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February 27, 2017 By AMK

Energy Dept. updates its acquisition guide for management and operating contracts

The U.S. Dept. of Energy (DOE) has updated its guidance for the administration of management and operating (M&O) contracts.

M&O contracts are unique to DOE and central to the department’s business model.  The term was first adopted in 1983 by the Secretary of Energy.  In actuality, M&O contracts predate the formal adoption of the term by more than thirty-five years, dating to contracts awarded by the Army Corps of Engineers during World War II as well as other contracts awarded by the Atomic Energy Commission (AEC).

M&O contracts are often referred to as on-site contracts, operating contracts, major cost-type contracts, or other comparable terms.

Over the years, the Government Accountability Office (GAO) has criticized DOE for its management of M&O contracts, in particular for not holding the M&O contractors accountable for their performance. As a result, DOE previously published an accountability rule intended to hold contractors liable for negligent acts under the contract.  DOE undertook a “contract reform” initiative in 1994 (entitled “Making Contracting Work Better and Cost Less”) to improve its management of M&O contracts.  That initiative included nearly 50 reforms including: 1) using performance-based contracts, 2) increasing competition for contracts, 3) improving management and cost controls, and 4) making performance-based criteria and other incentives part of DOE contracts.

FAR 17.601 defines an M&O contract as “an agreement under which the Government contracts for the operation, maintenance, 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 contracting Federal agency.”

FAR 17.604 provides a list of basic criteria to be used in identifying a requirement that is appropriate for use of the M&O form of contract. Among the criteria are the use of Government-owned or -controlled facilities and the necessity of a special, close relationship with the contractor and the contractor’s personnel in important functions.  Examples of this includes factors such as safety, security, cost control, site conditions, the performance of the contract is substantially separate from the contractor’s other business, the work is closely related to the agency’s mission and is of a long-term or continuing nature, and for special protection covering the orderly transition of personnel and work in the event of a change in contractors.

FAR 17.603 places certain limitations on the types of functions M&O contractor personnel may perform, e.g., the employees may not supervise or control Government personnel or determine basic Government policies.

Subsequent to 1994 acquisition reforms, DOE undertook a detailed review of the then existing M&O contracts to determine if the requirements remained appropriate for use of the M&O form of contract. The result of that review was that the M&O list was reduced from approximately 52 contracts to 29.  Among those contracts dropped from the M&O list were many tracing their histories to early in the AEC’s operations.

In the guidance issued February 2017, an evaluation of the history of DOE’s M&O contracts resulted in the identification of the following  indicators for their use:

  • Generally, the contractor assumes multi-program scientific and technical responsibilities and work under a broad statement of work.
  • The requirement is continuing with no foreseeable end.
  • The contractor is responsible for integration of scientific and technical and infrastructure functions.
  • The contractor performs the substantial portion of scientific and technical responsibilities with its own workforce.
  • The contractor’s workforce is large, remaining at the site despite change of contractors. This results in the need for DOE to assume stewardship of employee relations and workplace labor conditions.
  • DOE oversees security, health, and safety at the site.
  • Work takes place at very large, Government-owned reservations and facilities.
  • DOE requires the successful offeror to form a corporate entity specifically for and dedicated to the performance of the DOE M&O contract. The contractor may accept work only directly from DOE or as allowed specifically under the M&O contract.
  • The contractor must link its accounting system with the Department’s, and integrate its budget process with the Department’s; usually the budgets for M&O contracts are line items in the Department’s budget.

DOE’s updated guidance includes this historically-fascinating description of the origin of M&O contracting:

What today are known as DOE’s Management and Operating contracts began during World War II. The Manhattan Engineer District was the governmental entity responsible for the design, development, and production of the first atomic bombs, an undertaking, to that time, without precedent. This massive effort achieved its challenging objective on a schedule that was almost unimaginable. Over a two year period the theoretical science was advanced, the technology necessary to produce the necessary components was developed and applied, and some of the most complex and largest manufacturing facilities the world had known were designed, constructed, and brought into full operation in remote, and previously undeveloped, locales within the United States. The successful completion of the Manhattan Project resulted from the Government’s substantial reliance upon private industry and educational and other nonprofit institutions for the critical scientific and business expertise.

In 1946, following on the success of the Manhattan Project, Congress created the Atomic Energy Commission to design and produce nuclear weapons, to develop nuclear energy as a source of electricity, and to research the use of nuclear energy in medicine. The legislative history of the Atomic Energy Act of 1946 indicates the basic principle that underlies M&O contracts was that the AEC, a predecessor of DOE, was to employ highly capable companies and educational institutions to carry out the actual performance of the agency’s mission; that is, these contractors were to perform the agency’s mission as opposed to the agency’s using civil servants. “Wherever possible, the committee endeavors to reconcile Government monopoly of the production of fissionable material with our traditional free-enterprise system. Thus, the bill permits management contracts for the operation of Government-owned plants so as to gain the full advantage of the skill and experience of American industry.”

Thus — based on the Corps of Engineers role as project manager, reliance on scientists from academia, and the engineering and construction skills of industry — the Manhattan Engineer District successfully concluded the production of atomic bombs, and Congress decided to carry that scientific, technical, and business model forward into the AEC and today’s DOE.

View the DOE’s updated guidance on M&O contract administration at: https://energy.gov/sites/prod/files/2017/02/f34/Acq%20Guide%2017-602%20Origin%20Characteristics%20and%20Significance%20of%20DOE%20Management%20and%20Operating%20Contracts%20Feb%202017.pdf

Filed Under: Government Contracting News Tagged With: AEC, Atomic Energy Commission, contractor performance, cost, cost-type contract, DOE, Energy Dept., M&O, major cost-type contracts, management and operating contracts, Manhattan Project, on-site contracts, operating contracts, performance, performance based acquisition, performance-based contracts

January 9, 2017 By AMK

Bonneville Power Administration faulted for lax oversight of contractors

The Energy Department’s Bonneville Power Administration, which employs more contractors than federal workers out of its Portland, Ore., headquarters, has fallen short in monitoring the outsourcing of tasks that may be inherently governmental, a watchdog found.

FINAL_Updated BPA Logo 2015 - BW--color & text.epsIn a Dec. 29 audit, acting Energy Department inspector general Rickey Hass—responding to a 2015 hotline complaint—said Bonneville’s administration of 1,921 active service contracts worth $2.6 billion in some cases “created prohibited personal services contracts by establishing improper employer/employee relationships with supplemental labor workers.”

Only one of several allegations in the hotline complaint was substantiated in the audit of a judgmental sample of 20 of the 3,117 contract workers. But “the issues we identified occurred, in part, because of problems with the manner in which Bonneville managed and implemented its supplemental labor category of contract workers, lack of a strategic workforce plan, insufficient management and oversight of its contractor workforce, and an inadequate procurement control environment,” the IG wrote.

Keep reading this article at: http://www.govexec.com/contracting/2017/01/bonneville-power-administration-faulted-lax-oversight-contractors/134342/

Filed Under: Government Contracting News Tagged With: Bonneville Power Administration, contract administration, contracting-out, DOE, Energy Dept., hotline, IG, outsourcing

December 2, 2016 By AMK

Energy Dept. contractors agree to pay $125 million to settle false claims charges

The Department of Justice (DOJ) has announced a settlement in the amount of $125 million to resolve allegations against four contractors under the False Claims Act.

energy-deptBechtel National Inc., Bechtel Corp., URS Corp. (predecessor in interest to AECOM Global II LLC) and URS Energy and Construction Inc. (now known as AECOM Energy and Construction Inc.) were charged with making false statements and claims to the Department of Energy (DOE).   Specifically, the contractors were cited for supplying deficient nuclear quality materials, services, and testing at the Waste Treatment Plant (WTP) at DOE’s Hanford Site near Richland, Washington.

The settlement also resolves allegations that Bechtel National Inc. and Bechtel Corp. improperly used federal contract funds to pay for a comprehensive, multi-year lobbying campaign of Congress and other federal officials for continued funding at the WTP.

“The money allocated by Congress for the Waste Treatment Plant is intended to fund the Department of Energy’s important mission to clean up the contaminated Hanford nuclear site, and this mission is undermined if funds are wasted on goods or services that are not nuclear compliant or to further lobbying activities,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “This settlement demonstrates that the Justice Department will work to ensure that public funds are used for the important purposes for which they are intended.”

Between 2002 and 2016, DOE paid billions of dollars to the cited contractors to design and build the WTP, which is to be used to treat dangerous radioactive wastes that are currently stored at DOE’s Hanford Site.  The contract required materials, testing and services to meet certain nuclear quality standards.  The DOJ alleged that the defendants violated the False Claims Act by charging the government the cost of complying with these standards when they failed to do so.

  • In particular, it was alleged that the defendants improperly billed the government for materials and services from vendors that did not meet quality control requirements, for piping and waste vessels that did not meet quality standards and for testing from vendors who did not have compliant quality programs.
  • In addition, Bechtel National Inc. and Bechtel Corp. were charged with improperly claiming and receiving government funding for lobbying activities in violation of the Byrd Amendment, and applicable contractual and regulatory requirements, all of which prohibit the use of federal funds for lobbying activities.

Justice Dept. sealThe allegations resolved by the settlement were initially brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act by three individuals — Gary Brunson, Donna Busche, and Walter Tamosaitis — who worked on the WTP project.  The False Claims Act permits private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery.  The Act also permits the government to intervene in such a lawsuit, as it did in part in this case.  The whistleblowers’ reward has not yet been determined.

This matter was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Eastern District of Washington, the DOE Office of the Inspector General and the FBI.

The claims asserted against defendants are allegations only, and there has been no determination of liability.  The case is United States ex rel. Brunson, Busche, and Tamosaitis v. Bechtel National, Inc., Bechtel Corp., URS Corp., and URS Energy & Construction, Inc., Case No. 2:13-cv-05013-EFS (E.D. Wash.).

Source: https://www.justice.gov/opa/pr/united-states-settles-lawsuit-against-energy-department-contractors-knowingly-mischarging

Filed Under: Government Contracting News Tagged With: abuse, DOE, DOJ, Energy Dept., false claims, False Claims Act, FBI. fraud, IG, Justice Dept., lobbying, overbilling, qui tam, whistleblower, WTP

October 21, 2016 By AMK

Program management bill aims to boost acquisition efficiency

Congress is close to passing a bill that, for the first time, would institute a dedicated career path for federal contract program managers.

increasing-efficiencyThe House passage last week of the Program Management Improvement Accountability Act, S. 1550, was a step long awaited by advocates of acquisition efficiency within the government.

The bill would help to streamline the federal acquisition process, and by doing so would be of real benefit to agencies and government contractors alike by saving them time and money, proponents said.

“It’s time for government to make program management a real emphasis,” Robert Burton, a partner in Crowell & Moring’s government contracts group and a former deputy administrator of the Office of Federal Procurement Policy (OFPP), told Bloomberg BNA. “I view this as significant acquisition reform.”

Keep reading this article at: http://www.bna.com/program-management-bill-n57982078670/

Filed Under: Government Contracting News Tagged With: acquisition reform, DAWIA, DoD, efficiency, Energy Dept., FAC-C, innovation, NASA, OFPP, OMB, procurement reform, program management

May 26, 2016 By AMK

U.S. Energy Secretary’s visit highlights Georgia Tech’s energy collaborations

During U.S. Department of Energy (DOE) Secretary Dr. Ernest Moniz visit to the Georgia Institute of Technology, he delivered the keynote address for the second installment of the Quadrennial Energy Review.
Georgia Tech President G.P. "Bud" Peterson, left, and Executive Vice President for Research Steve Cross, right, host U.S. Secretary of Energy Ernest Moniz at Georgia Tech's Enterprise Innovation Institute on May 24, 2016.
Georgia Tech President G.P. “Bud” Peterson, left, and Executive Vice President for Research Steve Cross, right, host U.S. Secretary of Energy Ernest Moniz at Georgia Tech’s Enterprise Innovation Institute on May 24, 2016.

Moniz also toured the Southern Company’s Energy Innovation Center at Georgia Tech’s Enterprise Innovation Institute in Atlanta’s Tech Square and the Carbon Neutral Energy Solutions Laboratory on the Georgia Tech campus.

In his opening address, Moniz said Georgia Tech has the opportunity to play a key role as a center of innovation in developing regional energy solutions. He described a new DOE initiative to establish regional innovation partnerships.

Moniz said different regions have different needs, opportunities and resources, including natural, human and institutional resources. He added that Georgia Tech could serve as an institutional resource for the Southeast.

“We think that is good policy because those portfolios will take on different characters in different parts of the country,” he said.  

The Carbon Neutral Energy Solutions (CNES) Laboratory is designed to foster industry collaboration and support translational and pre-commercial research in clean, low carbon energy technologies. Research spans all aspects of the energy cycle from production and generation to distribution and use, and is focused on addressing the most pressing energy and environmental challenges. Core research conducted within the lab includes solar technologies, combustion, gasification, catalysis and bio-catalysis, as well as carbon capture and sequestration.

During a tour of the Carbon Neutral Energy Solutions Laboratory, U.S. Secretary of Energy Ernest Moniz receives a demonstration of a new design for a compact heat exchanger for supercritical carbon dioxide power cycle funded by the Department of Energy's Nuclear Energy University Program. Developer of the technology, Devesh Ranjan, associate professor of fluid mechanics in the School of Mechanical Engineering, explains the heat exchanger as Tim Lieuwen, Executive Director of the Strategic Energy Institute at Georgia Tech, looks on.
During a tour of the Carbon Neutral Energy Solutions Laboratory, U.S. Secretary of Energy Ernest Moniz receives a demonstration of a new design for a compact heat exchanger for supercritical carbon dioxide power cycle funded by the Department of Energy’s Nuclear Energy University Program. Developer of the technology, Devesh Ranjan, associate professor of fluid mechanics in the School of Mechanical Engineering, explains the heat exchanger as Tim Lieuwen, Executive Director of the Strategic Energy Institute at Georgia Tech, looks on.

“We’re honored to have Secretary Moniz back on the Georgia Tech campus, and it was especially meaningful to have him see one of our showcase facilities,” said Tim Lieuwen, executive director of the Georgia Tech Strategic Energy Institute. “We have a strong, mutually beneficial relationship with the Department of Energy as we work together to find clean, reliable, affordable and sustainable sources of energy.”

Lieuwen hosted the secretary for a tour of the CNES Lab, which has LEED Platinum status and was funded in part by Recovery Act funding through the National Institute of Standards and Technology (NIST.)

The Strategic Energy Institute at Georgia Tech was established to serve as a conduit for integrating, facilitating, and enabling Institute-wide programs in energy research and development.

Moniz also spent time with Georgia Tech partner, the Southern Company. Southern Company has worked with Georgia Tech’s Strategic Energy Institute on a number of research initiatives, including a promising 2005-2007 study on wind. DOE is a longtime supporter of and partner in Southern Company’s efforts to invent America’s energy future through robust, proprietary research and development (R&D).

Through the Energy Innovation Center, Southern Company is extending its R&D commitment by identifying better, more reliable and more efficient ways to increase value for customers through products and services. Many of the ideas being tested in the center come from the Southern Company system’s more than 26,000 employees, while others are surfaced through partnerships with leading universities, research organizations and like-minded companies such as Nest and Tesla.

Michael Britt, left, Vice President of Southern Company's Energy Innovation Center, demonstrates new technology being developed to U.S. Secretary of Energy Ernest Moniz.
Michael Britt, left, Vice President of Southern Company’s Energy Innovation Center, demonstrates new technology being developed to U.S. Secretary of Energy Ernest Moniz.

“Southern Company’s decades-long partnership with the U.S. Department of Energy has produced cutting-edge technologies that are reshaping electricity generation in America,” said Southern Company Energy Innovation Center Vice President Michael E. Britt. “Through the Energy Innovation Center at Tech Square and our partnership with Georgia Tech, Southern Company is expanding on its longstanding commitment to finding real energy solutions in coordination with like-minded leaders in R&D – from established corporations to fast-growing startups.”

In addition to the work taking place at the Energy Innovation Center, Southern Company operates DOE’s National Carbon Capture Center in Alabama and has received DOE support for the development of the world’s most advanced coal plant in Mississippi and two of the first new carbon-free nuclear units in a generation of Americans in Georgia.

Moniz also took the opportunity during his remarks to recognize leaders at Georgia Tech such as former U.S. Sen. Sam Nunn, namesake and distinguished professor in Georgia Tech’s Nunn School of International Affairs, and Provost Rafael Bras for their roles in advising federal energy and national security policy makers.

“We get lots of advice from Georgia Tech and we appreciate it,” Moniz said.

Filed Under: Georgia Tech News Tagged With: Carbon Neutral Energy Solutions Laboratory, CNES, DOE, Energy Dept., energy efficiency, environment, Georgia Tech, innovation, NIST, R&D, research

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