1. US Belle II Project Contracting Lead: W. Kevin Grubbs March 14, 2014

2. In FY 2013, PNNL purchased goods and services valued at more than $430 Million PNNL Contracts Department currently has 98staff PNNL National Security Directorate Contracts Group currently has 1 Manager, 6 Contracts Specialists, and 2 Contracts Assistants 2 PNNL’s Purchasing System

3. 3 Contracting Issues The project requires many contracts to be executed in a timely manner These contracts include large competitive procurements, sole source procurements, contracts with Universities and smaller purchases – Quartz procurement is ~50% of project cost Contracting process is integrated into cost and schedule management EH&S, Quality and Risk are integrated with contracting process To mitigate risks associated with procurements the project has a dedicated procurement manager – Two contracts specialists assigned to manage key contracts Other mitigations include: – conducting RFI and RFP processes ahead of funding authorization to reduce time from available funding to letting of contract – contracts with options to allow for single RFP processes for procurements that span multiple funding allotments

4. 4 Contracting Practices Solicitations and Contract Awards at the $1M+ level are reviewed/approved by the PNNL Acquisition Review Board (ARB) The ARB consists of the Contracts Specialist, the Line Manager, the Contracts Manager, the Cost/Price Manager, and the Legal office The ARB review ensures a rigorous quality check is performed for any large solicitations and awards PNNL’s eProcurement process enables Project technical staff to identify Quality requirements that must be incorporated in a contract In addition to the Contracts Specialist, each contract has a designated Technical Oversight Representative (TOR) to monitor technical progress, quality and safety requirements The designated TOR has no authority to make any changes to the contract, only the Contracts Specialist has that delegated authority Quality Assurance staff dedicated to the project review all contractual deliverables when QA clauses are stipulated in the contract Any work that will be performed onsite at PNNL is reviewed for safety issues by dedicated ES&H staff

5. PNNL demonstrates a proper balance between PNNL policies, private sector expertise and experience, and related provisions of Battelle’s Prime Contract with U.S. Department of Energy Objectives include: Acquisition of quality products and services at fair and reasonable prices Use of capable and reliable subcontractors who either have track records of successful past performance or can demonstrate a current superior ability to perform Minimization of acquisition lead-time and administrative costs of purchasing Use of effective competitive techniques, where applicable, based on business objectives 5 Contracting Objectives

6. Maintenance of the highest professional and ethical standards Customer satisfaction Compliance with applicable laws and regulation Maximization of opportunities for small businesses, HUBZone small businesses, small disadvantaged business (veteran-owned and service disabled veteran), and woman-owned small business concerns Acquisitions equal to or greater than $10 million require Department of Energy, Pacific Northwest Site Office (DOE- PNSO) Contracting Officer approval Acquisitions equal to or greater than $1 million require advance notification to the DOE-PNSO Contracting Officer Contracting Objectives Continued 6

7. Acquisition of items, materials, or equipment greater than $500,000, that have been determined to be non-available under the Buy American Act, requires DOE-PNSO Contracting Officer approval Acquisition of foreign supplies/equipment from non-domestic sources greater than $10,000, that are imported to the U.S., requires DOE-PNSO notification Acquisitions greater than $25,000 require competition or sole source justification (unless an exemption applies) Acquisitions of $150,000 or less made to small business concerns can be placed without seeking competition and do not require a sole source justification Acquisitions greater than $650,000 made to a large business require a small business subcontracting plan Acquisitions greater than $700,000 require certified cost or pricing data 7

8. 8 Optics Contracts Strategy Multiple suppliers to reduce schedule risk Lots of prototyping to assess quality and schedule performance The optics contracts contain priced options to provide flexibility to deal with project funding streams Flexibility going forward to exercise options with different suppliers based on quality and schedule performance Erin Enger, Contracts Specialist, dedicated for all quartz contracts

9. BARS (July 2011) A Request for Information was sent to eight companies that either manufacture raw materials for, or fabricate and polish, large-scale optics (pricing information not requested at that time) –Telephonic conferences were held with five respondents regarding feasibility of tight tolerance specifications, manufacturing capabilities and schedule constraints, and the cost ratio of raw materials to completed bars –(Sept 2011) In response to official RFP, two technically responsive proposals were received; both vendors are currently under contract Optics Competitive Awards 9

10. MIRRORS (July 2012) 18 companies were solicited for interest in proposing on prototypes for fused silica mirrors and prisms – still considered “large-scale” optics, but smaller than the bars (therefore, a greater potential range of manufacturers). –Most responded that the size of the optics was outside their manufacturing range. However, based on interest, 5 companies were sent a full Request for Proposal package in August 3, 2012. –4 proposals were received, 3 were deemed technically responsive. –(Dec 2012) LPTA award made to ITT Space Systems (now ITT Exelis) for one prototype mirror; and after successful completion and delivery, awarded additional quantity of 4 (Aug 2013). Optics Competitive Awards continued 10

11. PRISMS (Aug 2012) Four technically responsive proposals received for competitive solicitation (Oct 2012) Lowest price technically acceptable (LPTA) award to Cosmo Optics for one prototype prism (Mar 2013) Prism specs and drawing were updated –A formal competitive solicitation for quantity of four additional prototypes was sent to all the quartz optics manufacturers that expressed interest or responded to previous quartz optics requests – three of four responses deemed responsive and acceptable (May 2013) LPTA award made to Zygo Optics Competitive Awards continued 11

12. 12 University Contracts Strategy Primarily cost reimbursement type contracts are used with Universities conducting R&D work Some fixed price contracting based on work scope Rigorous review by PNNL’s Cost/Price office to ensure appropriate Indirect Rates are listed in the contracts Monica Chavez, Sr. Contracts Specialist, dedicated for all University contracts

13. 13 University Contracts Awards to the following Universities were excluded from competition per approved DOE-PNSO acquisition guidelines, where the university was named in the proposal: – University of Hawaii 3 subcontracts awarded based on work scope (Total $1,346K) – September 2011, May 2012 and April 2013 – Indiana University 2 subcontracts awarded based on work scope (Total $514K) – July 2012 and February 2013 – Virginia Tech 2 subcontracts awarded based on work scope (Total $298K) – July 2012 and February 2013