US DOE Procurements and Contractor Delivery Challenges
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1 US DOE Procurements and Contractor Delivery Challenges J. E. Surash, P.E. Deputy Assistant Secretary for Acquisition and Project Management Office of Environmental Management March 9,
2 Emerging policy implementation Ensure contracts align with taxpayer interests and structure contracts so contractors bear responsibility - Hold contractors accountable for overruns due to negligence - Share savings due to better-than-promised performance Improve upfront planning and requirements definitions - Ensure sufficient design and technical readiness before beginning construction activities Consider Firm-Fixed-Price (FFP) contracts first - Identify work that can be awarded FFP in new procurements and when exercising options on current contracts - Negotiate cost caps or ceilings on existing contracts Use objective performance based incentives for non-ffp contracts Use provisional fee, hard cost caps, or cost share approaches to ensure parties bear responsibility for their actions Document performance to hold contractors accountable; hire contractors who provide good performance 2
3 Hanford 222-S Lab Services Scope of Work Provide analytical services and testing of various samples Majority of samples come from the Tank Farms; samples may be liquid or sludge, salt cake or a mixture Support also includes industrial hygiene and ground water monitoring This is a fixed priced, small business set-aside procurement with limited cost-reimbursable portion 4 proposals received Value at Award $44.6 million Request for Proposals Award June 4, 2014 May 28,
4 Paducah Infrastructure Scope of Work Infrastructure support services in support of the Paducah Site Services include, but are not limited to, Computer and Telecommunication Services, Security, Maintenance of Grounds, Roads, and Parking Lots including snow removal, Training Services, Environmental, Safety, Health, and Quality Program, Facility Maintenance, Property Management, Janitorial Services, Records Management, and Mail Services Small Business set-aside, fixed price with IDIQ 5 proposals received Value at Award $177.2 million Request for Proposals Award October 6, 2014 June 17,
5 Scope of Work Manages and operates the TWPC Category II nuclear facility in support of processing Remote- Handled and Contact-Handled Transuranic waste Provides support to Central Characterization Project for final certification and disposition to the Waste Isolation Pilot Plant Performs facility surveillance and maintenance activities Small Business set-aside, Fixed price with one CPAF CLIN 7 proposals received Value at Award $123.9 million Transuranic Waste Processing Center (TWPC) Oak Ridge Request for Proposals Award October 14, 2014 June 18,
6 Scope of Work Management and operation of the Fort Saint Vrain (FSV) Independent Spent Fuel Storage Installation (ISFSI) facility in Colorado (including security) Management, operation and oversight of the Three Mile Island-2 (TMI-2) ISFSI facility at the Idaho Nuclear Technology and Engineering Center (INTEC) in Idaho Management of the Idaho Spent Fuel Facility (ISFF) license. Small Business set-aside 6 proposals received Value at Award $31.6 million Request for Proposals Idaho NRC Licensed Facilities Management Cleanup Award March 31, 2015 October 21,
7 Carlsbad Technical Assistance Contract Scope of Work Provides quality assurance (QA) audit and surveillance Support services for technical oversight, business operations, and executive management Areas of Support: WIPP site operations; safety and security; environmental and regulatory compliance; Transuranic (TRU) waste characterization, certification; transportation and packaging; business operations; and information technology Small Business Set-aside 6 proposals received Value at Award $42.4 million Request for Proposals Award Apr 1, 2015 November 12,
8 Portsmouth Infrastructure Scope of Work Infrastructure support services in support of the Portsmouth Site. Services include, but are not limited to, Computer and Telecommunication Services, Security, Maintenance of Grounds, Roads, and Parking Lots including snow removal, Training Services, Environmental, Safety, Health, and Quality Program, Facility Maintenance, Property Management, Janitorial Services, Records Management, and Mail Services. Small Business set-aside, fixed price procurement 7 proposals received Value at Award $122.8 million Request for Proposals Award December 9, 2014 January 15,
9 Headquarters Information Technology Scope of Work Provides assistance to IT management issues Supports audits and management reviews Provides technical and administrative support for IT Capital Planning, IT Strategic Planning and Architecture, IT Missions Systems Support and IT Cyber Security Small Business set-aside Estimated Value $50-$100 million Request for Proposals Receipt of Industry Proposals Award December 10, 2015 February 2, /
10 Scope of Work Provide S&M for the conversion facilities Operate the conversion facilities to convert the DUF6 from the inventory at Paducah/Portsmouth to uranium oxide Reuse, store, transport and dispose of the DUF6 conversion process end-products Sell the aqueous hydrofluoric acid (AqHF) product; and, provide S&M services for the cylinder storage yards Estimated Value $400-$600 million PPPO Gaseous Diffusion DUF6 Conversion Facilities Request for Proposals Receipt of Industry Proposals Award September 8, 2015 November 24, 2015 May-Jul
11 Savannah River Liquid Waste Scope of Work Liquid Waste Stabilization and Disposition: Base Operations of Facilities Liquid waste storage tanks, evaporators, transfer lines, and associated equipment/facilities Waste Removal from Tanks and Tank Closures, Construction of additional Saltstone Disposal Units, Operation of the Salt Waste Processing Facility after facility commissioning, startup, and one year of initial operation Estimated Value $1-$3 billion Request for Proposals Receipt of Industry Proposals Award May-Jul 2016 Jun-Aug 2016 Jan-Mar
12 Scope of Work Processing all of the CH-TRU in the surface facility and potential waste treatment in accordance with appropriate treatment permits Shipment of TRU to permitted disposal locations Protection of groundwater resources and surface water quality from legacy contaminant migration through compliance monitoring and sampling programs Los Alamos Legacy Cleanup Contract Estimated Value $600 million - $1 billion Request for Proposals Receipt of Industry Proposals Award Jun-Aug 2016 Jul-Sep 2016 Apr-Jun
13 Scope of Work Completion of the existing C-400 TCE groundwater source remediation Completion of the Bioremediation for Southwest Plume Sources Removal of all deposits, hold-up, and equipment necessary to achieve criticality incredible and disposal cell waste acceptance criteria for uranium isotopes in the C-337 Uranium Enrichment Building Estimated Value $600 million - $1 billion Paducah Gaseous Diffusion Plant Deactivation & Remediation Request for Proposals Receipt of Industry Proposals Award Jun-Aug 2016 Aug-Oct 2016 Feb-Apr
14 Richland Follow-on Procurements Scope of Work Base operations needed to support Hanford cleanup Groundwater base operations K Basin sludge transfer Provide critical site infrastructure Complete capsule transfer from the Waste Encapsulation and Storage Facility to dry storage Retrieve & enable shipping of transuranic waste to WIPP Expand groundwater & vadose zone cleanup & reduce key long-term threats Complete remaining River Corridor cleanup Treat K Basin sludge Continue Cleanup of the Central Plateau Estimated Value $10-$12 billion Request for Proposals Receipt of Industry Proposals Award TBD TBD TBD 14
15 Scope of Work Office of River Protection Tank Operations Contract Base Operations Maintain and operate nuclear/radiological facilities: 242-A Evaporator facilities Effluent Treatment Facility and support facilities 222-S Laboratory complex & effluent return Double-shell tanks space management Tank Integrity Program Vapor Implementation Plan Phase 2 Maintain One System integrated management strategy for WTP/TF Potential technology improvements Tank Retrieval and Closure Construction Projects Design, Permit, construct, commission and/or operate - Low Activity Waste Pretreatment Facility - Tank Waste characterization Facility - Facilities to support direct feed high-level waste, if approved by DOE - Immobilized high-level waste storage facility - Potential new capital improvements, & Miscellaneous support facilities for TF/WTP Estimated Value $13 $17 billion Request for Proposals Receipt of Industry Proposals Award TBD TBD TBD 15
16 Contract Management Project Management Two Sides of the Same Coin Andrew Wirkkala Director Office of Contract Assistance 16
17 Contract Management Project Management Team Effort Major EM Contract Success Requires a Team DOE and the contractors are a Team The goal is successful safe site cleanup We depend on each other to achieve the goal If we work together we can get the job done Establish Partnering Finalize Partnering Framework during transition After initial partnering session, finalize partnering agreement Refer to California Transportation Partnering website for an effective partnering program 17
18 Contract Management Project Management Good Start Taking certain actions during the Transition Period are key in getting a good start on the contract Integration of day-to-day CM and PM functions is vital to achievement of EM mission success The succeeding slides present a brief scenario to illustrate the respective CM and PM roles and their critical interdependence 18
19 Contract Management Project Management Contract Award Major Site Cleanup Contracts are Competitively Awarded Total contract durations range from 5 to 10 years Multi-year cost-type (not budget-based) contracts with award and incentive fees Defined work scope based on projected completion status of incumbent at projected award date as defined in the RFP Contract provision may require True-up assess material differences between projected and actual work status at time of transition to new contractor SCENARIO: Competitive contract - awarded at winning offeror s proposed price of $1.42B cost and fee (incentive/fixed fee) 19
20 Contract Management Project Management Transition Period Communicate the Contract At the appropriate time after contractor debriefs, it is critical for all parties to know the contractor s team and technical approach Parties will only know the current approach to the work and not what the awarded contractor proposed Need to get the word out to federal staff, incumbent workforce, regulators, community, etc The Federal Project Director and the Integrated Project Team need to have copies of the contractor s technical and cost proposal, with business sensitive information appropriately handled Contractor should have a series of meetings with the workforce, regulators and community to introduce team and brief on approach 20
21 Contract Management Project Management Transition Period Contract Changes - General Unilateral Modification For work which needs to start immediately Contracting Officer (CO) issues signed SF-30 with: o The scope red-line of affected contract sections o A not-to-exceed cost and time limit o Definitization Schedule (6-step Contract Change Process) Bilateral Modification For work to be started only after modification is finalized CO issues Change Proposal Request: o The scope red-line of affected contract sections Prepare for Contract True-Up o A date to submit a cost proposal 21
22 Contract Management Project Management Transition Period WBS Realignment Modification Step #1: If the contract s defined scope specifies a WBS, and the WBS differs, then the first contract modification permits the contractor to realign WBS Should only be done for a compelling rationale There is no change to contract scope, cost, or schedule Will be done for the full contract period The integrity of the proposed cost needs to be maintained as well as the individual scope risks The WBS revision must be completed to establish the revised basis for the contract costs and prior to the True-up Mod SCENARIO: Contract price remains at $1.42B (cost + fee) 22
23 Contract Management Project Management Transition Period Contract True-up Modification Step #2: Contract True-up reconciles contract scope to actual progress made by incumbent Quantity changes/revisions within general scope of contract as awarded Definitizes plugged costs for the initial contract period Cost, schedule, and scope can change modestly Modification issued per contract True-up and Changes clauses Contractor prepares proposal (See FAR 15 Table 15-2) for only the changes and map to level of detail in the RFP cost proposal by WBS Contractor can request revisions if material differences are determined in a timely manner and provided to CO SCENARIO: Modification increases contract price to $1.45B (cost + fee) 23
24 Contract Management Project Management Transition Period Work Scope Modification Step #3: Reconciles contract scope and conditions with changes since final RFP was issued Issues were not sufficient to trigger an RFP amendment prior to making award Example issues: labor rate revisions, environmental regulatory milestone changes, adjusted pension payments, funding profile, etc. Contractor prepares proposal for only the changes Modification issued per authority of contract Changes clause SCENARIO: Modification increases contract price to $1.5B (cost + fee) 24
25 Contract Management Project Management Transition Period Interim Baseline Defines/applies to work scope to be performed for first months (includes the first full fiscal year) Incorporates impact of contract modifications due to: WBS Realignment, Contract True-up and/or Contract Work-scope Permits timely preparation by the contractor of the initial PMB Permits the contractor s EVMS to be validated based on three months of performance using the initial PMB Can probably utilize the baseline submitted as part of the proposal responding to the RFP SCENARIO: Contract unaffected by this Project Management event 25
26 Contract Management Project Management Post -Transition Period Contract Baseline Defines/applies to work scope for the entire contract Expect CPB for chunks of work scope at a minimum for each CLIN, more is better. Definitizes any changes which were addressed for the initial contract period Definitizes plugged costs, plus new work Executed within 12 months from the end of the transition period to maintain the validity of the cost and pricing from RFP proposals Contractor prepares proposal for only the changes Modification issued per authority of contract Changes clause SCENARIO: Contract cost, fee, schedule, and project baseline elements revised in accordance with negotiated contract and changes 26
27 Contract Management Project Management Post -Transition Period Contract Baseline No change to overall contract scope, cost, schedule Contractor establishes Management Reserve (MR) MR a company policy/practice MR should be supported by analysis of contractor owned risks MR is managed by contractor (tracked from their EVMS) DOE will assess MR utilization & adequacy Contract Budget Base (CBB) + fee = contract price Contract Cost Fee Contract Cost = CBB=PMB+MR Contract Price SCENARIO: Contract unaffected by this Project Management event 27
28 Contract Management Project Management Project Contract and Project Baselines Overrun (Under-run) Final Contract Price Initial Contract Price Contract Cost DOE Directed Changes Fee Contract Cost Performance Baseline (PB) Contract Budget Base (CBB) DOE Contingency Fee MR PMB 28
29 Contract Management Project Management Transition Period Performance Management and Reporting H Clause INTEGRATED WORK CONTROL SYSTEMS AND REPORTING REQUIREMENTS requires the contractor put in place a Performance Measurement System Must meet requirements of the FAR clauses that require the contractor to track performance, price and schedule Use EVMS or an alternate system with metrics and milestones per the contract requirements For work that does not use EVMS a Contract Work Plan (CWP) is required to provides an integrated system of work management elements (e.g., cost, metrics, milestones aligned with WBS). 29
30 Contract Management Project Management Post -Transition Period Performance Management and Reporting Contractor s Work Plan/Baseline must remain aligned with the contract through integrated change control Monthly Progress Report to CO with copy to HQ Office of Project Assessment (EM-53) Collect and organize performance data so that the data can be used for subsequent procurements of a similar nature as well as to assist the Cost Estimating Team in the preparation of higher quality Independent Government Cost Estimates. SCENARIO: Contract unaffected by this Project Management event 30
31 Contract Management Project Management Best Practices Contract Administration Conduct post contract award training with federal staff to reaffirm differences in managing FP and CR contracts. Conduct a post-award contract orientation meeting with contractor to ensure all parties understand contract requirements and roles and responsibilities. To the extent possible, avoid change conditions, scope creep, or providing too much direction to the contractor as such may result in REAs. Careful review of contractor invoices to ensure proper cost allocation. 31
32 Helpful Websites Fees Earned by EM Major Contractors: Listing of EM Major Contracts: DOE Acquisition Forecast: EMCBC Major Procurements Website: EM Public Website:
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