Part I - The Schedule

Sections B through H

### TABLE OF CONTENTS {#table-of-contents .TOC-1}

[B-1 SERVICES BEING ACQUIRED 4](#b-1-services-being-acquired)

[B-2 CONTRACT TYPE AND VALUE 4](#b-2-contract-type-and-value)

[B-3 AVAILABILITY OF APPROPRIATED FUNDS
6](#b-3-availability-of-appropriated-funds)

[C-1 STATEMENT OF WORK 6](#c-1-statement-of-work)

[D-1 PACKAGING AND MARKING 6](#d-1-packaging-and-marking)

[E-1 FAR 52.246-9 INSPECTION of RESEARCH and DEVELOPMENT (Short Form)
(APR 1984)
6](#e-1-far-52.246-9-inspection-of-research-and-development-short-form-apr-1984)

[E-2 INSPECTION AND ACCEPTANCE 7](#e-2-inspection-and-acceptance)

[F-1 DELIVERIES 7](#f-1-deliveries)

[F-2 PLACE OF PERFORMANCE 7](#f-2-place-of-performance)

[F-3 PERIOD OF PERFORMANCE 7](#f-3-period-of-performance)

[G-1 GOVERNMENT CONTACTS 7](#g-1-government-contacts)

[H-1 REDEFINING THE FEDERAL/CONTRACTOR RELATIONSHIP TO IMPROVE
MANAGEMENT AND PERFORMANCE
8](#h-1-redefining-the-federalcontractor-relationship-to-improve-management-and-performance)

[H-2 PERFORMANCE DIRECTION 9](#h-2-performance-direction)

[H-3 CONTRACTOR ASSURANCE SYSTEM 11](#h-3-contractor-assurance-system)

[H-4 NNSA OVERSIGHT 12](#h-4-nnsa-oversight)

[H-5 ACCOUNTABILITY 13](#h-5-accountability)

[H-6 STANDARDS MANAGEMENT 13](#h-6-standards-management)

[H-7 UTILIZATION OF PARENT CORPORATE SYSTEMS
13](#h-7-utilization-of-parent-corporate-systems)

[H-8 CONTRACTOR REINVESTMENT OF COST EFFICIENCIES
13](#h-8-contractor-reinvestment-of-cost-efficiencies)

[H-9 CONTRACTOR MULTI-YEAR LABORATORIES' VISION FOR CONTINUOUS
IMPROVEMENT
14](#h-9-contractor-multi-year-laboratories-vision-for-continuous-improvement)

[H-10 PERFORMANCE BASED MANAGEMENT
14](#h-10-performance-based-management)

[H-11 PERFORMANCE INCENTIVES 16](#h-11-performance-incentives)

[H-12 AWARD TERM 17](#h-12-award-term)

[H-13 RESERVED 18](#h-13-reserved)

[H-14 MODIFICATION AUTHORITY 19](#h-14-modification-authority)

[H-15 SANDIA CORPORATION 19](#h-15-sandia-corporation)

[H-16 REPRESENTATIONS AND CERTIFICATIONS
19](#h-16-representations-and-certifications)

[H-17 BUSINESS ENTITY - FEDERALLY FUNDED RESEARCH AND DEVELOPMENT CENTER
(FFRDC)
19](#h-17-business-entity---federally-funded-research-and-development-center-ffrdc)

[H-18 SANDIA CORPORATION OBLIGATIONS
20](#h-18-sandia-corporation-obligations)

[H-19 PERFORMANCE GUARANTEE 20](#h-19-performance-guarantee)

[H-20 CONTRACTOR COMMITMENTS 20](#h-20-contractor-commitments)

[H-21 PRIVACY ACT SYSTEMS OF RECORDS
20](#h-21-privacy-act-systems-of-records)

[H-22 PERFORMANCE OF WORK AT DOE FACILITIES AND SITES OTHER THAN SANDIA
NATIONAL LABORATORIES
21](#h-22-performance-of-work-at-doe-facilities-and-sites-other-than-sandia-national-laboratories)

[H-23 ORGANIZATIONAL CONFLICTS OF INTEREST (OCI) - SPECIAL PROVISION
21](#h-23-organizational-conflicts-of-interest-oci---special-provision)

[H-24 HOME OFFICE AND OTHER CORPORATE SUPPORT
21](#h-24-home-office-and-other-corporate-support)

[H-25 CONTRACTOR EMPLOYEES 23](#h-25-contractor-employees)

[H-26 ADVANCE UNDERSTANDING OF COSTS AND EXPENSES
23](#h-26-advance-understanding-of-costs-and-expenses)

[H-27 LOBBYING RESTRICTION (ENERGY AND WATER DEVELOPMENT APPROPRIATIONS
ACT, 2003)
24](#h-27-lobbying-restriction-energy-and-water-development-appropriations-act-2003)

[H-28 LOBBYING RESTRICTION (DEPARTMENT OF INTERIOR AND RELATED AGENCIES
APPROPRIATIONS ACT, 2003)
24](#h-28-lobbying-restriction-department-of-interior-and-related-agencies-appropriations-act-2003)

[H-29 FLOWDOWN OF RIGHTS TO PROPOSAL DATA
24](#h-29-flowdown-of-rights-to-proposal-data)

[H-30 ASSET MANAGEMENT REQUIREMENTS
24](#h-30-asset-management-requirements)

[H-31 STRATEGIC PURCHASING 27](#h-31-strategic-purchasing)

[H-32 OPEN COMPETITION AND LABOR RELATIONS UNDER MANAGEMENT AND
OPERATING AND OTHER MAJOR FACILITIES CONTRACTS (DEC 2002)
29](#h-32-open-competition-and-labor-relations-under-management-and-operating-and-other-major-facilities-contracts-dec-2002)

[H-33 IMPLEMENTATION OF SECTION I CLAUSES
30](#h-33-implementation-of-section-i-clauses)

[H-34 PREEXISTING CONDITIONS 31](#h-34-preexisting-conditions)

**[Part I - The Schedule]{.underline}**

**[Section B - SUPPLIES OR SERVICES AND PRICES/COSTS]{.underline}**

### B-1 SERVICES BEING ACQUIRED

> The Contractor shall, in accordance with the terms of this Contract,
> provide the personnel, equipment, materials, supplies, and services,
> (except as may be furnished by the Government) and otherwise do all
> things necessary for, or incident to providing its best efforts so as
> to carry out in an efficient and effective manner all necessary and
> related services to manage and operate the Government-owned Sandia
> National Laboratories (hereinafter \"the Laboratories\", \"the
> Laboratory\", or "SNL").

### B-2 CONTRACT TYPE AND VALUE 

> \(a\) This contract is a cost-reimbursement management and operating
> contract employing performance incentives. The Estimated Cost, Fixed
> Fee, and Performance Incentive Fee Pool is set forth below.

\(b\) The Estimated Cost of the specified Contract periods, exclusive of
the Contractor\'s Fees, if any, is set forth below:

> [Contract Periods]{.underline} [Estimated Cost]{.underline}
>
> October 1, 1993 through
>
> September 30, 2003 \$15,395,011,897
>
> October 1, 2003 through
>
> September 30, 2004 \$ 2,173,608,020
>
> October 1, 2004 through
>
> September 30, 2008 \$[to be negotiated annually]{.underline}
>
> TOTAL through FY04 \$17,568,619,917
>
> \(c\) The Fixed Fee for the specified Contract period is set forth
> below:
>
> [Contract Period]{.underline} [Fixed Fee]{.underline}
>
> October 1, 1993 through
>
> September 30, 2003 \$155,733,103
>
> October 1, 2003 through
>
> September 30, 2004 \$ 15,400,000
>
> October 1, 2004 through
>
> September 30, 2008 \$[to be negotiated annually]{.underline}
>
> TOTAL through FY04 \$171,133,103
>
> \(d\) The maximum available Performance Incentive Fee pool is set
> forth below:
>
> Maximum Available Performance

#### Incentive Fee Pool

> October 1, 1993 through
>
> September 30, 2003 \$Not applicable
>
> October 1, 2003 through
>
> September 30, 2004 \$8,200,000
>
> October 1, 2004 through
>
> September 30, 2008 \$[to be negotiated annually]{.underline}
>
> TOTAL through FY04 \$8,200,000
>
> \(e\) The Total Estimated Cost, Fixed Fee, and Maximum Available
> Performance Incentive Fee Pool under this contract for the period
> October 1, 1993, through September 30, 2004 is \$17,747,953,020.
>
> \(f\) Pursuant to the Contract Clause entitled \"Obligation of Funds,"
> the total amount obligated by the Government with respect to this
> contract is \$15,850,267,293.11.
>
> \(g\) Fee will be calculated as follows: The Fixed Fee for each year
> shall be .7% (seven tenths of one percent) of the established total
> budget. The Performance Incentive Fee Pool shall be .375% (three
> eights of one percent) of the established total budget.
>
> \(h\) Payment of fee will be made on the following schedule:
>
> \(1\) Fixed Fee is authorized to be drawn down from the special
> financial institution account in monthly installments, representing
> one-twelfth (1/12) of the fixed fee amount, on the last day of each
> month.
>
> \(2\) Performance Incentive fee earned shall be authorized for draw
> down in full, upon the NNSA Sandia Site Office Manager's issuance of
> the Fee Determination Official's determination.

### B-3 AVAILABILITY OF APPROPRIATED FUNDS 

Except as may be specifically provided to the contrary in Contract
Clause "Nuclear Hazards Indemnity Agreement,\" the duties and
obligations of the Government hereunder calling for the expenditure of
appropriated funds shall be subject to the availability of funds
appropriated by the Congress, which the U.S. Department of Energy (DOE)
National Nuclear Security Administration (NNSA) may legally spend for
such purposes.

**[Section C - DESCRIPTION/SPECIFICATIONS/STATEMENT OF
WORK]{.underline}**

### C-1 STATEMENT OF WORK

> The work to be performed under this Contract is set forth in Part III,
> Section J, Appendix B, Statement of Work.

**[Section D - PACKAGING AND MARKING]{.underline}**

### D-1 PACKAGING AND MARKING

Packaging and marking of items to be delivered shall be in accordance
with work authorization requirements or other written directions of the
Contracting Officer or the Contracting Officer's Representative (COR).

**[Section E - INSPECTION AND ACCEPTANCE]{.underline}**

### E-1 FAR 52.246-9 INSPECTION of RESEARCH and DEVELOPMENT (Short Form) (APR 1984)

> The Government has the right to inspect and evaluate the work
> performed or being performed under the Contract, and the premises
> where the work is being performed, at all reasonable times, and in a
> manner that will not unduly delay or disrupt the work. If the
> Government performs inspection or evaluation on the premises of the
> Contractor or a subcontractor, the Contractor shall furnish and shall
> require subcontractors to furnish all reasonable facilities and
> assistance for the safe and convenient performance of these duties.

### E-2 INSPECTION AND ACCEPTANCE

> Inspection of all activities and acceptance for all work and effort
> under this Contract shall be accomplished by the Contracting Officer
> or any other duly authorized representative.

**[Section F - DELIVERIES OR PERFORMANCE]{.underline}**

### F-1 DELIVERIES

> Delivery of products under this Contract shall be in accordance with
> the written direction of the Contracting Officer or any other duly
> authorized representative.

### F-2 PLACE OF PERFORMANCE

> The work under this Contract is to be carried out at a variety of
> locations, but the principal places of performance will be at
> Albuquerque, New Mexico and Livermore, California.

### F-3 PERIOD OF PERFORMANCE

> The Parties recognize that the Contract's original period of
> performance for the management and operation of SNL commenced on
> October 1, 1993 and expired on September 30, 1998. Contract
> Modification No. M081 extended the period of performance through
> September 30, 2003. This Contract Modification No. M202 further
> extends the period of performance through September 30, 2008, unless
> sooner reduced, terminated or extended in accordance with the
> provisions of this Contract.

**[Section G - CONTRACT ADMINISTRATION DATA]{.underline}**

### G-1 GOVERNMENT CONTACTS 

(a) The NNSA Manager, Sandia Site Office (SSO), is the Contracting
    Officer responsible for this Contract. The SSO is the Contractor's
    focal point of contact for all matters, except as identified in (b)
    below, regarding this Contract. The Manager, SSO can be reached at:

> U.S. Department of Energy
>
> National Nuclear Security Administration
>
> Manager, Sandia Site Office
>
> Mail Stop 0184
>
> P.O. Box 5400
>
> Albuquerque, NM 87185-5400
>
> \(b\) The Patent Counsel, Office of Chief Counsel, is the Contractor's
> focal point for items concerning patent, intellectual property,
> licenses and technical data issues. The Patent Counsel can be reached
> at DOE/NNSA Service Center, Office of Chief Counsel, P.O. Box 5400,
> Albuquerque, New Mexico, 87185‑5400.
>
> \(c\) Correspondence. To promote timely and effective administration,
> correspondence submitted under this Contract shall contain a subject
> line commencing with the Contract Number, as illustrated below:
>
> \"SUBJECT: Contract No. DE-AC04-94AL85000, Request for subcontract
> placement approval.\"

**[Section H - SPECIAL CONTRACT REQUIREMENTS]{.underline}**

### H-1 REDEFINING THE FEDERAL/CONTRACTOR RELATIONSHIP TO IMPROVE MANAGEMENT AND PERFORMANCE

> \(a\) General
>
> The NNSA is committed to improving the effectiveness and efficiency of
> the Nuclear Weapons Complex. This H-1 Clause sets forth an overview of
> NNSA's approach to achieve this commitment. Contract Clauses H-2
> through H-10 set forth the specific Contract requirements that will
> provide the Contractor the flexibility to improve its management and
> performance.
>
> \(b\) Clarifying the Contract Relationship
>
> To clarify the contractual relationship, NNSA will provide program and
> performance direction regarding **what** NNSA wants in each of its
> programs. The Contractor shall determine **how** the program is
> executed and shall be accountable for performance in accordance with
> the terms and conditions of this Contract. The Contractor will have
> the flexibility to use its expertise and ingenuity to determine how
> the work is to be accomplished in the most effective and efficient
> manner. NNSA will issue performance direction to the Contractor only
> through a warranted Contracting Officer or a designated COR. All other
> Federal staff and oversight components are therefore precluded from
> tasking contractor personnel.
>
> \(c\) Approach to Oversight
>
> NNSA will rely on increased Contractor accountability as a result of
> implementation of the Contractor's Site Assurance System. In certain
> areas, NNSA oversight will focus on evaluating systems and performance
> rather than transactions. NNSA will transition its oversight of
> programs, projects, business systems and ongoing operations from a
> transactional to a performance and systems based approach.
>
> \(d\) Empowering Contractor Expertise
>
> NNSA will allow the Contractor to identify and evaluate, for NNSA
> approval, best commercial standards and best business practices and to
> continuously pursue improvements in aspects of Contract performance
> where cost effective and efficient improvements can be achieved. The
> Contractor is also encouraged to use the private-sector expertise of
> its parent organization to improve Contract performance as
> appropriate.
>
> \(e\) Results-Oriented, Streamlined Performance Appraisal
>
> A results-oriented, streamlined performance appraisal process will be
> established with critical performance objectives, measures, and
> targets that focus on those areas of greatest strategic value to NNSA
> using systems-based metrics.
>
> \(f\) Reward for Achieving Cost Efficiencies
>
> The Contractor will be rewarded for the achievement of cost
> efficiencies through onsite investment of cost savings and the
> potential to earn additional contract term.
>
> \(g\) Transition
>
> Contract Clauses H-2 through H-10 provide a mechanism for the
> Contractor to improve its management and performance. The Contractor's
> management systems that exist on October 1, 2003 will continue until
> the Contractor addresses the applicable requirements contained in
> Contract Clauses H-2 through H-10. For changes that do require NNSA
> approval, the Contractor will not implement a change until it is
> formally approved by the Contracting Officer.

### H-2 PERFORMANCE DIRECTION

> \(a\) The Contractor is responsible for the management, integration,
> and operation of the site in accordance with the Terms and Conditions
> of the Contract, duly issued Work Authorizations (WAs), and written
> direction and guidance provided by the Contracting Officer and the
> COR. NNSA is responsible for establishing the work to be accomplished,
> the applicable standards and requirements to be met, and overseeing
> the work of the Contractor. The Contractor will use its expertise and
> ingenuity in contract performance and in making choices among
> acceptable alternatives to most effectively and efficiently accomplish
> the work called for by this Contract.
>
> \(b\) Only the Contracting Officer may assign, modify, and priority
> rank WAs.
>
> \(c\) (1) The Contracting Officer and the NNSA Administrator will
> appoint, in writing, specific NNSA employees as CORs with the
> authority to issue Performance Direction to the Contractor. CORs are
> authorized to act within the limits of their delegation letter. A copy
> of each letter will be provided to the Contractor. COR functions
> include technical monitoring, inspection, and other functions of a
> technical nature not involving a change in the scope, cost, or Terms
> and Conditions of the Contract.
>
> \(2\) The Contractor must comply with written Performance Directions
> that are signed by the COR and:
>
> \(i\) Redirect the Contract effort, shift work emphasis within a work
> area or a WA, require pursuit of certain lines of inquiry, further
> define or otherwise serve to accomplish the Statement of Work (SOW),
> or
>
> \(ii\) Provide information that assists in the interpretation of
> drawings, specifications, or technical portions of the work
> description.
>
> \(3\) Performance Direction does not:
>
> \(i\) authorize the Contractor to exceed the funds obligated on the
> Contract;
>
> \(ii\) authorize any increased cost or delay in delivery in a WA;
>
> \(iii\) entitle the Contractor to an increase in fee; or
>
> \(iv\) change any of the terms or conditions of the Contract.
>
> \(d\) (1) The Contractor shall accept only Performance Direction that
> is provided in writing by a COR and that is within the SOW and a WA.
>
> \(2\) The COR is authorized to review and approve technical reports,
> drawings, specifications, and technical information delivered by the
> Contractor.
>
> \(e\) (1) The Contractor shall promptly comply with each duly issued
> Performance Direction unless the Contractor reasonably believes that
> the Performance Direction violates this clause. If the Contractor
> believes the Performance Direction violates this clause, the
> Contractor shall suspend implementation of the Performance Direction
> and promptly notify the Contracting Officer of its reasons for
> believing that the Performance Direction violates this clause. The
> Contractor shall confirm these reasons in writing to the Contracting
> Officer within ten days.
>
> \(2\) The Contracting Officer will determine if the Performance
> Direction is within the SOW and WA. This determination will be issued
> in writing and the Contractor shall promptly comply with the
> Contracting Officer\'s direction. If it is not within the SOW or WA,
> the Contracting Officer may issue a change order pursuant to the
> Changes clause.
>
> \(f\) The Parties agree to maintain full and open communication at all
> times, and on all issues affecting contract performance, during the
> term of this Contract.

### H-3 CONTRACTOR ASSURANCE SYSTEM

> \(a\) The Contractor shall develop a Contractor Assurance System that
> is approved and monitored by the Sandia Board of Directors. The
> Contractor's Assurance System, at a minimum, shall have the following
> key attributes:

(1) A comprehensive description of the Contractor Assurance System with
    risks, key activities and accountabilities clearly identified.

(2) A Process for notifying the Contracting Officer of significant
    assurance system changes.

(3) Rigorous, risk based credible self-assessments, feedback and
    improvement activities, including utilization of nationally
    recognized experts, and other independent reviews to assess and
    improve its work process and to carry out independent risk and
    vulnerability studies. The Contractor is encouraged to seek third
    party certifications (such as VPP and ISO 9001 or ISO 14001),
    audits, peer reviews and independent assessments with external
    certification or validation.

(4) Identification and correction of negative performance/compliance
    trends before they become significant issues.

(5) A method for validating assurance processes.

(6) Integration of the assurance system with Contractor management
    systems including Integrated Safety Management.

(7) A process for defining performance metrics and performance targets
    to assess performance, including benchmarking of key functional
    areas with other NNSA/DOE contractors and industry and research
    institutions to enhance processes and to assure development of
    performance metrics and performance targets that will result in
    achievement of best in class/industry performance where efficient
    and cost effective.

(8) Continuous feedback and performance improvement.

(9) An implementation plan that defines a transition period for the
    implementation to the Contractor Assurance System.

(10) A process for timely and appropriate communication to the
     Contracting Officer, including electronic access, of assurance
     related information.

> \(b\) The Contracting Officer will utilize internal and external
> reviews required by this clause as a significant factor in determining
> the adequacy of the Contractor's management systems. If the
> Contracting Officer determines that the Contractor is not fully
> complying with applicable laws or regulations or that performance has
> degraded and that the Contractor is not taking appropriate and timely
> corrective action, the Contracting Officer may take any action deemed
> necessary and reasonable under this Contract, including increasing
> oversight of the Contractor.
>
> \(c\) NNSA will revise its oversight in accordance with the Contract
> Clause entitled "NNSA Oversight" when the Contractor has demonstrated
> to the Contracting Officer's satisfaction that the Contractor
> Assurance System or components of the system are operating
> effectively.

### H-4 NNSA OVERSIGHT

> \(a\) [Oversight of Nuclear Facility Operations, Safeguards &
> Security, and Other High Hazard Activities]{.underline} - For nuclear
> facility operations, safeguards & security, and other high hazard
> activities identified by the Contracting Officer, NNSA oversight shall
> be performed at the transaction level. The Contractor shall cooperate
> with NNSA oversight personnel, NNSA Facility Representatives, and
> subject matter experts in the performance of their assigned functions.
> If NNSA is satisfied that the Contractor Assurance System is effective
> and has resulted in an improvement in the Contractor's performance in
> key functional areas, NNSA will consider conducting oversight at the
> systems level.
>
> \(b\) [Oversight of Non-Nuclear Facilities]{.underline} - Once the
> Contracting Officer is satisfied that the Contractor Assurance System
> is operating effectively, NNSA will conduct oversight of the
> Contractor's Non-Nuclear Facilities operations at the systems level.
> NNSA, with Contractor input, shall develop performance metrics and
> performance targets as the means of defining NNSA's performance level
> expectations of the Contractor.
>
> \(c\) [Oversight of Programs, Projects, and Business
> Systems]{.underline} -- In accordance with the Contract Clause
> entitled "Performance Based Management" the Parties will identify key
> end products and services that the Contractor provides to the Nuclear
> Weapons Complex. Oversight of the Contractor shall focus on whether
> the Contractor meets the performance objectives, measures and targets
> in the Performance Evaluation Plan and the performance metrics and
> targets in the Contractor Assurance System.
>
> \(d\) If the Contractor fails to achieve a performance measure or
> target, the Contractor shall develop a recovery plan and NNSA may
> increase its oversight of these areas until performance is corrected.

### H-5 ACCOUNTABILITY

The Contractor is responsible for the quality of its products and for
assessing its operations, programs, projects and business systems and
identifying deficiencies and implementing needed improvements in
accordance with the terms and conditions of this Contract, regardless of
whether NNSA has evaluated the Contractor's performance in any area of
the Contract. The purpose of NNSA oversight is for assessing the
Contractor's performance in meeting its obligations under this Contract.
NNSA oversight shall not be relied upon by the Contractor in assessing
its performance.

### H-6 STANDARDS MANAGEMENT

The Contractor shall regularly benchmark with industry to identify best
commercial standards and best business practices that will improve site
operations with the goal of improving performance where cost effective.
In this context, the term "standard" encompasses DOE Directives,
DOE/NNSA requirements and mandates, and national and international
consensus and generally accepted standards in accordance with NNSA
policy. Once NNSA has completed and issued a new policy for tailoring
standards, the parties shall use a jointly agreed upon process
consistent with that policy to tailor standards to be used at SNL across
all applicable requirements. The Contracting Officer will provide final
approval of those standards accepted by NNSA.

### H-7 UTILIZATION OF PARENT CORPORATE SYSTEMS

If the Contractor, in the interest of efficiency and effectiveness of
business operations, decides to adopt or adapt its parent corporate
systems or services, it will ensure that the Government and Contractor's
data in such systems is readily transferable to a successor contractor.

### H-8 CONTRACTOR REINVESTMENT OF COST EFFICIENCIES

Prior to the beginning of each fiscal year, or as soon as practical
after the budget is determined, the NNSA and the Contractor will
identify and agree upon listings of un-funded priority direct mission
work identified by specific appropriation and budget and reporting
category. Throughout the fiscal year, the Contractor shall apply cost
efficiencies achieved through streamlining systems and operations only
to un-funded priority direct mission work within the same appropriation
and budget and reporting category (ECOR Control Level) unless a formal
reprogramming action is approved by NNSA. Indirect cost efficiencies
shall be returned to the mission work in the form of reduced indirect
rates or applied only to un-funded priority indirect work, which has
been approved and documented by Sandia through its Program Leader
Council as a part of the Integrated Enabling Services Investment
Process. The extent of un-funded priority work accomplished in each
fiscal year shall serve as a key performance target when measuring the
Contractor\'s success in improving performance and achieving cost
efficiencies. Although it is the intent of the NNSA that the Contractor
shall apply cost efficiencies at SNL, the NNSA reserves the right to
reallocate direct mission work cost efficiencies to other programmatic
mission critical needs.

### H-9 CONTRACTOR MULTI-YEAR LABORATORIES' VISION FOR CONTINUOUS IMPROVEMENT

> []{.mark}

The Contractor shall prepare a multi-year Laboratories' Vision detailing
its planned efforts, and anticipated results in improving its management
and performance. The Contractor shall also include a description of
contributions of the corporate parent to improving site management and
performance and a description of the Contractor's approach to
participation within and coordination with the NNSA Weapon Complex. The
Laboratories' Vision shall be submitted to the Contracting Officer
annually and shall be consistent with the Contractor's Institutional and
Site Facility Plan.

### H-10 PERFORMANCE BASED MANAGEMENT

> \(a\) [Performance-Based Management System]{.underline}. This Contract
> is a management and operating performance-based contract, which holds
> the Contractor accountable for performance. This Contract uses clearly
> defined standards of performance consisting of performance objectives
> in relation to fixed fee, performance incentives as described in
> Contract Clause entitled \"Performance Incentives" and award term
> incentives as described in Contract Clause entitled \"Award Term" with
> measures and targets for each area agreed to in advance on a fiscal
> year basis and incorporated into the Performance Evaluation Plan. The
> Parties agree to continuously improve upon these standards of
> appraising Contractor performance.
>
> \(b\) [Performance Appraisal Process]{.underline}.
>
> \(1\) [Performance Evaluation Plan.]{.underline} A Performance
> Evaluation Plan developed by the Contracting Officer, with Contractor
> input, shall document the process by which the Contractor's
> performance will be evaluated. The Parties will strive to reach mutual
> agreement on expected business, operational and technical performance
> and will work together to develop performance objectives, performance
> incentives, award term incentives and associated measures and targets
> tied to key end products and NNSA/DOE strategic goals and objectives.
> The NNSA Sandia Site Office Manager reserves the unilateral right to
> make the final decision on all performance objectives and performance
> incentives (including the associated measures and targets) used to
> evaluate Contractor performance. The NNSA Administrator reserves the
> unilateral right to make the final decision on all award term
> incentives (including the associated measures and targets) used to
> evaluate Contractor performance. The Performance Evaluation Plan shall
> be finalized:
>
> \(i\) Prior to the start of an appraisal period if the performance
> objectives, performance incentives, award term incentives and
> associated measures and targets have been mutually agreed to by the
> Parties; or
>
> \(ii\) Not later than thirty days prior to the scheduled start date of
> the appraisal period, if the performance objectives, performance
> incentives, award term incentives and associated measures and targets
> have been unilaterally established by the NNSA Sandia Site Office
> Manager.
>
> Only the Contracting Officer may revise the Performance Evaluation
> Plan, consistent with the Contract statement of work, during the
> appraisal period of performance. The Contracting Officer shall notify
> the Contractor:
>
> \(i\) Of such bilateral changes at least sixty calendar days prior to
> the end of the affected appraisal period;
>
> \(ii\) Of such unilateral changes at least ninety calendar days prior
> to the end of the affected appraisal period and at least thirty
> calendar days prior to the effective date of the change; or
>
> \(iii\) If such change, whether unilateral or bilateral, is urgent and
> high priority, at least thirty calendar days prior to the end of the
> appraisal period.
>
> \(2\) [SNL Appraisal Self-Assessment Report]{.underline}. An annual
> self assessment report will be prepared by the Contractor of its
> performance against the performance objectives and incentives
> contained in the Performance Evaluation Plan and other significant
> factors as determined by the Contractor and Contracting Officer. This
> report shall also (i) include an assessment of the effectiveness of,
> and the improvements achieved through, the Contractor Assurance System
> in accordance with Contract Clause entitled "Contractor Assurance
> System", and (ii) a statement by the Contractor's President assuring
> the Contracting Officer that the Contractor's management system,
> including Assurance System Statements, utilized is adequate to provide
> reasonable assurance that its objectives are being accomplished and
> that the systems and controls continue to be operational. The parties
> agree that this statement fulfills the DOE Order 413.1 requirement
> "The Contractor shall consider all existing information and report
> annually to the appropriate Head of a Departmental Element on the
> status of their management control systems and financial management
> systems."
>
> \(c\) Schedule for Performance Incentive Fee earned determination.
>
> []{.mark}
>
> The NNSA Sandia Site Office Manager shall issue the Fee Determination
> Official's final total performance incentive fee amount earned
> determination in accordance with: the schedule set forth in the
> Performance Evaluation Plan; or as otherwise set forth in this
> contract. However, a determination must be made within sixty calendar
> days after the receipt by the Contracting Officer of the Contractor\'s
> self-assessment, if one is required or permitted, or seventy calendar
> days after the end of the evaluation period, whichever is later, or a
> longer period if the Contractor and Contracting Officer agree. If the
> Contracting Officer evaluates the Contractor\'s performance of
> specific requirements on their completion, the payment of any earned
> fee amount must be made within seventy calendar days (or such other
> time period as mutually agreed to between the Contracting Officer and
> the Contractor) after such completion. If the determination is delayed
> beyond that date, the Contractor shall be entitled to interest on the
> determined total available fee amount earned at the rate established
> by the Secretary of the Treasury under section 12 of the Contract
> Disputes Act of 1978 *(41 U.S.C. 611)* that is in effect on the
> payment date. This rate is referred to as the \"Renegotiation Board
> Interest Rate,\" and is published in the Federal Register semiannually
> on or about January 1 and July 1. The interest on any late total
> available fee amount earned determination will accrue daily and be
> compounded in 30-day increments inclusive from the first day after the
> schedule determination date through the actual date the determination
> is issued. That is, interest accrued at the end of any 30-day period
> will be added to the determined amount of fee earned and be subject to
> interest if not paid in the succeeding 30-day period.

### H-11 PERFORMANCE INCENTIVES

> \(a\) [Performance Incentives Negotiations]{.underline}.
>
> The Parties shall establish the specific Performance Incentives that
> the Contractor will be assessed against for fee determination in
> accordance with the Contract Clause entitled "Performance Based
> Management".
>
> \(b\) [Determination of Performance Incentives]{.underline}*.*
>
> \(1\) The NNSA shall, at the conclusion of each specified appraisal
> period, evaluate the Contractor\'s performance for all Performance
> Incentive requirements. Performance factors will be evaluated in the
> aggregate.
>
> \(2\) The Performance Incentive fee determination will be made in
> accordance with the Performance Evaluation Plan. The determination as
> to the amount of Performance Incentive fee earned is a unilateral
> determination made by the Fee Determining Official (FDO).
>
> \(3\) The Contractor shall be promptly advised in writing of the
> Performance Incentive fee determination, and the basis of the
> Performance Incentive fee determination.
>
> \(4\) Performance Incentive fee not earned during the evaluation
> period shall not be allocated to future evaluation periods.
>
> \(c\) [Fee]{.underline}. The maximum fees allocated for payments to
> the Contractor for the performance of the work under this Contract are
> set forth in Part I, Section B, of the Schedule. The fixed fee amount
> together with Performance Incentives fee earned is available for
> payment in accordance with the Contract Clause entitled "Payments and
> Advances." There shall be no adjustment in the amount of the
> Contractor\'s fee by reason of differences between any estimate of
> cost for performance of the work under this Contract and the actual
> cost of performance of that work.
>
> []{.mark}

### H-12 AWARD TERM

> \(a\) The Contract's term as set forth in the Section F Clause
> entitled "Period of Performance" may be extended if the Contractor
> obtains an overall rating of "Outstanding" on the performance
> objectives contained in its annual NNSA Performance Evaluation Report.
> If the Contractor does not receive an "Outstanding" rating, this Award
> Term clause becomes inoperable for the associated evaluation period.
>
> \(b\) If the Contractor succeeds in achieving an overall "Outstanding"
> rating, NNSA will evaluate the Contractor's success in the performance
> areas set forth in the Award Term section of the Performance
> Evaluation Plan.
>
> \(c\) The Contractor's performance in the performance areas described
> in the Award Term section of the Performance Evaluation Plan will be
> subjectively evaluated by NNSA as a component of its annual
> performance evaluation. The Sandia Site Office Manager will make an
> award term recommendation to the NNSA Fee Determination Official
> (FDO). The decision whether to award additional term will be made by
> the FDO in conjunction with the annual performance incentive fee
> determination.

\(d\) The FDO's award term decision is a unilateral determination of the
FDO.

\(e\) If the FDO's determination is to award additional term, the
Contract shall be modified unilaterally by the Contracting Officer to
extend the term of the contract by one year.

> \(f\) The Contract term, including all earned award term, shall not
> exceed a total cap of 10 years (i.e., FY2004 through FY2013).
>
> \(g\) If the Contractor fails 3 times to earn award term, the
> operation of this Award Term clause will cease. The Contract term will
> not be extended beyond the remaining term unless so extended as a part
> of the Extend/Compete Process as provided for by DOE Policy.
>
> \(h\) A significant failure of Contractor's management controls, as
> defined in the clause entitled "MANAGEMENT CONTROLS," or a
> catastrophic failure, as defined in the clause entitled "CONDITIONAL
> PAYMENT OF FEE, PROFIT, OR INCENTIVES," by the Contractor may result
> in the forfeiture of up to 3-years of previously earned award term in
> addition to other remedies provided for in Contract Clause entitled
> "CONDITIONAL PAYMENT OF FEE, PROFIT, OR INCENTIVES." Such reduction in
> Contract term, if exercised by the Government, does not constitute a
> termination action pursuant to Contract Clause entitled "TERMINATION
> (COST REIMBURSEMENT) (SEP 1996) as modified by DEAR 970.4905-1(b)."

### H-13 RESERVED

### 

### H-14 MODIFICATION AUTHORITY

Notwithstanding any of the other provisions of this Contract, a
Contracting Officer shall be the only individual on behalf of the
Government to:

> \(a\) Accept nonconforming work;
>
> \(b\) Waive any requirement of this Contract; or
>
> \(c\) Modify any term or condition of this Contract.

### H-15 SANDIA CORPORATION

\(a\) "Contractor\" means Sandia Corporation, a Delaware corporation, a
wholly-owned subsidiary of Lockheed Martin Corporation.

> \(b\) "Contractor\'s parent organization" means the sole stockholder
> of the Contractor. []{.mark}Lockheed Martin Corporation, a Maryland
> Corporation, is the Contractor's parent organization.

\(c\) Until expiration or termination of this Contract, all of the stock
of Sandia Corporation will be owned by the Contractor\'s parent
organization. Upon the expiration or termination of this Contract, the
Contractor, at the unilateral option of NNSA and upon payment to it of
the amount of Sandia Corporation\'s paid-in-capital, shall effect: (1)
the resignation of the existing board-of-directors and officers of
Sandia Corporation, and the election of new directors and officers
designated by NNSA, and; (2) assignment and transfer of all Sandia
Corporation stock as may be directed by NNSA.

### H-16 REPRESENTATIONS AND CERTIFICATIONS

The Representations, Certifications, and Other Statements of Offeror
completed by the Contractor and dated September 22, 2003, are hereby
incorporated in this Contract by reference.

### H-17 BUSINESS ENTITY - FEDERALLY FUNDED RESEARCH AND DEVELOPMENT CENTER (FFRDC)

Sandia Corporation shall operate as a separate, autonomous business
entity, which has as its sole purpose the management and operation of
Sandia National Laboratories. Accordingly, the Contractor will establish
and maintain its own system of policies and procedures related to
management and operation of the Laboratories, which is consistent with
the terms of this contract, DOE Directives, regulations, and practices.
The Contractor shall conduct its business consistent with the policies
and procedures applicable to FFRDC facilities as set forth in Federal
Acquisition Regulations Part 35.017-1 (c) (4) and 35.017-2(h).

### H-18 SANDIA CORPORATION OBLIGATIONS

> Existing contractual agreements and regulatory obligations entered
> into under Contract No. DE-AC04-76DP00789 will continue during
> performance of this Contract. The contractual agreements shall include
> all (a) subcontracts and purchase orders; (b) agreements with domestic
> and foreign research organizations; (c) agreements with universities
> and colleges; and (d) other similar agreements. The Contractor shall
> continue to have responsibility and accountability under the terms of
> this Contract for all existing commercial and regulatory obligations
> of Sandia Corporation.

### H-19 PERFORMANCE GUARANTEE

> \(a\) The Contractor\'s parent organization, Lockheed Martin
> Corporation, has provided a performance guarantee in a manner and form
> acceptable to the Contracting Officer assuring the performance,
> duties, and responsibilities of the Contractor shall be satisfactorily
> fulfilled. The performance guarantee is set forth in Part III, Section
> J, Appendix F, entitled "Performance Guarantee."
>
> \(b\) In the event any of the signatories to the Performance Guarantee
> Agreement enters into proceedings related to bankruptcy, whether
> voluntary or involuntary, the Contractor agrees to furnish written
> notification of the bankruptcy to the Contracting Officer.

### H-20 CONTRACTOR COMMITMENTS

> The Contractor agrees to use its best efforts to perform, or have
> performed in the case of those of the Contractor's parent
> organization, those commitments set forth in Part III, Section J,
> Appendix H, entitled \"Contractor and Corporate Parent Commitments,
> Agreements, and Understandings.\"

### H-21 PRIVACY ACT SYSTEMS OF RECORDS 

> The Contractor shall design, develop, or operate the following systems
> of records on individuals to accomplish an agency function pursuant to
> the Contract's \"Privacy Act\" clause.
>
> [DOE System No.]{.underline} [Title]{.underline}
>
> DOE-31 Firearms Qualifications Records
>
> DOE-45 Weapon Data Access Control System
>
> DOE-48 Security Education and/or Infraction Reports
>
> DOE-52 Alien Visits and Participation

The above list shall be revised from time to time by mutual agreement
between the Contractor and the Contracting Officer as may be necessary
to keep it current. Such changes need not be formally incorporated
before the annual Contract update modification, but shall have the same
effect as if actually listed above for the purpose of satisfying the
listing requirement contained in Paragraph (a)(1) of the Contract's
"Privacy Act" clause.

### H-22 PERFORMANCE OF WORK AT DOE FACILITIES AND SITES OTHER THAN SANDIA NATIONAL LABORATORIES 

[]{.mark}

In performance of the Contract's work at DOE or NNSA facilities and
sites other than SNL, the Contractor shall comply with applicable
requirements set forth in this Contract's Appendix G, List of Applicable
Directives and NNSA Policy Letters, and any additional directives which
have been established for the DOE/NNSA Prime Contractor at that DOE/NNSA
facility/site that are applicable to the Sandia Corporation work being
performed and that are applicable to the associated hazards at the
particular facility or site.

### H-23 ORGANIZATIONAL CONFLICTS OF INTEREST (OCI) - SPECIAL PROVISION 

> The Contractor and the Contractor\'s parent and affiliates shall
> comply with the provisions of the approved SNL OCI Management Plan in
> the performance of the Contract and any deviations or amendments to
> said Plan shall require the express written approval, in advance, from
> the Contracting Officer. The Contractor shall submit to the
> Contracting Officer annual OCI Disclosure Update Statements beginning
> July 1, 2004. Notwithstanding the annual disclosure requirement, any
> change in relevant facts since the last OCI Disclosure Update
> Statement shall be disclosed to the Contracting Officer pursuant to
> paragraph (c)(1), "Disclosure After Award" of the Contract's
> "Organizational Conflicts of Interest" clause. Initial notification to
> the Contracting Officer shall be accomplished as soon as the facts are
> known with a full disclosure within 60 days of the initial
> notification, unless otherwise directed by the Contracting Officer.

### H-24 HOME OFFICE AND OTHER CORPORATE SUPPORT

\(a\) Pursuant to the Contract's "Payments and Advances" clause, the
parties have agreed that the following home office and other parent
organization or affiliate-provided services, directly attributable to
the performance of this Contract, are allowable costs if they meet all
other criteria for allowability. Such support and services are not
considered procurements as contemplated by the Contract's "Contractor
Purchasing System" clause. Support activities include, but are not
limited to, the following:

> \(i\) Analysis and monitoring of employee benefits
>
> \(ii\) Union negotiations and personnel support
>
> \(iii\) Legal and/or labor contract support
>
> \(iv\) Financial and tax accounting support
>
> \(v\) Internal audit support
>
> \(vi\) Participation in purchasing/national agreements
>
> \(vii\) Environmental management
>
> \(viii\) Provision of Corporate Ethics
>
> \(ix\) Provision of advice and consultation on import/export
> compliance
>
> \(x\) Improvement of technical operations
>
> \(xi\) Conduct of Board of Directors meetings.
>
> \(b\) The Contractor shall charge to the account of the Government as
> provided in the Contract's "Payments and Advances" clause, or as
> otherwise directed by the Contracting Officer, the amounts incurred
> for the above support services. Such amounts will be charged and
> accounted for as follows; however, in any event, they shall not be
> inconsistent with the cost principles in FAR 31.2 as supplemented by
> DEAR 931.2:
>
> \(i\) [Corporate Services Provided to SNL.]{.underline} Costs may
> include travel, per diem, and other out-of-pocket costs, plus the
> actual salaries of the persons performing such services plus a
> percentage factor of salaries to cover fringe benefits and payroll
> taxes. The percentage factor will be applied in accordance with the
> Cost Accounting Standards Disclosure Statement issued by Lockheed
> Martin Corporation. The budget for all costs will be subject to
> advance approval by the Contracting Officer. All such costs will be
> charged against a specific Sandia Corporation-issued order or
> Inter-Lockheed Martin Corporation Work Transfer Agreement (IWTA) for
> such services as applicable. The Contractor may issue such orders or
> IWTA within the total budget limitation approved by the Contracting
> Officer for this support.
>
> \(ii\) [Board of Directors Meetings]{.underline}. Meetings of the
> Contractor\'s Board of Directors are for the purpose of assessing
> management and performance under this Contract and providing
> management guidance and assistance. Full Board of Directors meetings
> and other ancillary board committee meetings may be held as determined
> by the Board at locations convenient to SNL and corporate facilities.
> The applicable fiscal year (FY) budget will be submitted to the
> Contracting Officer for prior approval. This paragraph is not intended
> to make allowable any other expressly unallowable costs cited
> elsewhere in this Contract.
>
> \(c\) The Contractor shall provide periodic reports of activities and
> costs incurred as required by the Contracting Officer. The amount
> reimbursable under this Contract shall be subject to Government audit.
>
> \(d\) The total FY 2004 estimated budget for these services is
> \$1,787,887. Budget limitations shall not be exceeded without prior
> Contracting Officer approval. The parties agree that the budgeted
> amounts for costs may be reviewed further for appropriateness and
> scope. In addition, the parties agree that a tracking process,
> acceptable to the Contracting Officer, providing sufficient detail for
> reasonable accountability, shall be implemented. The NNSA and
> Contractor agree to negotiate in good faith any adjustments to these
> budgeted amounts as a result of empirical information from any such
> tracking system or reviews.

### H-25 CONTRACTOR EMPLOYEES

> In carrying out the work under this Contract, the Contractor shall be
> responsible for the employment of all professional, technical,
> skilled, and unskilled personnel engaged by the Contractor in the work
> hereunder, and for the training of personnel. Persons employed by the
> Contractor shall be and remain employees of the Contractor and shall
> not be deemed employees of the NNSA or the Government; however,
> nothing herein shall require the establishment of any
> employer-employee relationship between the Contractor and consultants
> or others whose services are utilized by the Contractor for the work
> hereunder.

### H-26 ADVANCE UNDERSTANDING OF COSTS AND EXPENSES

> \(a\) Personnel costs and related expenses incurred in accordance with
> the Personnel Appendix (Appendix A) shall be allowable to the extent
> indicated therein.
>
> \(b\) The advance understanding enables both the Contractor and the
> NNSA to determine allocability, allowability and reasonableness of
> costs prior to incurrence, thereby avoiding subsequent disallowance
> and disputes; provide appropriate and reasonable compensation levels
> to recruit and retain Contractor employees to meet DOE mission
> objectives; and assure prudent expenditure of public funds. The
> Appendix A was negotiated in concert with the requirements of DOE
> Order 350.1, CONTRACTOR HUMAN RESOURCE MANAGEMENT PROGRAMS, Change 1,
> dated September 30, 1996.
>
> \(c\) Should DOE Order 350.1, Change 1, be modified by the Department,
> and after review and acceptance by the NNSA, the NNSA and the
> Contractor agree to commence good faith negotiations to modify
> Appendix A as appropriate prior to the incorporation of the revised
> Order into the contract. This clause does not supercede the rights
> available to NNSA under the clause entitled "DEAR 970.5204-2 LAWS,
> REGULATIONS, AND DOE DIRECTIVES".

### H-27 LOBBYING RESTRICTION (ENERGY AND WATER DEVELOPMENT APPROPRIATIONS ACT, 2003)

> The Contractor agrees that none of the funds obligated on this award
> shall be expended, directly or indirectly, to influence congressional
> action on any legislation or appropriation matters pending before
> Congress, other than to communicate to Members of Congress as
> described in 18 U.S.C. 1913. This restriction is in addition to those
> prescribed elsewhere in statute and regulation.

### H-28 LOBBYING RESTRICTION (DEPARTMENT OF INTERIOR AND RELATED AGENCIES APPROPRIATIONS ACT, 2003)

> The Contractor agrees that none of the funds obligated on this award
> shall be made available for any activity or the publication or
> distribution of literature that in any way tends to promote public
> support or opposition to any legislative proposal on which
> Congressional action is not complete. This restriction is in addition
> to those prescribed elsewhere in statute and regulation.

### H-29 FLOWDOWN OF RIGHTS TO PROPOSAL DATA

The Contractor shall include the clause of 48 CFR 52.227-23 \"Rights to
Proposal Data (Technical)\" in any subcontract awarded based on
consideration of a technical proposal.

### H-30 ASSET MANAGEMENT REQUIREMENTS

> \(a\) [Asset Management]{.underline}
>
> The Contractor shall plan, acquire, maintain, operate, and dispose of
> NNSA/DOE facilities at the Laboratories through documented and
> integrated management processes including Sites Comprehensive
> Planning, Project Management, Maintenance, Real Property, Utilities
> Acquisition and Management, and Energy Management. Stewardship of the
> facilities at the Laboratories shall be accomplished in a
> cost-effective manner to meet the NNSA/DOE mission. Management of the
> facilities shall be based on incorporation of industry standards, a
> graded approach, and systematic analysis of life-cycle benefits
> received for the capital and operating costs incurred. The physical
> plant shall be maintained and operated in a manner that assures
> facilities are "fit for use." The term "fit for use" is defined as
> facility conditions that can effectively, efficiently, and safely
> support the world class research, science based engineering, and
> production efforts that take place at the sites managed by the
> Contractor.

\(b\) [Facilities Management Performance]{.underline}

> \(1\) [General]{.underline}
>
> The minimum industry standard for controlling facilities and
> infrastructure design, construction, and materials for maintenance,
> repair, renovation, and new construction shall be either the Uniform
> Building Code as issued by the International Conference of Building
> Officials, 1997 version or later edition, or the International
> Building Code as issued by the International Code Council, 2000
> version or later edition, at the discretion of the Contractor. Leased
> facilities or space, off-site or on-site, shall not be subject to the
> requirements of this paragraph (b)(1). Applicable requirements of 10
> CFR and of the applicable Directives in Contract Section J, Appendix
> G, List of Applicable Directives and NNSA Policy Letters, shall be
> used for the design and construction of nuclear facilities and
> accelerators in addition to the use of the Uniform Building Code, the
> International Building Code, and the referenced codes and standards.
> Use of the Uniform Building Code or the International Building Code as
> the minimum standard is not required to be applied retroactively to:
> facilities designed, constructed, modified, or having DOE approved
> project baselines prior to the date of incorporation of this paragraph
> in this Contract, or to temporary facilities such as trailers and
> modular facilities.
>
> \(2\) [Site Facility Plan]{.underline}
>
> The Contractor shall establish and maintain a Site Facility Plan that
> addresses the current condition of the Laboratories and future needs
> based on the strategic plan for the Laboratories. The Site Facility
> Plan shall be updated annually. The NNSA shall provide to the
> Contractor guidance for the preparation of the Site Facility Plan for
> which the Contractor is responsible under the terms and conditions of
> this contract. Based upon this guidance, the Contractor shall prepare,
> and maintain through annual updates, the Site Facility Plan to reflect
> those actions necessary to keep the development of facilities current
> with the needs of the Government and allow the Contractor to
> successfully accomplish its mission in support of National Security.
> In developing this Site Facility Plan, the Contractor shall follow the
> procedural guidance set forth in the applicable Directives in Contract
> Section J, Appendix G, List of Applicable Directives and NNSA Policy
> Letters. The Contractor shall use the Site Facility Plan to manage and
> control the development of facilities and lands. The Site Facility
> Plan and any NNSA directed revisions to the Site Facility Plan shall
> be submitted to the Contracting Officer for review and approval by
> NNSA. The Contractor may periodically during the year update and
> revise the Site Facility Plan to reflect changing mission needs.
> Changes to planned projects between official updates of the Site
> Facility Plan and the related NNSA approvals shall be approved through
> the NNSA project authorization process.
>
> \(3\) [Project Management]{.underline}
>
> All capital investments shall be managed and controlled by the
> Contractor in accordance with the Project Execution Plan for each
> project.
>
> \(4\) [Real Property]{.underline}
>
> Real property at the sites shall be acquired, operated, and disposed
> of in a manner to support the policies and standards established by
> NNSA/DOE with regard to optimization of space and proper utilization
> of facilities. The acquisition and disposal of real property shall be
> based on the facility needs identified in the Site Facility Plan.

(i) Acquisition of Real Property by Contractor Lease:

> \(A\) The Contractor shall comply with "Contractor Plan for
> Acquisition of Leased Real Property," dated January 7, 1999, and as
> amended.
>
> \(B\) Annually, the Contractor shall submit the "Contractor Plan for
> Acquisition of Leased Real Property."
>
> \(C\) For purposes of implementation of Paragraph (a)(2) and (b) of
> Contract Clause entitled "Acquisition of Real Property", the
> Contractor shall provide a Preliminary Real Estate Plan (PREP) for all
> proposed acquisitions.

(ii) Acquisition of Real Property Other than by Contractor Lease (fee
     simple or temporary interest by easement, license or permit):

> For purposes of implementation of Paragraphs (a)(1) and (a)(3) of
> Contract Clause entitled "Acquisition of Real Property", the
> Contractor shall provide a PREP for all proposed acquisitions.

(iii) Disposal of Real Property:

> The Contractor shall provide a PREP for all proposed disposals.
>
> \(5\) [Operations and Maintenance]{.underline}
>
> Facilities shall be operated and maintained in such a manner that they
> are fit for the intended use; promote operational safety; protect the
> environment, the workers, and the public; enhance the Laboratories'
> missions; minimize the use of energy resources; and protect the
> Government's capital investment.
>
> \(6\) [Utilities Acquisition and Management]{.underline}
>
> Utility systems including electrical, water, natural gas, sewage,
> telephone, and steam shall be acquired, operated, and maintained to
> provide highly reliable and efficient systems.
>
> \(7\) [Resources Management]{.underline}
>
> The Contractor shall manage the use of energy and water resources in a
> manner that minimizes consumption.
>
> \(c\) Subcontract Requirements. To the extent the Contractor
> subcontracts performance of any of the responsibilities discussed in
> this clause, the subcontract shall contain the requirements of this
> clause relative to the subcontracted responsibilities.

### H-31 STRATEGIC PURCHASING

\(a\) The Contractor shall participate with NNSA and other NNSA
contractors as part of an \"enterprise organization\" taking advantage
of the many benefits that can be achieved through strategic purchasing.
Strategic purchasing can result in better pricing, better products, more
timely delivery, reduced administrative costs and lead times for both
the contractor and the NNSA, greater standardization and
interchangeability across the NNSA complex, and increased awards to
small business entities.

\(b\) The Contractor shall cooperate with NNSA and other NNSA
contractors in identifying requirements under this Contract that are
suitable for strategic purchasing and shall facilitate the
identification of work to be directly acquired by NNSA to support the
objectives discussed below. The Contractor shall use the contracting
vehicles identified by the NNSA as strategic purchases and those awarded
by the Integrated Contractor Purchasing Team (ICPT) to meet all suitable
requirements under this Contract unless the cost of using such
contracting vehicles is shown to be excessive, does not provide the best
value and or impacts the Contractor's schedule. The Contractor may
propose alternative acquisition strategies to the Contracting Officer.

\(c\) (1) The Contracting Officer reserves the right to identify to the
Contractor any of the work in support of the Management and Operation of
SNL and contemplated by Section C, Statement of Work, of this Contract
that may be appropriate for performance by either another contractor
directly contracted by the NNSA or performed by Government employees, to
meet specific goals of the NNSA.

(2) Work so identified will be for the purpose(s) of: allowing the
    Government to conduct pilot programs, or to maximize the
    participation of small businesses in NNSA procurement programs. The
    Government and the Contractor will confer in advance on the strategy
    for changing responsibility for the work and will do so with the
    objective of minimum disruption to the site operations.

> \(3\) The Government may designate the Contractor as the Technical
> Monitor for such contracts that are directly related to the scope of
> this Contract. The Contractor agrees to perform such monitoring duties
> as shall be more further described in the designation for each such
> contract. No designation shall include, and the Contactor shall not
> perform, the following duties:

a.  Award, modification, change, or termination of the contract.

b.  Receipt, processing or adjudication of any claims, invoices, or
    demands for payment of any form.

c.  Any function determined to be inherently governmental.

> \(4\) The Technical Monitor shall report to the Contracting Officer,
> or the Contracting Officer's Representative, any performance of a
> designated contract that may not be in compliance with its terms and
> conditions and is not authorized to take any other action regarding
> such noncompliance.
>
> \(5\) Additionally, the NNSA agrees to insert provisions in all such
> contracts substantially as follows:
>
> *OTHER GOVERNMENT CONTRACTORS*
>
> *The Government may undertake or award other contracts for additional
> work or services. The contractor agrees to fully cooperate with such
> other contractors and Government employees and carefully fit its own
> work to such other work as may be directed by the Contracting Officer.
> The contractor shall not commit or permit any act which will interfere
> with the performance of work by any other contractor or by Government
> employees. (see, H-\_\_\_\_\_)*
>
> *H-\_\_\_. The Government may designate Sandia Corporation as
> Technical Monitor for any right, duty or interest in this contract. In
> that event, the contractor further agrees to fully cooperate with
> Sandia Corporation for all matters under the terms of the
> designation.*

\(d\) In the cases where the Government directly contracts for such
work, and retains administration, the Contractor shall fully cooperate
with the new performing entity and provide reasonable support as
required.

\(e\) Appropriate adjustments shall be made to the Contractor\'s
Subcontracting Plan to recognize the changes to the subcontracting base
and goals.

### H-32 OPEN COMPETITION AND LABOR RELATIONS UNDER MANAGEMENT AND OPERATING AND OTHER MAJOR FACILITIES CONTRACTS (DEC 2002)

> "Labor organization," as used in this clause, shall have the same
> meaning it has in 42 U.S.C. 2000e(d).
>
> \(a\) Unless acting in the capacity of a constructor on a particular
> project, the Contractor shall not -
>
> \(1\) Require bidders, offerors, contractors, or subcontractors to
> enter into or adhere to nor prohibit those parties from entering into
> or adhering to agreements with one or more labor organizations, i.e.,
> project labor agreements, that apply to construction project(s)
> relating to this contract; or
>
> \(2\) Otherwise discriminate against bidders, offerors, contractors,
> or subcontractors for refusing to become or to remain signatories or
> to otherwise adhere to project labor agreements for construction
> project(s) relating to this contract.
>
> \(b\) When the Contractor is acting in the capacity of a constructor,
> i.e., performing a substantial portion of the construction with its
> own forces, it may use its discretion to require bidders, offerors,
> contractors, or subcontractors to enter into a project labor agreement
> that the Contractor has negotiated for that individual project.
>
> \(c\) Nothing in this clause shall limit the right of bidders,
> offerors, contractors, or subcontractors to voluntarily enter into a
> project labor agreements.

### H-33 IMPLEMENTATION OF SECTION I CLAUSES

### 

> \(a\) For purposes of implementation of Paragraph (d) of Contract
> Clause entitled "Accounts, Records, and Inspection," the parties agree
> that contractor official procurement file records are contractor-owned
> records. Associated official financial records that are stand alone,
> separate and apart from the official procurement file records remain
> government-owned records.
>
> \(b\) For purposes of implementation of Paragraph (b)(2) of Contract
> Clause entitled "Required Sources For Helium And Helium Usage Data,"
> the parties agree to the following:

(i) Contractor delivery of Helium Supplier and Helium Usage Data to the
    Contracting Officer shall be considered met if the required data is
    entered into an appropriate database of Helium deliveries;

(ii) a copy of this data must be made available to the Contracting
     Officer upon request; and

(iii) the Contractor shall provide a quarterly report of helium usage to
      the Contracting Officer in a format determined by the Contracting
      Officer.

> \(c\) For purposes of implementation of paragraph (e) (1) of the
> Contract Clause entitled "Penalties for Unallowable Costs," the
> parties agree the phrase "an audit" means a DOE/NNSA initiated audit.

\(d\) For purposes of implementation of paragraph (b)(1) of the Contract
Clause entitled "Access to and Ownership of Records," the parties agree
to the following:

> \(1\) "Employee relations records" include records pertaining to
> qualifications or suitability for employment of any employee,
> applicant, or former employee, allegations, investigations, and
> resolution of employee misconduct, discipline, or charges of
> discrimination, negotiations, arbitration or grievance proceedings
> with any labor organization in connection with any labor contract, or
> affirmative action plans and related records.
>
> \(2\) "Employee assistance program records" include
> psychological/psychiatric records and files maintained on individual
> employees, applicants, and former employees of contractor.

### H-34 PREEXISTING CONDITIONS

### 

> \(a\) Any liability, obligation, loss, damage, penalty, fine, or claim
> (including, without limitation, a claim involving strict or absolute
> liability), action, suit, cost, expense or disbursement which may be
> incurred, imposed, or asserted by any party and arising out of any act
> or failure to act which occurred before October 1, 1993, in
> conjunction with the management and operation of Sandia National
> Laboratories, shall be deemed incurred under Contract No.
> DE‑AC04‑76DP00789. If it is not possible to relate or reasonably
> allocate particular activities to individual periods, the costs shall
> be presumed to have been incurred before October 1, 1993.
>
> \(b\) Notwithstanding the provisions of subparagraph (a) above, to the
> extent the acts or failure to act of the Contractor after September
> 30, 1993, cause or add to any fine, or penalty, or remediation costs
> resulting from a condition in existence prior to October 1, 1993, the
> Contractor shall be responsible in accordance with the terms and
> conditions of this Contract. The Contractor has the duty to inspect
> existing facilities and sites and timely identify to the Government
> those conditions which it believes could give rise to a liability,
> obligation, loss, damage, penalty, fine, claim, action, suit, cost,
> expense, or disbursement or areas of actual or potential noncompliance
> with the terms and conditions of this Contract or applicable law or
> regulation, and the responsibility to take corrective action, as
> directed by the Contracting Officer or as required elsewhere in this
> Contract.
>
> \(c\) The obligations of the Government under this clause are subject
> to the Contract Clause entitled \"Obligation of Funds.\"