formal, active market research has not been conducted for the planned five-year extension period. In FY 1999, DOE issued a competitive solicitation for the management and operation of the ORNL, and the contract was awarded to a team comprised of Battelle Memorial Institute and the University of Tennessee. Two proposals were submitted in response to this solicitation, one of which included the incumbent. Circumstances for competing the ORNL M&O contract were significantly different in the late 1990's. At present, SC considers it unlikely that a competition would result in improved performance.

Recent competitive trends indicate that the research and development business of SC national laboratories is a more specialized area for contractors to pursue than other government research and development contracts which have more competitive sources and higher performance risk.

Accordingly, SC’s position is that further market research, specific to ORNL, is unnecessary.

9. Any other facts supporting the use of other than full and open competition.

As set forth in FAR 17.605, the decision whether to replace an M&O contract is based on an expectation of meaningful improvement in technical or cost performance, and includes consideration of the incumbent’s performance, the potential impact of a change in contractors or program needs, and whether it is likely that qualified offerors would compete for the contract.

The incumbent contractor's overall performance is such that the situation meets the FAR criteria for an extension of the current contract. SC does not anticipate an improvement in performance or cost as a result of competition, nor does SC expect that more than one offeror would compete for the contract.

Consistent with statute, regulation, and DOE policy, SC conducted a disciplined process to determine the relevant near-term acquisition options for the mission needs met by the management and operation of ORNL. The Secretary’s August 30, 2024, approval to extend the contract is contingent on SC’s ability to achieve its acquisition objectives related to appropriate costs and fee, an updated performance work statement and contract terms, retention of contractor resources, and other objectives. This contingent approval, in accordance with DEAR 970.1706-1, puts the Department in the best possible position to negotiate a contract action that is fair and reasonable to all parties and facilitates mission accomplishment.

10. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition.

No sources have expressed written interest in the acquisition. Business information clearinghouses have requested source selection information to provide on a client subscription basis, but these contacts are not considered to originate from responsible sources.

11. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required.

Since 2005, DOE has conducted competitions for the management and operation of seven Office of Science National Laboratories–LBNL, TJNAF (twice), FNAL (twice), Ames, PPPL and BNL. SC continues to make efforts to encourage competition. DOE’s efforts to solicit competition included: 1) issuing draft solicitations; 2) holding comment workshops, one-on-one meetings, and pre-proposal conferences; and 3) maintaining websites to provide information to interested parties. There appears to be a trend that indicates the research and development business of the Office of Science National Laboratories is a more specialized area for contractors to pursue than that of other government contracts, which have more competitive sources that are much more motivated by significantly higher fees available under laboratory contracts.

Nonetheless, the Department will continue to evaluate future acquisitions in this area with a preference for full and open competition, while recognizing that the statutory and regulatory authority to noncompetitively extend an M&O contract may be justified on a case-by-case basis.

Before the end of this five-year extension, SC will conduct another analysis to determine the possibility of competition.