The management and operations contractor for two key U.S. nuclear arms sites improved its performance significantly in fiscal 2016, according to the National Nuclear Security Administration. However, Consolidated Nuclear Security will need to take another step forward to ensure it stays on the job past the initial term of its contract.
CNS has since July 1, 2014, managed the NNSA’s Y-12 National Security Complex in Tennessee and Pantex Plant in Texas. The limited liability company – a partnership of Bechtel National, Lockheed Martin Services, ATK Launch Systems, and SOC – holds a five-year base deal through June 30, 2019, with three option terms totaling another five years through the end of June 2024.
For fiscal 2016, the company’s performance rose to “very good” from “good” in the prior evaluation, according to the Nov. 28 NNSA performance evaluation made public this week. That was sufficient to earn CNS $30.6 million in award fees, 77 percent of the total available amount that was just shy of $40 million. While the company left nearly $10 million on the table, the result represented a 20-point step up from the prior evaluation covering the period from July 2014 to September 2015, when it earned $11.4 million in award fees, 57 percent of the total possible $19.9 million.
Last time around, the NNSA dinged its contractor in a number of operational areas, including failing to meet “many of the expectations” for quality of work and an incident in which Y-12 shipped an excess amount of nuclear weapon-usable highly enriched uranium to a commercial facility in New York.
The outlook was considerably sunnier in the latest evaluation.
“NNSA recognizes CNS’s substantial improvement in mission delivery in FY 2016 and the hard work and dedication of the workforce and leadership that made the success possible,” the agency said in its evaluation of CNS’ work from Oct. 1, 2015, to Sept. 30, 2016. “Continued improvements in environment, safety, and health and security programs and notable performance in material management and housekeeping were also observed.”
Still, CNS must focus on quality assurance for both its weapons and non-weapons operations to deter harm to “mission deliverables and/or safety,” according to the scorecard. The company must also move expeditiously to better its “marginally satisfactory” performance in financial management and cybersecurity, the NNSA said.
The agency, a semiautonomous branch of the Department of Energy, emphasized the importance of strong management of recapitalization to halt deterioration of aging infrastructure at the two decades-old facilities. The Pantex Plant assembles and disassembles nuclear warheads, while Y-12 hosts a number of nuclear security activities including uranium processing and storage.
As with other NNSA site managers, CNS was rated in six performance areas: manage the nuclear weapons mission; reduce nuclear security threats; DOE and strategic partnership projects mission objectives; science, technology, and engineering; operations and infrastructure; and leadership. Each has a specific weight in calculating the final award fee. CNS’ award fee percentage was the lowest among the agency’s seven site M&O contractors.
The company also received a fixed fee of $1.1 million, bringing its total for fiscal 2016 to $31.7 million. In the prior performance period, the total fixed fee landed at $31.2 million, bringing CNS’ total take to $42.6 million.
The NNSA has not reached the decision point for the first contract extension, said Geoffrey Beausoleil, manager of the agency’s Production Office, which oversees operations at Pantex and Y-12. In a telephone interview Friday, he reaffirmed the NNSA’s finding that Consolidated Nuclear Security has “improved greatly.”
To stay on, the company will need to “deliver on promises made in its proposal regarding efficiencies and to continue to meet mission and other contract requirements consistently,” the NNSA said in its original contract award announcement in 2013.
“The contract calls for us to reach 80 percent after the third year of the contract,” CNS spokesman Jason Bohne said Thursday in a statement to NS&D Monitor. “We are committed to maintaining progress achieved to date, and we are excited by the opportunity to continue our journey to performance excellence in service to the Nation through this fiscal year and beyond.”
The next performance evaluation, for fiscal 2017, would cover part of both the third and fourth years of CNS’s contract.
The first option will also only be executed if CNS reaches 80 percent of its cost savings commitment by that point, Beausoleil said. “We are evaluating that every day,” he said.
Bohne said the performance scorecard highlighted progress made by the company during the fiscal year in several areas, including exceeding production schedules at both sites and taking significant steps in consolidating management of Pantex and Y-12 “and aligning two geographically and historically separated sites.” Both facilities also finished several projects intended to improve their infrastructure, Bohne said.
National Security Technologies
Separately, the management and operations contractor for the Nevada National Security Site received an “excellent” rating and nearly all of its award fee in its latest performance scorecard, even as it will soon be replaced by another site boss.
National Security Technologies (NSTec) had an “excellent year” in fiscal 2016 in managing the 1,365-square-mile facility that conducts U.S. nuclear stockpile support and nonproliferation operations, among other testing and training activities, the National Nuclear Security Administration said in its fiscal 2016 evaluation.
The year was “highlighted by significant contributions to the enterprise by effectively performing across all of their mission lines including Stockpile Stewardship, Nuclear Non-proliferation, and Environmental Management,” according to the NNSA.
The contractor earned $24.3 million in award fees, 92 percent of the available $26.5 million. Combined with a $5.1 million fixed fee, NSTec pulled in $29.4 million for the 12-month period. That’s $3 million more than it earned in the previous fiscal year: $21.8 million in award fees and a $4.5 million fixed fee, for a total of $26.3 million.
“While the balance of NSTEc’s performance during the fiscal year was excellent, there were some challenges during this period that did not reflect the operational excellence expected from an M&O contractor,” Madelyn Creedon, NNSA principal deputy administrator, wrote in the Nov. 28 award-fee memo to agency Nevada Field Office Manager Steven Lawrence. “Opportunities for improvement still exist in the areas of nuclear safety basis development, issues management, and configuration management.”
For example, Creedon said, NSTec regularly postponed updates to the site’s safety basis, underestimated review and revision cycles, and faced various quality issues that led to unanticipated rework and project delays.
NSTec is a partnership of Northrop Grumman, AECOM, CH2M, and BWX Technologies. Its contract was to expire on Sept. 30, 2016, which would have been followed by a transition to anticipated new site contractor Nevada Site Science Support and Technologies Corp. (NVS3T) under a deal worth up to $5 billion over 10 years. But the NNSA in early September canceled the new contract, saying it had not been informed that NVS3T had changed hands from Lockheed to Leidos.
NSTec will remain on the job until completion of the renewed contractor selection process, which involves only bidders from the first round. The total number of bidders has not been made public, but included several teams, including a slightly reworked version of NSTec featuring Northrop Grumman Technical Services, AECOM subsidiary URS Federal Services, and CH2M Hill Constructors Inc.
There was no immediate update this week on the status of the bidding process for the Nevada National Security Site. NSTec also did not respond by deadline to a request for comment on the latest performance review.
Honeywell FM&T
Honeywell Federal Manufacturing & Technology received similarly strong marks for management and operations of the Kansas City, Mo., National Security Complex. The contractor’s award-fee performance evaluation does not list adjectival ratings for the six goals, but it received more than 90 percent of the available fee in all areas except reducing nuclear security threats.
The National Security Complex produces electronics and other non-nuclear parts for the U.S. nuclear arsenal.
In total, the Honeywell subsidiary received $27.1 million in award fees, 92 percent of the total available $29.3 million. It also collected another $13.9 million in fixed fees for a total of $41.1 million. In the prior budget year, the company earned $28.2 million in award fees, 94 percent of the potential $30 million. A $16 million fixed fee raised its total to $44.2 million.
