The Basics: Department of Energy (DOE)

Monday, October 3, 2022

As one of the largest federal departments and supporter of the physical sciences, the U.S. Department of Energy (DOE) takes on a massive range of tasks like expanding clean energy solutions nationwide and ensuring the safety of the country’s nuclear arsenal. Established in 1977, the Department was formed as a response to the need to consolidate U.S. energy policy in the aftermath of several historical events.

History, Mission, and Organization

Several historical events spurred the Department’s creation, beginning with the Manhattan Project and the race to develop the atomic bomb during World War II. The creation of the Atomic Energy Commission (AEC) and the Atomic Energy Act of 1946 led to the framework for the first National Laboratories. The enactment of the Energy Reorganization Act of 1974 split the responsibilities of the AEC between the Nuclear Regulatory Commission (NRC) and the Energy Research and Development Administration. The 1973 Oil Crisis, the “first oil shock,” saw the price of oil rise nearly 300%. 

In the aftermath of these events, President Jimmy Carter signed The Department of Energy Organization Act of 1977 which officially created the DOE and consolidated the Federal Energy Administration, Energy Research and Development Administration, and Federal Power Commission.

Today’s DOE’s mission revolves around energy, science and innovation, nuclear safety and security, and management and operational excellence. The Department funds cutting edge-research and utilization of innovative clean energy techniques and resources; as well as engages with all energy types, including clean energy, electric power, energy storage, hydrogen and fuel cells, and fossil fuels. The National Nuclear Security Administration (NNSA), a semi-autonomous agency within DOE, safeguards the country’s nuclear weapons and promotes nuclear nonproliferation and safety. 

DOE is headquartered in Washington, D.C., and operates out of 83 field locations and 17 National Laboratories. It has 16 Program Offices, 20 Staff Offices, 21 Lab and Technology Centers, 4 Power Marketing Administration Sectors, and 11 Operations Offices. 

Today DOE has 14,000 employees and 95,000 management and operating contractors. Additionally, DOE supports more than 33,000 researchers from universities, industry, and federal agencies at 28 user facilities annually. 

In 2022, DOE announced a reorganization with new names of Under Secretaries. This restructuring of two new offices supported efforts to implement $62B in investments from the Bipartisan Infrastructure Law (BIL)

Formerly the Under Secretary for Science and Energy, the new Under Secretary for Science and Innovation will advance the research and development of energy technologies and support their passage throughout the demonstration and deployment phases. The new Undersecretary of Infrastructure, previously the Under Secretary for Energy, will be responsible for activities related to clean energy technology deployments such as infrastructure financing, project development, and project management.

DOE in Action

Below are some notable projects DOE has taken on in pursuit of its mission recently:

Facilities and Infrastructure Restoration and Modernization Program (FIRM): DOE’s Sustainability Performance Office (SPO) focuses on improving DOE’s general purpose infrastructure, like office space, laboratory space, and utilities through a variety of initiatives. For example, FIRM has installed $500M of equipment at DOE sites since 1999 and runs the largest federally-owned wind farm. Current projects include the largest federally owned wind farm located in Amarillo, Texas. 

Energy Earthshots Initiatives: DOE collaborates with the Department of the Interior (DOI), Department of Commerce (DOC), Department of Transportation (DOT), and the National Science Foundation (NSF)  to transform key clean energy technologies in a decade. So far there have been 6 Energy Earthshots announced with anticipation for at least 2 more. The Earthshots are designed to drive integrated program development across DOE’s science and applied energy offices and Advanced Research Projects Agency-Energy (ARPA-E) to help achieve climate and economic competitiveness goals.

HQ Facilities Initiatives: The HQ Facilities Initiatives provides energy-saving solutions for DOE’s locations in Washington, D.C., and Germantown, Maryland. This is part of the Energy Savings Performance Contract (ESPC) that allows federal agencies to complete energy savings projects without up-front capital costs or special Congressional appropriations. The work includes upgrades to LED lighting, HVACs, chillers, light switches, steam traps, cool roofs, and more. DOE also tracks the initiative’s progress. For example, replacing 54,000 LED lights in both locations saves $270,000 each year, and replacing the HVAC in the D.C. building saves $743,000 annually. 

Contract Procurement, Acquisition, and Grants

Below is an organizational chart of DOE’s Office of Acquisition Management.

DOE purchases a wide variety of goods and services including:

  • Remediation Services 
  • Professional Services and Administrative Management 
  • Engineering Services
  • Facilities Support 
  • Computer Facilities Support 
  • Research and Development
  • Educational Services

DOE procurement is complex as compared to other federal agencies. It is important to note that about 80% of DOE’s annual procurement base is allocated to the Department’s Management and Operating contracts (M&Os), also commonly referred to as Facility Management Contractors (FMCs). 

The M&O contract model is designed to ensure the recruitment of world-leading scientific and technical talent. DOE directs the subject matter areas in which the contractors are focused and the overall performance objectives to be accomplished, and the contractors apply the best management, scientific, and business practices in carrying out that direction.

Under this model, the contractor performs the majority of scientific and technical responsibilities with its own workforce and the requirement continues with no foreseeable end. The contractor’s workforce is large, remaining at the site despite the change of contractors. This results in the need for DOE to assume stewardship of employee relations and workplace labor conditions. However, the work takes place at very large, Government-owned reservations and facilities that DOE oversees. The contractor has to form a corporate entity specifically for their DOE M&O contract, which may only accept direct work from DOE or as allowed specifically under the M&O contract. The contractor must link its accounting system and budget process with the DOE.

The budgets for M&O contracts are normally line items in the DOE’s budget. This special relationship is characterized by the use of these contractors to perform major portions of DOE’s mission. 

M&O contracts make working with DOE unique and sometimes challenging, especially for contractors that don’t have a long history with DOE. Just some of those complexities include:

  • 2 Senior Procurement Executives
  • 11 Heads of Contracting Activity
  • 15 SBA Procurement Center Representatives
  • 80+ Small Business Federal and M&O/FMC Program Managers (SBPMs)
  • Multiple Federal and M&O/FMC Forecasts including Multiple Contracting Sources through Federal Procurements and M&O/FMC subcontracts 
  • 22 Contracting Activities
  • Decentralized Business Model across 36 Different Sites

In addition to M&O contracts, DOE buys through other methods. DOE uses open bids to procure complex services, using SAM.gov, FedConnect, and GSA eBuy. DOE also uses its Supply Chain Management Center (SCMC) to support National Nuclear Security Administration (NNSA) and DOE Environmental Management (EM) sites’ operational and acquisition efficiencies. There are also M&O and FMCs subcontractor opportunities or procurements run by the M&Os/FMCs at each DOE contractor-managed site. The National Energy Technology Laboratory’s (NETL) Pittsburgh Office has operational responsibility for DOE’s Unsolicited Proposal Program. Finally, the DOE Office of SBIR/STTR Programs works collaboratively with 13 program offices throughout DOE. 

Recent Contracts

The following awards are recent examples of the types of products and services DOE acquires through contracts.

Digital Modernization: In December 2021 DOE issued $34.6M worth of contract awards to Verizon for digital modernization across the Department.  The two task orders were awarded through the General Service Administration (GSA) Enterprise Infrastructure Solutions (EIS) contract vehicle in support of voice and data components. 

Nuclear Materials Security: In February 2021 DOE EM issued a $1B contract award to SRS Critical Infrastructure Security LLC for security for special nuclear materials under the Safeguards and Security (S&S) program performed at the Savannah River Site (SRS) near Aiken, South Carolina.

Equipment to Extrude Material: NETL sought to purchase equipment to remove material from high-strength steel and nickel-based superalloys. The $1.3M contract went to Macrodyne Technologies, Inc. in September 2022. Specifically, NETL bought Macrodyne’s 900 Ton Extrusion Press. 

Construct North Bend Switching Station: DOE needed to build a North Bend Switching Station, Stage 01 in South Dakota. The work entails preparatory work, equipment, excavation for site and access road, a chain link fence, gravel surfacing, seeding, concrete foundations, cable trenches, a power circuit breaker, fiber optic equipment, security system, electrical testing, battery chargers, and switchboard sections. In May 2022, this work was awarded to Highmark Erectors, Inc. in a $7M contract. This contract was a Total Small Business Set-Aside.

EMCBC Technical Support Services: The Environmental Management Consolidated Business Center (EMCBC) and smaller sites in the EM Complex contracted for Technical Support Services on a range of topics: Quality Assurance, Subject Matter Experts, Radiological Protection, Emergency Management, Technical Writing, Health Physics, Waste Management, Fire Protection, Ventilation Systems, and Structural and Geotechnical Engineering. In April 2020, S&K Federal Services, LLC won the $22M contract.

Contract Spending and Grant Trends

As shown above, federal contract work is largely awarded to companies located in New Mexico, Tennessee, California, and Washington. Below are a few key data points for USDA contracting spending from FY15 to FY21:

Top Federal Contractors (FY15-FY21): 

  • Battelle Memorial Institute
  • National Technology & Engineering Solutions of Sandia, LLC 
  • Consolidated Nuclear Security, LLC
  • Lawrence Livermore National Security, LLC
  • Triad National Security LLC 
  • Savannah River Nuclear Solutions LLC
  • Los Alamos National Security LLC
  • Honeywell International Inc.
  • The Regents of the University of California 
  • UChicago Argonne, LLC 

Top PSC Obligations (FY15 – FY21):

  • M1HA – Operation of GOCO R&D Facilities
  • M1JZ – Operation of Miscellaneous Buildings 
  • AZ11 – R&D – Other Research and Development (Basic Research)
  • F999 – Other Environmental Services
  • M1QA – Operation of Restoration of Real Property (Public or Private)
  • Y1HA – Construction of GOCO R&D Facilities
  • M1PD – Operation of Waste Treatment and Storage Facilities 
  • Z1PD – Maintenance of Waste Treatment and Storage Facilities
  • P500 – Salvage – Demolition of Structure/Facilities (Other than Buildings) 
  • R799 – Support – Management: Other 

Top NAICS Obligations (FY15 – FY21):

  • 561210 – Facilities Support Services 
  • 541710 – Research and Development in the Physical, Engineering, and Life Sciences 
  • 562910 – Remediation Services 
  • 541990 – All Other Professional, Scientific, and Technical Services 
  • 562211 – Hazardous Waste Treatment and Disposal
  • 541715 – Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
  • 541714 – Research and Development in Biotechnology (except Nanobiotechnology) 
  • 541512 – Computer Systems Design Services
  • 611310 – Colleges, Universities, and Professional Schools

DOE awards various types of grants, including awards to other federal agencies, which creates more contractual opportunities for the industry. The Assisting Federal Facilities with Energy Conservation Technologies (AFFECT) Grant Program provides federal agencies with funds to help lower levels of government improve sustainability efforts. Wholesale Electricity Market Grants support states and regions investigating market improvements. Energy Future Grants fund states/communities weatherizing homes and launching the Low-Income Home Energy Assistance Program Advantage Pilot (LIHEAP Advantage).

DOE provides funding opportunities for startup energy businesses looking to launch a pilot project to a company with proven technology that needs help reaching commercial scale, or a state, local or tribal Government looking for funding resources for energy projects.

DOE has 5 grantmaking offices:

  • Office of Science
  • Office of Energy Efficiency and Renewable Energy (EERE)
  • Office of Nuclear Energy
  • Office of Fossil Energy
  • ARPA-E

Most grant work takes place in California, Illinois, and New York.

Top Grant Recipients (FY17-FY21):

  • General Atomics
  • University of Illinois
  • University of Rochester
  • Michigan State University 
  • The University of Utah 
  • NuScale Power, LLC
  • Massachusetts Institute of Technology 
  • University of Wisconsin System 
  • X Energy, LLC
  • US SFR Owner, LLC

Top CFDA Programs (FY17-FY21): 

  • Office of Science Financial Assistance Program 
  • Renewable Energy Research and Development 
  • Fossil Energy Research and Development
  • Nuclear Energy Research, Development, and Demonstration 
  • Advanced Research Projects Agency-Energy

DOE in 2023 and Beyond

DOE’s FY23 Budget Request is $48.2B, a 15.1% increase from FY21. DOE’s 2023 focus areas are investing in domestic clean energy manufacturing, advancing environmental justice, tackling the climate crisis, and modernizing and ensuring the safety and security of the nuclear stockpile. 

The FY23 Budget Request includes $11B in investments in clean energy research, development, demonstration, and deployment;  $1B investment to launch a Global Clean Energy Manufacturing effort that would build resilient supply chains for climate and clean energy equipment through engagement with allies; $200 million for a new Solar Manufacturing Accelerator that is able to meet the Administration’s solar deployment goals; and $105M for the Energy Future Grants Program.

Researched and authored by Haley Boulanger, Pulse Analyst.

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