DOE cancels bidding for PNNL contract; Battelle to continue operations

Jan. 24--The Department of Energy has canceled the bidding for the contract to manage and operate the Pacific Northwest National Laboratory, a move that was widely applauded Wednesday in the Tri-Cities.

The announcement means Battelle Memorial Institute of Ohio will continue to operate the lab for DOE through at least September 2009 without having to worry about preparing a competitive bid.

It also means DOE has dropped plans to eliminate from the contract the "use permit," which has allowed PNNL to do work for non-DOE clients since 1965.

DOE's draft request for proposals issued in October 2007 said that the use permit was being deleted because it gave Battelle an unfair advantage over any other potential competitors for the contract.

"Today's announcement is welcome news," Rep. Doc Hastings, R-Wash., and Sen. Patty Murray, D-Wash., said in a joint statement Wednesday.

"The 'use permit' was a critical tool in helping the lab to grow and to create new jobs and business in the Tri-Cities and across our state. DOE's proposal to abruptly end the 'use permit' was simply wrong," Murray and Hastings said.

Ray Orbach, undersecretary of science for DOE, had urged elimination of the use permit, arguing that it did not allow for a level field in the competitive bidding and didn't produce enough business for the lab to justify keeping it.

But Democratic and Republican members of Washington's congressional delegation rejected his claims and argued the use permit is a valuable asset for PNNL that should be incorporated in contracts at other national labs.

Hastings told the Herald in November that the appropriations bill was "a tool we can use" to protect the use permit.

Language Murray added to the federal 2008 appropriations bill said that the "use permit may not be waived, modified or terminated unless agreed to by both the contractor (at PNNL) and the Department of Energy."

Jeff Sherwood, spokesman for DOE, said that provision "complicated" the bidding process.

"(DOE) is canceling the competition for a new contract for the management and operation of the Pacific Northwest National laboratory in light of the complexities created by (law)," said a statement posted on the website for the contract competition.

DOE extended the current contract with Battelle through Sept. 30, 2009, to allow more time for the request for proposal and evaluation of bids, but Wednesday's announcement means the process is terminated, Sherwood said.

"DOE has not yet made a decision on a path forward regarding the PNNL management and operations contract," the DOE statement said.

Katy Delaney, spokeswoman for Battelle corporate headquarters in Columbus, Ohio, said Battelle "fully supports a thoughtful approach to ensure the best possible future for the lab."

PNNL has about 4,200 employees, with an annual budget of about $750 million. It works on complex problems in energy, national security, life sciences and the environment. The lab's clients include DOE, the Office of Science, Homeland Security, the Department of Defense and the National Nuclear Security Administration, as well as other government and nonfederal agencies, universities and private entities.

The use permit, which was created in 1964, allows Battelle to do research on its own and for other clients, using government resources and lab employees. The government is compensated for the use of its facilities. Battelle has reported that about 10 percent of its budget and as many as 300 to 400 of its employees are involved in research allowed by the use permit.

DOE's announcement noted that agency officials believed the use permit had "outlived its purpose now that PNNL is a well-established world class national laboratory." And that is why the use permit was intentionally written out of the bidding process.

But Gary Petersen, the Tri-City Development Council's vice president of Hanford programs, said Murray's efforts to include language in the Appropriations Act of 2008 to protect the use permit helped derail DOE's plan.

"We're very pleased," Petersen said, adding that many comments in favor of the use permit were sent to DOE in response to the draft request for proposals issued last fall.

"The number and strength of comments from the community showed the tremendous impact that deleting the use permit would have. It showed a community can come together and that we support the lab," Petersen said.

Battelle announced in late December that it planned to bid in the competition, and that Washington State University, the University of Washington and Babcock and Wilcox Technical Services would be part of its team submitting a proposal.

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