DOE O 4540.1C, Utility Acquisition and Management

DOE 4540.1C 6-8-92 THIS PAGE MUST BE KEPT WITH DOE 4540.1C, UTILITY ACQUISITION AND MANAGEMENT. DOE 4540.1C, UTILITY ACQUISITION AND MANAGEMENT, HAS REVISED DOE 4540.1B TO REFLECT ORGANIZATIONAL TITLE, ROUTING SYMB0L, AND OTHER EDITORIAL REVISIONS REQUIRED BY SEN-6. NO SUBSTANTIVE CHANGES HAVE BEEN MADE. DUE TO THE NUMBER OF PAGES AFFECTED BY THE REVISIONS, THE ORDER HAS BEEN ISSUED AS A REVISION. U.S. Department Washington, of Energy D.C. ORDER 6-8-92 SUBJECT UTILITY ACQUISITION AND MANAGEMENT 1. PURPOSE. To establish policies and procedures for the acquisition and management of utility services (except telecommunications) and for intervention in utility regulatory proceedings to represent the consumer interest of the Department of Energy (DOE). 2. CANCELLATION. DOE 4540.1B, UTILITY ACQUISITION AND MANAGEMENT, of 10-29-87. 3. SCOPE. The provisions of this Order apply to all Departmental Elements and contractors performing work for the Department as provided by law and/or contract and as implemented by the appropriate contracting officer. 4. EXCLUSIONS . Services obtained by Power Marketing Administrations that are directly incident to their marketing or transmission programs. 5. REFERENCES. a. b. c. d. e. DOE 2110.1A, PRICING OF DEPARTMENTAL MATERIALS AND SERVICES, 7-14-88, which prescribes policy for establishing prices and of charges for materials and services sold or provided by DOE, either directly or through operating contractors, to organizations and persons outside DOE. DOE 4200.1C, COMPETITION IN CONTRACTING, of 1-9-87, which establishes policies and procedures to assure conformance to the Competition in Contracting Act. DOE 4300.1C, REAL PROPERTY MANAGEMENT, of 6-28-92, which establishes policies and procedures for the acquisition, use, inventory, and disposal of real property or interests therein. DOE 4320.1B, SITE DEVELOPMENT PLANNING, of 1-7-91, which establishes policies and assigns authorities and procedures for the planning and development of DOE sites, including the planning for utility services to support the site’s mission and programs. DOE 6430.1A, GENERAL DESIGN CRITERIA, of 4-6-89, which provides general design criteria for use in the acquisition of DOE facilities and establishes responsibilities and authorities for the development and maintenance of these criteria. DISTRIBUTION: INITIATED BY: All Departmental Elements Office of Organization, Resources and Facilities Management DOE 4540.1C 2 f. g. h. i. j. k. l. DOE 4540.1C 6-8-92 Title 42 U.S.C. 7256, section 646(a), Department of Energy Organization Act, of 8-4-77, which grants general contract authority to DOE. Title 42 U.S.C. 7251, section 641, Department of Energy Organization Act, of 8-4-77, which authorizes DOE to carry out any function transferred by the Act, and to exercise any authority granted by law to the agency from which such function was transferred. Title 42 U.S.C. 2204, section 164, Atomic Energy Act of 1954, as amended, which authorizes DOE to enter into utility contracts for periods not exceeding 25 years for electric utility services to the Oak Ridge, Paducah, and Portsmouth installations, and referral of such utility contracts to Congress. Title 40 U.S.C. 481(a)(3), section 201(a)(3), Federal Property and Administrative Services Act of 1949, as amended, which authorizes the Administrator of the General Services Administration (GSA) to award contracts for utility services for a period of up to 10 years, and Section 201(a)(4), which authorizes GSA to represent Federal agencies before Federal and State regulatory bodies in proceedings involving utility services.

Title 48 CFR Chapter 1, Federal Acquisition Regulation (FAR), subpart 8.3, “Acquisition of Utility Services,” which provides policies and procedures for acquisition of utility services. Title 48 CFR Chapter 9, Department of Energy Acquisition Regulation (DEAR), subpart 908.3, “Acquisition of Utility Services,” which requires utility acquisitions to comply with FAR subpart 8.3 and DOE directives in subseries 4540 (Public Services). Section 908.307, ‘Recontract Acquisition Reviews,” prescribes the requirements and procedures for review and approval of proposed solicitations and contracts (including interagency and intra-agency agreements and subcontracts), and modifications thereto, for the acquisition of utility services at facilities owned or leased by DOE. Utility services shall be acquired directly by DOE and not by a contractor using a subcontractor arrangement, except as provided in section 970.0803, “Acquisition of Utility Services.” Section 970.0803 prescribes the require- ments and procedures for authorizing a management and operating (M&O) contractor for a facility, where it is determined to be in the best interest of the Government, to acquire by subcontract utility services for the facility. Letter of 2-12-87, whereby GSA delegated to the Secretary of Energy, in accordance with sections 201(a) (3) and 205(d) of the Federal Property and Administrative Services Act of 1949, as DOE 4540.1C 6-8-92 3 amended (40 U.S.C. 481(a)(3) and 486(d)), the authority to enter into long-term utility contracts, for a period not to exceed 10 years, for all utility services (i.e., electric, natural gas, water, sewage, and steam). 6. DEFINITIONS. a. b. c. d. e. f. g. h. Acquisition is the procuring by contract of supplies and services, through purchase or lease, by and for use of the Federal Government. Acquisition begins with the establishment of need and includes the description of requirements, solicitation> and selection processes, contract award, financing, performance, administration, and any technical and management functions directly related to fulfilling the agency’s needs by contract. Areawide Contract is the basic ordering agreement between GSA and the particular utility service supplier to cover the utility service acquisition of Federal agencies for a period not to exceed 10 years. Authorization is the ordering document under an areawide contract issued by the Federal agency procuring the required utility services. Connection Charge is the payment to the utility supplier by the procuring agency for the installation of facilities which are required to make connections to the nearest point of supply. (See paragraph 6m, below, for definition of Termination Liability. ) Contracting Officer is the person with the authority to enter into, administer, and terminate contracts and make related determinations and findings. Delegated Contract Authority is the authority redelegate from the Director of Procurement, Assistance and Program Management to heads of contracting activities authorizing them to enter into contracts within specified dollar limitations and other contract conditions. Head of Contracting Activity (HCA) is a DOE official who has overall responsibility for managing a contracting activity, who has been delegated authority regarding acquisition functions, including appointment of contracting officers, and who has been designated as an HCA by the Procurement Executive.

Interagency Agreement is the contractual document between Federal agencies for consolidated purchase, joint use, or cross-service of utility services or facilities. DOE 4540.1C 6-8-92 i. j. k. l. m. n. o. Intra-agency Agreement is the contractual document between DOE and the Power Marketing Administrations for services. Long Term is a period of time in excess Separate Contract is a utility services period not to exceed 10 years, to cover delivery point(s). the purchase of utility of 1 year. contract executed for a the utility services to a Subcontract is a utility services contract with the utility services supplier executed on behalf of the Department by the M&O contractor operating the DOE facility. Termination Liability is a contingent obligation to pay the unamortized cost of connecting facilities which are installed and owned by the utility supplier. This obligation becomes operative in the event the Department terminates the contract prior to the time required to satisfy obligation provisions of the contract. Utility Procurement Plan is the document containing the overall strategy and requirements for fulfilling the agency’s requirements for reliable and economic utility service. Utility Service is a service such as the furnishing of electricity, natural gas, steam, water, and sewage and the furnishing of appurtenant facilities and systems. Telecommunication services or removal and disposal of garbage, rubbish, and trash are not included. 7. POLICY. It is DOE policy to: a. b. c. d. Procure the most reliable and economical utility services available. Procure utility services through contractual arrangements pursuant to the policies and requirements of FAR subpart 8.3, DEAR subpart 908.3 and section 970.0803, and for the Oak Ridge, Paducah, and Portsmouth installations, any additional requirements imposed by the Atomic Energy Act of 1954, as amended. Represent DOE consumer interests by intervening or otherwise participating in proceedings before utility regulatory bodies when these proceedings affect operations, and ensure the effort is consistent with current policy. Recognize that, in the acquisition of utility services and participation in regulatory proceedings dealing with utility rates for Government facilities, utility suppliers are entitled to a fair rate of return on equity. 4 DOE 4540.1C 5 6-8-92 e. Provide effective management of the utilities program to ensure acquisition of the most economical and reliable utility services available. f. Develop and maintain long-term site utility plans to ensure adequacy and reliability of utility service supplies and onsite utility distribution systems to meet future load requirements. g. Determine that the proposed supplier is either the sole source of the required utility service or has been selected after consideration of all available sources of supply, consistent with DOE 4200.1C. h. Ensure that the sale of utility services to non-Federal entities is made at full cost recovery, in accordance with DOE 211O.1A. 8. AUTHORITIES. Pursuant to applicable legal authority, including section 646 of the DOE Organization Act, Section 164 of the Atomic Energy Act of 1954, as amended, and GSA delegation to the Secretary of Energy in accordance with sections 201(a)(3) and 205(d) of the Federal Property and Administrative Services Act of 1949, DOE is authorized to carry out the following: a. Enter into contracts for the acquisition of utility services for Departmental programs.

b. Enter into new contracts or modify existing contracts to provide electric service for periods not exceeding 25 years in connection with the construction or operation of the Oak Ridge, Paducah, and Portsmouth installations. c. Intervene or otherwise participate in State and Federal regulatory proceedings to protect the interests of the Department as a consumer of utility services. 9. RESPONSIBILITIES. a. Director of Administration and Human Resource Management shall: (1) Establish policy for the acquisition, management, and sale of utility services, consistent with established programmatic goals and objectives. (2) Request authorization from GSA for DOE participation in proceedings before regulatory bodies to protect the consumer interests of DOE and other Federal agencies, as appropriate. 6 DOE 4540.1C 6-8-92 b. Director of Organization, Resources and Facilities Management, through the Director of Energy Management and Facilities Evaluation, shall: (1) (2) (3) (4) (5) (6) Develop and maintain plans, policies, and procedures for the acquisition, management, and sale of utility services. Provide analysis, guidance, and assistance to program and field elements in determining utility service requirements, in implementing policies, plans, and procedures, and in the acquisition, management, and sale of utility services. Provide Departmental liaison with GSA and other Federal agencies on all utility service activities. Review and approve Utility Procurement Plans (Attachment 1) and proposed utility service contracts prior to award by the contracting officer. The review shall apply to all proposed contractual arrangements when the annual cost estimated at the time of initiation or annual review exceeds $150,000 for separate contracts or $250,000 for authorizations under effective areawide contracts, or the proposed connection charge, termination liability or other facility charge is estimated to exceed $75,000 for separate contracts or $125,000 for authorizations under effective areawide contracts. Coordinate applicable Utility Procurement Plans and proposed utility service contractual arrangements identified in paragraph 9b(4) with: the General Counsel; Procurement, Assistance and Program Management; and Program Secretarial Officers. Provide overall coordination of DOE involvement in utility regulatory proceedings. As part of this responsibility, the Director of Organization, Resources and Facilities Management shall: (a) Determine, upon receipt of notification of regulatory proceeding and an impact analysis from the field element, and with the concurrence of General Counsel, and the Program Secretarial Officers, whether the regulatory proceeding warrants DOE intervention. (b) Coordinate proposed regulatory actions with the applicable field element, General Counsel, and Program Secretarial Officers to ensure that counsel from the field element or Headquarters is available to represent DOE in the proceedings, and that all DOE 4540.1C 6-8-92 7 appropriate technical support requirements, including necessary funding, staff support, and utility rate expert services are met. (c) Where appropriate and beneficial to DOE interests, offer staff assistance and/or funds to the Federal agency involved in the regulatory proceedings. c. Director of Procurement. Assistance and Program Management shall: (1) Prescribe and publish agency acquisition policies, regulations, and procedures.

(2) Review and approve for award proposed contracts for utility services when the contract’s: total value exceeds the contracting authority delegated to the Heads of the Field Elements; is likely to provoke unusual public interest; or is of a new or unusual nature. The approval shall be concurrent with and incorporated in the same document as the Director of Organization, Resources and Facilities Management’s approval. d. General Counsel through the: (1) Assistant General Counsel for procurement and Finance shall: (a) Provide legal assistance and consultation on all matters relating to utility service acquisition. (b) Review and concur in all legal aspects of proposed contracts for utility services requiring Headquarters approval. (2) Assistant General Counsel for Civilian Nuclear Programs shall provide legal assistance and consultation on all matters relating to uranium enrichment utility services contracts at the Oak Ridge, Paducah, and Portsmouth installations. (3) Assistant General Counsel for Regulatory Interventions/Power Marketing shall provide legal assistance on utility regulatory matters, represent DOE in proceedings before State and Federal regulatory agencies, and take appropriate action for judicial review of such agencies’ decisions when determined necessary or appropriate. e. Program Secretarial Officers shall: (1) Participate in the planning and negotiation of utility service contracts, as appropriate. 8 DOE 4540.1C 6-8-92 (2) Review Utility Procurement Plans and proposed contracts to ensure that utility service is adequate for program requirements and provide concurrence to the Director of Organization, Resources and Facilities Management. (3) Review and concur with the Director of Organization, Resources and Facilities Management’s recommendations to participate in regulatory proceedings. f. Heads of Field Elements shall: (1) Adhere to the following procedures, in conjunction with Program Secretarial Officers, in acquiring utility services: (a) Solicit utility services by a request for proposals or invitation for bids in accordance with FAR paragraph 8.304-5(C) . Acquire utility services by sole source procurement in the absence of competitive procurement in accordance with the requirements set forth in FAR part 6, DEAR part 906, and DOE 4200.1C. Document the justification for procurement by sole source in the Utility Procurement Plan and place a copy of the Plan in the official contract file. (b) Submit a Utility Procurement Plan and proposed utility services contract to the Director of Organization, Resources and Facilities Management for coordination, review, and approval prior to the contracting officer’s award of the contract. The review applies to all proposed utility arrangements when the annual cost at the time of initiation or annual review exceeds $150,000 for separate contracts or $250,000 for authorizations under effective areawide contracts, or when the proposed connection charge, termination liability, or other facility charge is estimated to exceed $75,000 for separate contracts or $125,000 for authorizations under effective areawide contracts. (c) Submit for review and approval a post-negotiation summary to the Director of Organization, Resources and Facilities Management prior to contract execution if there are departures from the Utility Procurement Plan or if new issues are developed during the final negotiations which were not addressed in the Utility Procurement Plan.

(d) Enter into utility service contracts in accordance with FAR subpart 8.3 requirements, DEAR subpart 908.3 and section 970.0803, the terms and conditions of the DOE 4540.1C 6-8-92 9 Utility Procurement Plan, and the approved proposed utility contract. Acquire utility services under one of the following contractual arrangements: 1 Execute an authorization under a GSA areawide contract to take advantage of GSA’s negotiations with the utility supplier for the standard contract clauses and provisions. Rates may be negotiated. No changes may be made to GSA areawide contract clauses. However, additional specific and/or administrative requirements or necessary additional contract terms specific to the acquiring facility may be added to the areawide contract. 2 Execute a separate DOE-negotiated contract if an areawide contract is not available or if a separate contract is more advantageous and is in accordance with FAR subsection 8.304-5 and DEAR subpart 908.3. 3 Authorize a subcontract between the M&O contractor operating the DOE facility and the utility service supplier, in accordance with DEAR section 970.0803, only where it is determined to be in the best interest of the Government. Prior to authorizing such a subcontract, a written concurrence from the Director of Organization, Resources and Facilities Management is required. Requests for such concurrence should be included in the Utility Procurement Plan and Utilities Options Study. Alternatively, it may be made in a separate document submitted to the Director of Organization, Resources and Facilities Management early in the acquisition cycle. Any request shall set forth why it is in the best interest of DOE to acquire utility service by subcontract, i.e., what the benefits are, such as economic advantage. All provisions and clauses of utility service contracts with M&O contractors must be reviewed by DOE using the same criteria as if the utility contract were procured directly by DOE. 4 Enter into an interagency agreement with another Federal agency or entity for the consolidated purchase, joint-use, or cross service of utility services or facilities by specifying the 10 DOE 4540.1C 6-8-92 services or facilities to be supplied, the estimated costs, and other conditions under which service will be required. 5 Enter into an intra-agency agreement with a Power Marketing Administration for the purchase of electric power and wheeling services. Use a Government purchase order for utility services or other written request for service after a written, definite and final refusal to enter into a contract is received from the supplier in accordance with FAR subsection 8.304-5. Commercial forms and clauses of the utility company may be used in accordance with FAR paragraph 8.304-5(g), but language that may be contrary to Federal law and regulations must be deleted and the requirements of FAR Section 8.309 must be inserted. (e) Submit two copies of all executed contracts to the Director of Organization, Resources and Facilities Management within 30 days of execution. (2) Keep the Director of Organization, Resources and Facilities Management currently informed of any utility service related matters not covered elsewhere in this Order.

(3) Complete and submit to the Director of Organization, Resources and Facilities Management, by 12-31 of each year, DOE F 4330.1, “Electric Power, Actual Usage and Estimated Requirements” (see Attachment 2, page 1), and DOE F 4330.2, “Natural Gas Statistics, Actual Usage and Estimated Requirements” (see Attachment 2, page 2), for each location where DOE is paying for service or producing utility service onsite. Consumption and costs are to be identified by the first two digits of the budget and reporting (B&R) code to establish program responsibility. (4) Implement procedures for the annual review of utilities management, utility contracts, and supply options that may be available. (a) Verify that all utility bills have been reviewed against the applicable rate schedule or approved billing rate and certified correct or, if found in error, correction has been made. (b) Review all utility service contracts to ensure conformance to FAR requirements and that DOE is receiving service under the most favorable rates, 6 DOE 4540.1C 6-8-92 11 terms, and conditions available. If possible, enter into new contracts or modify contracts containing indefinite terms or lacking expiration dates in order to set a term (number of years) or specific expiration date. (c) Conduct a review of all utility service options available to the site for better terms and conditions of service, lower rates, or other cost-saving measures before acquiring the service. Attachment 3 contains a list of suggested options. (d) Review utilities management at each DOE site, and by each M&O contractor, where appropriate. As a minimum, the review should encompass assessment of ongoing and planned utility activities, review of any current or expected problem areas, evaluation of capability to accomplish required tasks and functions, and adherence to utility policies and procedures covered in this Order. (5) Develop and approve prices for sale of utility services ensuring the prices are on the basis of full-cost recovery, in compliance with DOE 211O.1A. A copy of the price determination, cost/price study, and other documents used in establishing the price shall be furnished to the Director of Organization, Resources and Facilities Management prior to sale. The sale of utility services must be reviewed and approved by the Director of Organization, Resources and Facilities Management prior to execution of a sales contract. (6) Closely monitor utility regulatory actions. If a utility’s action would have a significant impact on DOE operations or is otherwise of interest to DOE: (a) Notify the Director of Organization, Resources and Facilities Management immediately of any advance notification or actual filing of a proposed rate increase and forward a complete copy of the filing as soon as one can be obtained. (b) Immediately prepare an impact analysis setting forth the basis for the supplier’s proposed rate change and the cost impact to DOE. In addition, request an impact analysis from other significantly affected Federal agencies. 12 DOE 4540.1C 6-8-92 (c) (d) Forward the impact analysis to the Director of Organization, Resources and Facilities Management with a recommendation on whether DOE should participate in the regulatory proceedings. State the assistance available, or needed, if participation is recommended. Monitor all interventions which impact DOE, including those which have other Federal agency representation. Forward copies of all pertinent documents, findings, or reports arising from regulatory proceedings to the Director of Organization, Resources and Facilities Management. -

BY ORDER OF THE SECRETARY OF ENERGY: DONALD M. PEARMAN, JR. Acting Director Administration and Human Resource Management DOE 4540.1C 6-8-92 Attachment 1 Page 1 UTILITY PROCUREMENT PLAN This plan should be developed for the acquisition of all utility services and made available to the Director of Organization, Resources and Facilities Management for precontract review and approval in accordance with FAR subpart 8.3 prior to final negotiation and execution of the contract with the utility supplier. 1. SOLICITATION DATA. a. b. c. d. Identification of type of service required: electric, natural gas, water, and sewage. Market Survey Summary. (1) Identification of all available sources of supply, including GSA areawide contracts in the service area, and intra/interagency agreement possibilities. (2) Identification of method of supply or options available; e.g., cogeneration capabilities, transmission services, interties, wheeling possibilities, third-party financing, and so forth. If noncompetitive acquisition, basis for approval and name and title of person approving the justification for sole source, in accordance with the requirements of FAR part 6 and DOE 4200.1C. Solicitation method: Request for proposal, invitation for bid, letter request, and so forth. See FAR section 52.301 for solicitation provisions. 2. PRECONTRACT REVIEW. a. Prenegotiations or Preliminary Discussions. Submit any correspondence or memorandums of meetings or discussions with prospective supplier(s). b. FAR subsection 8.307-4 requirements: (1) (2) (3) Technical description or specification of the type, quality, and quantity of required service. Copy of proposed contract. See FAR subsection 15.406-1 for uniform contract format requirements for negotiated acquisitions. Utility service contracts shall contain prescribed clauses in accordance with FAR section 8.309. Complete copy of current rate schedules and tariff of the utility supplier. Attachment 1 DOE 4540.1C Page 2 6-8-92 (4) For new or initial service, in addition to the above: (a) Estimated maximum demand, monthly consumption, estimated annual cost of service, and date initial service is required. (b) Estimated ultimate demand and monthly consumption, and known or estimated time schedule for growth to ultimate requirements. (c) A simple schematic diagram of meter locations and new connecting facilities. (5) For existing utility service, in addition to subparagraphs 4(a), (b), and (c), above, submit the following: (a) (b) (6) Facil data appli (a) (b) A copy of the most recent 12 monthly bills, tabulated by month, showing demand, consumption, and charges; and projected consumption and cost for the next 12 months. A simple schematic diagram or line drawing showing meter locations. ities connection and/or related charges, the following should be submitted “for cable: Proposed refundable or charge, termination liability, or other facilities charges to be paid by DOE with a description of the supplier’s proposed facilities cost. new and existing services, when nonrefundable connection The basis for the connection charge and a statement by the supplier that the proposed facilities charge is not in excess of the charges to other customers for like facilities. (7) Identification of any unusual or other factors affecting the acquisition. DOE 4540.1C 6-8-92 Attachment 2 Page 1 POWER USAGE STATISTICS Attachment 2 Page 2 DOE 4540.1C 6-8-92 NATURAL GAS STATISTICS DOE 4540.1C 6-8-92

1. PURPOSE. Attachment 3 Page 1 (and 2) These studies are to identify all available energy supply sources and options that can meet present and planned utility requirements of the site in order to acquire the most economical and reliable service. Each study shall be completed at least 2 years prior to the current contract’s expiration/renewal notification date to allow time to determine if change of service is warranted, to pursue any of the identified options, and to forward a summary of the option study and recommendations to the Headquarters Public Utilities Branch, in conjunction with Program Secretarial Officers, for review and concurrence. The option studies should be prepared with the participation of the field utility staff and with close involvement of site personnel, with Program Secretarial Officers included in both the planning and execution stages. 2. CONTENTS. At minimum, the study should identify and, where appropriate, thoroughly analyze the following: a. Service Requirements. (1) Present Service: Supplier; type of service; adequacy of service; and cost. (2) Future Service Requirements: New load: pattern and changes from baseline level b. All Available Sources of Supply. (1) (2) (3) (4) (5) (6) Utility Capacity Status : Reserve margin new plant additions. or revised load s. adequacy and major Utility Financial Status : Planned/anticipated major plant closures; service area’s economic development pattern; and ability to switch to alternate fuels. Cogeneration capabilities; transmission services; interties; third-party financing; types of services; and rate provisions. Onsite Utility Distribution System : Adequacy and capacity to meet projected loads. Allocations from Power Marketing Administrations: Electric power allocations available to Federal agencies. Regulatory Climate: Federal, State, and local regulatory bodies. UTILITY SERVICE REQUIREMENTS AND OPTION STUDIES Available Opportunities for changes in Service: DOE 4540.1C 6-8-92 THIS PAGE MUST BE KEPT WITH DOE 4540.1C, UTILITY ACQUISITION AND MANAGEMENT. DOE 4540.1C, UTILITY ACQUISITION AND MANAGEMENT, HAS REVISED DOE 4540.1B TO REFLECT ORGANIZATIONAL TITLE, ROUTING SYMBOL, AND OTHER EDITORIAL REVISIONS REQUIRED BY SEN-6. NO SUBSTANTIVE CHANGES HAVE BEEN MADE. DUE TO THE NUMBER OF PAGES AFFECTED BY THE REVISIONS, THE ORDER HAS BEEN ISSUED AS A REVISION. U.S. Department Washington, of Energy D.C. ORDER 6-8-92 SUBJECT UTILITY ACQUISITION AND MANAGEMENT 1. 2. 3. 4. 5. PURPOSE. To establish policies and procedures for the acquisition and management of utility services (except telecommunications) and for intervention in utility regulatory proceedings to represent the consumer interest of the Department of Energy (DOE). CANCELLATION. DOE 4540.1B, UTILITY ACQUISITION AND MANAGEMENT, of 10-29-87. SCOPE. The provisions of this Order apply to all Departmental Elements and contractors performing work for the Department as provided by law and/or contract and as implemented by the appropriate contracting officer. EXCLUSIONS. Services obtained by Power Marketing Administrations that are directly incident to their marketing or transmission programs. REFERENCE. a. DOE 211O.1A, PRICING OF DEPARTMENTAL MATERIALS AND SERVICES, of 7-14-88, which prescribes policy for establishing prices and charges for materials and services sold or provided by DOE, either directly or through operating contractors, to organizations and persons outside DOE.

b. DOE 4200.1C, COMPETITION IN CONTRACTING, of 1-9-87, which establishes policies and procedures to assure conformance to the Competition in Contracting Act. c. DOE 4300.1C, REAL PROPERTY MANAGEMENT, of 6-28-92, which establishes policies and procedures for the acquisition, use, inventory, and disposal of real property or interests therein. d. DOE 4320.1B, SITE DEVELOPMENT PLANNING, of 1-7-91, which establishes policies and assigns authorities and procedures for the planning and development of DOE sites, including the planning for utility services to support the site’s mission and programs. e. DOE 6430.1A, GENERAL DESIGN CRITERIA, of 4-6-89, which provides general design criteria for use in the acquisition of DOE facilities and establishes responsibilities and authorities for the development and maintenance of these criteria. DISTRIBUTION. INITIATED BY: All Departmental Elements Office of Organization, Resources and Facilities Management DOE 4540.1C f. g. h. i. j. k. l. DOE 4540.1C 6-8-92 Title 42 U.S.C. 7256, section 646(a), Department of Energy Organization Act, of 8-4-77, which grants general contract authority to DOE. Title 42 U.S.C. 7251, section 641, Department of Energy Organization Act, of 8-4-77, which authorizes DOE to carry out any function transferred by the Act, and to exercise any authority granted by law to the agency from which such function was transferred. Title 42 U.S.C. 2204, section 164, Atomic Energy Act of 1954, as amended, which authorizes DOE to enter into utility contracts for periods not exceeding 25 years for electric utility services to the Oak Ridge, Paducah, and Portsmouth installations, and referral of such utility contracts to Congress. Title 40 U.S.C. 481(a)(3), section 201(a)(3), Federal Property and Administrative Services Act of 1949, as amended, which authorizes the Administrator of the General Services Administration (GSA) to award contracts for utility services for a period of Up to 10 years, and Section 201(a)(4), which authorizes GSA to represent Federal agencies before Federal and State regulatory bodies in proceedings involving utility services. Title 48 CFR Chapter 1, Federal Acquisition Regulation (FAR), subpart 8.3, “Acquisition of Utility Services,” which provides policies and procedures for acquisition of utility services. Title 48 CFR Chapter 9, Department of Energy Acquisition Regulation (DEAR), subpart 908.3, “Acquisition of Utility Services,” which requires utility acquisitions to comply with FAR subpart 8.3 and DOE directives in subseries 4540 (Public Services). Section 908.307, “Recontract Acquisition Reviews,” prescribes the requirements and procedures for review and approval of proposed solicitations and contracts (including interagency and intra-agency agreements and subcontracts), and modifications thereto, for the acquisition of utility services at facilities owned or leased by DOE. Utility services shall be acquired directly by DOE and not by a contractor using a subcontractor arrangement, except as provided in section 970.0803, ‘Acquisition of Utility Services.” Section 970.0803 prescribes the require- ments and procedures for authorizing a management and operating (M&O) contractor for a facility, where it is determined to be in the best interest of the Government, to acquire by subcontract utility services for the facility. Letter of 2-12-87, whereby GSA delegated to the Secretary of Energy, in accordance with sections 201(a) (3) and 205(d) of the Federal Property and Administrative Services Act of 1949, as

2 DOE 4540.1C 6-8-92 3 amended (40 U.S.C. 481(a)(3) and 486(d)), the authority to enter into long-term utility contracts, for a period not to exceed 10 years, for all utility services (i.e., electric, natural gas, water, sewage, and steam). 6. DEFINITIONS. a. b. c. d. e. f. g. h. Acquisition is the procuring by contract of supplies and services, through purchase or lease, by and for use of the Federal Government. Acquisition begins with the establishment of need and includes the description of requirements, solicitation, and selection processes, contract award, financing, performance, administration, and any technical and management functions directly related to fulfilling the agency’s needs by contract. Areawide Contract is the basic ordering agreement between GSA and the particular utility service supplier to cover the utility service acquisition of Federal agencies for a period not to exceed 10 years. Authorization is the ordering document under an areawide contract issued by the Federal agency procuring the required utility services. Connection Charge is the payment to the utility supplier by the procuring agency for the installation of facilities which are required to make connections to the nearest point of supply. (See paragraph 6m, below, for definition of Termination Liability.) Contracting Officer is the person with the authority to enter into, administer, and terminate contracts and make related determinations and findings. Delegated Contract Authority is the authority redelegate from the Director of Procurement, Assistance and Program Management to heads of contracting activities authorizing them to enter into contracts within specified dollar limitations and other contract conditions. Head of Contracting Activity (HCA) is a DOE official who has overall responsibility for managing a contracting activity, who has been delegated authority regarding acquisition functions, including appointment of contracting officers, and who has been designated as an HCA by the Procurement Executive. Interagency Agreement is the contractual document between Federal agencies for consolidated purchase, joint use, or cross-service of utility services or facilities. 4 i. j. k. l. m. n. o. DOE 4540.1C 6-8-92 Intra-agency Agreement is the contractual document between DOE and the Power Marketing Administrations for the purchase of utility services. Long Term is a period of time in excess of 1 year. Separate Contract is a utility services contract executed for a period not to exceed 10 years, to cover the utility services to a delivery point(s). Subcontract is a utility services contract with the utility services supplier executed on behalf of the Department by the M&O contractor operating the DOE facility. Termination Liability is a contingent obligation to pay the unamortized cost of connecting facilities which are installed and owned by the utility supplier. This obligation becomes operative in the event the Department terminates the contract prior to the time required to satisfy obligation provisions of the contract. Utility Procurement Plan is the document containing the overall strategy and requirements for fulfilling the agency’s requirements for reliable and economic utility service. Utility Service is a service such as the furnishing of electricity, natural gas, steam, water, and sewage and the furnishing of appurtenant facilities and systems. Telecommunication services or removal and disposal of garbage, rubbish, and trash are not included.

7. POLICY. It is DOE policy to: a. b. c. d. Procure the most reliable and economical utility services available. Procure utility services through contractual arrangements pursuant to the policies and requirements of FAR subpart 8.3, DEAR subpart 908.3 and section 970.0803, and for the Oak Ridge, Paducah, and Portsmouth installations, any additional requirements imposed by the Atomic Energy Act of 1954, as amended. Represent DOE consumer interests by intervening or otherwise participating in proceedings before utility regulatory bodies when these proceedings affect operations, and ensure the effort is consistent with current policy. Recognize that, in the acquisition of utility services and participation in regulatory proceedings dealing with utility rates for Government facilities, utility suppliers are entitled to a fair rate of return on equity. DOE 4540.1C 6-8-92 5 e. Provide effective management of the utilities program to ensure acquisition of the most economical and reliable utility services available. f. Develop and maintain long-term site utility plans to ensure adequacy and reliability of utility service supplies and onsite utility distribution systems to meet future load requirements. g. Determine that the proposed supplier is either the sole source of the required utility service or has been selected after consideration of all available sources of supply, consistent with DOE 4200.1C. h. Ensure that the sale of utility services to non-Federal entities is made at full cost recovery, in accordance with DOE 211O.1A. 8. AUTHORITIES. Pursuant to applicable legal authority, including section 646 of the DOE Organization Act, Section 164 of the Atomic Energy Act of 1954, as amended, and GSA delegation to the Secretary of Energy in accordance with sections 201(a)(3) and 205(d) of the Federal Property and Administrative Services Act of 1949, DOE is authorized to carry out the following: a. Enter into contracts for the acquisition of utility services for Departmental programs. b. Enter into new contracts or modify existing contracts to provide electric service for periods not exceeding 25 years in connection with the construction or operation of the Oak Ridge, Paducah, and Portsmouth installations. c. Intervene or otherwise participate in State and Federal regulatory proceedings to protect the interests of the Department as a consumer of utility services. 9. RESPONSIBILITIES. a. Director of Administration and Human Resource Management shall: (1) Establish policy for the acquisition, management, and sale of utility services, consistent with established programmatic goals and objectives. (2) Request authorization from GSA for DOE participation in proceedings before regulatory bodies to protect the consumer interests of DOE and other Federal agencies, as appropriate. 6 DOE 4540.1C 6-8-92 b. Director of Organization. Resources and Facilities Management, throug h the Director of EnergyManagement and Facilities Evaluation, shall: (1) Develop and maintain plans, policies, and procedures for the acquisition, management, and sale of utility services. (2) Provide analysis, guidance, and assistance to program and field elements in determining utility service requirements, in implementing policies, plans, and procedures, and in the acquisition, management, and sale of utility services. (3) Provide Departmental liaison with GSA and other Federal agencies on all utility service activities.

(4) Review and approve Utility Procurement Plans (Attachment 1) and proposed utility service contracts prior to award by the contracting officer. The review shall apply to all proposed contractual arrangements when the annual cost estimated at the time of initiation or annual review exceeds $150,000 for separate contracts or $250,000 for authorizations under effective areawide contracts, or the proposed connection charge, termination liability or other facility charge is estimated to exceed $75,000 for separate contracts or $125,000 for authorizations under effective areawide contracts. (5) Coordinate applicable Utility Procurement Plans and proposed utility service contractual arrangements identified in paragraph 9b(4) with: the General Counsel; Procurement, Assistance and Program Management; and Program Secretarial Officers. (6) Provide overall coordination of DOE involvement in utility regulatory proceedings. As part of this responsibility, the Director of Organization, Resources and Facilities Management shall: (a) Determine, upon receipt of notification of regulatory proceeding and an impact analysis from the field element, and with the concurrence of General Counsel, and the Program Secretarial Officers, whether the regulatory proceeding warrants DOE intervention. (b) Coordinate proposed regulatory actions with the applicable field element, General Counsel, and Program Secretarial Officers to ensure that counsel from the field element or Headquarters is available to represent DOE in the proceedings, and that all 7DOE 4540.1C 6-8-92 appropriate technical support requirements, including necessary funding, staff support, and utility rate expert services are met. (c) Where appropriate and beneficial to DOE interests, offer staff assistance and/or funds to the Federal agency involved in the regulatory proceedings. c. Director of Procurement, Assistance and Program Management shall: (1) Prescribe and publish agency acquisition policies, regulations, and procedures. (2) Review and approve for award proposed contracts for utility services when the contract’s: total value exceeds the contracting authority delegated to the Heads of the Field Elements; is likely to provoke unusual public interest; or is of a new or unusual nature. The approval shall be concurrent with and incorporated in the same document as the Director of Organization, Resources and Facilities Management’s approval. d. General Counsel through the: (1) Assistant General Counsel for Procurement and Finance shall: (a) Provide legal assistance and consultation on all matters relating to utility service acquisition. (t)) Review and concur in all legal aspects of proposed contracts for utility services requiring Headquarters approval. (2) Assistant General Counsel for Civilian Nucl ear Programs shall provide legal assistance and consultation on all matters relating to uranium enrichment utility services contracts at the Oak Ridge, Paducah, and Portsmouth installations. (3) Assistant General Counsel for Regulatory Interventions/Power Marketing shall provide legal assistance on utility regulatory matters, represent DOE in proceedings before State and Federal regulatory agencies, and take appropriate action for judicial review of such agencies’ decisions when determined necessary or appropriate. e. Program Secretarial Officers shall: (1) Participate in the planning and negotiation of utility service contracts, as appropriate. 8 DOE 4540.1C 6-8-92 f.

(2) Review Utility Procurement Plans and proposed contracts to ensure that utility service is adequate for program requirements and provide concurrence to the Director of Organization, Resources and Facilities Management. (3) Review and concur with the Director of Organization, Resources and Facilities Management’s recommendations to participate in regulatory proceedings. Heads of Field Elements shall: (1) Adhere to the following procedures, in conjunction with Program Secretarial Officers, in acquiring utility services: (a) (b) (c) (d) Solicit utility services by a request for proposals or invitation for bids in accordance with FAR paragraph 8.304-5(c) . Acquire utility services by sole source procurement in the absence of competitive procurement in accordance with the requirements set forth in FAR part 6, DEAR part 906, and DOE 4200.1C. Document the justification for procurement by sole source in the Utility Procurement Plan and place a copy of the Plan in the official contract file. Submit a Utility Procurement Plan and proposed utility services contract to the Director of Organization, Resources and Facilities Management for coordination, review, and approval prior to the contracting officer’s award of the contract. The review applies to all proposed utility arrangements when the annual cost at the time of initiation or annual review ‘ exceeds $150,000 for separate contracts or $250,000 for authorizations under effective areawide contracts, or when the proposed connection charge, termination liability, or other facility charge is estimated to exceed $75,000 for separate contracts or $125,000 for authorizations under effective areawide contracts. Submit for review and approval a post-negotiation summary to the Director of Organization, Resources and Facilities Management prior to contract execution if there are departures from the Utility Procurement Plan or if new issues are developed during the final negotiations which were not addressed in the Utility Procurement Plan. Enter into utility service contracts in accordance with FAR subpart 8.3 requirements, DEAR subpart 908.3 and section 970.0803, the terms and conditions of the DOE 4540.1C 6-8-92 9 Utility Procurement Plan, and the approved proposed utility contract. Acquire utility services under one of the following contractual arrangements: 1 Execute an authorization under a GSA areawide contract to take advantage of GSA’S negotiations with the utility supplier for the standard contract clauses and provisions. Rates may be negotiated. No changes may be made to GSA areawide contract clauses. However, additional specific and/or administrative requirements or necessary additional contract terms specific to the acquiring facility may be added to the areawide contract. 2 Execute a separate DOE-negotiated contract if an areawide contract is not available or if a separate contract is more advantageous and is in accordance with FAR subsection 8.304-5 and DEAR subpart 908.3. 3 Authorize a subcontract between the M&O contractor operating the DOE facility and the utility service supplier, in accordance with DEAR section 970.0803, only where it is determined to be in the best interest of the Government. Prior to authorizing such a subcontract, a written concurrence from the Director of Organization, Resources and Facilities Management is required. Requests for such concurrence should be included in the Utility Procurement Plan and Utilities Options Study. Alternatively, it may be made in a separate document submitted to the Director of Organization, Resources and Facilities Management early in the acquisition cycle. Any request shall set forth why it is in the best interest of DOE to acquire utility service by subcontract, i.e., what the benefits are, such as economic advantage. All provisions and clauses of utility service contracts with M&O contractors must be reviewed by DOE using the same criteria as if the utility contract were procured directly by DOE.

Enter into an interagency agreement with another Federal agency or entity for the consolidated purchase, joint-use, or cross service of utility services or facilities by specifying the 4 10 DOE 4540.1C 6-8-92 services or facilities to be supplied, the estimated costs, and other conditions under which service will be required. 5 Enter into an intra-agency agreement with a Power Marketing Administration for the purchase of electric power and wheeling services. 6 Use a Government purchase order for utility services or other written request for service after a written, definite and final refusal to enter into a contract is received from the supplier in accordance with FAR subsection 8.304-5. Commercial forms and clauses of the utility company may be used in accordance with FAR paragraph 8.304-5(g), but language that may be contrary to Federal law and regulations must be deleted and the requirements of FAR Section 8.309 must be inserted. (e) Submit two copies of all executed contracts to the Director of Organization, Resources and Facilities Management within 30 days of execution. (2) Keep the Director of Organization, Resources and Facilities Management currently informed of any utility service related matters not covered elsewhere in this Order. (3) Complete and submit to the Director of Organization, Resources and Facilities Management, by 12-31 of each year, DOE F 4330.1, “Electric Power, Actual Usage and Estimated Requirements” (see Attachment 2, page 1), and DOE F 4330.2, “Natural Gas Statistics, Actual Usage and Estimated Requirements” (see Attachment 2, page 2), for each location where DOE is paying for service or producing utility service onsite. Consumption and costs are to be identified by the first two digits of the budget and reporting (B&R) code to establish program responsibility. (4) Implement procedures for the annual review of utilities management; utility contracts, and supply opti be available. (a) Verify that all utility bills have been against the applicable rate schedule or billing rate and certified correct or, error, correction has been made. (b) Review all utility service contracts to ons that may reviewed approved if found in ensure conformance to FAR requirements and that DOE is receiving service under the most favorable rates, DOE 4540.1C 6-8-92 11 (5) terms, and conditions available. If possible, enter into new contracts or modify contracts containing indefinite terms or lacking expiration dates in order to set a term (number of years) or specific expiration date. (c) Conduct a review of all utility service options available to the site for better terms and conditions of service, lower rates, or other cost-saving measures before acquiring the service. Attachment 3 contains a list of suggested options. (d) Review utilities management at each DOE site, and by each M&O contractor, where appropriate. As a minimum, the review should encompass assessment of ongoing and planned utility activities, review of any current or expected problem areas, evaluation of capability to accomplish required tasks and functions, and adherence to utility policies and procedures covered in this Order. Develop and approve prices for sale of utility services ensuring the prices are on the basis of full-cost recovery, in compliance with DOE 211O.1A. A copy of the price determination, cost/price study, and other documents used in establishing the price shall be furnished to the Director of Organization, Resources and Facilities Management prior to sale. The sale of utility services must be reviewed and approved by the Director of Organization, Resources and Facilities Management prior to execution of a sales contract.

(6) Closely monitor utility regulatory actions. If a utility’s action would have a significant impact on DOE operations or is otherwise of interest to DOE: (a) Notify the Director of Organization, Resources and Facilities Management immediately of any advance notification or actual filing of a proposed rate increase and forward a complete copy of the filing as soon as one can be obtained. (b) Immediately prepare an impact analysis setting forth the basis for the supplier’s proposed rate change and the cost impact to DOE. In addition, request an impact analysis from other significantly affected Federal agencies. 12 DOE 4540.1C 6-8-92 (c) Forward the impact analysis to the Director of Organization, Resources and Facilities Management with a recommendation on whether DOE should participate in the regulatory proceedings. State the assistance available, or needed, if participation is recommended. (d) Monitor all interventions which impact DOE, including those which have other Federal agency representation. Forward copies of all pertinent documents, findings, or reports arising from regulatory proceedings to the Director of Organization, Resources and Facilities Management. BY ORDER OF THE SECRETARY OF ENERGY: DONALD W. PEARMAN, JR. Acting Director Administration and Human Resource Management DOE 4540.1C 6-8-92 Attachment 1 Page 1 UTILITY PROCUREMENT PLAN This plan should be developed for the acquisition of all utility services and made available to the Director of Organization, Resources and Facilities Management for precontract review and approval in accordance with FAR subpart 8.3 prior to final negotiation and execution of the contract with the utility supplier. 1. SOLICITATION DATA. a. Identification of type of service required: electric, natural gas, water, and sewage. b. Market Survey Summary. (1) Identification of all available sources of supply, including GSA areawide contracts in the service area, and intra/interagency agreement possibilities. (2) Identification of method of supply or options available; e.g., cogeneration capabilities, transmission services, interties, wheeling possibilities, third-party financing, and so forth. c. If noncompetitive acquisition, basis for approval and name and title of person approving the justification for sole source, in accordance with the requirements of FAR part 6 and DOE 4200.1C. d. Solicitation method: Request for proposal, invitation for bid, letter request, and so forth. See FAR section 52.301 for solicitation provisions. 2. PRECONTRACT REVIEW. a. Prenegotiations or Preliminary Discussions. Submit any correspondence or memorandums of meetings or discussions with prospective supplier(s). b. FAR subsection 8.307-4 requirements: (1) Technical description or specification of the type, quality, and quantity of required service. (2) Copy of proposed contract. See FAR subsection 15.406-1 for uniform contract format requirements for negotiated acquisitions. Utility service contracts shall contain prescribed clauses in accordance with FAR section 8.309. (3) Complete copy of current rate schedules and tariff of the utility supplier. Attachment 1 DOE 4540.1C Page 2 6-8-92 (4) For new or initial service, in addition to the above: (a) Estimated maximum demand, monthly consumption, estimated annual cost of service, and date initial service is required. (b) Estimated ultimate demand and monthly consumption, and known or estimated time schedule for growth to ultimate requirements.

(c) A simple schematic diagram of meter locations and new connecting facilities. (5) For existing utility service, in addition to subparagraphs 4(a), (b), and (c), above, submit the following: (a) (b) (6) Facil data appl (a) (b) A copy of the most recent 12 monthly bills, tabulated by month, showing demand, consumption, and charges; and projected consumption and cost for the next 12 months. A simple schematic diagram or line drawing showing meter locations. ities connection and/or related charges, the following should be submitted for new and existing services, when icable: Proposed refundable or nonrefundable connection charge, termination liability, or other facilities charges to be paid by DOE with a description of the supplier’s proposed facilities cost. The basis for the connection charge and a statement by the supplier that the proposed facilities charge is not in-excess of the charges to other customers for like facilities. (7) Identification of any unusual or other factors affecting the acquisition. POWER USAGE STATISTICS DOE 4540.1C 5-8-92 Attachment 2 Page 1 Attachment 2 Page 2 DOE 4540.1C 6-8-92 NATURAL GAS STATISTICS DOE 4540.1C Attachment 3 6-8-92 Page 1 (and 2) UTILITY SERVICE REQUIREMENTS AND OPTION STUDIES 1. PURPOSE. These studies are to identify all available energy supply sources and options that can meet present and planned utility requirements of the site in order to acquire the most economical and reliable service. Each study shall be completed at least 2 years prior to the current contract’s expiration/renewal notification date to allow time to determine if change of service is warranted, to pursue any of the identified options, and to forward a summary of the option study and recommendations to the Headquarters Public Utilities Branch, in conjunction with Program Secretarial Officers, for review and concurrence. The option studies should be prepared with the participation of the field utility staff and with close involvement of site personnel, with Program Secretarial Officers included in both the planning and execution stages. 2. CONTENTS. At minimum, the study should identify and, where appropriate, thoroughly analyze the following: a. Service Requirements. (1) Present Service: Supplier; type of service; adequacy of service; and cost. (2) Future Service Requirements: New loads or revised load pattern and changes from baseline levels. b. All Available Sources of Supply. (1) (2) (3) (4) (5) (6) Utility Capacity S atust : Reserve margin adequacy and major new plant additions. Utility Financial Status: Planned/anticipated major plant closures; service area’s economic development pattern; and ability to switch to alternate fuels. Cogeneration capabilities; transmission services; interties; third-party financing; types of services; and rate provisions. Onsite Utility Distribution System: Adequacy and capacity to meet projected loads. : Electric power allocations available to Federal agencies. Regulatory Climate : Federal, State, and local regulatory bodies. Available Opportunities for Changes in Service: Allocations from Power Marketing Administrations