[Federal Register Volume 59, Number 192 (Wednesday, October 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24649]
[[Page Unknown]]
[Federal Register: October 5, 1994]
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DEPARTMENT OF ENERGY
Office of Procurement and Assistance Management Award, Renewal,
and Extension of Management and Operating Contracts
AGENCY: Department of Energy
ACTION: Notice of interim policy statement
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SUMMARY: The Department of Energy today publishes an interim
Acquisition Letter for public comment that sets forth new interim
policies regarding the competition and extension of the Department's
management and operating contracts. The policies supersede Department
of Energy Acquisition Regulation Subparts 917.605 and 970.0001, pending
the issuance of a rule. Supporting deviations have been authorized by
the Procurement Executive.
DATES: The effective dates are set forth in the interim Acquisition
Letter. Comments are due on or before November 4, 1994.
ADDRESSES: Comments may be submitted to Richard Langston, Office of
Procurement and Assistance Management (HR-521.1), U.S. Department of
Energy, Washington, D.C. 20585.
FOR FURTHER INFORMATION CONTACT: Richard Langston, Office of
Procurement and Assistance Management (HR-521.1), U.S. Department of
Energy, Washington, D.C. 20585 (202) 586-8247.
SUPPLEMENTARY INFORMATION: The Department of Energy (Department),
through its Contract Reform initiative, has concluded that the
Department's policies and practices regarding the extension of its
management and operating contracts need to be revamped. Existing
policies favor indefinite extensions of incumbent contractors and, in
practice, few competitions for management and operating contracts
historically have been undertaken. Such policies and practices
effectively preclude the introduction of new companies and best
management practices into the Department's laboratory and weapons
production complex.
This new policy establishes competition for performance-based
management contracts (a new form of management and operating contract)
as the norm. Exceptions to competition will be made, on a case by case
basis, only in exceptional circumstances and only when authorized by
the Head of the Agency. The underlying intent of the new policy is to
balance the benefits of a competitive environment with the recognition
that long-term contractual relationships can facilitate superior
performance. Accordingly, the policy permits contract terms of up to
five years with an option to extend the term for an additional five
years for competitively awarded performance-based management contracts.
Contracts awarded on a noncompetitive basis, however, will require
justification and approval by the Head of the Agency prior to any
extension.
In view of the foregoing, the Department has issued the Acquisition
Letter set forth below as an interim policy, the effective dates of
which are set forth below. It is essential that these interim policies
and procedures be effected immediately so that the Department can
initiate procurement actions for those contracts that will expire in
the near term, but were not specifically addressed in the Secretary of
Energy's July 5, 1994 Action Memorandum. A notice of proposed
rulemaking is in the process of being developed.
The Department is seeking public comment on the Acquisition Letter
in order to give the public, including those persons who are affected
by the policies, an opportunity to comment on the interim Letter before
it is finalized.
Issued in Washington, D.C., on September 28, 1994.
Richard H. Hopf,
Deputy Assistant Secretary for Procurement and Assistance Management
Acquisition Letter 94-14
September 28, 1994
Authority
This Acquisition Letter is issued by the Procurement Executive
pursuant to a delegation from the Secretary and under the authority of
the Department of Energy Acquisition Regulation Subpart 901.301-70.
Contents
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Citation Title
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FAR 17.605........ Award, Renewal, and Extension.
DEAR 917.605...... Award, Renewal, and Extension.
DEAR 970.0001..... Renewal of management and operating contracts.
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I. Purpose
The Department of Energy Contract Reform Team Report concluded that
the Department's policies and practices regarding the extension of its
management and operating contracts needed to be revamped. The Contract
Reform Team found that existing policies favored indefinite extensions
of incumbent contractors and that in practice, few competitions for
management and operating contracts were undertaken.
Such policies and practices effectively precluded the introduction
of new companies and best management practices into the Department's
laboratory and weapons production complex. The Report also recognized
the need to balance the benefits of a competitive environment with the
recognition that long contract terms of up to 10 years can facilitate
superior performance.
The purpose of this Acquisition Letter is to establish an interim
policy that favors competition, yet preserves the benefits of long-term
contract relationships. Under this new policy, competition will be the
norm. Exceptions to competition will be made only in exceptional
circumstances and only when authorized by the Head of the Agency.
II. Background
Subpart 17.6 of the Federal Acquisition Regulation prescribes
policies and procedures for award, renewal, and extension of management
and operating contracts.
III. Guidance
This Acquisition Letter is issued to revise and consolidate the
policy and procedures regarding competing or extending performance-
based management contracts, a new form of management and operating
contract. The attached interim procedures supersede all previous
guidance regarding extend or compete decisions. They will be used until
the rulemaking process is completed. A class deviation from Department
of Energy Acquisition Regulation 917.605 and 970.0001 has been
authorized to implement the attached procedures. In addition, a class
deviation to subsection 17.605(b) of the Federal Acquisition Regulation
has been authorized to permit a revision to the timing of the Agency
Head authorization for the renewal and extension of performance-based
management contracts at the five-year point in the performance period
under certain circumstances specified in this Acquisition Letter.
By Action Memorandum dated July 5, 1994, the Secretary of Energy
has made determinations regarding certain management and operating
contracts which will expire in the near term. The Secretary's
determination mandates that certain contracts be competed and that
others be extended to facilitate either competition or the immediate
negotiation of key elements of contract reform into the existing
contracts. Contracts awarded or extended pursuant to that determination
are subject to this Acquisition Letter; however, no further action is
required relating to the extension of those contracts until the time of
the next extend or compete decision. Furthermore, contracts extended
pursuant to the Secretary's determination shall not include an option
to extend the contract for an additional five years.
The term ``performance-based management contract'' denotes the new
form of management and operating contract that will be used by the
Department of Energy for the operation of its Government-owned, or
controlled, laboratories and weapons production facilities. Its use
reflects the Department's policy and intent to convert traditional
management and operating contracts to the new form of contract called
for in the Contract Reform Team Report.
IV. Effective Date
This Acquisition Letter is effective upon the date of issue shown
above.
V. Expiration Date
The Department is seeking public comment on these policies. The
Acquisition Letter will remain in effect on an interim basis until the
Department takes further action after reviewing any public comments on
these policies.
Award, Renewal and Extension of Management and Operating Contracts
I. Policy
(a) It is the policy of the Department of Energy to use full and
open competition in the award of performance-based management
contracts, except in exceptional circumstances where it is determined
that the use of competitive procedures is incompatible with the
effective and efficient discharge of Departmental programs or is
otherwise incompatible with the paramount interest of the United
States, and the Head of the Agency authorizes the use of noncompetitive
procedures to extend the term of an existing contract. Such
authorizations shall be supported by a written justification which
shall be certified by the Head of the Contracting Activity and the
cognizant Assistant Secretary(s).
(b) Performance-based management contracts shall normally be
competed at inception and upon expiration of their contract term as set
forth below.
II. Contract Term and Options to Extend
(a) Effective work performance under performance-based management
contracts is facilitated by the use of relatively long contract terms
of up to 10 years. Accordingly, competitively awarded performance-based
management contracts shall provide for a basic contract term not to
exceed 5 years and may include an option to extend the term for a
period not to exceed 5 years.
(b) Contracts awarded prior to the effective date of this
Acquisition Letter using competitive procedures may be modified to
incorporate an option to extend the term of the contract for a period
not to exceed 5 years where:
(1) the total period of performance, including the continuation,
will not exceed 10 years;
(2) the contractor's past performance under the contract has been
determined to be of high quality; and
(3) the contractor has also agreed to a contract modification
necessary to implement other performance-based management contract
provisions.
(c) Exercise of Options. As part of the review required by FAR
17.605(b), the contracting officer shall assess whether competing the
contract will produce a more advantageous offer than the option. The
incumbent contractor's past performance under the contract, the extent
to which performance-based management contract provisions are present,
or can be negotiated into, the contract, and the impact of a change in
a contractor on the Department's discharge of its programs are
considerations that shall be addressed in the contracting officer's
decision that the exercise of the option is in the Government's best
interest. The contracting officer's decision shall be approved by the
Head of the Contracting Activity and the cognizant Assistant
Secretary(s). In instances where a contract has been modified, pursuant
to paragraph (b) above, to incorporate an option to extend, a
justification for other than full and open competition shall be
prepared and approved in accordance with FAR Part 6 and DOE Order
4200.1C prior to the exercise of the option.
III. Procedures for Noncompetitive Extension
Exceptional circumstances, as defined in I.(a) above, may exist
that warrant the noncompetitive extension of a performance-based
management contract beyond the basic and option periods. In such cases,
a performance-based management contract may be extended for an
additional period not to exceed 5 years when authorized by the Head of
the Agency. Requests for extension shall be subject to the following
procedures:
(a) The Head of the Contracting Activity shall publicize the intent
to recommend a contract extension in the Federal Register and invite
comment thereon.
(b) A recommendation to extend a performance-based management
contract (other than through the exercise of an option to extend) may
be submitted to the Head of the Agency through the Deputy Assistant
Secretary for Procurement and Assistance Management at any time, but no
later than 24 months prior to the expiration of the contract term. The
recommendation shall be supported by:
(1) a justification for other than full and open competition
prepared in accordance with FAR Part 6 and DOE Order 4200.1C, including
a certification by the Head of Contracting Activity and cognizant
program Assistant Secretary(s) that the use of full and open
competition is incompatible with the effective and efficient discharge
of Departmental programs or otherwise incompatible with the paramount
interest of the United States;
(2) a detailed description of the incumbent's performance history
in areas such as program accomplishment, safety, health, environment,
energy conservation, financial and business management and socio-
economic programs, including measurable results against established
performance measures and criteria;
(3) an identification of significant projects or other objectives
planned for assignment under the contract if extended;
(4) an outline of principal issues and/or significant changes to be
negotiated in the terms and conditions of the extended contract;
(5) in the case of a Federally Funded Research and Development
Center, a review of the use and continued need for FFRDC designation in
accordance with FAR 35.0l7-4;
(6) a determination that the performance-based management contract
remains the appropriate form of contract; and
(7) any other information pertinent to the decision.
(c) Conditional Authorization. Authorization to extend by the Head
of the Agency shall be considered conditional upon the successful
negotiation of the contract to be extended in accordance with the
Department's negotiation objectives. The Head of the Contracting
Activity shall advise the approving authority no later than 6 months
after receipt of the conditional authorization as to whether the
Department's objectives will be met and, if not, the contracting
activity's plans for competing the requirement.
(d) Justification. FAR 6.302 identifies statutory authorities for
the use of other than full and open competition. These authorities are
permissive. Nothing in this Acquisition Letter is intended to impair
the availability of these authorities for performance-based management
contracts. However, it is intended that they be applied only when the
use of competitive procedures is incompatible with the effective and
efficient discharge of Departmental programs or is otherwise
incompatible with the paramount interest of the United States .
IV. Renewal of the Performance-based Management Contract Form
All performance-based management contracts shall be periodically
reviewed to determine whether the performance-based management contract
form remains the most appropriate contract form. In the case of
competitively awarded contracts, the request to authorize the continued
use of the performance-based management contract shall be submitted at
least 6 months prior to the anticipated release date of the
solicitation. The Head of the Contracting Activity shall submit a
request to authorize the continued use of the performance-based
management form of contract to the Head of the Agency through the
cognizant Assistant Secretary(s) and the Deputy Assistant Secretary for
Procurement and Assistance Management.
For contracts that will be extended using noncompetitive
procedures, the request to authorize the continued use of the
performance-based management contract shall be submitted as part of the
extension recommendation required by III.(b)(6).
[FR Doc. 94-24649 Filed 10-4-94; 8:45 am]
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