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U.S. Department of Energy
Washington, D.C. 20585
DOE G 413.3-13
7-22-08

U.S. DEPARTMENT OF ENERGY
ACQUISITION STRATEGY GUIDE
FOR CAPITAL ASSET PROJECTS

[This Guide describes suggested nonmandatory approaches for meeting requirements. Guides
are not requirements documents and are not to be construed as requirements in any audit or
appraisal for compliance with the parent Policy, Order, Notice, or Manual.]

FOREWORD

This Department of Energy Guide is for use by all DOE elements. This Guide provides
acceptable approaches for implementing the Acquisition Strategy requirements and criteria
required by DOE O 413.3A, Program and Project Management for the Acquisition of Capital
Assets, dated 7-28-07, related to the development and implementation of a quality Acquisition
Strategy for the project. This Guide describes suggested non-mandatory approaches for meeting
requirements. DOE Guides are part of the DOE Directives System and provide supplemental
information regarding the Department’s expectations of its requirements as contained in rules,
Orders, Notices, and regulatory standards. Guides may also provide acceptable methods for
implementing these requirements. Guides are not substitutes for requirements, nor do they
replace technical standards used to describe established practices and procedures for
implementing requirements.

Purpose

This guide serves as a tool for federal project directors (FPDs) and the Integrated Project Team
(IPT) for developing a project acquisition strategy document. An acquisition strategy is a
comprehensive high-level technical and business management approach designed to achieve
project objectives within specified resource constraints. It is also considered the framework for
the next phases of planning, organizing, staffing, controlling, and leading a project. In sum, the
acquisition strategy provides an approach for activities essential for project success and for
formulating functional strategies and plans. The DOE O 413.3A requires the development and
approval of the acquisition strategy for projects with total project cost (TPC) of $20M or greater,
as part of the Critical Decision-1 (CD-1), Approve Alternative Selection and Cost Range
Milestone.

Scope

This guide discusses the process for formulating an acquisition strategy for DOE projects using
as the basis the Federal Acquisition Regulations (FAR) for acquisition planning in general. The
guide will include discussions with application examples on the following main topics that
should be covered in an acquisition strategy document for a project (the FPD and the IPT have
wide latitude in tailoring the presentation of the acquisition strategy document as long as the
topics identified here are addressed in a coherent manner):

1. Desired outcome, requirements, and major applicable conditions
2. Cost and schedule range
3. Alternatives (technical and location) and risk analysis
4. Business and acquisition approach
5. Management structure and approach

An appendix to the guide includes an example of an acquisition strategy document for a case
project that meets the requirements for content and format following the recommendations in this
guide. This example can be used as a template for development of an acquisition strategy
document for a DOE project.

Development

The project FPD leads the acquisition strategy development with the assistance of the Federal
team members of the IPT. Project stakeholders among DOE service centers, DOE-HQ’s program
offices, site offices, laboratories and industry are often consulted during acquisition strategy
development. A Contracting Officer is typically part of the IPT and is often the best resource for
developing the business and acquisition approach (section 4.0 of this document). However, care
should be taken to avoid discussing or releasing pre-procurement sensitive information, directly
or indirectly, especially to current contractors, that could be construed as giving or appearing to
give a potential offerer a competitive advantage, the appearance of competitive advantage, or
result in those contractors being unable to propose on the new work.

The objective in preparing the acquisition strategy is to describe and integrate the high level
technical and management approaches, to guide top-down alignment of all project team
activities, and enhance the ultimate goal of a successful project.

The FAR is the basis for acquisition planning in general. The acquisition strategy document
precedes the acquisition plan document but does not contain the details of implementation or
procurement sensitive information appropriate to the acquisition plan. The FAR allows for
tailoring an acquisition strategy and plan with specific content based on the size and complexity
of the project. The information provided to respond to the FAR and using the guidelines
provided in Office of Management and Budget (OMB) Circular No. A-11, Preparation,
Submission, and Execution of the Budget, ensure the Government receives the best value and that
agency business processes focus on optimizing performance at the lowest cost.

Five characteristics are found in a comprehensive acquisition strategy: realistic, credible,
durable, flexible, and risk management.

An acquisition strategy is realistic when the programmatic, functional, operational objectives are
attainable.

An acquisition strategy is credible when reasonable and/or innovative technical and location
alternatives are given due consideration and critical thinking is demonstrated in evaluating the
alternatives.

Acquisition strategy durability discourages disruption from negative external or internal choices
by concentrating on strategy rather than detailed planning. For durability, an acquisition strategy
only includes a high-level view, or approach, and does not include detail that may change based
on later operational or tactical decisions.

A flexible acquisition strategy is related to the effort made to keep the project description at the
strategy level so that operational details can be better incorporated within that vision without
changes or redirection to the strategy or without significant disruption to project resources or
project baselines.

Risk management in an acquisition strategy is concerned with the identification, analysis,
management, and tracking of potential impacts to the project.

Thus the characteristics of realism, credibility, durability, flexibility, and managed risk are used
to guide the development and execution of an acquisition strategy. An acquisition strategy meets
the five characteristics through a comprehensive and integrated depiction of the technical and
business management issues at the strategic level.

The acquisition strategy conveys the IPT’s approach for the successful acquisition of the project
and rationale for that approach. The approach should include the alternatives analyzed; market
conditions, competition considerations, and performance based contracting opportunities. The
acquisition strategy incorporates those considerations to develop business and management
approach(es) the project anticipates to integrate and coordinate contractor efforts.

Approvals of mission needs and acquisition strategies do not constitute approvals required by the
Office of Acquisition and Supply Management (OPAM) for business clearance purposes,
including acquisition plans. The acquisition strategy is approved by the Program Secretarial
Officer (PSO) as part of CD-1. The strategy may or may not anticipate a procurement contract
that requires an acquisition plan as delineated in FAR 7.1.

The IPT has wide latitude in tailoring the presentation of the acquisition strategy as long as the
topics identified in the Acquisition Strategy Format and Content section are addressed in a
coherent manner. A combination of narrative and tables is common, keeping emphasis on brevity
and integrating key points across the document. For example, major risks identified for a
technical/location alternative reasonably affects the business and management approach in most
cases. For the recommended alternative, the business and management approach should reflect
how the IPT intends to address those risks.

It is recommended that during the process of ranking alternatives the IPT should have conducted
an analysis with defined criteria to support the precision indicated by the ranking. For example,
rankings of high, medium and low are common from structured discussions of the alternatives
with subject matter experts, while ranking 1 through 10 indicates significant discrimination and
analysis to delineate between a particular rank, and the rank one increment above and one below.
Do not imply unsupportable precision in your alternatives by applying arithmetic operations to
ordinal rankings, e.g., averaging rankings to create additional decimal places of ranking, without
having developed criteria to support additional granularity among alternatives.

Requirements and Approval

Per DOE O 413.3A, all projects with a TPC of $20M, or greater, require an acquisition strategy
approved by the Program Secretarial Officer (PSO). For Major System projects with a TPC of
$750M or greater, the Office of Engineering and Construction Management (OECM) reviews the
acquisition strategy and provides recommendations to the PSO prior to acquisition strategy
approval.

An electronic version of the acquisition strategy for a Major System project should be submitted
to (preferably in MS Word) ESAAB.SECRETARIAT@hq.doe.gov at least three weeks prior to
any scheduled CD-1 decisional briefings. OECM will then coordinate the review of the
acquisition strategy and will provide a recommendation memo to the appropriate PSO or Deputy
Administrator. Approval of the acquisition strategy does not imply approval of CD-1.

The acquisition strategy is a durable vision of the high level technical and business management
approach. The strategy is based on assumptions, facts and circumstances existing at the time of
development and may be changed when additional information becomes available or conditions
change. Changes should make good business sense and be documented. Material changes to the
acquisition strategy, such as changes in contract type consideration, approach to competition, or
changing major milestones are documented and approved at the same approval level as the
original. Administrative or acquisition planning level of detail should be saved for future
acquisition planning products to avoid the acquisition strategy document becoming a
procurement sensitive document or containing decisions reserved for the contracting officer later
in the acquisition planning process.

Acquisition Strategy Format and Content

The strategy should be a logical extension from the approved mission need narrowing the range
of technical alternatives to the one or group best suited for the project. The depth and breath of
the alternative analysis is tailored to the size, risk, and complexity of the project. When an
element from the below suggested format is not applicable, include a brief explanation of why
the element is not relevant to facilitate the review process.

The acquisition strategy should be a concise document where the focus is on quality of content
and supporting the recommended alternative, rather than the maximum quantity of words or
pages that may impair the durability of the acquisition strategy by including too much detail. For
very large or complex projects, the acquisition strategy document may reference supporting
analyses or materials pertinent to the conclusions.

The following format and explanation of content are common across DOE acquisition strategy
documents (the FPD and the IPT have wide latitude in tailoring the flow of the information of
the acquisition strategy document to the particular project/program in question as long as the
topics identified in bold letter headings are addressed in a coherent manner): [Note: Italics are
used to emphasize the suggested content under each heading. Tables shaded gray are examples
of summary tables under each section and are not case project related to each other. The Sample
Acquisition Strategy in Appendix D is a case integrated approach of how information could be
provided in an acquisition strategy document following the format below.]

Cover Page

Project Title: Should be the same as was presented in the mission need statement or if the title
has changed, reference the former title.

Lead Program and Project Office: Identify the primary DOE program office responsible for
this acquisition and the DOE site office or laboratory responsible for this project.

Total Project Cost Range: State the project TPC range as will be presented for CD-1 approval.

CD-0 Approval Date, Approving Official and Any Material Changes: List the mission need
approval date, the approving official, and summarize any material changes from the approved
mission need. If there have been no material changes since CD-0, state “No material changes
since CD-0.”

1.0 Desired Outcome, Requirements, and Major Applicable Conditions Definition

1.1 Summary Project Description and Scope. Describe how the project fits within the
mission of the program office and how it is critical to the overall accomplishment of the DOE
mission, including the benefits anticipated.

1.2 Performance Parameters Required to Obtaining Desired or Expected Outcome. This
section summarizes the major technical and performance parameters for the project, including
the proposed location(s). For each new facility, show the square footage and address the
elimination by transfer, sale, or demolition of excess buildings and facilities (Reference: FY
2002 Energy and Water Development Appropriations Bill Conference Report (H. Rept. 107-
258), commonly referred to as the one-for-one rule whereby construction of new facilities
requires elimination of space equal to the amount of new space being constructed). Include
important laws, agreements, or other factors that significantly influence the project. If this is
decontamination and decommissioning (D&D) project, identify the planned end use.

This section should also summarize the characteristics of the project and address the following
questions utilizing results from the conceptual design report. If a question is not applicable for
the project, include a brief explanation as to why it is not applicable.

* What is the purpose of the proposed acquisitioning?

* If applicable, what items or services will be produced?

* What are the estimated quantities of products or services?

* What is the proposed location of the new asset?

* For a facility, what is the required square footage?

* What excess buildings or facilities will be eliminated as a result of this new acquisition?

* What specific laws, regulations, agreements or other factors will significantly influence
the project?

* Is this a hazard category 1, 2 or 3 nuclear facility or other hazardous facility?

* Is the facility required to comply with the DOE requirement for Leadership in Energy
and Environmental Design (LEED) Green Building Rating System certification?

1.3 Major Applicable Conditions

1.3.1 Environmental, Regulatory, Technology Development, Security and Political
Sensitivities, Others. Identify major applicable conditions and factors that may affect the
operational, design, or execution requirements, such as those regulated by the U.S.
Environmental Protection Agency, State and other legal entities. Workforce issues,
economic factors, technology development, security, and political sensitivities and
conditions should each be discussed. For example: discuss the applicability of and
expected major milestones for the environmental assessment or environmental impact
statement, and the proposed resolution of any environmental-related requirements that
affect the project. If the IPT identifies a range of possibilities in any major condition
[e.g., a CERCLA (Comprehensive Environmental Response, Compensation and Liability
Act) versus a RCRA (Resource Conservation and Recovery Act) regulatory framework],
then identify the risks associated with each option. See the following example:

EXAMPLE OF MAJOR APPLICABLE CONDITIONS

Environmental, Regulatory, and Political Sensitivities

The proposed action includes surface disturbance, new construction activities, and a new
emissions source that are not sufficiently addressed in the Final Y-12 Site-Wide
Environmental Impact Statement (SWEIS) (DOE/EIS-0309, September 2001). The
SWEIS is under contract as of August 2005 to Tetra Tech, Inc., directly to YSO for
complete development that will address the Uranium Processing Facility (UPF) as well as
other modernization plans.

NNSA has identified the need for a modern and efficient nuclear weapons complex to
ensure continued reliable maintenance of the nuclear weapons stockpile. This modern and
efficient nuclear weapons complex is being called Complex 2030. A Complex 2030
programmatic EIS (PEIS) is being developed and scheduled for completion in FY 2008.
UPF is included in the Complex 2030 PEIS alternatives. UPF will continue with
preliminary design while the Complex 2030 PEIS is being developed; however, a Record
of Decision on the PEIS will be issued prior to the start of final design and construction.

Security

Anticipated security requirements for this project have been coordinated with the Y-12
Safeguards and Security Directorate. The IPT will continue to coordinate with the
Safeguards and Security Directorate as the acquisition proceeds from strategy approval to
acquisition planning to incorporate necessary requirements into the pre-award planning,
such as for industry day and site tours, as well as for the contracts and subcontracts
and/or to implement appropriate mitigating controls. However, once the design of record
is established (i.e., at approval, issue of design criteria, and award of Title I design), any
changes will be handled through formal baseline change control procedures.

Technology Development

As part of the overall modernization strategy for Y-12, a Technology Development Plan
[The Technology Development Plan for the Uranium Processing Facility (UPF), PL-PJ-
801768-A003] identified all reasonable technologies that the complex would like to
incorporate within the UPF and other future projects. This plan was developed by a team
composed of key members of the UPF IPT, contractor project team, and members from
both design agencies. The plan was approved by all involved NNSA Site Managers (i.e.,
YSO, Los Alamos Site Office, and Livermore Site Office). This plan was forwarded and
agreed to by NA-12 associate administrators as a complex-wide agreement. The
objectives of this initiative are to validate technologies that can be developed to a point to
be included in the UPF and other projects, but also to establish specific critical dates for
closure should the technology not reach adequate maturity by the appropriate time. As
part of risk management planning, alternative technologies will be used should
development of current technologies fail to meet planning needs.

2.0 Cost and Schedule Range

2.1 Total Project Cost Range. Identify the projected TPC expressed as a cost range. The
TPC includes the total estimated cost (TEC) and other project costs (OPC) as defined in DOE O
413.3A.

Provide a table with the lower and upper cost estimate range for each of the major work
breakdown structure (WBS) elements and the summary totals. Explain the basis for the lower
and upper range of the cost estimates and identify major elements or products not included, but
necessary to implement the acquisition strategy. See the example below for the table:

Table 1: Example--Estimated Cost Range Basis for the Project
See the table in the PDF file

It is noted that the Cost and Schedule Range should be compatible with the selected acquisition
alternative under this document (point estimate and schedule for the selected alternative should
be within this established range). If a more detailed estimate by WBS element is required a
reference should be made to the Preliminary Project Execution Plan or any other available
document.

2.2 Funding Profile.

Include a funding profile for the selected acquisition alternative that distributes the cost by fiscal
years and the funding sources, including those from outside. See the suggested Table 2 below for
presenting the budget point estimate funding profile (at CD-1 a cost range is presented but for
budget planning purposes a target point estimate is required). It should be clearly noted that at
CD-1 the project has not been baselined and the presented funding profile is for planning
purposes but not definitive.

2.3 Key Milestones and Events.

Identify key milestones and events in the acquisition, development, and implementation process
of the project. Examples include dates for Critical Decisions, project reviews, start of
construction, start of operations, etc. See the suggested Table 3 below.

Table 2: Example--Required Target Funding Profile ($M)
See the table in the PDF file

Table 3: Example--Key Milestones and Events
See the table in the PDF file

3.0 Alternatives (Technical and Location) and Risk Analysis

This section presents an analysis of alternatives for acquiring the required capability, including
technical approaches, safety risks, alternative sites, and location-specific issues. By exploring a
wide range of alternatives, there is greater likelihood of evaluating all potentially worthwhile
options.

Market analysis of local, national or worldwide factors that could affect project objectives and
shape the technical components of the acquisition strategy precedes writing the acquisition
strategy document. In addition, the process of highlighting the advantages and disadvantages of
each alternative may lead to new ideas and better approaches for acquiring contracted support.
As a result of this analysis, the acquisition strategy should logically support a recommended
alternative.

3.1 Technical Alternatives Analysis.

List and describe the alternatives reasonably used to meet the required capability and the primary
advantages and disadvantages of each. Reasonable alternatives should include innovations; not
only the solutions used previously. The narrative or comparative tables used should provide
sufficient detail to discriminate one alternative from another while maintaining the level of
granularity or detail at the strategy level.

Identify and consider at least three viable alternatives such as renovating existing facilities or use
of other facilities, a proposed new facility, and the current baseline, i.e., the status quo. Consider
a range of alternatives to bridge a performance gap, including noncapital alternatives, before
choosing to purchase or construct a capital asset or facility. These noncapital options include
contracting out, privatizing the activity, non-ownership options such as leasing, or engaging in
joint venture projects with other organizations to minimize the amount invested and reduce the
organization’s risk. Also, consider the use of exiting assets before choosing to purchase or
construct new assets. If the IPT proposes to combine critical decision milestones or implement
other “fast-tracking” of projects, those alternatives should be presented as technical alternatives
and related risks should be recognized in the risk analysis.

To develop discriminators among alternatives, consider the following discriminators that may
influence the technical alternative.

* Scope and definition

* Environment, safety and health[including any Defense Nuclear Facilities Safety Board
(DNFSB) issues]

* Cost and schedule

* Workforce issues (cost, availability, legacy transitions)

* Funding and budget

* Technology and engineering

* Interfaces and integration requirements

* Safeguards and security

* Location and site conditions

* Legal and regulatory

* Stakeholder issues

Table 4 is a sample matrix of how risk items may be consolidated in the ranking scheme for
evaluating technical alternatives. Risk or related issues should also be a criterion for evaluating
alternatives. The details of it should be done in a separate working document but presented in the
tables at the summary level. For conciseness of this document the risk evaluation details and
supporting narrative is presented for the recommended alternative in Section 3.5.

Table 4: Example--Technical Alternative Analysis
See the table in the PDF file

In addition to the discriminators listed above, there could be other project specific criteria that
may need to be evaluated. See Table 5 as an example. Present the risks and alternatives in table
form as well as in narrative text describing the trade-offs.

Table 5: Example Tailored Alternative Analysis (One Location, LANL, TA-55 Area)
See the table in the PDF file

3.2 Location Alternatives Analysis.

List the potential locations for the selected technical alternative and discuss the relative risks (For
example: for a nuclear facility there could geotechnical/seismic risks at a particular location). If
there are no location alternatives, indicate why none reasonably exists. If alternate locations
exist, discuss or compare the costs and other advantages and disadvantages of the potential
locations. State the rationale in selecting the preferred site. A table such as Table 6 may be used
to summarize the narrative of location analysis. If rankings are used, the rankings should be
traceable to the location analysis narrative, so that the reader might reasonably reach the same
conclusion.

Table 6: Example--Summary Location Alternative
See the table in the PDF file

3.3 Total Lifecycle Costs (LCCs).

Discuss and/or summarize the LCC of the alternatives such as operations and maintenance cost,
and costs of dismantling and demolition at project completion (the summary costs obtained from
LCC analysis can be moved to the summary tables used for technical and location analysis for
summary integration purposes and down-selection of best alternatives). Lifecycle costs are not
only facility costs. For example, for environmental clean-up projects include the legacy
workforce costs and projections associated with each alternative if applicable to the acquisition
strategy. Also discuss the benefits of the alternative as described in OMB Circular A-94,
Guidelines and Discount Rates for Benefit Cost Analysis of Federal Programs.

Summarize in tabular form the LCC of the alternative approaches.

See the suggested Table 7 and Table 8 for displaying the summaries for total LCCs (the tables
below present numbers with no correlation to the samples presented in the other tables in the
preceding sections). Note that the numbers in Tables 7 and 8 should be comparable and
consistent (i.e., all should be either in present day dollars, or all should have the same time
period of analysis.)

Table 7: Example Comparison of Alternative Case Capital Costs and LCCs
See the table in the PDF file

3.4 Recommended Alternative. State the final recommended alternative based on the
preceded analysis in an integrated form. Summarize why this is the preferred alternative; support
the recommendation with facts from the analysis.

3.5 Risk Analysis. For the recommended alternative, this section represents a preliminary
assessment of risks that could jeopardize the ability of the project to meet scope requirements
within the budget and the proposed schedule (risks were also taken into consideration when
evaluating the other alternatives above; they used the same approach as discussed here for the
selected alternative). This effort leads to a preliminary risk management strategy that serves as a
starting point for a formal Risk Management Plan for the recommended alternative. The risk
analysis also identifies risk mitigation approaches for which the costs need to be included in the
project cost range at CD-1.

At the summary level identify risks and possible mitigation strategies for the recommended
alternative. If critical decisions have been combined or other project acceleration is proposed,
identify the risks of the project as well as for combining or accelerating the work.

This section should address the following questions, at a minimum:

* What are the major acquisition management, technical, cost and schedule risks that
jeopardize the successful completion of the project on time and within the budget?

* What areas of significant and/or high risk are being transferred to the contractor for
management or mitigation during contract administration?

* For each of the following categories, identify what risks exist. Describe mitigating
actions recommended or planned to address these risks. Classify risks in each category as
low, medium, or high.

o Scope and definition

o Functional as it relates to the facility, technology, or system to perform or meet the
project requirements

o Environment, safety and health [including any Defense Nuclear Facilities Safety
Board (DNFSB) issues].

o Cost and schedule

o Workforce issues (cost, availability, legacy transitions)

o Funding and budget

o Technology and engineering

o Interfaces and integration requirements

o Safeguards and security

o Location and site conditions

o Legal and regulatory

o Stakeholder issues

o Existence of metrics for performance measurement

o Required Government-furnished property/information and its availability

o Expertise and human resources--from DOE’s perspective and the management
expertise required to perform the work.

Table 9 is a partitioned example of risks identified in the above categories. The table should
evaluate all of the categories above, or more if so identified.

Possible risks in four categories are shown in the example below with some possible mitigating
actions, and evaluation factors or criteria that might be utilized for selecting a preferred
acquisition strategy.

Table 9: Example Risk Analysis Summary Table
See the table in the PDF file

4.0 Business and Acquisition Approach

For the selected technical alternative and location, discuss the general approach to the
acquisition, including managing pre-award activities and executing the project. Provide an
overview of what the IPT anticipates for the pre-award and post-award management of business
and acquisition issues. Identify whether government or industry resources or some mix are
anticipated to meet management need, both pre-award and post-award. Indicate how funding is
matched to or requests are in process for the recommended alternative over the lifecycle,
inclusive of how the IPT will secure appropriate resources for developing the Statement of Work
and the Independent Government Estimate, issuing the Request for Proposals, and conducting
evaluations.

If the acquisition strategy proposes bundling, the Contracting Officer must perform the analysis
and develop the justification required by FAR Part 7. Details required in the Acquisition Plan
(FAR Part 7) should not be included in the acquisition strategy document; information that is
procurement sensitive under FAR 2.101 and 3.104. Further, specific decisions reserved for the
Contracting Officer (contract type, fee type, etc.) and appropriate to acquisition planning should
not be included in the strategy level discussion of this section, Business and Acquisition
Approach. DOE often needs to release the acquisition strategy to vendors as part of pre-award
industry involvement or market research. Having procurement sensitive information in the
acquisition strategy prevents that from occurring, or requires redacting the acquisition strategy
prior to release.

The Acquisition Strategy is required at the critical decision milestone that includes conceptual
design. The business and management approach must also be conceptual to accommodate further
refinement of the chosen technical alternative in subsequent decision-making and planning.

4.1 Contract Alternatives.

Describe the potential contract approaches, including the use of a prime contractor, integrating,
or multiple contractors and the rationale for the recommended alternative. Discuss the rationale
of using an existing prime contract, if that is proposed [among the alternatives could be going
directly to a management and operating (M&O) contractor and having them make whatever
award is necessary or a Federal managed contract; provide a high-level rationale and justification
of how that is in best interest of DOE].

Indicate if the selected alternative will result in new or follow-on contracts. If this is a follow-on
contract, describe how previous competition, or lack thereof, is expected to affect the current
acquisition.

4.2 Major Contracts Contemplated.

* Discuss the methods of competition (full and open, sole source, set-aside) anticipated
throughout the course of the project for major contracts. Indicate if this alternative will
result in new or follow-on contracts. If this a follow-on contract, describe how previous
competition, or lack thereof, is expected to affect the current acquisition.

* Discuss the contract types contemplated (e.g., fixed-price, cost-plus, etc. or options under
each) and why this general type is contemplated, including potential incentive and fee
arrangements and the rational for each based on features of the proposed acquisition,
and/or DOE experience with that type of fee arrangements.

* Discuss why the risk/benefit of the contract type or mix of contract types planned is
appropriate for the proposed action. The risks and mitigations identified in the previous
section (section 3.5) should logically lead into the current contract alternatives considered
to support that type or requirement and risk. For example,

“Based on the uncertainty of the remediation effort and the technical risks
reasonably present over the life of the project, the IPT anticipates that the
contract to support this effort meets the requirements of FAR 16.3 for a
cost-reimbursement contract because the uncertainties involved in
contract performance do not permit costs to be estimated with sufficient
accuracy to use any type of fixed-price contract.”

This type of response identifies the general contract type without including the certainty
that would make the document procurement sensitive.

4.3 Special Acquisition Procedures.

Identify the use of special acquisition procedures (e.g., design-build or design-negotiate-build) or
activities planned to reduce risk or risk levels, and provide rationale and justification of how that
is in best interest of DOE. If the acquisition is substantially for Architect Engineer (A-E)
services, indicate so. Discuss whether sealed bidding or best value evaluation are anticipated and
why.

4.4 Performance Incentives.

At the strategy level (without going into contract specifics), describe the performance incentive
approach(es) and how performance incentives for each major acquisition are contemplated to
promote performance. What areas has the IPT identified as potentially responsive to incentive
payments? Performance incentives planning should be based on consideration of major risks as
well as critical needs and outcomes required by the Government. Support the proposed approach
based on the unique technical features of the recommended alternative.

4.5 Small Business Approach.

Each acquisition strategy should clearly state the approach to actively identifying small
businesses for the project. Discuss small business prime award to small businesses and small
business subcontracting. What past contracts (large or small) are relevant to the new
requirements? Does the work support a mentor protégé arrangement? Are there perceived
concerns or benefits to subcontracting some or all of the work? Do not indicate subcontracting
percentages or dollars to be subcontracted. A general statement that the project plans to meet
current DOE small business goals and a description of how meeting DOE small business goals
will be addressed by the IPT as the project moves from acquisition strategy to acquisition
planning may be sufficient as the small business approach.

5.0 Management Structure and Approach

5.1 Identify the FPD, IPT, Organization Structure, and Staffing Skills.

Discuss the management approach to managing the project, and supporting program and project
interrelationships. Identify the IPT, organization structure, and staffing skills. Describe the
relationships and interfaces between organizational elements. Discuss the required skills and
staffing levels needed to successfully manage the project and administer the contract vehicles
during the various phases of the project, as well as the anticipated availability of project
management resources.

5.2 Approaches to Performance Evaluation and Validation.

Describe the approaches to performance evaluation, verification, and validation. Describe how
project management and control systems such as the Earned Value Management System
(EVMS) or the quality assurance program are proposed to monitor progress and successful
execution of the project. Describe how the organization anticipates Government personnel will
collect, validate, and evaluate contractor performance?

5.3 Interdependencies and Interfaces.

Summarize the interfaces with other DOE organizations, national laboratories, or outside
stakeholders relevant to the acquisition strategy. If a site is subject to the requirements of DOE
Acquisition Letter 2006-11 of August 18, 2000, requiring a site utilization and management plan
(SUMP), state that the acquisition strategy is consistent with the SUMP or when the SUMP will
be updated. Discuss the impact of this project and proposed contracts upon existing
programs/projects at the site for mutual attainment of the project and the site's mission.

SIGNATURE PAGE. Insert names, titles, and dates of approving authority and concurring
officials.

Insert the following paragraphs as the basis for signatures (preceding the signatures):

This report accurately represents the best thinking and efforts of the project FPD
and the IPT to understand the full range of project risks and alternatives
available to accomplish the project mission.

All reasonable risks and mitigations to executing this acquisition strategy have
been included, at this time, and the IPT believes the recommended acquisition
strategy is in the best interest of DOE.

If new information or facts arise that could have a significant impact on the
project’s cost, schedule, or performance, the FPD will make the PSO and the
Office of Engineering and Construction Management (OECM) aware of this in a
timely manner.

The acquisition strategy may be revised when it makes good business sense to do
so. Any changes will be justified and documented. Material changes to the
acquisition strategy such as changes in recommended alternative(s), risk profile,
contract or competition approach, or major milestones, are adequately
documented and approved at the same approval level as the original document.

(NOTE: Approval of this acquisition strategy does not constitute approvals required by
DOE Headquarters Office of Acquisition and Supply Management for specific contract
clearance purposes, including contract acquisition plans under Federal Acquisition
Regulation Part 7.)

APPENDIX A: GLOSSARY

1. Acquisition. The act of acquiring by contract with appropriated funds supplies or
services (including construction) by and for the use of the Federal Government through
purchase or lease.

2. Acquisition planning. The process by which the efforts of all personnel responsible for
an acquisition are coordinated and integrated through a comprehensive plan for
fulfilling the agency need in a timely manner and at a reasonable cost. It includes
developing the overall strategy for managing the acquisition.

3. Acquisition strategy. A comprehensive high-level business and technical management
approach designed to achieve project objectives within specified resource constraints;
the plan for satisfying the mission need in the most effective, economical, and timely
manner; the framework for the next phases of planning, organizing, staffing, controlling,
and leading a project. It provides an acquisition approach for activities essential for
project success and for formulating functional strategies and plans.

4. Acquisition plan. The more detailed procurement strategies and supporting assumptions
by which a system, project or product is obtained by the Government and/or its
contractors. The plan, after approvals, becomes the guidance document to the Field
Contracting Officer for future contracting and procurement actions. When separate
acquisition strategy and acquisition plans are prepared, the acquisitions may not be
approved until the acquisition strategy has been approved by the Critical Decision
authority.

5. Acquisition program or project. Acquisitions of capital assets, equal to or greater than
$5 million, regardless of the funding source, that deliver a product or capability, with a
specified beginning and end, stated cost, and expected performance objectives. They are
directed with the purpose of providing a useful material capability in response to a
validated mission or business need.

6. Acquisition streamlining. Any effort that results in more efficient and effective use of
resources to design and develop, or produce quality systems, which meet stated
performance requirements. This includes ensuring that necessary and cost-effective
requirements are included, at the most appropriate time in the acquisition cycle, in
solicitations and resulting contracts for the design, development, and production of new
systems, or for modifications to existing systems that involve redesign of systems or
subsystems.

7. Competition. An acquisition strategy whereby more than one contractor is sought to bid
on a service or function; the winner is selected on the basis of criteria established by the
activity for which the work was performed. The law and DOE policy require maximum
competition throughout the acquisition lifecycle.

8. Competitive proposals. A procedure used in negotiated procurement that concludes with
awarding a contract to the offerer whose offer is most advantageous to the government.

9. Lifecycle cost. The total cost to the Government of acquiring, operating, supporting, and
(if applicable) disposing of the items being acquired.

APPENDIX B: REFERENCES

1. Acquisition Letter 2000-08, Site Utilization and Management Planning, August 18, 2000.

2. FAR Part 7, Acquisition Planning.

3. FAR 3.104, Procurement Integrity.

4. FAR 16.3, Cost Reimbursement Contracts.

5. FAR Part 19, Small Business Programs.

6. FAR 34.004, Acquisition Strategy (Major System).

7. FAR 37.6, Performance-Based Contracting.

8. DOE Acquisition Guide (August 2006).

9. DOE Exhibit 300 Guidance.

10. DOE O 413.3A, Program and Project Management for the Acquisition of Capital Assets,
dated 7-28-06.

11. DOE M 413.3-1, Project Management for the Acquisition of Capital Assets, dated
3-28-03.

12. DOE 413-Series Guides.

13. DOE-STD-1189-2008, Integration of Safety into the Design Process, April 2008.

14. OMB A-11, Preparation, Submission and Execution of the Budget.

15. OMB A-94, Guidelines and Discount Rates for Benefit-Cost Analysis of Federal
Programs.

16. MOPAS 2, Dec 2006, Department of the Navy, Management & Oversight Process for the
Acquisition of Services.

APPENDIX C: ACRONYMS

CD Critical Decision

DNFSB Defense Nuclear Facilities Safety Board

EVMS Earned Value Management System

FAR Federal Acquisition Regulation

FPD Federal Project Director

FY Fiscal Year

IPT Integrated Project Team

LCC Lifecycle Cost

OECM Office of Engineering and Construction Management

OMB Office of Management and Budget

OPC Other Project Cost

PED Project Engineering and Design

PSO Program Secretarial Officer

TEC Total Estimated Cost

TPC Total Project Cost

APPENDIX D: SAMPLE ACQUISITION STRATEGY

ACQUISITION STRATEGY SAMPLE AND GUIDANCE TOOL

PROJECT TITLE

Acquisition Strategy

Revision X

September 200X

EXECUTIVE SUMMARY (Optional)

Table of Contents

Appendix D: Sample Acquisition Strategy D-1

Change Log D-4

1.0 Desired Outcome, Requirements, and Major Applicable Conditions D-5

2.0 Cost and Schedule Rang D-9

3.0 Alternatives (Technical and Location) and Risk Analysis D-11

4.0 Business and Acquisition Approach D-20

5.0 Management Structure and Approach D-22

Change Log
Rev. No.
Date
Change Description
Pages Modified
Rev. A
10/0X
Initial Draft
N/A

SUMMARY PROJECT INFORMATION

Project Title:

Lead Program and Project Office:

Facilities and Infrastructure Recapitalization Program (FIRP)

Total Project Cost (TPC) Range:

* $7.80 to $10.21 Million (M)

CD-0 Mission Need Approved:

* November 19, 2003

CD-0 Approving Official:

* John Doe, Program Secretarial Office

CD-0 Material Change:

* 44,405 Linear Feet (LF) offsite gas line in CD-0 changed to 47,000 LF.

* Added re-seed of construction easement.

* Added three-strand barbed wire fence on both sides of the easement for construction.

* Planned acquisition altered from Design-Bid-Build to Design-Build strategy

* National Environmental Policy Act (NEPA) strategy changed from Categorical Exclusion
to Environmental Assessment (EA)

1.0 Desired Outcome, Requirements, and Major Applicable Conditions

1.1 Project Description

The purpose of the project is to provide reliable natural gas service to support Manufacturing and
Infrastructure operations. The project addresses those areas of the gas main and distribution
system that are of questionable reliability due to aging, incompatible materials, and antiquated
technologies. Additionally, the project will minimize risks to the government associated with
failures both onsite and offsite, eliminate the deferred maintenance for the system, and provide a
design life of 25 years. Specific areas to be addressed are:

* Pipeline replacement/upgrade

* Upgrade of appurtenances

* Cathodic protection installation

Pipeline replacement/upgrade includes approximately 47,000 LF of steel piping offsite (installed
in the early 1950s) and approximately 27,445 LF of steel piping onsite (installed in the early
1940s).

Instrumentation required to meter the flow of natural gas from the supplier will be upgraded with
the latest technological devices. New flow regulators and isolation valves will be installed, and a
motor operated isolation valve (MOIV) with remote-control capability will be installed at the
Plant property line where the gas main enters the site, for enhanced safety and control.

Utilization of high density polyethylene (HDPE) in place of steel piping for the underground
portions of the system eliminates the need for impressed ground beds for cathodic protection.
Metallic valves, regulations, and metering components will be cathodically protected using
sacrificial anodes and test stations.

1.2 Performance Parameters Required to Obtain Desired Outcome

This project will revitalize the system to meet NNSA mission for project parameters, will assure
facility infrastructure reliability, and NNSA mission expectations.

Ruptures in the current gas system affect various manufacturing and infrastructure operations at
the plant. Gas distribution failures have increased over the past several years. Most gas
interruptions are minor, since the Steam Plant and other critical items have the capability of
switching to an alternate fuel source (diesel). The use of diesel however, becomes an
environmental air quality permit issue. The plant carefully monitors all usage of the alternate fuel
source to ensure that the environmental air quality permit is not violated.

Replacement and upgrade of the gas system will minimize potential violation of the air quality
permits, and reduce impacts to the following critical facilities and processes:

* Steam for environmental controls for mission essential bays and cells.

* Steam for process equipment.

* Steam for heat in buildings and ramps.

* Direct gas fired heating and water heating.

* Plant water well pump operations.

* Emergency generator for medical facility.

* Sanitization of classified material (incinerator).

* Metal treating for Tooling Operations.

NNSA’s nuclear facilities require a reliable and safe infrastructure. Natural gas utilities are an
essential part of ensuring reliable facilities. The project will require modern materials and
appurtenances that promote safety and longevity at low cost. These materials will have to be able
to resist damage due to mechanical means or natural occurrences. A modern, well-designed gas
main and distribution system will reduce or eliminate maintenance costs over its design life and
provide the reliability that the plant needs.

Operational requirements reflect the core functions that the current system lacks. The current
system is potentially unreliable, unsafe, and does not provide for future needs. Operational
requirements will be the same for each alternative considered.

The final requirement for the upgrade is that it must provide for the Plant’s current and future
needs as noted above, and have a design life of 25 years as reflected in the DOE Accounting
Handbook, Chapter 10, attachment 10-1, “Standard Service Lives” and is consistent with the
DOE Conditions Assessment Survey (CAS) Manual. Note that this design life is below the
expected life of HDPE piping, a conservative 40 years (estimated by HDPE manufacturer
Polypipe).

1.3 Major Applicable Conditions

The project is the replacement and upgrade of existing infrastructure at the plant. Natural gas is a
required utility service that supports mission essential and mission support facilities on the plant.

The goals of the project are reflected in the Facilities and Infrastructure Recapitalization Program
(FIRP) within NNSA. The goals were established to “extend facility lifetimes, reduce the risk of
unplanned facility system and facility equipment failures and/or increase operational efficiencies
and effectiveness.”

1.4 Environmental, Regulatory, Technology Development, Security and Political
Sensitivities; Others

Environmental and Regulatory

No environmental issues have been identified to date that would significantly impact this project.
The project entails the upgrade of the natural gas distribution system onsite and the gas main
offsite. Preliminary NEPA analysis during the pre-conceptual phase indicated that the project is
categorically excluded as applicable within 10 CFR 1021, Subpart D, Appendix B.1, however,
due to the sensitivities involved with offsite landowners, and potential NNSA vulnerabilities, the
project has prepared an Environmental Assessment (EA). A pre-decisional EA for this project
was completed and made available to the public for review and comment. The Finding of No
Significant Impact (FONSI) and final EA were issued on September 15, 2005.

The project area cuts across three different land uses: cultivated ground, native grass or
pastureland, and land in the Conservation Reserve Program (CRP). The United States
Department of Agriculture has confirmed that CRP payments to landowners will not be impacted
as long as ground cover is re-established within two years of the construction. The project scope
entails reseeding all areas affected by construction utilizing the appropriate ground cover
material (seed mix).

Terrestrial habitats may be disturbed by construction. Shortgrass prairie (buffalo grass, blue
grama, and, in mestic sights, western wheatgrass) represents the primary habitat for species of
concern (e.g.,.Texas horned lizards, ferruginous hawk, western burrowing owls, song birds) in
the area. The Natural Resource Coordinator of the Regulatory Compliance Department will be
contacted if a nest of any bird is encountered prior to or during the project. The project
documents will require that the Plant’s wildlife biologist be notified well in advance to any
planned construction across these specific areas of concern.

The project does involve construction in or across Solid Waste Management Units (SWMUs).
These areas have been assessed and do not pose a hazard. The crossing of the SWMUs will be
coordinated with the construction contractor and the Regulatory Compliance Department,
SWMU Management Section. The Regulatory Compliance Department and Environmental
Remediation Services will evaluate the work within the SWMUs and the construction
contractor will be provided with instructions on how to manage these areas.

Use of the alternate fuel source (diesel) could be a risk for air quality management, but the
project is working to mitigate this usage by performing tie-ins/cutovers of the new system on
weekends when natural gas demand to support mission critical programs is at its lowest.

Pollution Prevention Plans

The construction contract will require the contractor to protect the environment. Throughout
construction, storm-water management techniques will be used to prevent erosion and contain
storm water while the site is disturbed. Dust control measures will be implemented to
minimize air pollution during site preparation and construction. The Design-Build firm will be
required to conform to the requirements of the plant’s Master Specification Division 1, Section
01557, “Environmental Protection” and Section 01558, “Storm Water Pollution Prevention”.

Security

The project scope has been coordinated with the site technical security office, and there are no
technical security issues that need to be captured in the design. Access to the Plant for design
or construction activities will be by a security escort where applicable. Any changes in
security requirements will be addressed upon official notification by NNSA, and will be
factored into the project as applicable. Possible security issues are heightened security levels
and commensurate restrictions on work at the site. Contingency measures are available to
mitigate impacts if these conditions occur.

Technology and Research and Development

No technology issues have been identified.

Funding

No funding issues have been identified.

Operational Including Shutdown and Start Up Planning

No operational issues have been identified.

2.0 Cost and Schedule Range

2.1 Total Project Cost Range

The preliminary total project cost (TPC) range at CD-0 was $5.340 - $7.540M.

The current total project cost estimate is $8.856M as outlined in Table 1, below.

Total project cost range is $8.107M - $9.640M.

Table 1 – Total Project Cost Range
See the table in the PDF file

2.2 Funding Profile

See the table in the PDF file

The Budget Department, in accordance with NNSA budget guidance, manages the budgeting and
funding. The funding for the Title I and Title II Design Phase is to be funded from the Project
Engineering and Design (PED) funds. Total funding requirements are defined in the
Construction Project Data Sheet (CPDS), which has been updated to reflect the funding profile
utilized in the development of this document. The Integrated Construction Program Plan (ICPP)
will also need to be modified to reflect this profile.

2.3 Key Milestones and Events

The following are the milestones planned for this project:

Table 3 – Key Milestones
See the table in the PDF file

3.0 Alternatives (Technical and Location) and Risk Analysis

3.1 Technical Alternatives Analysis

Alternatives that cover the range of available technical approaches for future service are
identified as follows:

Alternative 1 Do nothing defined as retaining the existing system and performing
repairs as required.

Alternative 2 Replace only onsite distribution system and relinquish ownership of
the offsite main to existing natural gas provider.

Alternative 3 Replace the existing DOE owned offsite gas main and onsite
distribution system.

The advantages and disadvantages for each of these three alternatives are summarized in Table 4,
below.

Table 4 – Alternative Advantages/Disadvantages Summary
See the table in the PDF file

3.2 Location Alternative Analysis

The location alternatives for this project are limited. The distribution system is located on the
Plant site to serve the existing equipment, and buildings that are in fixed locations, so there were
no other practical location alternatives available for consideration.

Several location alternatives for the gas main supply to serve the plant were considered. In
addition to the existing main line that currently supplies the gas main, three alternative
transmission lines were researched for their ability to meet the plant needs relative to this project.
Options identified were:

* 24” line owned by Transwestern Pipe Line Company, which grazes the southeast corner
of the Plant on the opposite side of Highway XX.

* 12.75” line owned by Oneoke Westex Transmission, also at the SE corner of the plant on
the opposite side of Highway XX, in the same location.

* 12.75” line owned by Oneoke Westex Transmission, located at the closest point about
8000’ from the west, northwest side of the Plant.

The two 12.75–in. lines owned by Oneoke were considered unacceptable location alternatives
because the plant requires at least a 10” line to meet its natural gas requirements. It was assumed
that Oneoke could not meet its current demand on these lines with such a large, new tap.

The gas distributor was contacted regarding capacity of the 24” line. The distributor stated that it
had already tried to tap into the 24” line with a tap smaller than that required by the plant, and
had been rejected due to insufficient capacity. Therefore, this location alternative was also
deemed unacceptable.

As a result, the remaining gas main supply location—the existing supply line for the plant—was
considered the only viable alternative.

3.3 Total Lifecycle Costs

In addition to analyzing the advantages and disadvantages for each alternative, the project team
completed a lifecycle cost (LCC) analysis as summarized in Table 5, below.

Table 5 – Lifecycle Cost Analysis Summary
See the table in the PDF file

Assumptions used to develop the LCC for each alternative are as follows:

* Discount rate of 2.95 percent, per OMB Circular A-94.

* Useful life of 25 years.

* Total project cost of $8.856M for replacing on-site and off-site gas distribution.

* Total project cost of $4.700M for replacing on-site gas distribution.

* $94K per year for on-site gas distribution operations ($80K) and maintenance costs
($14K). It is assumed this cost will remain constant for all alternatives.

* $83K per year for off-site gas distribution operations ($63K) and maintenance cost
($20K). It is assumed this cost will remain constant for all alternatives.

* Maintenance and Operations costs for all alternatives were based upon HDPE pipe
replacement (see Additional Alternatives Considered below, on page 13)

* Cost of failures is assumed to be approximately $300,000 per failure.

* Projection failures for Alternative 1, Do Nothing, were estimated using information from
a previous HPFL LCC analysis that was based on information from the book “Control of
Pipeline Corrosion,” by A. W. Peabody, and statistical software, TableCurve. TableCurve
has different methods for determining the best fit line of logarithmic data using different
equations: y=ae(bx), lny=a+bx, and weighted lny=a+bx. The most conservative projected
failures line (weighted lny=a+bx) was used for this LCC analysis.

* For Alternative 2, it is assumed that when DOE/NNSA relinquishes ownership of the off-
site main, DOE/NNSA would not be responsible for repair costs.

3.4 Recommended Alternative

All of the alternatives were evaluated against the LCC analysis, risk analysis, and major
functional and operational requirements. The team chose to use a three-step process that
develops selection criteria, weighs each criterion against each other, and then evaluates each
alternative against each criterion. The resulting weights and relative scores are shown in Tables 6
and 7, below.

Table 6 – Alternatives Analysis Matrix
See the table in the PDF file

These results are also expressed graphically in Table 7, below.

All values assigned to the alternatives selection matrix were derived by project team consensus
and reviewed and approved by PXSO.

* WEIGHT: The number in the colored box is the weight assigned to the criteria. The weight
was assigned on a 1:10 basis, 1 being the lowest and 10 being the highest. The percentage
derived for each weighted criteria was calculated based on the individual criteria weight
divided by the total of all criteria weights. For example: Safety was assigned a criteria weight
of 10 by the team. The total of all criteria weights is 77, so Safety is 10/77 or 13% of the
overall decision weight.

* IMPACT VALUE: The number in the upper triangle is the impact value. This is the score
assigned to the impact the alternative has on the criteria. The impact value was assigned on a
1:10 basis, 1 being the lowest (does not meet criteria) and 10 being the highest (fully meets
criteria/need).

* SCORE: The weight multiplied by the impact value equals the score assigned for each criteria
for each alternative. This number is shown in the lower triangle. These scores then make up
the values used in the stack chart, so that each “stack” equals the TOTAL score for each
alternative.

Table 7 – Alternatives Analysis Graphic
See the table in the PDF file

Based upon the information evaluated, as presented above, the project team elected to develop
Alternative 3. The overall benefit to the government was the basis of this decision, rather than
cost alone.

Alternative 1 was deemed unacceptable due to the number and severity of unacceptable risks
associated with a pipeline failure that would be an increasing possibility as the pipeline
continued to age and deteriorate. Additionally, this alternative does not meet the goals to reduce
the deferred maintenance backlog, reduce preventive maintenance costs, increase system
reliability, and does not comply with DOE useful life requirements for the gas main and
distribution system; this system has already exceeded the 25-year service life (DOE Accounting
Handbook) by approximately 25 years. Furthermore, this option would not allow the plant to
meet increased natural gas demand for future needs, nor would a dedicated line with isolation
capability be available. The project also had the highest LCC of the three alternatives considered.

Alternative 2 was deemed unacceptable due to the number and severity of unacceptable risks
associated with a pipeline failure that would be an increasing possibility as the offsite gas main
pipeline continued to age and deteriorate. This alternative does not significantly increase system
reliability because the offsite portion would continue to deteriorate and NNSA would no longer
have control over gas main taps, sizing, reliability, and replacement schedule for supply line.
This would virtually eliminate the possibility of NNSA locating a dedicated pipeline with
isolation capability of sufficient size to meet future needs for natural gas demand for the Plant.
Additionally, NNSA would lose the ability to negotiate with other natural gas providers to
achieve better gas prices in the future. This alternative also relies heavily upon the assumption
that the current natural gas provider would be willing to accept ownership of and liability for an
aging asset with little forecast service expansion. Although this alternative does provide the
lowest LCC, it does not provide the best value to the government.

Alternative 3 is recommended as the preferred alternative because it is the most efficient use of
capital funds that also meets the safety and technical objectives required by plant operations. The
recommended approach in this project meets the requirements to address all identified concerns
in the gas main and distribution system at the plant. The estimated initial investment/construction
cost of $5.5M-$6.7M is based on the updated detailed cost estimate as validated by an
Independent Cost review conducted in January, 200X. This alternative places the entire burden
of construction cost for a new line on site. In addition, the Plant would maintain liability for any
problems that arise. Even though this alternative does not have the lowest LCC, it is considered
the best option because it provides the most value to the government. NNSA could negotiate for
better gas prices in the future, as it has done in the past, saving money in the long run. In
addition, NNSA would not have to place any taps on this line, leaving it completely dedicated to
the plant. Furthermore, a new motor operated isolation valve (MOIV) would provide the
capability of remotely operating the valve to quickly isolate the natural gas supply onsite in the
event of a leak or other incident.

Additional alternatives that were evaluated include the following alternative studies:

Alternative methods for replacing the gas main and distribution lines were explored. The use of a
graded approach to replace the most critical or deteriorated lines was explored. This alternative
would allow replacement of the worst portions of the lines and deteriorated lines that provide
natural gas to the most critical areas. The remainder of the system not selected for replacement
would continue to age and be replaced on a “replace when fails” basis. At present, this
alternative is not advisable due to the continuing safety risks and maintenance needs for sections
not replaced; this alternative does not improve the reliability of the system and the risk of
unplanned outages to plant operations is unacceptable.

Alternate pipeline materials were also explored. The current gas main is constructed of steel, and
it has proven to be a durable, long-lasting material. However, steel is heavy, expensive to
purchase and install, and expensive to maintain because it requires the use of a cathodic
protection system. The Plant gas main and distribution system operates in the low- to mid-
pressure range, so a material as strong as steel is not required. High density polyethylene
(HDPE) is a modern material that is lightweight, durable, non-reactive, and easy to work with.
HDPE works well in low- to mid-range transmission and distribution systems, such as the one
under consideration. HDPE is currently used for all new gas distribution projects on the plant.
HDPE is currently considered the best material option for this project, but this alternative will be
further evaluated for lifecycle cost and value engineering during the design process.

Other Acquisition Alternatives Considerations

Various alternatives have been considered with respect to this project. The alternatives
considered are Federal led or utilizing the current management and operating contractor. The
Federal led alternative consists of the site office relying on either the U.S. Army Corps of
Engineers (USACE), directly contracting with a qualified architect-engineering (A-E) firm and
qualified construction company, or directly contracting with a design-build (D-B) firm to
perform the required services. Due to the simplicity of the design and the relatively advanced
level of development of the construction scope requirements, the site office recommends the use
of a D-B firm through a Federal led acquisition.

3.5 Risk Analysis

An essential part of the project planning will be to ensure the risks associated with the project
have been identified, analyzed, and determined to be either avoidable or manageable. Risk
identification and analyses will be continued throughout the planning process, including the
acquisition strategy and the project execution plan (PEP). Each of the identified risks will be
monitored at each critical decision and review point to ensure they have been satisfactorily
addressed, eliminated, or managed.

The risk assessment process was started before CD-0. Risk analysis process and conclusions
were reviewed and revised during both the independent cost review (conducted in January 2005)
and the CD-1 preparation.

A formal risk management plan has been prepared for this project that includes strategies for
mitigating risks. For additional risk assessment detail, refer to the current version of the Risk
Assessment Plan. In the assessment, a total of 10 risks were identified. Of the active risks, there
were no High risks, 5 are Moderate, and 5 are Low, based on the mathematical database (5X5
Risk Level Matrix).

Table 8 – Risk Summary
See the table in the PDF file

The general conclusion of this analysis is that the predominant consequence of the identified
risks is a potential for cost and schedule increases.

Based on this analysis and conclusion, the following activities are recommended:

Risks continue to be monitored and managed throughout the project.

* Continue to monitor and coordinate potential security risks.

* Coordinate with operations and maintenance to minimize the effect of outages.

* Evaluate lessons learned and stress the importance of safe work practices.

* Monitor contractor performance to ensure safe work practices are followed.

* Inspect all work and material being installed for compliance.

* Ensures all adequate resources are available to implement those mitigation strategies that
have been identified as Moderate and support alternative work locations in the event of a
security event.

* Quantify any cost impact of the residual risks and include them in the project cost
estimate. Once a baseline is approved, monitor and trend all deviations.

4.0 Business and Acquisition Approach

4.1 Contract Alternatives

Contract Administration

The site office will manage and administer the D-B, and/or other service type contracts and have
the following responsibilities:

Develop the request for proposal (RFP) for the design and construction with the project
management team and submit to NNSA service center for issue.

Attend project team and construction progress meetings.

Conduct pre-proposal meetings.

Conduct price negotiations.

4.2 Major Contracts Contemplated

The NNSA service center will award and the site office will administer and manage the prime
contract for this project with technical support from the USACE and the Managing and operating
(M&O) contractor. Construction and technical management of the D-B project will be performed
by the USACE. Critical components of the project will be subject to M&O review and support
during construction. A memorandum of understanding (MOU) will be initiated between all
parties. The MOU will outline roles and responsibilities for each participating party to include
submittal reviews, quality assurance, contracting officer duties, contract administration,
construction administration, and oversight, at a minimum.

A competitive selection of the design-build (D-B) firm for the project will be based on
demonstrated technical expertise, qualifications, capability, and resource availability to meet
schedule requirements. Price will be considered, but it is expected that technical criteria will be
weighted more than cost. The final solution may use price as a consideration from finalist firms,
as determined appropriate in the acquisition planning. Due to uncertainty of the requirements, a
firm fixed price (FFP) is contemplated. The FFP D-B contract will include all design, materials,
equipment, and services necessary to achieve a complete and functional utility meeting all
required criteria.

The D-B contract will provide preliminary design, detailed design, construction services and
engineering support, as well as closeout and post-construction services.

4.3 Special Acquisition Procedures

No special acquisition procedures will be used for the acquisition contracts.

4.4 Performance Incentives

The D-B contract will be competitively solicited and awarded to the Small Business
Administration Contractor Community first with other contracting entities considered if Small
Business Administration contracting is not successful. Historically, construction contracts in this
range do not attract architect/engineer and general contractors beyond the local area. Solicitation
of general contractors will be made within the region, with consideration for small business,
veteran-owned small business, service-disabled veteran-owned small business, HUB Zone small
business, and small disadvantaged business and women-owned small business concerns. The
award will be based on the best value determined from an evaluation of technical criteria such as
technical qualifications, past performance and experience, as well as cost considerations.

The site is located in an area where subcontractor resources are limited in some trades and
competitive bidding in this area has been increasingly difficult. Due to this fact, the site office
and the USACE will be working with the local and regional Association of General Contractors
(AGC) and Construction Specifications Institute (CSI) affiliates as well as the Panhandle
Regional Planning Commission (PRPC) in order to solicit and develop contractors from outside
the area.

4.5 Small Business Approach

The site office, in conjunction with the NNSA service center, NA-50, and NA-63, and support
from the USACE, will actively search for prospective small business contractors by using
electronic sourcing to include the U.S. Small Business Administration’s Central Contractor
Registration Database and Pro-Net. It is anticipated that the D-B project will be openly competed
to both small and large business firms, with the large business firms being considered if not
successful with small business firms. Awards to a large business above $500,000 ($1,000,000 for
construction) require a Small Business Subcontracting Plan. The plan must include goals for the
utilization of small business, veteran-owned small business, service-disabled veteran-owned
small business, HUB Zone small business, small disadvantaged business, and women-owned
small business concerns as subcontractors. The goals, if necessary, shall be negotiated by the site
office contracting officer, with support from the USACE, and approved by NA-52 and NA-63.

5.0 Management Structure and Approach

5.1 Identify FPD, IPT, Organization Structure and Staffing Skills

The project organization chart is shown below with Table 9 which identifies the DOE/NNSA
Integrated Project Team members.

Project Organizational Structure

See the chart in the PDF file

Table 9 – DOE/NNSA IPT Team Members
See the table in the PDF file

The government’s role relating to acquisition is summarized as follows:

* The NNSA Associate Administrator for Infrastructure & Environment approves the
acquisition strategy.

* The Associate Administrator for Infrastructure & Environment chairs the Equivalent
Energy Systems Acquisition Advisory Board and approves critical decisions for the
project.

* The federal project director acts as the single point of contact with the Plant organization
and NNSA. He oversees the design, construction, and ES&H efforts performed by the
M&O and the USACE and any subcontractors relating to the project.

The M&O contractor under the DOE prime contract dated February 1, 200X, will provide
activities as described herein and in accordance with the Memorandum of Understanding (MOU)
to be established between M&O, the Site Office, and the USACE.

5.2 Approach to Performance Evaluation and Validation

Project Controls

DOE O 413.3A, Program and Project Management for the Acquisition of Capital Assets, will be
used as the primary management tool and guideline to execute the project.

The site office and M&O are implementing a certifiable EVMS that is in compliance with
ANSI/EIA-748-A-1998. This EVMS will be certified in the XX quarter of FY 200X, and will be
implemented and used to monitor and evaluate project progress and performance for the duration
of the project.

An activity based Network Analysis System (NAS) including estimated costs and resources will
be utilized to manage this proposed project. Throughout the various phases of this project, the
NAS will be updated and refined to reflect the sequence of activities required to be accomplished
within specified milestone completion dates and planned costs. The NAS will be updated
monthly to document progress with respect to performance durations and cost. The site office
will coordinate the preparation and submittal of any status reports required by DOE/NNSA
Headquarters.

Change Control

The site office has an established change control process. This process will be utilized to manage
any required changes to cost, scope, or schedule.

Project Reporting

Monthly reporting will be accomplished through the DOE Project Assessment and Reporting
System (PARS). This project is below the $20 million threshold but the project management
system used by the contractor is based on earned value (EV), calculated by PARS.

PXSO will use the FIRP monthly/quarterly reporting system and all projects will be reviewed
monthly and quarterly as prescribed by DOE/NNSA Headquarters guidelines.

Project Meetings

The FPD will conduct regularly scheduled meetings and reviews to discuss project technical
scope, schedule, and cost status, and any emerging issues that may have an adverse impact on
technical scope, schedule, or cost. Participants will include the integrated project team
representatives as deemed appropriate.

5.3 Interdependencies and Interfaces

The site office will utilize the M&O contractor and the USACE to coordinate any required
interdependencies or interfaces required with other contractors at the plant.

SIGNATURES

This report accurately represents the best thinking and efforts of the project FPD and the IPT to
understand the full range of project risks and alternatives available to accomplish the project
mission.

All reasonable risks and mitigations to executing the acquisition strategy have been included, at
this time, and the IPT believes the recommended acquisition strategy is in the best interest of
DOE.

If new information or facts arise that could have a significant impact on the project’s cost,
schedule, or performance, the FPD will make the PSO and the Office of Engineering and
Construction Management (OECM) aware of this in a timely manner.

The acquisition strategy may be revised when it makes good business sense to do so. Any
changes will be justified and documented. Material changes to the acquisition strategy such as
changes in recommended alternative(s), risk profile, contract or competition approach, or major
milestones, are adequately documented and approved at the same approval level as the original
document.

(NOTE: Approval of this acquisition strategy does not constitute approvals required by DOE
Headquarters Office of Acquisition and Supply Management for specific contract clearance
purposes, including contract acquisition plans under Federal Acquisition Regulation Part 7.)

APPROVALS

DOE/NNSA:

Submitted for Approval:

____________________________________________________ __________________
Federal Project Director, NNSA Date

Recommended for Approval:

____________________________________________________ ___________________
Contracting Officer Date

Concurrence:

___________________________________________________ ____________________
Director, Office of Acquisition Date
and Supply Management, NNSA/NA-63

DOE NNSA Approval:

___________________________________________________ ____________________
Associate Administrator, Date
Infrastructure and Environment, NNSA/NA-50