Staff Reports
NS&D Monitor
3/28/2014
Not surprisingly, the most frequently asked questions being asked these days at Y-12 and Pantex have to do with jobs and benefits, as the two plants in Tennessee and Texas are transitioning to a new contractor. However, the new contractor, Consolidated Nuclear Security, LLC, isn’t ready to make job offers—there are still discussions between CNS and the National Nuclear Security Administration regarding the number of employees needed at the two sites—or divulge the plans for benefit changes at the federal facilities to be managed by the Bechtel-led contractor team.
In a message to Y-12 and Pantex employees this week, CNS President and CEO Jim Haynes said the new managing contractor would make job offers between April 15 and June 2 and provide detailed information on benefits by mid-May. On April 2, CNS is supposed to deliver a “high-level staffing plan” to the Department of Energy for review and approval. That plan will include the contractor’s proposed number of employees and “our plans for moving forward with offers,” Haynes wrote to the thousands of employees waiting to hear about their future. “We are also planning opportunities for employees to interact with the CNS management team face-to-face in ways that will not impact current operations,” Haynes wrote. “We’ll continue to work details with the incumbent teams and will announce more information soon.”
Also, the CNS chief said the contractor would participate in a “post-contract-award conference” with the National Nuclear Security Administration during the first week of April to obtain “clarification” on NNSA expectations going forward. CNS also posted a copy of Frequently Asked Questions on its transition website. Asked why an employment process is necessary if people are already employed at one of the sites, CNS stated: “There are two primary reasons. First, we are determining the needs of the new organization and the number of employees needed to carry out that scope. Second, all employees who transition to the new contract will become employed by a new company, Consolidated Nuclear Security, LLC, and will need to complete all legally mandated requirements for new employment.”
Fee Information Released
Meanwhile, the NNSA this week released a copy of its basic contract with CNS, shedding light on how much fee the contractor could earn. The contract is basic and doesn’t include information since the award was reaffirmed (following protests) and transition began. However, the contract indicates the fixed fee for CNS for the first year will be about $30 million, with a performance incentive maximum fee of nearly $10 million. There is a separate fee associated with cost savings incentives (a major point of emphasis in the Request for Proposals for the combined Y-12/Pantex contract) and that would be set at about $21.4 million in the first year. The first year is the only time in which there’ll be a fixed fee, according to the contract.
In the second year, the available performance fee would be $39.9 million, which is the same as the combined fixed fee and performance fee for the first year. The maximum estimated cost savings fee for the second year would be about $42.1 million and that would go up to nearly $47 million by the third year. There is a clause that if the cost savings are not upheld in subsequent years of the contract, the government is entitled “to reimbursement of previously paid CSIF (cost savings incentive fee) and will obtain it out of future fee.”
The Uranium Processing Facility will be handled separately, and the basic contract released publicly does not include any fee numbers associated with the UPF—apparently because the funding and costs haven’t yet been determined. “The cost and fee associated with this CLIN (Contract Line Item Number) shall be accounted for and reported separately and be completely severable from all other parts of this contract,” the contract document states. The maximum fee for UPF work apparently will be based in part of the cost baseline for the project.
Could CNS Earn More than $100 Million?
The CNS contract also says the estimated cost and available fixed fee for the work for others—and other reimbursable work—will be established by the NNSA prior to the start of the applicable year of that work. Even though all information isn’t yet available, it appears there is the potential—with a high grade—for CNS to earn $100 million or more in total fees for the combined Y-12/Pantex management contract. By comparison, a maximum fee of about $57 million is going to be available for the nine months that B&W Y-12 manages Y-12 under the current contract arrangement.
If the CNS contract is modified to include the Savannah River tritium operations, the services required by the contractor will be changed and the available fees will be increased, the contract states. The transition period for incorporating the Savannah River work would be six months. It’s not clear when the decision will be made on whether to include the tritium work in the contract.
